Exhibit 10.1

 

 

 

AGREEMENT AND PLAN OF MERGER

 

 

 

BY AND AMONG

 

U.S. GOLD CORP.

 

and

 

GOLD KING ACQUISITION CORP.

 

and

 

NORTHERN PANTHER RESOURCES CORPORATION

 

and

 

RICHARD SILAS, as STOCKHOLDER REPRESENTATIVE

 

Dated as of August 10, 2020

 

 

 

 

TABLE OF CONTENTS       Page       ARTICLE I. THE MERGER 1 Section 1.02
Effective Time 1 Section 1.03 Closing 1 Section 1.04 Certificate of
Incorporation, Bylaws, Directors and Officers 2 Section 1.05 Assets and
Liabilities 2 Section 1.06 Subscription Transaction 2 Section 1.07 Manner and
Basis of Converting Shares 2 Section 1.08 Surrender and Exchange of Certificates
3 Section 1.09 Parent Stock 3 Section 1.10 Further Assurances 3       ARTICLE
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4 Section 2.01 Organization,
Standing, Subsidiaries, Etc. 4 Section 2.02 Qualification 4 Section 2.03
Capitalization 4 Section 2.04 Indebtedness 5 Section 2.05 Company Stockholders 5
Section 2.06 Corporate Acts and Proceedings 5 Section 2.07 Governmental Consents
5 Section 2.08 Compliance with Laws and Instruments 5 Section 2.09 Binding
Obligations 6 Section 2.10 Broker’s and Finder’s Fees 6 Section 2.11 Financial
Statements 6 Section 2.12 Absence of Undisclosed Liabilities 6 Section 2.13
Changes 6 Section 2.14 Assets and Contracts 7 Section 2.15 Tax Returns and
Audits 8 Section 2.16 Patents and Other Intangible Assets 9 Section 2.17
Employee Benefit Plans; ERISA 9 Section 2.18 Title to Property and Encumbrances
10 Section 2.19 Condition of Properties 10 Section 2.20 Litigation 10 Section
2.21 Licenses 10 Section 2.22 Interested Party Transactions 10 Section 2.23
Environmental Matters 11 Section 2.24 Questionable Payments 12 Section 2.25
Obligations to or by Stockholders 12 Section 2.26 Duty to Make Inquiry 12
Section 2.27 Disclosure 12       ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION CORP. 13 Section 3.01 Organization, Standing 13 Section
3.02 Qualification 13 Section 3.03 Corporate Authority 13 Section 3.04 Broker’s
and Finder’s Fees 14 Section 3.05 Capitalization 14 Section 3.06 Acquisition
Corp 14 Section 3.07 Validity of Shares 14 Section 3.08 SEC Reporting and
Compliance 14 Section 3.09 Financial Statements 15 Section 3.10 Governmental
Consents; Listing Approvals 15

 

 

 

 

Section 3.11 Compliance with Laws and Other Instruments 15 Section 3.12 No
General Solicitation 15 Section 3.13 Binding Obligations 15 Section 3.14 Absence
of Undisclosed Liabilities 15 Section 3.15 Changes 16 Section 3.16 Tax Returns
and Audits 16 Section 3.17 Assets and Contracts 17 Section 3.18 Title to
Property and Encumbrances 17 Section 3.19 Condition of Properties 17 Section
3.20 Insurance 17 Section 3.21 Litigation 17 Section 3.22 Licenses 17 Section
3.23 Environmental Matters 17 Section 3.24 Questionable Payments 18 Section 3.25
Duty to Make Inquiry 18 Section 3.26 Disclosure 18       ARTICLE IV. ADDITIONAL
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS 19     ARTICLE V.
CONDUCT OF BUSINESSES OF THE COMPANY PENDING THE MERGER. 20 Section 5.01 Conduct
of Business 20       ARTICLE VI. ADDITIONAL AGREEMENTS 22 Section 6.01 Access
and Information 22 Section 6.02 Additional Agreements 22 Section 6.03 Publicity
22 Section 6.04 Appointment of Directors and Officers 22 Section 6.05 Parent
Stockholder Approval 22 Section 6.06 Company Written Consent 23       ARTICLE
VII. CONDITIONS TO PARTIES’ OBLIGATIONS 23 Section 7.01 Conditions to Parent and
Acquisition Corp. Obligations 23 Section 7.02 Conditions to the Company’s
Obligations 25       ARTICLE VIII. TERMINATION PRIOR TO CLOSING 26 Section 8.01
Termination of Agreement 26 Section 8.02 Termination of Obligations 27 Section
8.03 Expense Reimbursement 27       ARTICLE IX. MISCELLANEOUS 27 Section 9.01
Stockholder Representative 27 Section 9.02 Notices 28 Section 9.03 Entire
Agreement 29 Section 9.04 Expenses 29 Section 9.05 Time 29 Section 9.06
Severability 30 Section 9.07 Successors and Assigns 30 Section 9.08 No Third
Parties Benefited 30 Section 9.09 Counterparts 30 Section 9.10 Recitals,
Schedules and Exhibits 30 Section 9.11 Section Headings and Gender 30 Section
9.12 Currency 30 Section 9.13 Governing Law 30

 

Exhibit A   Articles of Merger       Exhibit B   Voting Agreement       Exhibit
C   Company Amended and Restated Articles of Incorporation       Exhibit D  
Company Bylaws       Exhibit E   Form of Leak Out Agreement       Exhibit F  
Series H Convertible Preferred Stock of Parent

 

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AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into on
August 10, 2020, by and among U.S. Gold Corp., a Nevada corporation (“Parent”),
Gold King Acquisition Corp., a Nevada corporation (“Acquisition Corp.”), which
is a wholly-owned subsidiary of Parent, Northern Panther Resources Corporation.,
a Nevada corporation (the “Company”), and Richard Silas, in his capacity as
stockholder representative (the “Stockholder Representative”).

 

W I T N E S S E T H :

 

WHEREAS, the Board of Directors of each of Acquisition Corp., Parent and the
Company have each determined that it is fair to and in the best interests of
their respective corporations and stockholders for Acquisition Corp. to be
merged with and into the Company (the “Merger”) upon the terms and subject to
the conditions set forth herein; and

 

WHEREAS, the Board of Directors of each of Parent, Acquisition Corp. and the
Company have approved the Merger in accordance with the Nevada Revised Statutes
(the “NRS”) and upon the terms and subject to the conditions set forth herein,
in the Nevada Articles of Merger, (the “Articles of Merger”) in the form
attached hereto as Exhibit A; and

 

WHEREAS, the stockholders of the Company (the “Stockholders”) have approved this
Agreement, the Articles of Merger and the transactions contemplated and
described hereby and thereby, including, without limitation, the Merger, and
Parent, as the sole stockholder of Acquisition Corp., has approved by written
consent pursuant to NRS Section 78.320(2), this Agreement, the Articles of
Merger and the transactions contemplated and described hereby and thereby,
including, without limitation, the Merger; and

 

WHEREAS, on the date of this Agreement certain directors and officers of the
Company have executed and delivered a voting agreement to the Parent in
substantially in the form attached hereto as Exhibit B;

 

WHEREAS, the parties hereto intend that the Merger contemplated herein shall
qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the “Code”), by reason of Section
368(a)(2)(E) of the Code.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereto agree as follows:

 

Article I.

THE MERGER

 

Section 1.01 Merger. Subject to the terms and conditions of this Agreement and
the Articles of Merger, Acquisition Corp. shall be merged with and into the
Company in accordance with NRS Chapter 92A. At the Effective Time (as defined
below), the separate legal existence of Acquisition Corp. shall cease, and the
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the “Surviving Corporation”) and shall continue its corporate
existence under the laws of the State of Nevada under the name “Northern Panther
Resources Corporation.”

 

Section 1.02 Effective Time. The Merger shall become effective upon the filing
of the Articles of Merger with the Secretary of State of Nevada in accordance
with NRS Chapter 92A. The time at which the Merger shall become effective as
aforesaid is referred to hereinafter as the “Effective Time.”

 

Section 1.03 Closing. The closing of the Merger (the “Closing”) shall occur on
the date of this Agreement (the “Closing Date”). The Closing shall occur at the
offices of Haynes and Boone, LLP referred to in Section 9.02 hereof. At the
Closing, all of the documents, certificates, agreements, opinions and
instruments referenced in Article VII will be executed and delivered as
described therein. At the Effective Time, all actions to be taken at the Closing
shall be deemed to be taken simultaneously.

 

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Section 1.04 Certificate of Incorporation, Bylaws, Directors and Officers.

 

(a) The Amended and Restated Articles of Incorporation of the Company, as in
effect immediately prior to the Effective Time, attached as Exhibit C hereto, as
amended by the Articles of Merger and as provided herein, shall be the Articles
of Incorporation of the Surviving Corporation from and after the Effective Time
until amended in accordance with applicable law and such Articles of
Incorporation.

 

(b) The Bylaws of the Company, as in effect immediately prior to the Effective
Time, attached as Exhibit D hereto, shall be the Bylaws of the Surviving
Corporation from and after the Effective Time until amended in accordance with
applicable law, the Articles of Incorporation of the Surviving Corporation and
such Bylaws.

 

(c) Edward M. Karr shall be the President and sole director and Ted Sharp shall
be the Secretary and Treasurer of the Surviving Corporation subsequent to the
Closing Date until their respective successors shall have been elected or
appointed and shall have qualified in accordance with applicable law, or as
otherwise provided in the Articles of Incorporation or Bylaws of the Surviving
Corporation.

 

Section 1.05 Assets and Liabilities. At the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of Acquisition Corp. and the Company
(collectively, the “Constituent Corporations”); and all the rights, privileges,
powers and franchises of each of the Constituent Corporations, and all property,
real, personal and mixed, and all debts due to any of the Constituent
Corporations on whatever account, as well as all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate vested by
deed or otherwise in either of such Constituent Corporations shall not revert or
be in any way impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.

 

Section 1.06 Subscription Transaction. Immediately prior to the Closing, the
Company shall (A) release, or obtain the consent of the applicable subscription
holders necessary to release, the $2,500,000.00 held in escrow in connection
with outstanding subscription receipts between the Company and the holders of
such receipts, and (B) complete all other actions in order to effect all
outstanding subscriptions for shares of common stock (the “Subscription
Transaction”).

 

Section 1.07 Manner and Basis of Converting Shares.

 

(a) At the Effective Time:

 

(i) each share of common stock, par value $0.001 per share of Acquisition Corp.
that shall be outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive one (1) share of common stock, $0.001 par
value, of the Surviving Corporation, so that at the Effective Time, Parent shall
be the holder of all of the issued and outstanding shares of the Surviving
Corporation;

 

(ii) the shares of common stock, $0.001 par value, of the Company (the “Company
Common Stock”) beneficially owned by the Stockholders of the Company (other than
(A) shares of Company Common Stock as to which appraisal rights are perfected
pursuant to the applicable provisions of the NRS and not withdrawn or otherwise
forfeited and (B) each share of Company Common Stock held in the treasury of the
Company immediately prior to the Effective Time) shall, by virtue of the Merger
and without any action on the part of the holders thereof, be converted into the
right to receive (i) 581,053 share(s) of common stock, par value $0.001 per
share, of Parent (the “Parent Common Stock”) and (ii) 106,894 shares of Series H
Convertible Preferred Stock par value $0.001 of Parent (“Parent Preferred Stock”
and, together with the Parent Common Stock, the “Parent Stock”), in such amounts
as more specifically set forth on Schedule 1.07(a)(ii), which Parent Preferred
Stock shall have substantially the rights, powers, preferences, privileges and
restrictions set out in Exhibit F hereto and convert into Parent Common Stock on
a 1 for 10 basis upon receipt of the approval (the “Parent Stockholder
Approval”) by the requisite vote of the stockholders of the Parent (the “Parent
Stockholders”) at the 2020 annual meeting of Parent Stockholders to be held on
or about October 27, 2020 (the “Parent Stockholder Meeting”); and

 

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(iii) each share of Company Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall be cancelled in the Merger and
cease to exist.

 

(b) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock that were outstanding immediately prior to the Effective
Time.

 

(c) Notwithstanding any contrary provisions of this Section 1.07, the Company
may instruct Parent to allocate Parent Preferred Stock among the holders of the
Company Common Stock other than based on a pro rata allocation; provided, that
no holder of Company Common Stock approve such different allocation and each
holder of Company Common Stock receives an equivalent amount of Parent Common
Stock for any Parent Preferred Stock that it would have otherwise received but
for any different allocation of Parent Preferred Stock contemplated hereby. This
Section 1.07(c) shall have no force and effect if it would result in adverse tax
consequence to the Company or Parent.

 

Section 1.08 Surrender and Exchange of Certificates.

 

Concurrent with or promptly after the Effective Time and upon (a) surrender of a
certificate or certificates representing shares of Company Common Stock that
were outstanding immediately prior to the Effective Time or an affidavit and
indemnification in form reasonably acceptable to counsel for Parent stating that
such Stockholder has lost its certificate or certificates or that such have been
destroyed or upon receipt by the Parent of a list of Stockholders for whom
shares of Company Common Stock held were un-certificated and (b) delivery of a
Letter of Transmittal (as described in Article IV hereof), Parent shall issue to
each record holder of Company Common Stock surrendering such certificate,
certificates or affidavit and Letter of Transmittal, a certificate or
certificates registered in the name of such Stockholder representing the number
of shares of Parent Stock that such Stockholder shall be entitled to receive as
set forth in Section 1.07(a)(ii) hereof. Until the certificate, certificates,
affidavit or certified list of Stockholders is or are surrendered together with
the Letter of Transmittal as contemplated by this Section 1.08 and Article IV
hereof, each certificate or affidavit that immediately prior to the Effective
Time represented any outstanding shares of Company Common Stock shall be deemed
at and after the Effective Time to represent only the right to receive upon
surrender as aforesaid the Parent Stock specified in Schedule 1.07(a)(ii) for
the holder thereof or to perfect any rights of appraisal that such holder may
have pursuant to the applicable provisions of the NRS.

 

Section 1.09 Parent Stock. Parent agrees that it will cause the Parent Stock
into which the Company Common Stock is converted at the Effective Time pursuant
to Section 1.07(a)(ii) to be available for such purposes.

 

Section 1.10 Further Assurances. From time to time, from and after the Effective
Time, as and when reasonably requested by Parent, the proper officers and
directors of the Company as of the Effective Time shall, for and on behalf and
in the name of the Company or otherwise, execute and deliver all such deeds,
bills of sale, assignments and other instruments and shall take or cause to be
taken such further actions as Parent, Acquisition Corp. or their respective
successors or assigns reasonably may deem necessary or desirable in order to
confirm or record or otherwise transfer to the Surviving Corporation title to
and possession of all of the properties, rights, privileges, powers, franchises
and immunities of the Company or otherwise to carry out fully the provisions and
purposes of this Agreement and the transactions contemplated hereby.

 

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Article II.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Parent and Acquisition Corp. as
follows:

 

Section 2.01 Organization, Standing, Subsidiaries, Etc.

 

(a) The Company is a corporation duly organized and existing in good standing
under the laws of the State of Nevada and has all requisite power and authority
(corporate and other) to carry on its business, to own or lease its properties
and assets, to enter into this Agreement and the Articles of Merger and to carry
out the terms hereof and thereof. Copies of the Amended and Restated Articles of
Incorporation and Bylaws of the Company that have been delivered to Parent and
Acquisition Corp. prior to the execution of this Agreement are true and complete
and have not since been amended or repealed.

 

(b) The Company has one wholly owned subsidiary, Western Panther Resources
Corporation, a Nevada corporation (“WPRC”), which owns a 100% membership
interest in Eagle Resources Management LLC, a Utah limited liability company
(“ERM” and, together with WPRC, the “Company Subsidiaries”). Each of the Company
Subsidiaries is a corporation or limited liability company, as applicable, duly
organized and existing in good standing under the laws of its jurisdiction of
incorporation or formation, as applicable, and has all requisite power and
authority (corporate and other) to carry on its business as presently conducted
and to own or lease its properties and assets. Copies of the organizational
documents of the Company Subsidiaries that have been delivered to Parent and
Acquisition Corp. prior to the execution of this Agreement are true and complete
and have not been amended or repealed.

 

(c) Each of the Company Subsidiaries is wholly and directly or indirectly owned
by the Company. Other than with respect to the Company Subsidiaries, the Company
has no direct or indirect interest (by way of stock ownership or otherwise) in
any firm, corporation, limited liability company, partnership, association or
business. Other than with respect to the ownership interests disclosed in
Section 2.01(b), no Company Subsidiary has any direct or indirect interest (by
way of stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business.

 

Section 2.02 Qualification. Each of the Company and the Company Subsidiaries is
duly qualified to conduct business as a foreign corporation and is in good
standing in each jurisdiction wherein the nature of its activities or its
properties owned or leased makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), properties, assets, liabilities, business
operations, results of operations or prospects of the Company, or the Company
Subsidiaries, taken as a whole (the “Condition of the Company”).

 

Section 2.03 Capitalization. The authorized and outstanding capital stock of the
Company and the Company Subsidiaries is listed on Schedule 2.03. All of the
outstanding capital stock of the Company and of each Company Subsidiary is duly
authorized, validly issued, fully paid and non-assessable, and none of such
capital stock has been issued in violation of the preemptive rights of any
natural person, corporation, business trust, association, limited liability
company, partnership, joint venture, other entity, government, agency or
political subdivision (each, a “Person”). The offer, issuance and sale of the
authorized and outstanding shares of Company Common Stock were (a) exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933, as amended (the “Securities Act”), (b) registered or qualified (or were
exempt from registration or qualification) under the registration or
qualification requirements of all applicable state securities laws and (c)
accomplished in conformity with all other applicable securities laws. None of
such shares of Company Common Stock are subject to a right of withdrawal or a
right of rescission under any federal or state securities or “Blue Sky” law.
Except as otherwise set forth in this Agreement or as disclosed in Schedule
2.03, the Company and the Company Subsidiaries have no outstanding options,
rights or commitments to issue common stock or other Equity Securities (as
defined below), and there are no outstanding securities convertible or
exercisable into or exchangeable for common stock or other Equity Securities of
the Company or the Company Subsidiaries or any equity appreciation, phantom
equity, profit participation, or similar rights with respect to the Company or
the Company Subsidiaries. For purposes of this Agreement, “Equity Security”
shall mean any stock or other equity interest or similar security of an issuer
or any security (whether stock, other equity interests, or Indebtedness for
Borrowed Money (as defined below)) convertible, with or without consideration,
into any stock or other equity security, or any security (whether stock, other
equity interests or Indebtedness for Borrowed Money) carrying any warrant or
right to subscribe to or purchase any stock or similar equity security, or any
such warrant or right.

 

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Section 2.04 Indebtedness. Except as provided in the Company’s Financial
Statements (as defined below), the Company has no Indebtedness for Borrowed
Money. For purposes of this Agreement, “Indebtedness for Borrowed Money” shall
mean (a) all Indebtedness in respect of money borrowed including, without
limitation, Indebtedness that represents the unpaid amount of the purchase price
of any property and is incurred in lieu of borrowing money or using available
funds to pay such amounts and not constituting an account payable or expense
accrual incurred or assumed in the ordinary course of business of the Company,
(b) all Indebtedness evidenced by a promissory note, bond or similar written
obligation to pay money or (c) all such Indebtedness guaranteed by the Company
or for which the Company is otherwise contingently liable. Furthermore, for
purposes of this Agreement, “Indebtedness” shall mean any obligation of the
Company which, under generally accepted accounting principles in the United
Stated (“GAAP”), is required to be shown on the balance sheet of the Company as
a liability. Any obligation secured by a mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (a “Lien”), shall be deemed to be
Indebtedness, even though such obligation is not assumed by the Company.

 

Section 2.05 Company Stockholders. Schedule 2.05 hereto contains a true and
complete list of the names of the record owners of all of the outstanding shares
of Company Common Stock and other Equity Securities of the Company, together
with the number of securities held or to which such Person has rights to
acquire. To the knowledge of the Company, there is no voting trust, agreement or
arrangement among any of the beneficial holders of Company Common Stock
affecting the nomination or election of directors or the exercise of the voting
rights of Company Common Stock.

 

Section 2.06 Corporate Acts and Proceedings. The execution, delivery and
performance of this Agreement and the Articles of Merger (together, the “Merger
Documents”) have been duly authorized by the Board of Directors of the Company
(the “Company Board”), unanimously recommended by the Company Board to the
Stockholders (the “Company Board Recommendation”), and all of the corporate acts
and other proceedings required for the due and valid authorization, execution,
delivery and performance of the Merger Documents and the consummation of the
Merger have been validly and appropriately taken, except for the filing referred
to in Section 1.02 and the Written Consent (as defined below) to be obtained by
the Company in accordance with Section 6.06.

 

Section 2.07 Governmental Consents. All material consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with any federal or state governmental authority on the part of the
Company or any Company Subsidiary required in connection with the consummation
of the Merger shall have been obtained prior to, and be effective as of, the
Closing.

 

Section 2.08 Compliance with Laws and Instruments. The business, products and
operations of the Company and the Company Subsidiaries have been and are being
conducted in compliance in all material respects with all applicable laws, rules
and regulations, except for such violations thereof for which the penalties, in
the aggregate, would not have a material adverse effect on the Condition of the
Company. The execution, delivery and performance by the Company of the Merger
Documents and the consummation by the Company of the transactions contemplated
by this Agreement: (a) will not cause the Company, or any Company Subsidiary, to
violate or contravene (i) any provision of law, (ii) any rule or regulation of
any agency or government, (iii) any order, judgment or decree of any court, or
(iv) any provision of the Amended and Restated Articles of Incorporation,
Bylaws, or other governing documents of the Company, or any Company Subsidiary,
(b) will not violate or be in conflict with, result in a breach of or constitute
(with or without notice or lapse of time, or both) a default under, any
indenture, loan or credit agreement, deed of trust, mortgage, security agreement
or other contract, agreement or instrument to which the Company, or any Company
Subsidiary, is a party or by which the Company, any Company Subsidiary, or any
of their respective properties are bound or affected, except as would not have a
material adverse effect on the Condition of the Company, and (c) will not result
in the creation or imposition of any Lien upon any property or asset of the
Company or any Company Subsidiary. Neither the Company nor any Company
Subsidiary is in violation of, or (with or without notice or lapse of time, or
both) in default under, any term or provision of its Articles of Incorporation,
Bylaws, or other governing documents, or of any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or, except as would not
materially and adversely affect the Condition of the Company, any other material
agreement or instrument to which the Company, or any Company Subsidiary, is a
party or by which the Company, any Company Subsidiary, or any of their
respective properties are bound or affected.

 

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Section 2.09 Binding Obligations. The Merger Documents constitute the legal,
valid and binding obligations of the Company and are enforceable against the
Company in accordance with their respective terms, except as such enforcement is
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity.

 

Section 2.10 Broker’s and Finder’s Fees. No Person has, or, as a result of the
transactions contemplated or described herein will have, any right or valid
claim against the Company, any Company Subsidiary, Parent, Acquisition Corp. or
any Stockholder for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, except as set forth in Schedule 2.10 hereto.

 

Section 2.11 Financial Statements. Parent has previously been provided with the
Company’s and each Company Subsidiary’s (i) balance sheet (the “Balance Sheets”)
as of July 15, 2020 (the “Balance Sheet Date”), and (ii) statements of
operations, statements of changes in stockholders’ equity and statements of cash
flows for the period of inception to July 15, 2020. Such financial statements
are collectively referred to as the “Financial Statements”. The Financial
Statements (a) present fairly in all material respects the financial condition
of the Company and the Company Subsidiaries at the dates therein specified and
the results of its operations and changes in financial position for the periods
therein specified and (b) have been prepared by management on a consistent
basis.

 

Section 2.12 Absence of Undisclosed Liabilities. Neither the Company nor any
Company Subsidiary has any material obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Balance Sheets, (b) to the extent set forth on or
reserved against in the Balance Sheets or the notes to the Financial Statements,
(c) current liabilities incurred and obligations under agreements entered into
in the usual and ordinary course of business since the Balance Sheet Date, none
of which (individually or in the aggregate) has had or will have a material
adverse effect on the Condition of the Company and (d) by the specific terms of
any written agreement, document or arrangement identified in the Schedule 2.12
hereto.

 

Section 2.13 Changes. Since the Balance Sheet Date and except as set forth on
Schedule 2.13, neither the Company nor any Company Subsidiary has (a) incurred
any debts, obligations or liabilities, absolute, accrued, contingent or
otherwise, whether due or to become due, except for fees, expenses and
liabilities incurred in connection with the Merger and related transactions and
current liabilities incurred in the usual and ordinary course of business, (b)
discharged or satisfied any Liens other than those securing, or paid any
obligation or liability other than, current liabilities shown on the Balance
Sheets and current liabilities incurred since the Balance Sheet Date, in each
case in the usual and ordinary course of business, (c) mortgaged, pledged or
subjected to Lien any of its assets, tangible or intangible other than in the
usual and ordinary course of business, (d) sold, transferred or leased any of
its assets, except in the usual and ordinary course of business, (e) cancelled
or compromised any debt or claim, or waived or released any right, of material
value, (f) suffered any physical damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the Condition of the
Company, (g) entered into any transaction other than in the usual and ordinary
course of business, (h) made or granted any wage or salary increase or made any
increase in the amounts payable under any profit sharing, bonus, deferred
compensation, severance pay, insurance, pension, retirement or other employee
benefit plan, agreement, arrangement, policy, practice, commitment, contract or
understanding, entered into any employment agreement, or established, amended,
modified, or terminated any Employee Benefit Plan, except to the extent required
to comply with applicable law, (i) issued or sold any shares of capital stock,
bonds, notes, debentures or other securities or granted any options (including
employee stock options, warrants, restricted stock, restricted stock units,
stock appreciation rights, equity appreciation, phantom equity, or any other
compensation in whole or in part by reference to, or otherwise based on its
capital stock), (j) declared or paid any dividends on or made any other
distributions with respect to, or purchased or redeemed, any of its outstanding
capital stock, (k) suffered or experienced any change in, or condition
affecting, the Condition of the Company other than changes, events or conditions
in the usual and ordinary course of its business, none of which (either by
itself or in conjunction with all such other changes, events and conditions) has
been materially adverse, (l) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies or
rates theretofore adopted, (m) made or permitted any amendment or termination of
any material contract, agreement or license to which it is a party, (n) suffered
any material loss not reflected in the Balance Sheets or its applicable
statement of income for the period ended on the Balance Sheet Date, (o) paid, or
made any accrual or arrangement for payment of, bonuses or special compensation
of any kind or any severance, retention, termination pay, or similar payments or
benefits to any present or former officer, director, employee, stockholder or
consultant, (p) made or agreed to make any charitable contributions or incurred
any non-business expenses in excess of $1,000 in the aggregate or (q) entered
into any agreement, or otherwise obligated itself, to do any of the foregoing.

 

6

 

 

Section 2.14 Assets and Contracts.

 

(a) Schedule 2.14(a) contains a true and complete list of all real property
owned or leased by the Company or any Company Subsidiary and of all tangible
personal property owned or leased by the Company or any Company Subsidiary
having a cost or fair market value of greater than $25,000. All the real
property listed in Schedule 2.14(a) is owned or leased by the Company or a
Company Subsidiary under valid deeds, leases, or other documents of a similar
nature, enforceable in accordance with their terms, and there is not, under any
such deed, lease, or other document any existing default or event of default or
event which with notice or lapse of time, or both, would constitute a default by
the Company or the applicable Company Subsidiary, and neither the Company nor
any Company Subsidiary has received any notice or claim of any such default by
the Company. Save as disclosed in Schedule 2.14(a), neither the Company nor any
Company Subsidiary owns any real property.

 

(b) Except as disclosed in Schedule 2.14(b) hereto, neither the Company nor any
Company Subsidiary is a party to any written or oral agreement not made in the
ordinary course of business that is material to the Company or any Company
Subsidiary. Except as disclosed in Schedule 2.14(b) hereto, neither the Company
nor any Company Subsidiary is a party to any written or oral (i) agreement for
the purchase of fixed assets or for the purchase of materials, supplies or
equipment in excess of normal operating requirements, (ii) agreement for the
employment or engagement of any officer, individual employee or other Person or
any agreement with any Person for consulting services, (iii) indenture, loan or
credit agreement, note agreement, deed of trust, mortgage, security agreement,
promissory note or other agreement or instrument relating to or evidencing
Indebtedness for Borrowed Money or subjecting any asset or property of the
Company or any Company Subsidiary to any Lien or evidencing any Indebtedness,
(iv) guaranty of any Indebtedness, (v) other than as set forth in Schedule
2.14(a) hereto, lease or agreement under which the Company or any Company
Subsidiary is lessee of or holds or operates any property, real or personal,
owned by any other Person under which payments to such Person exceed $5,000 per
year, (vi) agreement granting any preemptive right, right of first refusal or
similar right to any Person, (vii) agreement or arrangement with any Affiliate
or any “associate” (as such term is defined in Rule 405 under the Securities
Act) of the Company, any Company Subsidiary, or any present or former officer,
director or stockholder of the Company, or any Company Subsidiary, (viii)
agreement obligating the Company or any Company Subsidiary to pay any royalty or
similar charge for the use or exploitation of any tangible or intangible
property, (ix) covenant not to compete or other material restriction on its
ability to conduct a business or engage in any other activity, (x) agreement to
register securities under the Securities Act, (xi) collective bargaining
agreement, or (xii) agreement providing for severance, retention, change in
control payments, or similar payments or benefits. None of the agreements,
contracts, leases, instruments or other documents or arrangements listed in
Schedules 2.14(a) and 2.14(b) requires the consent of any of the parties thereto
other than the Company or a Company Subsidiary to permit the contract,
agreement, lease, instrument or other document or arrangement to remain
effective following consummation of the Merger and the transactions contemplated
hereby. For purposes of this Agreement, an “Affiliate” shall mean any Person
that directly or indirectly controls, is controlled by, or is under common
control with, the indicated Person.

 

(c) The Company has made available to Parent and Acquisition Corp. true and
complete copies of all agreements and other documents and a description of all
applicable oral agreements disclosed or referred to in Schedules 2.14(a) and
2.14(b), as well as any additional agreements or documents, requested by Parent
or Acquisition Corp. The Company and each Company Subsidiary has in all material
respects performed all obligations required to be performed by it to date and is
not in default in any material respect under any of the contracts, agreements,
leases, documents, commitments or other arrangements to which it is a party or
by which it or any of its property is otherwise bound or affected. To the
Company’s knowledge, all such contracts are valid and legally binding on each
party thereto.

 

(d) The Company has made available to Parent and Acquisition Corp. (i) all
information, data, geological and geophysical test results, maps and surveys in
the possession of the Company or any Company Subsidiary that might reasonably be
expected to be material to a prospective purchaser of the Company and its
properties and business and the Company has not withheld from Parent or
Acquisition Corp. any such information, data, test results, maps or surveys; and
(ii) all current and historical reports regarding the Company’s, and each
Company Subsidiary’s, ore reserves and resources and mine plans in the
possession or control of the Company or any Company Subsidiary, all of which
were prepared in good faith in the ordinary course of business.

 

7

 

 

Section 2.15 Tax Returns and Audits.

 

(a) All required federal, state and local Tax Returns (as defined below) of the
Company and each Company Subsidiary, if any, have been accurately prepared and
duly and timely filed, and all federal, state and local Taxes (as defined below)
required to be paid with respect to the periods covered by such returns have
been paid. Neither the Company nor any Company Subsidiary is or has been
delinquent in the payment of any Tax. Neither the Company nor any Company
Subsidiary has had a Tax deficiency proposed or assessed against it and has not
executed a waiver of any statute of limitations on the assessment or collection
of any Tax. None of the Company’s, or any Company Subsidiary’s, federal income
tax returns have been audited by any governmental authority; and none of the
Company’s, or any Company Subsidiary’s, state or local income or franchise tax
returns have been audited by any governmental authority. The reserves for Taxes
reflected on the Balance Sheets, if any, are and will be sufficient for the
payment of all unpaid Taxes payable by the Company, or any Company Subsidiary,
as of the Balance Sheet Date. Since the Balance Sheet Date, the Company and each
Company Subsidiary have made adequate provisions on their books of account for
all Taxes with respect to its business, properties and operations for such
period. The Company and each Company Subsidiary has withheld or collected from
each payment made to each of its employees the amount of all taxes (including,
but not limited to, federal, state and local income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper Tax
receiving officers or authorized depositaries. There are no federal, state,
local or foreign audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of the Company
or any Company Subsidiary now pending, and neither the Company nor any Company
Subsidiary has received any notice of any proposed audits, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns.
Neither the Company nor any Company Subsidiary is obligated to make a payment,
nor is it a party to any agreement that under certain circumstances could
obligate it to make a payment that would not be deductible under Section 280G of
the Code. Neither the Company nor any Company Subsidiary has agreed, nor is it
required, to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local and foreign law), whether by reason of a
change in accounting method or otherwise, for any Tax period for which the
applicable statute of limitations has not yet expired. Neither the Company nor
any Company Subsidiary (i) is a party to, nor bound by or obligated under, any
Tax sharing agreement, Tax indemnification agreement or similar contract or
arrangement, whether written or unwritten (collectively, “Tax Sharing
Agreements”), and (ii) has any potential liability or obligation to any Person
as a result of, or pursuant to, any such Tax Sharing Agreements.

 

(b) For purposes of this Agreement, the following terms shall have the meanings
provided below:

 

(i) “Tax” or “Taxes” shall mean (A) any and all taxes, assessments, customs,
duties, levies, fees, tariffs, imposts, deficiencies and other governmental
charges of any kind whatsoever (including, but not limited to, taxes on or with
respect to net or gross income, franchise, profits, gross receipts, capital,
sales, use, ad valorem, value added, transfer, real property transfer, transfer
gains, transfer taxes, inventory, capital stock, license, payroll, employment,
social security, unemployment, severance, occupation, real or personal property,
estimated taxes, rent, excise, occupancy, recordation, bulk transfer,
intangibles, alternative minimum, doing business, withholding and stamp),
together with any interest thereon, penalties, fines, damages costs, fees,
additions to tax or additional amounts with respect thereto, imposed by the
United States (federal, state or local) or other applicable jurisdiction; (B)
any liability for the payment of any amounts described in clause (A) as a result
of being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferor or successor liability, including, without
limitation, by reason of Regulation section 1.1502-6; and (C) any liability for
the payments of any amounts as a result of being a party to any Tax Sharing
Agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described in
clause (A) or (B).

 

8

 

 

(ii) Tax Return” shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065) required to be
supplied to a Tax authority relating to Taxes.

 

Section 2.16 Patents and Other Intangible Assets.

 

(a) The Company and each Company Subsidiary (i) owns or has the right to use,
free and clear of all Liens, claims and restrictions, all patents, trademarks,
service marks, trade names, copyrights, licenses and rights with respect to the
foregoing, if any, used in or necessary for the conduct of its business as now
conducted or proposed to be conducted without, to the knowledge of the Company,
infringing upon or otherwise acting adversely to the right or claimed right of
any Person under or with respect to any of the foregoing and (ii) is not
obligated or under any liability to make any payments by way of royalties, fees
or otherwise to any owner or licensor of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise.

 

(b) To the knowledge of the Company, the Company and each Company Subsidiary
owns and has the unrestricted right to use all trade secrets, if any, including
know-how, negative know-how, formulas, patterns, programs, devices, methods,
techniques, inventions, designs, processes, computer programs and technical data
and all information that derives independent economic value, actual or
potential, from not being generally known or known by competitors (collectively,
“Intellectual Property”) required for or incident to the development, operation
and sale of all products and services sold by the Company or any Company
Subsidiary, free and clear of any right, Lien or claim of others. All
Intellectual Property can and will be transferred by the Company, or applicable
Company Subsidiary, to the Surviving Corporation as a result of the Merger and
without the consent of any Person other than the Company or applicable Company
Subsidiary.

 

Section 2.17 Employee Benefit Plans; ERISA.

 

(a) The Company is not currently a party to, and at no time prior to the date of
this Agreement has the Company ever sponsored, maintained, contributed to or
been required to contribute to, or have any liabilities, contingent or
otherwise, with respect to, any Employee Benefit Plan. “Employee Benefit Plan”
means (i) all “employee benefit plans” as defined by Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), all
specified fringe benefit plans as defined in Section 6039D of the Code and all
other incentive compensation, deferred compensation, profit sharing, stock
option, stock appreciation right, stock bonus, stock purchase, employee stock
ownership, phantom equity, savings, severance, supplemental unemployment,
layoff, salary continuation, retirement, pension, health, life insurance,
dental, disability, accident, group insurance, vacation, holiday, sick leave,
fringe benefit or welfare plans, and any other employee compensation or benefit
plan, agreement, policy, practice, commitment, contract or understanding
(whether qualified or nonqualified, written or unwritten, or subject to ERISA),
and any trust, escrow or other agreement related thereto, which currently is or
was sponsored, established, maintained or contributed to or required to be
contributed to by the Company or for which the Company has any liability,
contingent or otherwise, and (ii) all “multiemployer plans,” as that term is
defined in Section 4001 of ERISA and all “employee benefit plans” (as defined in
Section 3(3) of ERISA) that are subject to Title IV of ERISA or Section 412 of
the Code which the Company or any ERISA Affiliate (defined below) has maintained
or contributed to or been required to contribute to at any time or with respect
to which the Company or any ERISA Affiliate has any liability, contingent or
otherwise. “ERISA Affiliate” means any trade or business (whether or not
incorporated) that would be treated as a “single employer” with the Company
under Section of 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA.

 

(b) Neither the Company nor any ERISA Affiliate has at any time contributed to
or had any obligation to contribute to, or has any liability, contingent or
otherwise, with respect to any (i) “multiemployer plan,” as that term is defined
in Section 4001 of ERISA, or (ii) “employee benefit plan” subject to Title IV of
ERISA or Section 412 of the Code. No Employee Benefit Plan is a “multiple
employer welfare arrangement” within the meaning of Section 3(40) of ERISA. No
Employee Benefit Plan is or has been funded by, associated with or related to
(x) a “voluntary employee’s beneficiary association” within the meaning of
Section 501(c)(9) of the Code, or (y) a “qualified asset account” within the
meaning of Section 419A of the Code.

 

9

 

 

(c) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will result in (i) “excess parachute payments”
within the meaning of Section 280G(b) of the Code or (ii) the payment, vesting,
or acceleration of any benefit or obligation to fund any benefit, assuming that
no employee incurs a termination of employment or reduction in hours in
connection with the transactions contemplated by this Agreement.

 

Section 2.18 Title to Property and Encumbrances. The Company and each Company
Subsidiary has good, valid and indefeasible marketable title to all properties
and assets used in the conduct of its business (except for property held under
valid and subsisting leases that are in full force and effect and which are not
in default) free of all Liens and other encumbrances, except (i) as disclosed in
Schedule 2.18, (ii) Permitted Liens (as defined below) and (iii) such ordinary
and customary imperfections of title, restrictions and encumbrances as do not,
individually or in the aggregate, materially detract from the value of the
property or assets or materially impair the use made thereof by the Company or
any Company Subsidiary in its business. Without limiting the generality of the
foregoing, the Company and each Company Subsidiary has good and indefeasible
title to all of its properties and assets reflected in the Balance Sheets,
except for property disposed of in the usual and ordinary course of business
since the Balance Sheet Date and for property held under valid and subsisting
leases that are in full force and effect and that are not in default. For
purposes of this Agreement, “Permitted Liens” shall mean (a) Liens for taxes and
assessments or governmental charges or levies not at the time due or in respect
of which the validity thereof shall currently be contested in good faith by
appropriate proceedings; (b) Liens in respect of pledges or deposits under
workmen’s compensation laws or similar legislation, carriers’, warehousemen’s,
mechanics’, laborers’ and materialmens’ and similar Liens, if the obligations
secured by such Liens are not then delinquent or are being contested in good
faith by appropriate proceedings; and (c) Liens incidental to the conduct of the
business of the Company and the Company Subsidiaries that were not incurred in
connection with the borrowing of money or the obtaining of advances or credits
and that do not in the aggregate materially detract from the value of its
property or materially impair the use made thereof by the Company or the Company
Subsidiaries in their business.

 

Section 2.19 Condition of Properties. All facilities, machinery, equipment,
fixtures and other properties owned, leased or used by the Company and the
Company Subsidiaries are in reasonably good operating condition and repair,
subject to ordinary wear and tear, and are adequate and sufficient for the
business of the Company and the Company Subsidiaries.

 

Section 2.20 Litigation. There is no legal action, suit, arbitration or other
legal, administrative or other governmental proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company, any
Company Subsidiary, or their properties, assets or business, and after
reasonable investigation, the Company is not aware of any incident, transaction,
occurrence or circumstance that might reasonably be expected to result in or
form the basis for any such action, suit, arbitration or other proceeding.
Neither the Company nor any Company Subsidiary is in default with respect to any
order, writ, judgment, injunction, decree, determination or award of any court
or any governmental agency or instrumentality or arbitration authority.

 

Section 2.21 Licenses. The Company and each Company Subsidiary possesses from
all appropriate governmental authorities all licenses, permits, authorizations,
approvals, franchises and rights necessary for the Company and each Company
Subsidiary to engage in the business currently conducted by it, all of which are
in full force and effect.

 

Section 2.22 Interested Party Transactions. Except as described on Schedule 2.22
annexed hereto, no officer, director or stockholder of the Company or any
Affiliate or “associate” (as such term is defined in Rule 405 under the
Securities Act) of any such Person or the Company has or has had, either
directly or indirectly, (a) an interest in any Person that (i) furnishes or
sells services or products that are furnished or sold or are proposed to be
furnished or sold by the Company or any Company Subsidiary or (ii) purchases
from or sells or furnishes to the Company or any Company Subsidiary any goods or
services, or (b) a beneficial interest in any contract or agreement to which the
Company or any Company Subsidiary is a party or by which it may be bound or
affected.

 

10

 

 

Section 2.23 Environmental Matters.

 

(a) To the knowledge of the Company, there has been no generation, use,
handling, treatment, release, spill, migration, disposal, leak, dumping,
discharging or emitting of any Hazardous Materials (as defined below) on, at, to
or from any real property which the Company currently owns, operates or leases
or during the time of such ownership, operation or lease, on, at, to or from any
real property that the Company or any Company Subsidiary formerly owned,
operated or leased, except in compliance with all applicable Environmental Laws
(as defined below) and so as would not reasonably be expected to result in a
material liability under Environmental Law.

 

(b) The business, products and operations of the Company and each Company
Subsidiary are and have been in compliance with all applicable Environmental
Laws, except where any non-compliance has not had and would not reasonably be
expected to have a material adverse effect on the Condition of the Company.

 

(c) There are no material pending or, to the knowledge of the Company,
threatened, demands, claims, information requests, investigations or notices of
noncompliance or violation against or to the Company or any Company Subsidiary
relating to any Environmental Law or Hazardous Materials; and, to the knowledge
of the Company, there are no conditions or occurrences on any of the real
property used by the Company or any Company Subsidiary in connection with its
business that would reasonably be expected to lead to any such demands, claims,
investigations or notices against or to the Company or any Company Subsidiary,
except such as have not had, and would not reasonably be expected to have, a
material adverse effect on the Condition of the Company.

 

(d) The Company and each Company Subsidiary (i) has not sent or disposed of,
otherwise had taken or transported, arranged for the taking or disposal of (on
behalf of itself, a customer or any other party) or in any other manner
participated or been involved in the taking of or disposal or release of a
Hazardous Material to or at a site that is contaminated by any Hazardous
Material or that, pursuant to any Environmental Law, (A) has been placed on the
“National Priorities List”, the “CERCLIS” list, or any similar state or federal
list, or (B) is subject to or the source of a claim, an administrative order or
other request to take “removal”, “remedial”, “corrective” or any other
“response” action, as defined in any Environmental Law, or to pay for the costs
of any such action at the site; (ii) is not involved in (and has no basis to
reasonably expect to be involved in) any suit or proceeding and has not received
(and has no basis to reasonably expect to receive) any notice, request for
information or other communication from any governmental authority or other
third party with respect to a release or threatened release of any Hazardous
Material or a violation or alleged violation of any Environmental Law, and has
not received (and has no basis to reasonably expect to receive) notice of any
claims from any Person relating to property damage, natural resource damage or
to personal injuries from exposure to any Hazardous Material; and (iii) has
timely filed every report required to be filed, acquired all necessary
certificates, approvals and Environmental Permits, and generated and maintained
all required data, documentation and records under all Environmental Laws, in
all such instances except where the failure to do so would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the Condition of the Company.

 

(e) The Company and each Company Subsidiary holds all Environmental Permits, if
any, required for the operations of its business as it is now conducted. Such
Environmental Permits, if any, are final and non-appealable, and no action or
proceeding is pending or, to the knowledge of the Company, threatened to revoke,
modify or terminate any such Environmental Permit. No action is required to
transfer any such Environmental Permit as a result of the transactions
contemplated by this Agreement.

 

(f) Neither the Company nor any Company Subsidiary has assumed, undertaken or
provided an indemnity with respect to the liability of any other Person relating
to Environmental Law or Hazardous Materials.

 

(g) The Company has made available to Parent and Acquisition Corp. (i) true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated pertaining to Hazardous Materials relating to
the Company or any Company Subsidiary or their respective business, or
concerning compliance with Environmental Laws and (ii) true and complete copies
of all Environmental Permits, if any, or any reports required to be made or data
required to be maintained under such Environmental Permits.

 

11

 

 

(h) For purposes of this Agreement, the following terms shall have the meanings
provided below:

 

(i) “Environmental Laws” shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. §§ 9601, et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001, et seq.;
the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901, et seq.; the
Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136, et seq. and
comparable state statutes dealing with the registration, labeling and use of
pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et
seq.; the Endangered Species Act, 16 U.S.C. §§ 1531 et. seq.; the National
Environmental Policy Act, 42 U.S.C. §§4321 – 4370h; the Safe Drinking Water Act,
42 U.S.C. §§ 300f, et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. §§ 1801, et seq.; the Occupational Safety and Health Act, as amended, 29
U.S.C. §§651 et. seq.; and the Federal Mine Safety and Health Act, as amended,
30 U.S.C. §§801 et. seq., as any of the above statutes have been amended as of
the date hereof, all rules, regulations and policies promulgated pursuant to any
of the above statutes, and any other foreign, federal, state or local law,
statute, ordinance, rule, regulation, orders, directives, agreements or policy
relating to environmental matters, relating to the protection of human health
and safety, the environment or environmentally sensitive areas, relating to the
investigation, remediation or cleanup of substances in the environment, or
relating to the reclamation or restoration of land or natural resources
disturbed by or in conjunction with mining operations, as the same have been
amended as of the date hereof. Environmental Laws shall include without
limitation obligations under contracts or leases to reclaim or restore land or
natural resources or to investigate, remediate, remove, or clean up any
materials in the environment.

 

(ii) “Hazardous Material” shall mean any substance or material regulated because
of its effect or potential effect on human health or the environment, or any
substance of material meeting any one or more of the following criteria: (a) it
is or contains a substance designated as or meeting the characteristics of a
hazardous waste, hazardous substance, hazardous material, pollutant, contaminant
or toxic substance under any Environmental Law; (b) its presence at some
quantity requires investigation, notification or remediation under any
Environmental Law; or (c) it contains, without limiting the foregoing, asbestos,
per- or polyfluoroalkyl substances, polychlorinated biphenyls, petroleum
hydrocarbons (or any fraction thereof), petroleum derived substances or waste,
pesticides, herbicides, crude oil or any fraction thereof, nuclear fuel, natural
gas or synthetic gas.

 

(iii) “Environmental Permits” shall mean any permit, approval, identification
number, license, registration and other authorization required under or issued
pursuant to any applicable Environmental Law.

 

Section 2.24 Questionable Payments. Neither the Company, any Company Subsidiary,
nor any director, officer or, to the knowledge of the Company, agent, employee
or other Person associated with or acting on behalf of the Company or any
Company Subsidiary, has used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payments to government officials or
employees from corporate funds; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any false or
fictitious entries on the books of record of any such corporations; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

Section 2.25 Obligations to or by Stockholders. Except as set forth in Schedule
2.25 hereto, neither the Company nor any Company Subsidiary has any liability or
obligation or commitment to any Stockholder or any Affiliate or “associate” (as
such term is defined in Rule 405 under the Securities Act) of any Stockholder,
nor does any Stockholder or any such Affiliate or associate have any liability,
obligation or commitment to the Company or any Company Subsidiary.

 

Section 2.26 Duty to Make Inquiry. To the extent that any of the representations
or warranties in this Article II are qualified by “knowledge” or “belief,” the
Company represents and warrants that it has made due and reasonable inquiry and
investigation concerning the matters to which such representations and
warranties relate, including, but not limited to, diligent inquiry of its
directors, officers and key personnel.

 

Section 2.27 Disclosure. There is no fact relating to the Company or the Company
Subsidiaries that the Company has not disclosed to Parent and Acquisition Corp.
in writing that has had or is currently having a material and adverse effect or,
insofar as the Company can now foresee, will materially and adversely affect the
Condition of the Company. No representation or warranty by the Company herein
and no information disclosed in the schedules or exhibits hereto by the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.

 

12

 

 

Article III.

REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.

 

Parent and Acquisition Corp. represent and warrant to the Company as follows.
Notwithstanding anything to the contrary contained herein, disclosure of items
in the Parent SEC Documents (as defined below) shall be deemed to be disclosure
of such items for all purposes under this Agreement, including, without
limitation, for all applicable representations and warranties of Parent and
Acquisition Corp.:

 

Section 3.01 Organization, Standing, Subsidiaries, Etc.

 

(a) Parent is a corporation duly organized and existing in good standing under
the laws of the State of Nevada. Acquisition Corp. is a corporation duly
organized and existing in good standing under the laws of the State of Nevada.
Parent and Acquisition Corp. have heretofore delivered to the Company complete
and correct copies of their respective Articles of Incorporation and Bylaws as
now in effect. Parent and Acquisition Corp. have full corporate power and
authority to carry on their respective businesses as they are now being
conducted and as now proposed to be conducted and to own or lease their
respective properties and assets.

 

(b) In addition to Acquisition Corp., Parent has three wholly-owned
subsidiaries, U.S. Gold Acquisition Corp., a Nevada corporation (“US Gold
Acquisition”), Gold King Corp., a Wyoming corporation (“Gold King”) and 2637262
Ontario Inc., a corporation incorporated under the laws of the Province of
Ontario (“2637262”), which owns all of the issued and outstanding shares of
Orevada Metals Inc., a Nevada corporation (“Orevada” and together with US Gold
Acquisition, Gold King and 2637262, the “Parent Subsidiaries” and individually a
“Parent Subsidiary”). Each of the Parent Subsidiaries is a corporation duly
organized and existing in good standing under the laws of its jurisdiction of
incorporation and has all requisite power and authority (corporate and other) to
carry on its business as presently conducted and to own or lease its properties
and assets.

 

(c) Each of the Parent Subsidiaries is wholly and directly or indirectly owned
by the Parent and except as otherwise disclosed in the Parent SEC Documents,
neither Parent nor Acquisition Corp. has any subsidiaries (except for Parent’s
ownership of the Parent Subsidiaries and Acquisition Corp.) or direct or
indirect interest (by way of stock ownership or otherwise) in any firm,
corporation, limited liability company, partnership, association or business.
Parent owns all of the issued and outstanding capital stock of the Parent
Subsidiaries and Acquisition Corp. free and clear of all Liens, and none of the
Parent Subsidiaries nor Acquisition Corp. has any outstanding options, warrants
or rights to purchase capital stock or other securities of Parent Subsidiaries
or Acquisition Corp., other than the capital stock owned by Parent. Unless the
context otherwise requires, all references in this Article III to the “Parent”
shall be treated as being a reference to the Parent and the Parent Subsidiaries
taken together as one enterprise.

 

Section 3.02 Qualification. Parent is duly qualified to conduct business as a
foreign corporation and is in good standing in each jurisdiction wherein the
nature of its activities or its properties owned or leased makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the condition, properties, assets, liabilities
or business operations of Parent (the “Condition of the Parent”).

 

Section 3.03 Corporate Authority. Each of the Parent and/or Acquisition Corp.
(as the case may be) has full corporate power and authority to enter into the
Merger Documents and the other agreements to be made pursuant to the Merger
Documents, and to carry out the transactions contemplated hereby and thereby.
All corporate acts and proceedings required for the authorization, execution,
delivery and performance of the Merger Documents and such other agreements and
documents by Parent and/or Acquisition Corp. (as the case may be) have been duly
and validly taken or will have been so taken prior to the Closing. No other vote
or corporate proceedings on the part of the Parent’s shareholders is necessary
to authorize, adopt or approve this Agreement or to consummate the transactions
contemplated hereby, including the Merger.

 

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Section 3.04 Broker’s and Finder’s Fees. No Person is entitled by reason of any
act or omission of Parent or Acquisition Corp. to any broker’s or finder’s fees,
commission or other similar compensation with respect to the execution and
delivery of the Merger Documents, or with respect to the consummation of the
transactions contemplated thereby, except as set forth in Schedule 3.04 hereto.

 

Section 3.05 Capitalization.

 

(a) The authorized capital stock of Parent consists of (i) 200,000,000 shares of
Parent Common Stock, of which 2,919,867 shares are issued and outstanding as of
the date hereof and (ii) 50,000,000 shares of “blank check” preferred stock, par
value $0.001 per share, of which 1,300,000 are designated as Series A
Convertible Preferred Stock, 400,000 shares are designated as Series B
Convertible Preferred Stock, 45,002 are designated as Series C Convertible
Preferred Stock, 7,402 are designated as Series D Convertible Preferred Stock,
2,500 are designated as Series E Convertible Preferred Stock, 1,250 are
designated as Series F Preferred Stock, and 127 are designated as Series G
Preferred Stock, and of which no shares are issued and outstanding. Except as
set forth in Schedule 3.05(a) hereto, Parent has no outstanding options, rights
or commitments to issue shares of Parent Stock or any other Equity Security of
Parent or Acquisition Corp., and there are no outstanding securities convertible
or exercisable into or exchangeable for shares of Parent Common Stock or any
other Equity Security of Parent or Acquisition Corp.

 

(b) The authorized capital stock of Acquisition Corp. consists of 10,000 shares
of common stock, par value $0.001 per share (the “Acquisition Corp. Common
Stock”), of which 10,000 shares are issued and outstanding. All of the
outstanding Acquisition Corp. Common Stock is owned by Parent. All outstanding
shares of the capital stock of Acquisition Corp. are validly issued and
outstanding, fully paid and non-assessable, and none of such shares have been
issued in violation of the preemptive rights of any Person. Acquisition Corp.
has no outstanding options, rights or commitments to issue shares of Acquisition
Corp. Common Stock or any other Equity Security of Acquisition Corp., and there
are no outstanding securities convertible or exercisable into or exchangeable
for shares of Acquisition Corp. Common Stock or any other Equity Security of
Acquisition Corp.

 

Section 3.06 Acquisition Corp. Acquisition Corp. is a wholly-owned Nevada
subsidiary of Parent that was formed specifically for the purpose of the Merger
and that has not conducted any business or acquired any property, and will not
conduct any business or acquire any property prior to the Closing Date, except
in preparation for and otherwise in connection with the transactions
contemplated by the Merger Documents and the other agreements to be made
pursuant to or in connection with the Merger Documents.

 

Section 3.07 Validity of Shares. The shares of Parent Stock to be issued at the
Closing pursuant to Section 1.07(a)(ii) hereof, when issued and delivered in
accordance with the terms of the Merger Documents, shall be duly and validly
issued, fully paid and non-assessable. Based in part on the representations and
warranties of the Stockholders as contemplated by Article IV hereof and assuming
the accuracy thereof, the issuance of the Parent Common Stock upon consummation
of the Merger pursuant to Section 1.07(a)(ii) will be exempt from the
registration requirements of the Securities Act and from the qualification or
registration requirements of any applicable state “Blue Sky” or securities laws.

 

Section 3.08 SEC Reporting and Compliance.

 

(a) Parent is a reporting issuer under Section 13 and Section 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not in
default of any requirement of the Exchange Act or other regulatory requirements
of the United States Securities and Exchange Commission (the “Commission”) or
any applicable state securities regulators;

 

(b) Parent has made available to the Company true and complete copies of the
registration statements, information statements, proxy statements, and other
reports or notices (collectively, the “Parent SEC Documents”) filed by Parent
with the Commission. None of the Parent SEC Documents, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained therein not
misleading, nor any misrepresentation at the time of filing that has not been
corrected since filing.

 

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(c) Parent is not an investment company within the meaning of the Investment
Company Act of 1940, as amended.

 

(d) The shares of Parent Common Stock are listed and posted for trading on the
Nasdaq Capital market (“NASDAQ”) and no order ceasing or suspending trading in
any securities of Parent is currently outstanding and no proceedings for such
purpose are pending, or, to the knowledge of Parent, threatened. Parent has not
taken any action which would be reasonably expected to result in the delisting
or suspension of Parent Common Stock on or from NASDAQ and Parent is currently
in compliance, in all material respects, with the rules and regulations of
NASDAQ.

 

Section 3.09 Financial Statements. The balance sheets and statements of
operations, stockholders’ equity and cash flows contained in the Parent SEC
Documents (the “Parent Financial Statements”) (a) have been prepared in
accordance with GAAP applied on a consistent basis and (b) present fairly in all
material respects the financial condition of Parent at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified. The annual financial statements included in
Parent’s Annual Report on Form 10-K for the fiscal year ending April 30, 2020
were audited by Marcum LLP (for the fiscal year ended April 30, 2020) and KBL,
LLP (for the fiscal year ended April 30, 2019), Parent’s independent registered
public accounting firms.

 

Section 3.10 Governmental Consents; Listing Approvals. All material consents,
approvals (including any required listing approvals under the rules and
regulations of the NASDAQ), orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or state
governmental authority on the part of Parent or Acquisition Corp. required in
connection with the consummation of the Merger shall have been obtained prior
to, and be effective as of, the Closing.

 

Section 3.11 Compliance with Laws and Other Instruments. Save as disclosed in
the Parent SEC Documents, the business, products and operations of the Parent
have been and are being conducted in compliance in all material respects with
all applicable laws, rules and regulations, except for such violations thereof
for which the penalties, in the aggregate, would not have a material adverse
effect on the Condition of the Parent. The execution, delivery and performance
by Parent and/or Acquisition Corp. of the Merger Documents and the other
agreements to be made by Parent or Acquisition Corp. pursuant to or in
connection with the Merger Documents and the consummation by Parent and/or
Acquisition Corp. of the transactions contemplated by the Merger Documents will
not cause Parent and/or Acquisition Corp. to violate or contravene (a) any
provision of law, (b) any rule or regulation of any agency or government, (c)
any order, judgment or decree of any court or (d) any provision of their
respective charters or Bylaws as amended and in effect on and as of the Closing
Date and will not violate or be in conflict with, result in a breach of or
constitute (with or without notice or lapse of time, or both) a default under
any material indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other agreement or contract to which Parent or Acquisition
Corp. is a party or by which Parent and/or Acquisition Corp. or any of their
respective properties is bound.

 

Section 3.12 No General Solicitation. In issuing the Parent Stock in the Merger
hereunder, neither Parent nor anyone acting on its behalf has offered to sell
the Parent Stock by any form of general solicitation or advertising.

 

Section 3.13 Binding Obligations. The Merger Documents constitute the legal,
valid and binding obligations of Parent and Acquisition Corp., and are
enforceable against Parent and Acquisition Corp., in accordance with their
respective terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity.

 

Section 3.14 Absence of Undisclosed Liabilities. Neither Parent nor Acquisition
Corp. has any Indebtedness, material obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or
reserved against in the balance sheet of Parent in the most recent Parent
Financial Statements filed by the Parent (the “Parent Balance Sheet”) or the
notes to the Parent Financial Statements, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary course of
business since the date of the Parent Balance Sheet (the “Parent Balance Sheet
Date”), none of which (individually or in the aggregate) materially and
adversely affects the Condition of Parent and (d) by the specific terms of any
written agreement, document or arrangement attached as an exhibit to the Parent
SEC Documents.

 

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Section 3.15 Changes. Since the Parent Balance Sheet Date, except as disclosed
in the Parent SEC Documents or Schedule 3.15, Parent has not (a) incurred any
debts, obligations or liabilities, absolute, accrued or, to Parent’s knowledge,
contingent, whether due or to become due, except for current liabilities
incurred in the usual and ordinary course of business, (b) discharged or
satisfied any Liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the Parent Balance Sheet and
current liabilities incurred since the Parent Balance Sheet Date, in each case
in the usual and ordinary course of business, (c) mortgaged, pledged or
subjected to Lien any of its assets, tangible or intangible, other than in the
usual and ordinary course of business, (d) sold, transferred or leased any of
its assets, except in the usual and ordinary course of business, (e) cancelled
or compromised any debt or claim, or waived or released any right of material
value, (f) suffered any physical damage, destruction or loss (whether or not
covered by insurance) that could reasonably be expected to have a material
adverse effect on the Condition of the Parent, (g) entered into any transaction
other than in the usual and ordinary course of business, (h) encountered any
labor union difficulties, (i) made or granted any wage or salary increase or
made any increase in the amounts payable under any profit sharing, bonus,
deferred compensation, severance pay, insurance, pension, retirement or other
employee benefit plan, agreement or arrangement, other than in the ordinary
course of business consistent with past practice, or entered into any employment
agreement, (j) issued or sold any shares of capital stock, bonds, notes,
debentures or other securities or granted any options (including employee stock
options), warrants or other rights with respect thereto, (k) declared or paid
any dividends on or made any other distributions with respect to, or purchased
or redeemed, any of its outstanding capital stock, (l) suffered or experienced
any change in, or condition affecting, the Condition of the Parent other than
changes, events or conditions in the usual and ordinary course of its business,
none of which (either by itself or in conjunction with all such other changes,
events and conditions) could reasonably be expected to have a material adverse
effect on the Condition of the Parent, (m) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (n) made or permitted any amendment or
termination of any material contract, agreement or license to which it is a
party, (o) suffered any material loss not reflected in the Parent Balance Sheet
or its statement of income for the year ended on the Parent Balance Sheet Date,
(p) paid, or 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, director, employee, stockholder or consultant, (q) made or
agreed to make any charitable contributions or incurred any non-business
expenses in excess of $1,000 in the aggregate or (r) entered into any agreement,
or otherwise obligated itself, to do any of the foregoing.

 

Section 3.16 Tax Returns and Audits. Except as disclosed in the Parent SEC
Documents, all required federal, state and local Tax Returns of the Parent have
been accurately prepared and duly and timely filed, and all federal, state and
local Taxes required to be paid with respect to the periods covered by such
returns have been paid. The Parent is not or has not been delinquent in the
payment of any Tax and the Parent has not had a Tax deficiency proposed or
assessed against it and has not executed a waiver of any statute of limitations
on the assessment or collection of any Tax. None of the Parent’s federal income
tax returns have been audited by any governmental authority; and none of the
Parent’s state or local income or franchise tax returns have been audited by any
governmental authority. The reserves for Taxes reflected in the Parent Financial
Statements, if any, are and will be sufficient for the payment of all unpaid
Taxes payable by the Parent, as of the Parent Balance Sheet Date. Since the
Parent Balance Sheet Date, the Parent has made adequate provisions on its books
of account for all Taxes with respect to its business, properties and operations
for such period. The Parent has withheld or collected from each payment made to
each of its employees the amount of all taxes (including, but not limited to,
federal, state and local income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper Tax receiving officers or
authorized depositaries. There are no federal, state, local or foreign audits,
actions, suits, proceedings, investigations, claims or administrative
proceedings relating to Taxes or any Tax Returns of the Parent now pending, and
the Parent has not received any notice of any proposed audits, investigations,
claims or administrative proceedings relating to Taxes or any Tax Returns. The
Parent is not obligated to make a payment, nor is it a party to any agreement
that under certain circumstances could obligate it to make a payment that would
not be deductible under Section 280G of the Code. The Parent has not agreed, nor
is it required, to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local and foreign law), whether by reason of a
change in accounting method or otherwise, for any Tax period for which the
applicable statute of limitations has not yet expired. The Parent (i) is not a
party to, nor bound by or obligated under, any Tax Sharing Agreement, and (ii)
has no potential liability or obligation to any Person as a result of, or
pursuant to, any such Tax Sharing Agreements.

 

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Section 3.17 Assets and Contracts. All written or oral agreements or contracts
not made in the ordinary course of business to which the Parent or Acquisition
Corp. is a party or otherwise bound that are material to Parent or Acquisition
Corp. (the “Parent Material Agreements”) have been disclosed in the Parent SEC
Documents and each is valid, subsisting, in good standing and in full force and
effect, enforceable in accordance with the terms thereof. The Parent and
Acquisition Corp., as applicable, have performed all obligations (including
payment obligations) in a timely manner under, and are in compliance with all
material terms and conditions contained in each Parent Material Agreement and
neither the Parent nor Acquisition Corp., as applicable, is in violation, breach
or default nor has it received any notification from any party claiming that the
Parent or Acquisition Corp. is in violation, breach or default under any Parent
Material Agreement except such as have not had, and would not reasonably be
expected to have, a material adverse effect on the Condition of the Parent and
no other party, to the knowledge of the Parent, is in breach, violation or
default of any material term under any Parent Material Agreement.

 

Section 3.18 Title to Property and Encumbrances. Save as disclosed in the Parent
SEC Documents, the Parent has good, valid and indefeasible marketable title to
all properties and assets used in the conduct of its business (except for
property held under valid and subsisting leases that are in full force and
effect and which are not in default) free of all Liens and other encumbrances,
except for Permitted Liens and such ordinary and customary imperfections of
title, restrictions and encumbrances as do not, individually or in the
aggregate, materially detract from the value of the property or assets or
materially impair the use made thereof by the Parent in its business. Without
limiting the generality of the foregoing, the Parent has good and indefeasible
title to all of its properties and assets reflected in the Parent Financial
Statements, except for property disposed of in the usual and ordinary course of
business since the Parent Balance Sheet Date and for property held under valid
and subsisting leases that are in full force and effect and that are not in
default.

 

Section 3.19 Condition of Properties. Save as disclosed in the Parent SEC
Documents, all facilities, machinery, equipment, fixtures and other properties
owned, leased or used by the Parent are in reasonably good operating condition
and repair, subject to ordinary wear and tear, and are adequate and sufficient
for the business of the Parent.

 

Section 3.20 Insurance. The assets of the Parent and its business and operations
are insured against loss or damage with responsible insurers on a basis
consistent with insurance obtained by reasonably prudent participants in
comparable businesses, and such coverage is in full force and effect, and the
Parent has not failed to promptly give any notice of or present any material
claim thereunder.

 

Section 3.21 Litigation. Save as disclosed in the Parent SEC Documents, there is
no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the knowledge of the Parent, threatened
against or affecting the Parent, or its properties, assets or business, and
after reasonable investigation, the Parent is not aware of any incident,
transaction, occurrence or circumstance that might reasonably be expected to
result in or form the basis for any such action, suit, arbitration or other
proceeding. The Parent is not in default with respect to any order, writ,
judgment, injunction, decree, determination or award of any court or any
governmental agency or instrumentality or arbitration authority.

 

Section 3.22 Licenses. Save as disclosed in the Parent SEC Documents, the Parent
possesses from all appropriate governmental authorities all licenses, permits,
authorizations, approvals, franchises and rights necessary for the Parent to
engage in the business currently conducted by it, all of which are in full force
and effect.

 

Section 3.23 Environmental Matters. Save as disclosed in the Parent SEC
Documents;

 

(a) To the knowledge of the Parent, there has been no generation, use, handling,
treatment, release, spill, migration, disposal, leak, dumping, discharging or
emitting of any Hazardous Materials on, at, to or from any real property which
the Parent currently owns, operates or leases or during the time of such
ownership, operation or lease, on, at, to or from any real property that the
Parent formerly owned, operated or leased, except in compliance with all
applicable Environmental Laws and so as would not reasonably be expected to
result in a material liability under Environmental Law.

 

17

 

 

(b) The business, products and operations of the Parent are and have been in
compliance with all applicable Environmental Laws, except where any
non-compliance has not had and would not reasonably be expected to have a
material adverse effect on the Condition of the Parent.

 

(c) There are no material pending or, to the knowledge of the Parent,
threatened, demands, claims, information requests, investigations or notices of
noncompliance or violation against or to the Parent relating to any
Environmental Law or Hazardous Materials; and, to the knowledge of the Parent,
there are no conditions or occurrences on any of the real property used by the
Parent in connection with its business that would reasonably be expected to lead
to any such demands, claims, investigations or notices against or to the Parent,
except such as have not had, and would not reasonably be expected to have, a
material adverse effect on the Condition of the Parent.

 

(d) The Parent (i) has not sent or disposed of, otherwise had taken or
transported, arranged for the taking or disposal of (on behalf of itself, a
customer or any other party) or in any other manner participated or been
involved in the taking of or disposal or release of a Hazardous Material to or
at a site that is contaminated by any Hazardous Material or that, pursuant to
any Environmental Law, (A) has been placed on the “National Priorities List”,
the “CERCLIS” list, or any similar state or federal list, or (B) is subject to
or the source of a claim, an administrative order or other request to take
“removal”, “remedial”, “corrective” or any other “response” action, as defined
in any Environmental Law, or to pay for the costs of any such action at the
site; (ii) is not involved in (and has no basis to reasonably expect to be
involved in) any suit or proceeding and has not received (and has no basis to
reasonably expect to receive) any notice, request for information or other
communication from any governmental authority or other third party with respect
to a release or threatened release of any Hazardous Material or a violation or
alleged violation of any Environmental Law, and has not received (and has no
basis to reasonably expect to receive) notice of any claims from any Person
relating to property damage, natural resource damage or to personal injuries
from exposure to any Hazardous Material; and (iii) has timely filed every report
required to be filed, acquired all necessary certificates, approvals and
Environmental Permits, and generated and maintained all required data,
documentation and records under all Environmental Laws, in all such instances
except where the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Condition of
the Parent.

 

(e) The Parent holds all Environmental Permits required for the operations of
its business as it is now conducted. Such Environmental Permits are final and
non-appealable, and no action or proceeding is pending or, to the knowledge of
the Parent, threatened to revoke, modify or terminate any such Environmental
Permit. No action is required to transfer any such Environmental Permit as a
result of the transactions contemplated by this Agreement.

 

(f) The Parent has not assumed, undertaken or provided an indemnity with respect
to the liability of any other Person relating to Environmental Law or Hazardous
Materials.

 

Section 3.24 Questionable Payments. Neither the Parent, nor any director,
officer or, to the knowledge of the Parent, agent, employee or other Person
associated with or acting on behalf of the Parent, has used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payments to
government officials or employees from corporate funds; established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
made any false or fictitious entries on the books of record of any such
corporations; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.

 

Section 3.25 Duty to Make Inquiry. To the extent that any of the representations
or warranties in this Article III are qualified by “knowledge” or “belief,” the
Parent represents and warrants that it has made due and reasonable inquiry and
investigation concerning the matters to which such representations and
warranties relate, including, but not limited to, diligent inquiry of its
directors, officers and key personnel.

 

Section 3.26 Disclosure. There is no fact relating to the Parent that the Parent
has not disclosed to the Company in writing or in the Parent SEC Documents that
has had or is currently having a material and adverse effect or, insofar as the
Parent can now foresee, will materially and adversely affect the Condition of
the Parent. No representation or warranty by the Parent herein and no
information disclosed in the schedules or exhibits hereto by the Parent contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.

 

18

 

 

Article IV.
ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE STOCKHOLDERS

 

Concurrent with or promptly after the Effective Time, Parent shall cause to be
mailed to each holder of record of Company Common Stock that was converted
pursuant to Section 1.07 hereof into the right to receive Parent Stock a letter
of transmittal (“Letter of Transmittal”) that shall contain additional
representations, warranties and covenants of such Stockholder, including without
limitation, that (a) such Stockholder has full right, power and authority to
deliver such Company Common Stock and Letter of Transmittal, (b) such
Stockholder has good, valid and marketable title to all shares of Company Common
Stock indicated in such Letter of Transmittal and that such Stockholder is not
affected by any voting trust, agreement or arrangement affecting the voting
rights of such Company Common Stock, (c) whether such Stockholder is an
“accredited investor,” as such term is defined in Regulation D under the
Securities Act and that such Stockholder is acquiring Parent Stock for
investment purposes, and not with a view to selling or otherwise distributing
such Parent Stock in violation of the Securities Act or the securities laws of
any state, (d) such Stockholder has had an opportunity to ask and receive
answers to any questions such Stockholder may have had concerning the terms and
conditions of the Merger and the Parent Stock and has obtained any additional
information that such Stockholder has requested, (e) such Stockholder
acknowledges and agrees that the Parent Common Stock will be “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities Act and
will remain “restricted securities” notwithstanding any resale within or outside
the United States unless the sale is completed pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
therefrom, including in accordance with Rule 144 under the Securities Act (“Rule
144”), if available, (f) such Stockholder acknowledges that the Parent Common
Stock will be subject to a minimum hold period of at least six months under Rule
144 from the date of issuance, (g) such Stockholder acknowledges that he, she or
it has been advised to obtain independent legal and professional advice on the
requirements of Rule 144, and that such Stockholder has been advised that
resales of the Parent Common Stock may be made only under certain circumstances,
(h) such Stockholder understands that to the extent that Rule 144 is not
available, the Stockholder may be unable to sell any Parent Common Stock without
either registration under the Securities Act or the availability of another
exemption or exclusion from such registration requirements, and in all cases
pursuant to exemptions from applicable securities laws of any applicable state
of the United States, and (i) such Stockholder understands that upon the
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Securities Act or applicable U.S. state laws
and regulations, the certificates representing the Parent Stock will bear a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY AND ANY COMMON STOCK ISSUED UPON THE
CONVERSION OF THE SECURITY EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDITION AND, ACCORDINGLY, THESE SECURITIES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO ANY PERSON
EXCEPT AS SET FORTH HEREIN. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (C) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS, AND
THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF
COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY
TO THE CORPORATION. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

19

 

 

Delivery shall be effected, and risk of loss and title to the Company Common
Stock shall pass, only upon delivery to Parent (or an agent of Parent) of (x)
certificates evidencing ownership thereof as contemplated by Section 1.08 hereof
(or affidavit of lost certificate), and (y) the Letter of Transmittal containing
the representations, warranties and covenants of each Stockholder, as
contemplated by this Article IV.

 

Article V.
CONDUCT OF BUSINESSES of the Company PENDING THE MERGER.

 

Section 5.01 Conduct of Business. Prior to the Effective Time, unless Parent or
Acquisition Corp. shall otherwise agree in writing or as otherwise contemplated
by this Agreement:

 

(b) the business of the Company and each Company Subsidiary shall be conducted
only in the ordinary course;

 

(c) the Company shall not (i) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire any shares
of its capital stock; (ii) amend its Amended and Restated Articles of
Incorporation or Bylaws except to effectuate the transactions contemplated
hereby or (iii) split, combine or reclassify the outstanding Company Common
Stock or declare, set aside or pay any dividend payable in cash, stock or
property or make any distribution with respect to any such stock;

 

(d) the Company shall not, and shall cause each Company Subsidiary not to (i)
issue or agree to issue any additional shares of, or options, warrants or rights
of any kind to acquire any shares of, Company Common Stock, Equity Securities or
any equity appreciation, phantom equity, profit participation, or similar rights
with respect to the Company or any Company Subsidiary, except to issue shares of
Company Common Stock in connection with any matter relating to the transactions
contemplated hereby; (ii) acquire or dispose of any fixed assets or acquire or
dispose of any other substantial assets other than in the ordinary course of
business; (iii) incur any Indebtedness or any other liabilities or enter into
any other transaction other than in the ordinary course of business or to effect
the Merger; (iv) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing or (v) except as contemplated by this
Agreement, enter into any contract, agreement, commitment or arrangement to
dissolve, merge, consolidate or enter into any other material business
combination;

 

(e) the Company shall preserve intact the business organization of the Company
and the Company Subsidiaries, to keep available the service of its present
officers and key employees, and to preserve the good will of those having
business relationships with it;

 

(f) the Company will not, nor will it authorize any director or authorize or
permit any officer or employee or any attorney, accountant or other
representative retained by it to make, solicit, encourage any inquiries with
respect to, or engage in any negotiations concerning, any Acquisition Proposal
(as defined below for purposes of this paragraph). The Company will promptly
advise Parent orally and in writing of any such inquiries or proposals (or
requests for information) and the substance thereof. As used in this paragraph,
“Acquisition Proposal” shall mean any proposal for a merger or other business
combination involving the Company or for the acquisition of a substantial equity
interest in it or any material assets of the Company other than as contemplated
by this Agreement. The Company will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Person conducted
heretofore with respect to any of the foregoing. Notwithstanding anything to the
contrary herein, in response to the receipt of a bona fide written Acquisition
Proposal made after the date of this Agreement that does not result from a
breach of this Section 5.01(f) by the Company and that the Company Board
determines in good faith (after consultation with outside legal counsel and a
financial advisor) constitutes or could reasonably be expected to lead to a
Superior Acquisition Proposal (as defined below for purposes of this paragraph),
the Company may (1) furnish information with respect to the Company to the
Person making such Acquisition Proposal (provided, that (i) all such information
has previously been provided to Parent or is provided to Parent prior to or
concurrently with the provision of such information to such Person) pursuant to
a customary confidentiality agreement that does not restrict the Company’s
ability to comply with its obligations under this Section 5.01 and (2)
participate in discussions and negotiations regarding the terms of such
Acquisition Proposal and any definitive agreement related thereto. As used in
this paragraph, “Superior Acquisition Proposal” shall mean a bona fide written
Acquisition Proposal, which the Company Board determines in good faith, after
consultation with outside legal counsel and a financial advisor, and taking into
account the legal, financial, regulatory, timing and other aspects of such
Acquisition Proposal, the identity of the Person making the proposal and any
financing required for such proposal, the ability of the Person making such
proposal to obtain such required financing and the level of certainty with
respect to such required financing, and such other factors that are deemed
relevant by the Company Board, is more favorable to the holders of Company
Common Stock than the transactions contemplated by this Agreement (after taking
into account any revisions to the terms of this Agreement that are committed to
in writing by Parent (including pursuant to Section 5.01(g)). Without limiting
the foregoing, it is agreed that any violation of the restrictions set forth in
this Section 5.01(f) by any representative of the Company or any of its
Affiliates, in each case, at the Company’s direction, shall constitute a breach
of this Section 5.01(f) by the Company. Except as set forth in this Section
5.01(f), neither the Company Board nor any committee thereof shall authorize,
permit, approve or recommend, or propose publicly to authorize, permit, approve
or recommend, or allow the Company or any of its Affiliates to execute or enter
into, any letter of intent, memorandum of understanding, agreement in principle,
agreement or commitment constituting, or that would reasonably be expected to
lead to, any Acquisition Proposal, or requiring, or that would reasonably be
expected to cause, the Company to abandon or terminate this Agreement (a
“Company Acquisition Agreement”);

 

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(g) Notwithstanding anything to the contrary herein, at any time prior to
obtaining Stockholder approval, the Company Board may change the Company Board
Recommendation if the Company has received a Superior Acquisition Proposal that
does not result from a breach (other than an immaterial breach) of Section 5.01
by the Company and if the Company Board determines in good faith (after
consultation with outside legal counsel and a financial advisor) that the
failure to change its recommendation in response to the receipt of such Superior
Acquisition Proposal, would be reasonably likely to be inconsistent with the
Company Board’s fiduciary duties under applicable law; provided, however, that
the Company Board may not change the Company Board Recommendation unless (1) the
Company Board has provided prior written notice to Parent (a “Company
Recommendation Change Notice”) that it is prepared to effect a change of the
Company Board Recommendation at least five (5) business days prior to taking
such action, which notice shall specify the basis for such intended action and,
in the case of a Superior Acquisition Proposal, attaching the most current draft
of any Company Acquisition Agreement with respect to such Superior Acquisition
Proposal or, if no draft exists, a summary of the material terms and conditions
of such Superior Acquisition Proposal, (2) during the five (5) Business Day
period after delivery of the Company Recommendation Change Notice, the Company
and its representatives negotiate in good faith with Parent and its
representatives regarding any revisions to this Agreement that Parent proposes
to make, and (3) at the end of such five (5) business day period and taking into
account any changes to the terms of this Agreement committed to in writing by
Parent, the Company Board determines in good faith (after consultation with
outside legal counsel and a financial advisor) that the failure to change the
Company Board Recommendation would be inconsistent with its fiduciary duties
under applicable law, and that the Acquisition Proposal still constitutes a
Superior Acquisition Proposal;

 

(h) the Company shall not, and shall cause the Company Subsidiaries not to,
enter into any new agreement or amend or modify any current agreements with any
of its current or former officers or employees, grant any increases in the
compensation or benefits of any of its officers and employees, or adopt, amend,
modify or terminate any Employee Benefit Plan or any other employee benefit
plan, agreement, arrangement, policy, practice, commitment, contract or
understanding that would be an Employee Benefit Plan if in existence as of the
date hereof; and

 

(i) the Company shall not, and shall cause the Company Subsidiaries not to, take
any other action outside of the ordinary course of business.

 

21

 

 

Article VI.
ADDITIONAL AGREEMENTS

 

Section 6.01 Access and Information. The Company, on the one hand, and Parent
and Acquisition Corp., on the other hand, shall each afford to the other and to
the other’s accountants, counsel and other representatives full access during
normal business hours throughout the period prior to the Effective Time to all
of its properties, books, contracts, commitments and records (including but not
limited to tax returns) and during such period, each shall furnish promptly to
the other all information concerning its business, properties and personnel as
such other party may reasonably request, provided that no investigation pursuant
to this Section 6.01 shall affect any representations or warranties made herein.
Each party shall hold, and shall cause its employees and agents to hold, in
confidence all such information (other than such information that (a) is already
in such party’s possession or (b) becomes generally available to the public
other than as a result of a disclosure by such party or its directors, officers,
managers, employees, agents or advisors or (c) becomes available to such party
on a non-confidential basis from a source other than a party hereto or its
advisors, provided that such source is not known by such party to be bound by a
confidentiality agreement with or other obligation of secrecy to a party hereto
or another party until such time as such information is otherwise publicly
available; provided, however, that (i) any such information may be disclosed to
such party’s directors, officers, employees and representatives of such party’s
advisors who need to know such information for the purpose of evaluating the
transactions contemplated hereby (it being understood that such directors,
officers, employees and representatives shall be informed by such party of the
confidential nature of such information), (ii) any disclosure of such
information may be made as to which the party hereto furnishing such information
has consented in writing and (iii) any such information may be disclosed
pursuant to a judicial, administrative or governmental order or request;
provided, further, that the requested party will promptly so notify the other
party so that the other party may seek a protective order or appropriate remedy
and/or waive compliance with this Agreement and if such protective order or
other remedy is not obtained or the other party waives compliance with this
provision, the requested party will furnish only that portion of such
information that is legally required and will exercise its best efforts to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the information furnished. If this Agreement is
terminated, each party will deliver to the other all documents and other
materials (including copies) obtained by such party or on its behalf from the
other party as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof.

 

Section 6.02 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its commercially reasonable efforts to satisfy
the conditions precedent to the obligations of any of the parties hereto, to
obtain all necessary waivers, and to lift any injunction or other legal bar to
the Merger (and, in such case, to proceed with the Merger as expeditiously as
possible). In order to obtain any necessary governmental or regulatory action or
non-action, waiver, consent, extension or approval, each of Parent, Acquisition
Corp. and the Company agrees to take all reasonable actions and to enter into
all reasonable agreements as may be necessary to obtain timely governmental or
regulatory approvals and to take such further action in connection therewith as
may be necessary. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of Parent, Acquisition Corp. and the
Company shall take all such necessary action.

 

Section 6.03 Publicity. No party shall issue any press release or public
announcement pertaining to the Merger that has not been agreed upon in advance
by Parent and the Company, except as Parent reasonably determines to be
necessary in order to comply with the rules of the Commission or of the
principal trading exchange or market for the Parent Common Stock, provided, that
in such case Parent will use its best efforts to allow the Company to review and
reasonably approve any such press release or public announcement prior to its
release.

 

Section 6.04 Appointment of Directors and Officers. Immediately at the Effective
Time, the Parent shall appoint or cause to be appointed George Bee as President
of the Parent, provided that the officers and directors of the Parent prior to
the Closing Date shall otherwise remain the officers and directors of the Parent
after the Closing Date. Parent agrees to nominate George Bee and Robert Schafer
(the “Company Designees”) and include such Company Designees among management’s
nominees for election of directors at the Parent Stockholder Meeting (or
alternative designee(s) specified in writing and delivered by the Stockholder
Representative pursuant to the notice provisions contained herein at least ten
(10) days prior to the scheduled mailing date of the Parent’s proxy materials to
the Parent Stockholders for the Parent Stockholder Meeting). At the Parent
Stockholder Meeting and thereafter, the election of members of the Board of
Directors of the Parent (the “Parent Board”) shall be accomplished in accordance
with the Bylaws of Parent and the rules of the Commission.

 

Section 6.05 Parent Stockholder Approval. Parent shall use its commercially
reasonable efforts to obtain, at the Parent Stockholder Meeting, the requisite
Parent Stockholder Approval for conversion of the Parent Preferred Stock into
Parent Common Stock (the “Conversion”), in accordance with the applicable rules
of the Commission and NASDAQ Rule 5635. Without limiting the generality of the
foregoing, the Parent shall (a) include in the proxy materials submitted to the
Parent Stockholders in connection with the Parent Stockholder Meeting an
unanimous recommendation from the Parent Board that the Parent Stockholders
approve the Conversion, and (b) deliver or caused to be delivered to the
Company, on or before Closing, a voting agreement (in a form and substance
mutually acceptable to the Company and Parent, acting reasonably) from each of
the current directors and officers of the Parent agreeing to vote their
respective Parent Common Stock in favor of the Conversion at the Parent
Stockholder Meeting.

 

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Section 6.06 Company Written Consent. The Company shall, by not later than the
fifth (5th) business day after the date of this Agreement, have obtained written
consents from the Stockholders representing at least a majority of the
outstanding shares of Company Common Stock approving this Agreement and the
Merger (the “Written Consent”). The materials submitted to the Stockholders in
connection with the Written Consent shall include the Company Board
Recommendation and shall be approved by Parent prior to distribution to the
Stockholders (which approval shall not be unreasonably withheld or delayed).
Promptly following receipt of the Written Consent, the Company shall deliver a
copy of such Written Consent to Parent. Promptly following, but in no event more
than five (5) business days after receipt of the Written Consent, the Company
shall prepare and mail a notice (the “Stockholder Notice”) to every Stockholder,
if any, entitled to dissenter’s rights pursuant to NRS 92A.380. The Stockholder
Notice shall (i) be a statement to the effect that the Company Board unanimously
recommended the Plan of Merger in accordance with NRS 92A.120 and unanimously
approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby, (ii) provide the Stockholders to whom it is sent with
notice of the actions taken in the Written Consent, including the approval and
adoption of this Agreement, the Merger and the other transactions contemplated
hereby in accordance with NRS 92A.120(7), NRS 78.320 and the bylaws of the
Company and (iii) notify such Stockholders of their dissent and appraisal rights
pursuant to NRS 92A.430. The Stockholder Notice shall include therewith a copy
of NRS 92A.300 to 92A.500, inclusive and all such other information as Parent
shall reasonably request, and shall be sufficient in form and substance to start
the 30-60 day period during which a Stockholder must demand payment for such
Stockholder’s shares of Company Common Stock as contemplated by NRS 92A.430. All
materials submitted to the Stockholders in accordance with this Section 6.06
shall be subject to Parent’s advance review and reasonable approval.

 

Article VII.
CONDITIONS TO PARTIES’ OBLIGATIONS

 

Section 7.01 Conditions to Parent and Acquisition Corp. Obligations. The
obligations of Parent and Acquisition Corp. under the Merger Documents are
subject to the fulfillment, at or prior to the Closing, of the following
conditions, any of which may be waived in whole or in part by Parent:

 

(a) The representations and warranties of the Company under this Agreement shall
be deemed to have been made again on the Closing Date and shall then be true and
correct in all material respects.

 

(b) The Company shall have performed and complied in all material respects with
all agreements and conditions required by this Agreement to be performed or
complied with by it on or before the Closing Date.

 

(c) No action or proceeding before any court, governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit, or to
obtain substantial damages in respect of, the Merger Documents or the carrying
out of the transactions contemplated by the Merger Documents.

 

(d) All consents or approvals required pursuant to Section 2.07 shall have been
obtained.

 

(e) Parent and Acquisition Corp. shall have received the following:

 

(i) copies of resolutions of the Company Board and the Stockholders, certified
by the Secretary of the Company, authorizing and approving the execution,
delivery and performance of the Merger Documents and all other documents and
instruments to be delivered pursuant thereto;

 

(ii) a certificate of incumbency executed by the Secretary of the Company
certifying the names, titles and signatures of the officers authorized to
execute any documents referred to in this Agreement and further certifying that
the Amended and Restated Articles of Incorporation and Bylaws of the Company
delivered to Parent and Acquisition Corp. at the time of the execution of this
Agreement have been validly adopted and have not been amended or modified;

 

23

 

 

(iii) a certificate, dated the Closing Date, executed by the President of the
Company certifying that (A) he has no knowledge of any plan to issue any
securities of the Company or any Acquisition Proposal, and the Company has not
entered into any agreement, written or oral, (y) to issue any securities of the
Company or (z) entertain any Acquisition Proposal, except as described in this
Agreement, (B) except for the filing of the Articles of Merger, all consents,
authorizations, orders and approvals of, and filings and registrations with, any
court, governmental body or instrumentality that are required for the execution
and delivery of the Merger Documents and the consummation of the Merger shall
have been duly made or obtained, and all material consents by third parties
required for the Merger have been obtained and (C) no action or proceeding
before any court, governmental body or agency has been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, the Merger Documents or the carrying out of the transactions contemplated by
any of the Merger Documents;

 

(iv) evidence as of a recent date of the good standing and corporate existence
of (A) the Company, issued by the Secretary of State of the State of Nevada, (B)
each Company Subsidiary, issued by the jurisdiction of its formation or
incorporation, as applicable, and (C) evidence that the Company and each Company
Subsidiary is qualified to transact business as a foreign corporation and is in
good standing in each state of the United States and in each other jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary;

 

(v) Leak Out Agreements in substantially the form attached hereto as Exhibit E
from each of the Stockholders;

 

(vi) Evidence satisfactory to Parent and Acquisition Corp. that the Subscription
Transaction has been completed; and

 

(vii) such additional supporting documentation and other information with
respect to the transactions contemplated hereby as Parent and Acquisition Corp.
may reasonably request.

 

(f) All corporate and other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such transactions
shall be reasonably satisfactory in form and substance to Parent and Acquisition
Corp. The Company shall furnish to Parent and Acquisition Corp. such supporting
documentation and evidence of the satisfaction of any or all of the conditions
precedent specified in this Section 7.01 as Parent or its counsel may reasonably
request.

 

(g) The Written Consent shall have been obtained.

 

(h) Holders of no more than 1% of the outstanding shares of Company Common Stock
as of immediately prior to the Effective Time, in the aggregate, shall have
exercised, or remain entitled to exercise, statutory appraisal rights pursuant
to NRS 92A.380 with respect to such shares of Company Common Stock.

 

(i) From the date of this Agreement, there shall not have occurred any Material
Adverse Effect, nor shall any event or events have occurred that, individually
or in the aggregate, with or without the lapse of time or both, could reasonably
be expected to result in a Material Adverse Effect. For purposes of this Section
7.01(i), “Material Adverse Effect” shall mean any event, occurrence, fact,
condition or change that is, or could reasonably be expected to become,
individually or in the aggregate, materially adverse to (a) the business,
results of operations, condition (financial or otherwise) or assets of the
Company or any Company Subsidiary, or (b) the ability of the Company to
consummate the transactions contemplated hereby on a timely basis.

 

24

 

 

Section 7.02 Conditions to the Company’s Obligations. The obligations of the
Company under the Merger Documents are subject to the fulfillment, at or prior
to the Closing, of the following conditions, any of which may be waived in whole
or in part by the Company.

 

(a) The representations and warranties of Parent and Acquisition Corp. under
this Agreement shall be deemed to have been made again on the Closing Date and
shall then be true and correct in all material respects.

 

(b) Parent and Acquisition Corp. shall have performed and complied in all
material respects with all agreements and conditions required by the Merger
Documents to be performed or complied with by them on or before the Closing
Date.

 

(c) The Company shall have received the following:

 

(i) copies of resolutions of Parent’s and Acquisition Corp.’s respective boards
of directors and the sole stockholder of Acquisition Corp., certified by their
respective Secretaries, authorizing and approving, to the extent applicable, the
execution, delivery and performance of the Merger Documents and all other
documents and instruments to be delivered by them pursuant thereto;

 

(ii) a certificate of incumbency executed by the respective Secretaries of
Parent and Acquisition Corp. certifying the names, titles and signatures of the
officers authorized to execute the documents referred to in this Agreement and
further certifying that the Articles of Incorporation and Bylaws of Parent and
Acquisition Corp. appended thereto have not been amended or modified.

 

(iii) a certificate, dated the Closing Date, executed by the President or Chief
Executive Officer of each of the Parent and Acquisition Corp., certifying that
(A) except for the filing of the Articles of Merger, all consents,
authorizations, orders and approvals of, and filings and registrations with, any
court, governmental body or instrumentality that are required for the execution
and delivery of the Merger Documents and the consummation of the Merger shall
have been duly made or obtained, and all material consents by third parties
required for the Merger have been obtained and (B) no action or proceeding
before any court, governmental body or agency has been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages in respect
of, the Merger Documents or the carrying out of the transactions contemplated by
any of the Merger Documents;

 

(iv) evidence as of a recent date of the good standing and corporate existence
of each of the Parent, the Parent Subsidiaries and Acquisition Corp. issued by
the Secretary of State of the State of Nevada or such other governmental
authority having jurisdiction and evidence that the Parent and Acquisition Corp.
are qualified to transact business as foreign corporations and are in good
standing in each state of the United States and in each other jurisdiction where
the character of the property owned or leased by them or the nature of their
activities makes such qualification necessary;

 

(v) the voting agreements from the current directors and officers of the Parent
as contemplated in Section 6.05; and

 

(vi) such additional supporting documentation and other information with respect
to the transactions contemplated hereby as the Company may reasonably request.

 

(d) All corporate and other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such transactions
shall be satisfactory in form and substance to the Company. Parent and
Acquisition Corp. shall furnish to the Company such supporting documentation and
evidence of satisfaction of any or all of the conditions specified in this
Section 7.02 as the Company may reasonably request.

 

(e) No action or proceeding before any court, governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit, or to
obtain substantial damages in respect of, the Merger Documents or the carrying
out of the transactions contemplated by the Merger Documents.

 

25

 

 

(f) All consents or approvals required pursuant to Section 3.10 shall have been
obtained.

 

(g) From the date of this Agreement, there shall not have occurred any Parent
Material Adverse Effect, nor shall any event or events have occurred that,
individually or in the aggregate, with or without the lapse of time or both,
could reasonably be expected to result in a Parent Material Adverse Effect. For
purposes of this Section 7.02(g), “Parent Material Adverse Effect” shall mean
any event, occurrence, fact, condition or change that is, or could reasonably be
expected to become, individually or in the aggregate, materially adverse to (a)
the business, results of operations, condition (financial or otherwise) or
assets of the Parent or any Parent Subsidiary, or (b) the ability of the Parent
or Acquisition Corp. to consummate the transactions contemplated hereby on a
timely basis.

 

Article VIII.
TERMINATION PRIOR TO CLOSING

 

Section 8.01 Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:

 

(a) by the mutual written consent of the Company, Acquisition Corp. and Parent;

 

(b) by the Company, if Parent or Acquisition Corp. (i) fails to perform in any
material respect any of its agreements contained herein required to be performed
by it on or prior to the Closing Date, or (ii) materially breach any of their
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after the Company has notified
Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant
to this paragraph (b);

 

(c) by the Company, in the event that the Company Board has changed the Company
Board Recommendation with respect to a Superior Acquisition Proposal and shall
have approved, and concurrently with the termination hereunder, the Company
shall have entered into, a Company Acquisition Agreement providing for the
implementation of such Superior Acquisition Proposal, so long as (i) the Company
has complied in all material respects with its obligations under Section 5.01
and (ii) the Company prior to or concurrently with such termination pays to
Parent an amount in cash equal to $375,000 (the “Company Termination Fee”) to an
account designated in writing by Parent. The termination pursuant to this
Section 8.01(c) shall not be effective and the Company shall not enter into any
such Company Acquisition Agreement until Parent is in receipt of the Company
Termination Fee; provided, however, that the Company shall not have the right to
terminate this Agreement under this Section 8.01(c) after the Written Consent is
obtained;

 

(d) by Parent and Acquisition Corp. if the Company (i) fails to perform in any
material respect any of its agreements contained herein required to be performed
by it on or prior to the Closing Date, (ii) materially breaches any of its
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after Parent or Acquisition Corp.
has notified the Company of its intent to terminate this Agreement pursuant to
this paragraph (c), or (iii) in the event that the Company Board has changed the
Company Board Recommendation; provided, however, that Parent shall not have the
right to terminate this Agreement under this Section 8.01(d)(iii) after the
Written Consent is obtained. If Parent terminates this Agreement pursuant to
Section 8.01(d)(iii), the Company shall pay the Company Termination Fee to the
account designated in writing by Parent no later than three (3) business days
after the date of such termination by Parent;

 

(e) by either the Company, on the one hand, or Parent and Acquisition Corp., on
the other hand, if there shall be any order, writ, injunction or decree of any
court or governmental or regulatory agency binding on Parent, Acquisition Corp.
or the Company that prohibits or materially restrains any of them from
consummating the transactions contemplated hereby, provided that the parties
hereto shall have used their best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted within
ninety (90) days after entry by any such court or governmental or regulatory
agency; or

 

26

 

 

(f) by either the Company, on the one hand, or Parent and Acquisition Corp., on
the other hand, if the Closing has not occurred on or prior to August 14, 2020,
for any reason other than delay or nonperformance of the party seeking such
termination.

 

(g) by either the Company, on the one hand, or Parent or Acquisition Corp., on
the other hand, if the Written Consent is not obtained within the time period
set forth in Section 6.06; provided, that the Company may terminate this
Agreement pursuant to this Section 8.01(g) only if the Company has fully
performed its obligations under this Agreement to seek the Written Consent.

 

Section 8.02 Termination of Obligations. Termination of this Agreement pursuant
to this Article VIII shall terminate all obligations of the parties hereunder,
except for the obligations under Section 6.01, Section 9.04 and Section 9.12;
provided, however, that termination pursuant to paragraphs (b) or (c) of Section
8.01 shall not relieve the defaulting or breaching party or parties from any
liability to the other parties hereto.

 

Section 8.03 Expense Reimbursement. If this Agreement is terminated (i) under
circumstances in which the Company is obligated to pay the Company Termination
Fee under Section 8.01(c), or (ii) pursuant to Section 8.01(g), the Company
shall reimburse Parent for its reasonable and documented out-of-pocket costs and
expenses (including reasonable legal, accounting and other professional fees and
expenses) incurred by it in connection with the transactions contemplated by
this Agreement.

 

Article IX.
MISCELLANEOUS

 

Section 9.01 Stockholder Representative. By approving this Agreement and the
transactions contemplated hereby or by executing and delivering a Letter of
Transmittal, each Stockholder shall have irrevocably authorized and appointed
Stockholder Representative as such Person’s representative and attorney-in-fact
to act on behalf of such Person with respect to this Agreement and to take any
and all actions and make any decisions required or permitted to be taken by
Stockholder Representative pursuant to this Agreement, including the exercise of
the power to:

 

(a) give and receive notices and communications;

 

(b) execute and deliver all documents necessary or desirable to carry out the
intent of this Agreement (including, without limitation, amendment of this
Agreement on behalf of the Stockholders);

 

(c) enforce, at the Parent’s expense, Parent’s obligation to appoint George Bee
as President of the Parent or nominate the Company Designees for election as
directors of the Parent at the Parent Stockholder Meeting pursuant to Section
6.04;

 

(d) enforce, at the Parent’s expense, Parent’s obligation to seek Parent
Stockholder Approval pursuant to Section 6.05;

 

(e) make all elections or decisions contemplated by this Agreement;

 

(f) engage, employ or appoint any agents or representatives (including
attorneys, accountants and consultants) to assist Stockholder Representative in
complying with its duties and obligations; and

 

(g) take all actions necessary or appropriate in the good faith judgment of
Stockholder Representative for the accomplishment of the foregoing.

 

Parent shall be entitled to deal exclusively with Stockholder Representative on
all matters relating to this Agreement and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Stockholder by Stockholder
Representative, and on any other action taken or purported to be taken on behalf
of any Stockholder by Stockholder Representative, as being fully binding upon
such Person. Notices or communications to or from Stockholder Representative
shall constitute notice to or from each of the Stockholders. Any decision or
action by Stockholder Representative hereunder shall constitute a decision or
action of all Stockholders and shall be final, binding and conclusive upon each
such Person. No Stockholder shall have the right to object to, dissent from,
protest or otherwise contest the same. The provisions of this Section 9.01,
including the power of attorney granted hereby, are independent and severable,
are irrevocable and coupled with an interest and shall not be terminated by any
act of any one or more Stockholders, or by operation of law, whether by death or
other event.

 

27

 

 

The Stockholder Representative may resign at any time, and may be removed for
any reason or no reason by the vote or written consent of a majority in interest
of the Stockholders according to each Stockholder’s respective percentage of
ownership in the Company immediately prior to the Effective Time (the “Majority
Holders”); provided, however, in no event shall Stockholder Representative
resign or be removed without the Majority Holders having first appointed a new
Stockholder Representative who shall assume such duties immediately upon the
resignation or removal of Stockholder Representative. In the event of the death,
incapacity, resignation or removal of Stockholder Representative, a new
Stockholder Representative shall be appointed by the vote or written consent of
the Majority Holders. Notice of such vote or a copy of the written consent
appointing such new Stockholder Representative shall be sent to Parent, such
appointment to be effective upon the later of the date indicated in such consent
or the date such notice is received by Parent; provided, that until such notice
is received, Parent, Acquisition Corp. and the Surviving Corporation shall be
entitled to rely on the decisions and actions of the prior Stockholder
Representative as described in this Section 9.01.

 

The Stockholder Representative shall not be liable to the Stockholders for
actions taken pursuant to this Agreement, except to the extent such actions
shall have been determined by a court of competent jurisdiction in a final and
conclusive, non-appealable judgment to have constituted gross negligence or
involved fraud, intentional misconduct or bad faith (it being understood that
any act done or omitted pursuant to the advice of counsel, accountants and other
professionals and experts retained by Stockholder Representative shall be
conclusive evidence of good faith). The Stockholders shall severally and not
jointly (in accordance with their respective percentage of ownership in the
Company immediately prior to the Effective Time), indemnify and hold harmless
Stockholder Representative from and against, compensate it for, reimburse it for
and pay any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys’ fees and disbursements, arising out of and in
connection with its activities as Stockholder Representative under this
Agreement (the “Representative Losses”), in each case as such Representative
Loss is suffered or incurred; provided, that in the event it is finally
adjudicated that a Representative Loss or any portion thereof was primarily
caused by the gross negligence, fraud, intentional misconduct or bad faith of
Stockholder Representative, Stockholder Representative shall reimburse the
Stockholders the amount of such indemnified Representative Loss attributable to
such gross negligence, fraud, intentional misconduct or bad faith. The
Representative Losses shall be satisfied from the Stockholders, severally and
not jointly (in accordance with their respective percentage of ownership in the
Company immediately prior to the Effective Time).

 

Section 9.02 Notices. Any notice, request or other communication hereunder shall
be given in writing and shall be served either personally, by overnight
delivery, sent by electronic transmission, or delivered by mail, certified
return receipt requested and addressed to the following addresses:

 

  (a) If to Parent or Acquisition Corp.:           U.S. Gold Corp.     1910 E.
Idaho Street, Suite 102-Box 604     Elko, NV 89801           Attention: Edward
Karr, Chief Executive Officer     E-mail: ek@usgoldcorp.gold             with a
copy (which shall not constitute notice) to:           Haynes and Boone, LLP    
30 Rockefeller Plaza, 26th Floor     New York, NY 10112           Attention:
Rick A. Werner and Greg Kramer     E-mail: rick.werner@haynesboone.com      
greg.kramer@haynesboone.com

 

28

 

 

  (b) If to the Company:           Northern Panther Resources Corporation    
241 Ridge Street, Suite 210     Reno, Nevada 89501           Attention: Richard
Silas, President             with a copy (which shall not constitute notice) to:
          Gregory T. Chu, A Law Corporation     Suite 1604 – 1166 Alberni Street
    Vancouver, B.C. Canada V6E 3Z3             Attention: Gregory T. Chu    
E-mail: gtchu@telus.net           (c) If to the Stockholder Representative:    
      Richard Silas     c/o Suite 615 – 800 West Pender Street     Vancouver,
B.C. Canada V6C 2V6             E-mail: rsilas@gmail.com

 

Any such communication so given or made shall be deemed to have been given or
made and to have been received on the day of delivery if delivered, or on the
day of sending by electronic transmission, provided that such day in either
event is a business day and the communication is so delivered or sent prior to
5:00 p.m. at the place of receipt on such day. Otherwise, such communication
shall be deemed to have been given or made and to have been received on the next
following business day. Any such communication sent by mail shall be deemed to
have been given or made and to have been received on the fifth business day
following the mailing thereof. Any party may from time to time change its
address under this Section 9.02 by notice to the other party given in the manner
provided by this Section. No party shall prevent, hinder or delay or attempt to
prevent, hinder or delay the service on that party of a notice or other
communication relating to this Agreement.

 

Section 9.03 Entire Agreement. This Agreement, including the schedules and
exhibits attached hereto and other documents referred to herein, contains the
entire understanding of the parties hereto with respect to the subject matter
hereof. This Agreement supersedes all prior agreements and undertakings between
the parties with respect to such subject matter.

 

Section 9.04 Expenses. Except as otherwise described herein, each party shall
bear and pay all of the legal, accounting and other expenses incurred by it in
connection with the transactions contemplated by this Agreement. For greater
certainty, the Company shall be entitled to deduct its legal, accounting and
other expenses incurred by it in connection with the transactions contemplated
by this Agreement including, but not limited to, the acquisition of ERM and the
Subscription Transaction from the net proceeds of the Company’s Subscription
Transaction to a maximum of $100,000 prior to or concurrent with the Closing of
the Merger.

 

Section 9.05 Time. Time is of the essence in the performance of the parties’
respective obligations herein contained.

 

29

 

 

Section 9.06 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 9.07 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and heirs; provided, however, that neither party shall directly or
indirectly transfer or assign any of its rights hereunder in whole or in part
without the written consent of the others, which may be withheld in its sole
discretion, and any such transfer or assignment without said consent shall be
void.

 

Section 9.08 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and benefit of the parties hereto, their successors,
assigns and heirs, and no other Person shall have any right or action under this
Agreement.

 

Section 9.09 Counterparts. This Agreement may be executed in one or more
counterparts, with the same effect as if all parties had signed the same
document. Each such counterpart shall be an original, but all such counterparts
together shall constitute a single agreement.

 

Section 9.10 Recitals, Schedules and Exhibits. The Recitals, Schedules and
Exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth herein.

 

Section 9.11 Section Headings and Gender. The Section headings used herein are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter gender, and the singular shall include the plural, and vice
versa, whenever and as often as may be appropriate.

 

Section 9.12 Currency. All references in this Agreement to dollar ($) amounts
are to lawful money of the United States of America unless otherwise indicated.

 

Section 9.13 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to principles of conflicts of laws, except that the applicable
terms of Article I shall be governed by the NRS.

 

[Signature Page Follows]

 

30

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
binding and effective as of the day and year first above written.

 

  U.S. GOLD CORP.         By: /s/ Edward M. Karr   Name: Edward M. Karr   Title:
Chief Executive Officer         ACQUISITION CORP.         GOLD KING ACQUISITION
CORP.         By: /s/ Edward M. Karr   Name: Edward M. Karr   Title: Chief
Executive Officer         NORTHERN PANTHER RESOURCES CORPORATION         By: /s/
Richard Silas   Name: Richard Silas   Title: President         STOCKHOLDER
REPRESENTATIVE         By: /s/ Richard Silas     Richard Silas     (in his
capacity as Stockholder Representative and without individual or personal
liability)

 

Signature Page to Agreement and Plan of Merger

 

 

 

 

Exhibit A

 

Articles of Merger

 

[omitted]

 

 

 

 

Exhibit B

 

Voting Agreement

 

[omitted]

 

 

 

 

EXHIBIT C

 

Company Amended and Restated Articles of Incorporation

 

[omitted]

 

 

 

 

EXHIBIT D

 

Company Bylaws

 

[omitted]

 

 

 

 

EXHIBIT E

 

Form of Leak Out Agreement

 

[omitted]

 

 

 

 

EXHIBIT F

 

Series H Convertible Preferred Stock of Parent

 

[omitted]