Exhibit 10.8

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

 

between

 

Calx Minerals, LLC

 

and

 

RMR Aggregates, Inc.

 

dated as of

 

October 7, 2016

 

 

 

 

TABLE OF CONTENTS

 

Article I Definitions 1       Article II Purchase and Sale 9       Section 2.01
Purchase and Sale of Assets 9       Section 2.02 Excluded Assets 10      
Section 2.03 Assumed Liabilities 11       Section 2.04 Excluded Liabilities 11  
    Section 2.05 Purchase Price 12       Section 2.06 Allocation Schedule 12    
  Section 2.07 Third Party Consents 13       Section 2.08 Post Closing
Adjustment 13       Article III Closing 13       Section 3.01 Closing 13      
Section 3.02 Closing Deliverables 14       Article IV Representations and
warranties of seller 16       Section 4.01 Organization and Qualification of
Seller 16       Section 4.02 Authority of Seller 16       Section 4.03 No
Conflicts; Consents 16       Section 4.04 Financial Statements 17       Section
4.05 Undisclosed Liabilities 17       Section 4.06 Absence of Certain Changes,
Events and Conditions 17       Section 4.07 Material Contracts 19       Section
4.08 Title to Purchased Assets 20       Section 4.09 Condition and Sufficiency
of Assets 21       Section 4.10 Mining Claims 21       Section 4.11 Intellectual
Property 22       Section 4.12 Inventory 23

 

 

 

 

Section 4.13 Real Property and Leased Real Property 23       Section 4.14
Customers and Suppliers 23       Section 4.15 Insurance 24       Section 4.16
Legal Proceedings; Governmental Orders 24       Section 4.17 Compliance With
Laws; Permits 24       Section 4.18 Environmental Matters 25       Section 4.19
Employee Benefit Plans 26       Section 4.20 Employment Matters 27       Section
4.21 Taxes 27       Section 4.22 Brokers 28       Section 4.23 Full Disclosure
28       Section 4.24 Capitalization 28       Section 4.25 Officers and Managers
29       Section 4.26 Water Rights and Easements 29       Section 4.27 Fines 29
      Section 4.28 Reclamation Bonds 29       Section 4.29 Reclamation Plan 29  
    Section 4.30 Plan of Operations 29       Section 4.31 Seller’s Operations on
the Land 29       Section 4.32 Majority Member and Managers Authorization 30    
  Section 4.33 Indebtedness 30       Article V Representations and warranties of
buyer 30       Section 5.01 Organization of Buyer 30       Section 5.02
Authority of Buyer 30       Section 5.03 No Conflicts; Consents 31       Section
5.04 Brokers 31       Section 5.05 Legal Proceedings 31

 

 

 

 

Article VI Covenants 31       Section 6.01 Conduct of Business Prior to the
Closing 31       Section 6.02 Access to Information 32       Section 6.03 No
Solicitation of Other Bids 32       Section 6.04 Notice of Certain Events 33    
  Section 6.05 Employees and Employee Benefits 33       Section 6.06
Confidentiality 34       Section 6.07 Non-competition; Non-solicitation 34      
Section 6.08 Governmental Approvals and Consents 35       Section 6.09 Books and
Records 36       Section 6.10 Closing Conditions 36       Section 6.11 Public
Announcements 36       Section 6.12 Bulk Sales Laws 36       Section 6.13
Transfer Taxes 37       Section 6.14 Permit and Surety Bond Matters 37      
Section 6.15 Payments Received from Third Parties 37       Section 6.16 Further
Assurances 38       Section 6.17 BLM 38       Section 6.18 Accounts Payable 38  
    Article VII Conditions to closing 38       Section 7.01 Conditions to
Obligations of All Parties 38       Section 7.02 Conditions to Obligations of
Buyer 38       Section 7.03 Conditions to Obligations of Seller 41       Article
VIII Indemnification 42       Section 8.01 Survival 42       Section 8.02
Indemnification By Seller 42       Section 8.03 Indemnification By Buyer 43

 

 

 

 

Section 8.04 Certain Limitations 43       Section 8.05 Indemnification
Procedures 44       Section 8.06 Insurance and Other Recoveries 46       Section
8.07 Payments 46       Section 8.08 Tax Treatment of Indemnification Payments 46
      Section 8.09 Effect of Investigation 46       Section 8.10 Not Exclusive
Remedy 47       Article IX Termination 47       Section 9.01 Termination 47    
  Section 9.02 Effect of Termination 47       Article X Miscellaneous 48      
Section 10.01 Expenses 48       Section 10.02 Notices 48       Section 10.03
Interpretation 49       Section 10.04 Headings 49       Section 10.05
Severability 49       Section 10.06 Entire Agreement 49       Section 10.07
Successors and Assigns 50       Section 10.08 No Third-party Beneficiaries 50  
    Section 10.09 Amendment and Modification; Waiver 50       Section 10.10
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 50       Section
10.11 Specific Performance 51       Section 10.12 Counterparts 51       Section
10.13 Acknowledgement of Counsel 51

 

Exhibits

Exhibit A - Transition Services Agreement Exhibit B - Mining Complex Exhibit C -
Guaranty Agreement Exhibit D - Land Exhibit E - Indebtedness

 

 

 

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), is entered into between CalX
Minerals, LLC, a Colorado limited liability company (“Seller”), and RMR
Aggregates, Inc., a Colorado corporation (“Buyer”) on October ___, 2016.

 

RECITALS

 

WHEREAS, Seller owns forty-one (41) Bureau of Land Management (“BLM”) unpatented
placer mining claims on which Seller operates the Mid-Continent Limestone Quarry
located in Garfield County, Colorado relating to (i) the development,
exploitation of calcium carbonate and dolomite deposits and (ii) the mining,
processing, pulverizing, preparation, packaging, marketing, selling and shipping
of limestone (the “Business”); and

 

WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase
and assume from Seller, substantially all the assets, and certain specified
liabilities, of the Business, subject to the terms and conditions set forth
herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Article I
Definitions

 

The following terms have the meanings specified or referred to in this
Article I:

 

“Access Rights” means easements, right-of ways, permits, licenses, contract
rights and other rights for ingress, egress, utilities, pipelines, power
facilities, communication facilities or other facilities.

 

“Acquisition Proposal” has the meaning set forth in Section 6.03(a).

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.

 

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

“Allocation Schedule” has the meaning set forth in Section 2.06.

 

 1 

 

 

“Annual Financial Statements” has the meaning set forth in Section 4.04.

 

“Assigned Contracts” has the meaning set forth in Section 2.01(g).

 

“Assumed Liabilities” has the meaning set forth in Section 2.03.

 

“Balance Sheet” has the meaning set forth in Section 4.04.

 

“Balance Sheet Date” has the meaning set forth in Section 4.04.

 

“Basket” has the meaning set forth in Section 8.04(a).

 

“Benefit Plan” has the meaning set forth in Section 4.19(a).

 

“Bill of Sale” has the meaning set forth in Section 3.02(a)(i).

 

“Books and Records” has the meaning set forth in Section 2.01(n).

 

“Business” has the meaning set forth in the recitals.

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in Colorado are authorized or required by Law to be
closed for business.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Closing Certificate” has the meaning set forth in Section 7.03(e).

 

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

 

“Buyer’s Accountants” means Hein & Associates LLP.

 

“Cap” has the meaning set forth in Section 8.04(a).

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

 

“Closing” has the meaning set forth in Section 3.01.

 

“Closing Date” has the meaning set forth in Section 3.01.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

 

 2 

 

 

“Dartagnan Litigation” means litigation involving a dispute between Dartagnan
LLC and BCM CalX Fund LP. Such litigation commenced by BCM CalX Fund LP in June
2011, and was resolved in Dartagnan LLC’s favor, via grant of its motion for
summary judgment on April 19, 2013.

 

“Deed” has the meaning set forth in Section 3.02(a)(iv).

 

“Designated Buyer” has the meaning set forth in Section 10.07.

 

“Direct Claim” has the meaning set forth in Section 8.05(c).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.

 

“Dollars or $” means the lawful currency of the United States.

 

“Drop Dead Date” has the meaning set forth in Section 9.01(b)(ii).

 

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty,
or, as to each, any settlement or judgment arising therefrom, by or from any
Person alleging liability of whatever kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resources
damages, property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any Hazardous
Materials; or (b) any actual or alleged non-compliance with any Environmental
Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials. The term “Environmental Law” includes, without
limitation, the following (including their implementing regulations and any
state analogs): the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901
et seq.; the Federal Water Pollution Control Act of 1972, as amended by the
Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control
Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§
7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. §§ 651 et seq.

 

 3 

 

 

“Environmental Notice” means any written directive, notice of violation or
infraction, or notice respecting any Environmental Claim relating to actual or
alleged non-compliance with any Environmental Law or any term or condition of
any Environmental Permit.

 

“Environmental Permit” means any Permit, letter, clearance, consent, waiver,
closure, exemption, decision or other action required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

“ERISA Affiliate” means all employers (whether or not incorporated) that would
be treated together with the Seller or any of its Affiliates as a “single
employer” within the meaning of Section 414 of the Code.

 

“Excluded Assets” has the meaning set forth in Section 2.02.

 

“Excluded Contracts” has the meaning set forth in Section 2.02

 

“Excluded Liabilities” has the meaning set forth in Section 2.04.

 

“Financial Statements” has the meaning set forth in Section 4.04.

 

“Fines” has the meaning set forth in Section 4.27.

 

“FIRPTA Certificate” has the meaning set forth in Section 7.02(s).

 

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“Government Contracts” has the meaning set forth in Section 4.07(a)(viii).

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

 4 

 

 

“Guaranty Agreement” means that certain guaranty agreement entered into by Buyer
and the Guarantor Entity, upon which the Guarantor Entity guarantees all of the
obligations, representations and indemnities of Seller hereunder this Agreement.

 

“Guarantor Entity” means Satuit LLC, a Colorado limited liability company.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

 

“Indebtedness” means with respect to Seller any obligations of Seller for
borrowed money (including outstanding principal and unpaid interest, penalties,
fees and expenses thereon), (ii) to the extent not included in the preceding
clause, evidenced by a note, debenture, bankers acceptance, letter of credit or
similar instrument or facility (including a purchase money obligation) given in
connection with the acquisition of any property or assets, including securities,
(iii) to the extent not included in the preceding clauses, upon which interest
charges (other than late payment charges) are customarily paid or owed, issued
or assumed as the deferred purchase price of property or services, conditional
sale obligations and obligation under any title retention agreement, any direct
or indirect guarantee, any obligation or reimburse any bank or other Person for
amount aid under any letter of credit and any obligations under interest rate
currency and other drive contracts.

 

“Improvements” means buildings, millsites, fixtures, improvements, tunnels,
drifts, power lines, pipe lines, roads and other similar facilities on the Land.

 

“Indemnified Party” has the meaning set forth in Section 8.05.

 

“Indemnifying Party” has the meaning set forth in Section 8.05.

 

“Insurance Policies” has the meaning set forth in Section 4.15.

 

“Intellectual Property” means any and all trademarks and domain names; original
works of authorship and related copyrights, trade secrets, whether or not
patentable; designs and inventions and related patents; and similar intangible
property in which any Person holds proprietary rights, title, interest or
protections, however arising, pursuant to the Laws of any jurisdiction
throughout the world, and all applications, registrations, renewals, issues,
reissues, divisions and continuations in connection with any of the foregoing.

 

“Intellectual Property Agreements" means all licenses, sublicenses, consent to
use agreements, settlements, coexistence agreements, covenants not to sue,
permissions and other Contracts (including any right to receive or obligation to
pay royalties or any other consideration), whether written or oral, relating to
any Intellectual Property that is used in or necessary for the conduct of the
Business as currently conducted to which Seller is a party, beneficiary or
otherwise bound.

 

 5 

 

 

“Intellectual Property Assignments” has the meaning set forth in Section
3.02(a)(vii).

 

“Inventory” has the meaning set forth in Section 2.01(f).

 

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge
qualification, means the actual or constructive knowledge of any director,
manager or officer of Seller, after due inquiry.

 

“Land” means those certain tracts or parcels of land owned, leased, or possessed
by Seller, including by not limited to the forty-one (41) Mining Claims as
defined in Section 4.10(a) herein, and/or the Mining Complex located in Garfield
County as set forth on Exhibit D, together with all Improvements, easements,
hereditaments, Access Rights, Water Rights, privileges, and rights appurtenant
and/or related thereto.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Liabilities” means liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise.

 

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance providers;
provided, however, that “Losses” shall not include punitive damages, except in
the case of fraud or to the extent actually awarded to a Governmental Authority
or other third party.

 

“Material Adverse Effect” means 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 Business, (b) the value of
the Purchased Assets, or (c) the ability of Seller to consummate the
transactions contemplated hereby on a timely basis; provided, however, that
“Material Adverse Effect” shall not include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or attributable to:
(i) general economic or political conditions; (ii) conditions generally
affecting the industries in which the Business operates; (iii) acts of war
(whether or not declared), armed hostilities or terrorism, or the escalation or
worsening thereof; (iv) any action required or permitted by this Agreement,
except pursuant to Section 6.08; (vi) any changes in applicable Laws or
accounting rules, including GAAP; or (vii) the public announcement, pendency or
completion of the transactions contemplated by this Agreement; provided further,
however, that any event, occurrence, fact, condition or change referred to in
clauses (i) through (iv) immediately above shall be taken into account in
determining whether a Material Adverse Effect has occurred or could reasonably
be expected to occur to the extent that such event, occurrence, fact, condition
or change has a disproportionate effect on the Business compared to other
participants in the industries in which the Business operates.

 

“Material Contracts” has the meaning set forth in Section 4.07(a).

 

 6 

 

 

“Material Customers” has the meaning set forth in Section 4.14(a).

 

“Material Suppliers” has the meaning set forth in Section 4.14(b).

 

“Mineral Rights” means the right to exploit, mine or produce any minerals lying
beneath the surface of a property.

 

“Mining Claims” has the meaning set forth in Section 4.10(a).

 

“Mining Complex” means the mining complex commonly referred to as the
“Mid-Continent Limestone Quarry” located in Garfield County, Colorado as set
forth on the map attached as Exhibit B.

 

“Permits” means all permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.

 

“Permitted Encumbrances” has the meaning set forth in Section 4.08.

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Plans of Operations” means those plans of operations under which Seller
operates its Business under.

 

“Post-Closing Tax Period” means any taxable period beginning after the Closing
Date and, with respect to any taxable period beginning before and ending after
the Closing Date, the portion of such taxable period beginning after the Closing
Date.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and, with respect to any taxable period beginning before and ending
after the Closing Date, the portion of such taxable period ending on and
including the Closing Date.

 

“Purchase Price” has the meaning set forth in Section 2.05.

 

“Purchased Assets” has the meaning set forth in Section 2.01.

 

“Purchased IP” has the meaning set forth in Section 4.11(a).

 

“Reclamation Plan” means that certain reclamation plan approved by the Mined
Land Reclamation Division and any related amendments thereto.

 

“Reclamation Obligations” means all reclamation and similar obligations arising
from Seller’s ownership and operation of the Business and/or the Purchased
Assets.

 

“Release” means any actual or threatened release, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through
the environment (including, without limitation, ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any
building, structure, facility or fixture).

 

 7 

 

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

“Restricted Business” means the (i) ownership or operation of limestone mines
and (ii) the marketing, distribution, or sale of limestone.

 

“Restricted Period” has the meaning set forth in Section 6.07(a).

 

“Seller” has the meaning set forth in the preamble.

 

“Seller Closing Certificate” has the meaning set forth in Section 7.02(k).

 

“Seller Indemnitees” has the meaning set forth in Section 8.03.

 

“Tangible Personal Property” has the meaning set forth in Section 2.01(e).

 

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, documentary, franchise,
registration, profits, license, lease, service, service use, withholding,
payroll, employment, unemployment, estimated, excise, severance, environmental,
stamp, occupation, premium, property (real or personal), real property gains,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatsoever, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties.

 

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

 

“Territory” means Colorado.

 

“Third Party Claim” has the meaning set forth in Section 8.05(a).

 

“Town of Basalt Litigation” means litigation involving a dispute between Seller
and the Town of Basalt, for which mediation concluded in March 2016.

 

“Transaction Documents” means this Agreement, the Bill of Sale, the assignments,
Intellectual Property Assignments, deed(s), lease assignment and assumption
agreement(s), and the other agreements, instruments and documents required to be
delivered at the Closing.

 

“Transitions Services Agreement” means that Transition Services Agreement to be
entered into as of the Closing Date in substantially the form attached hereto as
Exhibit A.

 

“Union” has the meaning set forth in Section 4.20(b).

 

 

 8 

 

 

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act
of 1988, and similar state, local and foreign laws related to plant closings,
relocations, mass layoffs and employment losses.

 

“Water Rights” means water rights, water leases and water supply agreements,
ditch rights or other interests in water or water conveyance rights owned,
leased or possessed by the Seller.

 

Article II
Purchase and Sale

 

Section 2.01         Purchase and Sale of Assets. Subject to the terms and
conditions set forth herein, at the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller,
free and clear of any Encumbrances other than Permitted Encumbrances, all of
Seller’s right, title and interest in, to and under all of the assets,
properties and rights of every kind and nature, whether real, personal or mixed,
tangible or intangible (including goodwill), wherever located and whether now
existing or hereafter acquired (other than the Excluded Assets), which relate
to, or are used or held for use in connection with, the Business (collectively,
the “Purchased Assets”), including, without limitation, the following:

 

(a)          all Improvements;

 

(b)          all Access Rights;

 

(c)          all Water Rights;

 

(d)          all Mining Claims;

 

(e)          all equipment, fixed assets other tangible assets, including all
mobile mining equipment, machinery, tools, vehicles, office equipment,
furniture, supplies, computers, and telephones of Seller wherever located,
including at the Mining Complex, loadouts, preparation plants, active mining
areas, reclamation areas, storage areas or elsewhere, set forth on
Section 2.01(g) of the Disclosure Schedules (the “Tangible Personal Property”);

 

(f)          all limestone and other inventory, finished goods, raw materials,
work in progress, packaging, supplies, parts and other inventories
(“Inventory”);

 

(g)          all Contracts, Intellectual Property Agreements, and equipment
leases, set forth on Section 2.01(g) of the Disclosure Schedules (the “Assigned
Contracts”);

 

(h)          all Permits, including Environmental Permits, which are held by
Seller and required for the conduct of the Business as currently conducted or
for the ownership and use of the Purchased Assets, including, without
limitation, those listed on Section 4.17(b) and Section 4.18(b) of the
Disclosure Schedules;

 

(i)          all Purchased IP;

 

 9 

 

 

(j)          all rights to any Actions of any nature available to or being
pursued by Seller to the extent related to the Business, the Purchased Assets or
the Assumed Liabilities, whether arising by way of counterclaim or otherwise;

 

(k)          all prepaid expenses, deposits, credits, advance payments, claims,
security, refunds, rights of recovery, rights of set-off, rights of recoupment,
deposits, charges, sums and fees (excluding any such items to the extent they
relate primarily to any Excluded Asset or Excluded Liability);

 

(l)          all of Seller’s rights under warranties, indemnities and all
similar rights against third parties to the extent related to any Purchased
Assets;

 

(m)         all insurance benefits, including rights and proceeds, arising from
or relating to the Business, the Purchased Assets or the Assumed Liabilities on
or after the Closing Date;

 

(n)          originals, or where not available, copies, of all books and
records, including, but not limited to, all mine, land, and lease files, title
opinions, ownership reports, and abstracts, books of account, ledgers and
general, financial and accounting records, machinery and equipment maintenance
files, customer lists, customer purchasing histories, price lists, distribution
lists, supplier lists, production data, quality control records and procedures,
customer complaints and inquiry files, research and development files, records
and data (including all correspondence with any Governmental Authority), sales
material and records (including pricing history, total sales, terms and
conditions of sale, sales and pricing policies and practices), strategic plans,
internal financial statements, marketing and promotional surveys, material and
research and files relating to the Purchased IP (“Books and Records”); and

 

(o)          all goodwill and the going concern value of the Business.

 

It is the intention of the Parties that Buyer acquire, lease or sublease, all
assets, properties and rights necessary for the operation of the Business as
conducted, including all mining, processing, loading, pulverizing, transporting,
marketing, and selling of limestone and reclamation activities, but excluding
the Excluded Assets. If, at any time after the Closing, it is discovered that
certain assets, properties or rights, including rights under Contracts and
fractional real property interests, owned, leased or subleased by Seller (other
than the Excluded Assets) were not included in the Purchased Assets to be sold
to Buyer and such assets properties or rights are needed by Buyer in the
operation of the Business, including all mining, processing, pulverizing,
loading, transporting, marketing and selling of limestone and all reclamation
activities, then Seller shall assign, convey, lease or sublease, as applicable,
such assets, properties or rights to Buyer, in each case upon the reasonable
request of Buyer; provided, however, this obligation shall not include the
assignment, conveyance, lease or sublease of any Excluded Assets other than
Contracts which the parties mutually agree were omitted from Section 2.01(g) of
the Disclosure Schedules.

 

Section 2.02         Excluded Assets. Notwithstanding the foregoing, the
Purchased Assets shall not include the following assets (collectively, the
“Excluded Assets”):

 

(a)          all cash, cash equivalents, certificates of deposit and trade
accounts receivables held by Seller prior to September 30, 2016;

 

 10 

 

 

(b)          Contracts, including Intellectual Property Agreements that are not
Assigned Contracts (the “Excluded Contracts”);

 

(c)          the corporate seals, organizational documents, minute books, stock
books, Tax Returns, books of account or other records having to do with the
corporate organization of Seller;

 

(d)          all Benefit Plans and assets attributable thereto;

 

(e)          the assets, properties and rights specifically set forth on
Section 2.02(e) of the Disclosure Schedules; and

 

(f)          all insurance policies of Seller and any related benefits or claims
arising from or relating to the operation of the Business prior to the Closing
Date;

 

(g)          the rights which accrue or will accrue to Seller under the
Transaction Documents.

 

Section 2.03         Assumed Liabilities. Subject to the terms and conditions
set forth herein, Buyer shall assume and agree to pay, perform and discharge
only the following Liabilities of Seller (collectively, the "Assumed
Liabilities"), and no other Liabilities:

 

(a)          all Liabilities in respect of the Assigned Contracts but only to
the extent that such Liabilities thereunder are required to be performed after
the Closing Date, were incurred in the ordinary course of business and do not
relate to any failure to perform, improper performance, warranty or other
breach, default or violation by Seller on or prior to the Closing; and

 

(b)          those Liabilities, if any, of Seller set forth on Section 2.03(c)
of the Disclosure Schedules.

 

Section 2.04         Excluded Liabilities. Buyer shall not assume and shall not
be responsible to pay, perform or discharge any Liabilities of Seller or any of
its Affiliates of any kind or nature whatsoever other than the Assumed
Liabilities (the "Excluded Liabilities"). Seller shall, and shall cause each of
its Affiliates to, pay and satisfy in due course all Excluded Liabilities which
they are obligated to pay and satisfy. Without limiting the immediate foregoing,
the Excluded Liabilities shall include, but not be limited to, the following:

 

(a)          any Liabilities of Seller arising or incurred in connection with
the negotiation, preparation, investigation and performance of this Agreement,
the other Transaction Documents and the transactions contemplated hereby and
thereby, including, without limitation, fees and expenses of counsel,
accountants, consultants, advisers and others;

 

(b)          any Liability for (i) Taxes of Seller (or any Affiliate of Seller)
or relating to the Business, the Purchased Assets or the Assumed Liabilities for
any Pre-Closing Tax Period; or (ii) Taxes that arise out of the consummation of
the transactions contemplated hereby or that are the responsibility of Seller
pursuant to Section 6.14;

 

(c)          any Liabilities relating to or arising out of the Excluded Assets;

 

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(d)          any Liabilities in respect of any pending or threatened Action
arising out of, relating to or otherwise in respect of the operation of the
Business or the Purchased Assets to the extent such Action relates to such
operation and arose on or prior to the Closing Date;

 

(e)          any Environmental Claims, or Liabilities under Environmental Laws,
to the extent arising out of or relating to facts, circumstances or conditions
existing on or prior to the Closing Date or otherwise to the extent arising out
of any actions or omissions of Seller;

 

(f)          any trade accounts payable of Seller including any intercompany
trade payables;

 

(g)          any Liabilities associated with royalty payments to Pitkin Iron
Corporation that accrued or became due on or before the Closing Date; and

 

(h)          any Liabilities associated with the Dartagnan Litigation and Town
of Basalt Litigation.

 

Section 2.05         Purchase Price. The aggregate purchase price for the
Purchased Assets shall be Two Million Eight Hundred Twenty-Seven Thousand Six
Hundred Twenty-Four Dollars 00/100 ($2,827,624.00) (the “Purchase Price”), plus
the assumption of the Assumed Liabilities. The Purchase Price shall be paid by
wire transfer of immediately available funds to an account designated in writing
by Seller to Buyer on the Closing Date.

 

(a)          Tax. Buyer shall be entitled to deduct and withhold from the
Purchase Price fifty thousand dollars 00/100 ($50,000) for withholding taxes
(“Withholding Taxes”) and all such amounts due and payable for the Garfield
County Property Taxes (“Property Taxes”). All such withheld amounts shall be
treated as delivered to Seller hereunder.

 

(b)          Indebtedness. Seller shall pay all Indebtedness set forth on
Exhibit E prior to the Closing Date or Buyer shall be entitled to deduct and
withhold all such amounts due and payable and all such withheld amounts shall be
treated as delivered to Seller hereunder.

 

Section 2.06         Allocation Schedule. Seller and Buyer agree that the
Purchase Price and the Assumed Liabilities (plus other relevant items) shall be
allocated among the Purchased Assets for all purposes (including Tax and
financial accounting) as shown on the allocation schedule (the “Allocation
Schedule”). A draft of the Allocation Schedule shall be prepared by Buyer, with
reasonable input from Seller, and delivered to Seller within thirty (30) days
following the Closing Date. Seller shall have fifteen (15) days following
receipt of such draft of the Allocation Schedule to notify Buyer of any
objections. If Seller notifies Buyer in writing that Seller objects to one or
more items reflected in the Allocation Schedule, Seller and Buyer shall
negotiate in good faith to resolve such dispute; provided, however, that if
Seller and Buyer are unable to resolve any dispute with respect to the
Allocation Schedule within fifteen (15) days following the Seller’s notice of
objection, such dispute shall be resolved by the Independent Accountant. The
fees and expenses of such accounting firm shall be borne equally by Seller and
Buyer. Buyer and Seller shall file all Tax Returns (including amended returns
and claims for refund) and information reports in a manner consistent with the
Allocation Schedule as such may have been revised by the Independent Accountant.

 

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Section 2.07         Third Party Consents. To the extent that Seller’s rights
under any Contract or Permit constituting a Purchased Asset, or any other
Purchased Asset, may not be assigned to Buyer without the consent of another
Person which has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller, at its expense, shall use its
reasonable best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Buyer’s rights under the
Purchased Asset in question so that Buyer would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law and
the Purchased Asset, shall act after the Closing as Buyer’s agent in order to
obtain for it the benefits thereunder and shall cooperate, to the maximum extent
permitted by Law and the Purchased Asset, with Buyer in any other reasonable
arrangement designed to provide such benefits to Buyer. Notwithstanding any
provision in this Section 2.07 to the contrary, Buyer shall not be deemed to
have waived its rights under Section 7.02(d) hereof unless and until Buyer
either provides written waivers thereof or elects to proceed to consummate the
transactions contemplated by this Agreement at Closing.

 

Section 2.08         Post Closing Adjustment. The parties shall work together
following the Closing Date to determine the Post Closing Adjustment. The Post
Closing Adjustment shall mean the difference between those cash expense items
paid in the ordinary course of Business (and consistent with past practice) by
Seller between September 30, 2016 and the Closing Date and all trade account
receivables received by Seller between September 30, 2016 and the Closing Date.
If the number is negative then Buyer shall remit such amount to Seller. If the
number is positive then Seller shall immediately remit such amount to Buyer.
Notwithstanding the foregoing or anything herein to the contrary, Seller shall
pay all repair expenses related to the mill site that were incurred on or before
September 30, 2016 even if such expenses are invoiced after September 30, 2016
and such expenses shall not be the responsibility of Buyer nor shall they be
figured into the Post Closing Adjustment.

 

Seller shall keep records of cash expense items and accounts receivable and
provide such records to Buyer so that Buyer can adequately review and prepare
the Post Closing Adjustment pursuant to this Section 2.08.

 

Article III
Closing

 

Section 3.01         Closing. Subject to the terms and conditions of this
Agreement, the consummation of the transactions contemplated by this Agreement
(the “Closing”) shall take place on the business day immediately following the
day on which all the conditions to Closing set forth in Article VII are either
satisfied or waived (other than conditions which, by their nature, are to be
satisfied on the Closing Date) (the “Closing Date”). The Closing shall take
place by email exchange of signature pages. To the extent permitted by Law for
tax, accounting and financial purposes, the parties shall treat the Closing as
being effective as of 12:01 a.m. on September 30, 2016.

 

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Section 3.02         Closing Deliverables.

 

(a)          At the Closing, Seller shall deliver to Buyer the following:

 

(i)          one or more bills of sale, in form and substance satisfactory to
Buyer (each, a “Bill of Sale”) and duly executed by Seller, transferring the
tangible personal property included in the Purchased Assets to Buyer;

 

(ii)         one or more assignment and assumption agreements in form and
substance satisfactory to Buyer and duly executed by Seller, effecting the
assignment to and assumption by Buyer of the Purchased Assets and the Assumed
Liabilities;

 

(iii)        duly executed deeds sufficient to transfer all of the Purchased
Assets that are owned Mining Claims to Buyer;

 

(iv)        duly executed assignments sufficient to transfer all of the
Purchased Assets that are leased Mining Claims to Buyer;

 

(v)         duly executed assignments sufficient to transfer all of the
Purchased Assets that are Access Rights to Buyer;

 

(vi)        duly executed deeds or assignments sufficient to transfer all of the
Purchased Assets that are Water Rights to Buyer;

 

(vii)       duly executed deeds or assignments sufficient to transfer all of the
Improvements to Buyer;

 

(viii)      one or more assignments in form and substance satisfactory to Buyer
(each, an “Intellectual Property Assignments”) and duly executed by Seller,
transferring all of Seller’s right, title and interest in and to the Purchased
IP to Buyer;

 

(ix)         all documents of title and instruments of conveyance, duly executed
by Seller, necessary to transfer record and/or beneficial ownership to Buyer of
all automobiles, trucks and trailers owned by Seller which are included in the
Purchased Assets (and any other Purchased Assets owned by Seller which require
execution, endorsement and/or delivery of a document in order to vest record or
beneficial ownership thereof in Buyer);

 

(x)          any documents or agreements, in form and substance satisfactory to
Buyer, necessary to transfer any and all Permits that are part of the Purchased
Assets to Buyer;

 

(xi)         a power of attorney in form and substance satisfactory to Buyer and
duly executed by Seller;

 

(xii)        the Seller Closing Certificate;

 

(xiii)       the FIRPTA Certificate;

 

(xiv)       the certificates of the Secretary or Assistant Secretary of Seller
and Guarantor Entity required by Section 7.02(o), Section 7.02(p), Section
7.02(q), and Section 7.02(r); and

 

 14 

 

 

(xv)       such other customary instruments of transfer, assumption, filings or
documents, in form and substance reasonably satisfactory to Buyer, as may be
required to give effect to this Agreement;

 

(xvi)      the Transition Services Agreement in substantially the form set forth
on Exhibit A hereto.

 

(xvii)     the Guaranty Agreement in substantially the form set forth on Exhibit
C hereto.

 

(xviii)    a payoff and release letter (approved and acknowledged by Buyer) from
BCM CalX Fund, L.P., the holder of a perfected first-priority security interests
in the Purchased Assets, confirming upon the receipt of $2,100,000 by BCM CalX
Fund, L.P from Buyer, all indebtedness of Seller owed to BCM CalXFund, L.P.
shall be satisfied in full and BCM CalXFund, L.P. shall immediately cause to be
filed with the proper Governmental Authorities all termination statements
(copies of which shall have been made available for Buyer’s inspection and
approval, prior to the Closing Date) and BCM CalXFund, L.P. shall take any other
actions requested by Buyer to extinguish any liens on the Purchased Assets,
including but not limited to filing releases of deeds of trusts, and
satisfaction of judgment documents;

 

(xix)       payoff letters from Komatsu

 

(xx)        a writing from Garfield County for any property taxes owed

 

(xxi)       a writing from Town of Basalt for any monies owed

 

(xxii)      a list of accounts payable items as of September 30, 2016 that are
to be p aid ten (10) days after the Closing Date

 

(xxiii)     Indebtedness amounts set forth on Exhibit E hereto.

 

(xxiv)    a resolution adopted by Seller and approved in form by Buyer
authorizing the transaction, naming the current managers of Seller and removing
any other managers;

 

(b)          At the Closing, Buyer shall deliver to Seller the following:

 

(i)          the Purchase Price;

 

(ii)         the assignment and assumption agreement(s) duly executed by Buyer;

 

(iii)        the Transition Services Agreement duly executed by Buyer;

 

(iv)        the Guaranty Agreement duly executed by Buyer;

 

(v)         the Buyer Closing Certificate; and

 

(vi)        the certificates of the Secretary or Assistant Secretary of Buyer
required by Section 7.03(f) and Section 7.03(g).

 

 15 

 

 

Article IV
Representations and warranties of seller

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Seller represents and warrants to Buyer that the statements contained
in this Article IV are true and correct as of the date hereof.

 

Section 4.01         Organization and Qualification of Seller. Seller is a
limited liability company duly organized, validly existing and in good standing
under the Laws of the state of Colorado and has full company power and authority
to own, operate or lease the properties and assets now owned, operated or leased
by it and to carry on the Business as currently conducted. Section 4.01 of the
Disclosure Schedules sets forth each jurisdiction in which Seller is licensed or
qualified to do business, and Seller is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the ownership of
the Purchased Assets or the operation of the Business as currently conducted
makes such licensing or qualification necessary except where the failure to be
so licensed, qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect.

 

Section 4.02         Authority of Seller  Seller has full company power and
authority to enter into this Agreement and the other Transaction Documents to
which Seller is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Seller of this Agreement and any other Transaction
Document to which Seller is a party, the performance by Seller of its
obligations hereunder and thereunder and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite company action on the part of Seller. This Agreement has been duly
executed and delivered by Seller, and (assuming due authorization, execution and
delivery by Buyer) this Agreement constitutes a legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms.
When each other Transaction Document to which Seller is or will be a party has
been duly executed and delivered by Seller (assuming due authorization,
execution and delivery by each other party thereto), such Transaction Document
will constitute a legal and binding obligation of Seller enforceable against it
in accordance with its terms.

 

Section 4.03         No Conflicts; Consents. The execution, delivery and
performance by Seller of this Agreement and the other Transaction Documents to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of the articles of
organization, operating agreement or other organizational documents of Seller or
cause the trigger of any rights of first refusal; (b) conflict with or result in
a violation or breach of any provision of any Law or Governmental Order
applicable to Seller, the Business or the Purchased Assets; (c) except as set
forth in Section 4.03 of the Disclosure Schedules, require the consent, notice
or other action by any Person under, conflict with, result in a violation or
breach of, constitute a default or an event that, with or without notice or
lapse of time or both, would constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any Contract or Permit (i) to which Seller is a party, (ii) by
which Seller or the Business is bound or (iii) to which any of the Purchased
Assets are subject (including any Assigned Contract) to the extent such Contract
or Permit constitutes any of the Purchased Assets or would otherwise affect the
transfer of the Purchased Assets; or (d) result in the creation or imposition of
any Encumbrance other than Permitted Encumbrances on the Purchased Assets,
except in the case of clauses (c) and (d), where the conflict, violation,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice or Encumbrance would not, individually or in the aggregate, have
a Material Adverse Effect. No consent, approval, Permit, Governmental Order,
declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Seller in connection with the execution and delivery of
this Agreement or any of the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby.

 

 16 

 

 

Section 4.04         Financial Statements. Complete copies of the unaudited
financial statements consisting of the balance sheet of the Business as at
December 31, in each of the years 2015, 2014 and 2013, and the related
statements of income and retained earnings, stockholders’ equity and cash flow
for the years then ended (the “Annual Financial Statements”), and unaudited
financial statements consisting of the balance sheet of the Business as at
August 31, 2016 and the related statements of income and retained earnings,
stockholders’ equity and cash flow for the eight- month period then ended (the
“Interim Financial Statements” and together with the Annual Financial
Statements, the “Financial Statements”) have been delivered to Buyer. The
Financial Statements have been prepared on a consistent basis throughout the
period involved, subject, in the case of the Interim Financial Statements, to
normal and recurring year-end adjustments (the effect of which will not be
materially adverse). The Financial Statements are based on the books and records
of the Business, and fairly and accurately present the financial condition of
the Business as of the respective dates they were prepared and the results of
the operations of the Business for the periods indicated. The balance sheet of
the Business as of December 31, 2015 is referred to herein as the “Balance
Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of
the Business as of August 31, 2016 is referred to herein as the “Interim Balance
Sheet” and the date thereof as the “Interim Balance Sheet Date”. Seller
maintains a standard system of accounting for the Business and has used and
continues to use consistent non-GAAP accounting principles, policies and
procedures.

 

Section 4.05         Undisclosed Liabilities. Seller has no Liabilities with
respect to the Business, except (a) those which are adequately reflected or
reserved against in the Interim Balance Sheet as of the Interim Balance Sheet
Date, and (b) those which have been incurred in the ordinary course of business
consistent with past practice since the Interim Balance Sheet Date and which are
not, individually or in the aggregate, material in amount.

 

Section 4.06         Absence of Certain Changes, Events and Conditions. Since
the Interim Balance Sheet Date, and other than in the ordinary course of
business consistent with past practice, there has not been any:

 

(a)          event, occurrence or development that has had, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect;

 

(b)          material change in any method of accounting or accounting practice
for the Business;

 

 17 

 

 

(c)          material change in cash management practices and policies,
practices and procedures with respect to collection of Accounts Receivable,
establishment of reserves for uncollectible Accounts Receivable, accrual of
Accounts Receivable, inventory control, prepayment of expenses, payment of trade
accounts payable, accrual of other expenses, deferral of revenue and acceptance
of customer deposits;

 

(d)          entry into any Contract that would constitute a Material Contract;

 

(e)          incurrence, assumption or guarantee of any indebtedness for
borrowed money in connection with the Business except unsecured current
obligations and Liabilities incurred in the ordinary course of business
consistent with past practice;

 

(f)          transfer, assignment, sale or other disposition of any of the
Purchased Assets shown or reflected in the Interim Balance Sheet, except for the
sale of Inventory in the ordinary course of business;

 

(g)          cancellation of any debts or claims or amendment, termination or
waiver of any rights constituting Purchased Assets;

 

(h)          transfer, assignment or grant of any license or sublicense of any
material rights under or with respect to any Purchased IP or Intellectual
Property Agreements;

 

(i)          material damage, destruction or loss, or any material interruption
in use, of any Purchased Assets, whether or not covered by insurance;

 

(j)          acceleration, termination, material modification to or cancellation
of any Assigned Contract or Permit;

 

(k)          material capital expenditures which would constitute an Assumed
Liability;

 

(l)          imposition of any Encumbrance upon any of the Purchased Assets;

 

(m)         (i) grant of any bonuses, whether monetary or otherwise, or increase
in any wages, salary, severance, pension or other compensation or benefits in
respect of any current or former employees, officers, directors, independent
contractors or consultants of the Business, other than as provided for in any
written agreements or required by applicable Law, (ii) change in the terms of
employment for any employee of the Business or any termination of any employees,
or (iii) action to accelerate the vesting or payment of any compensation or
benefit for any current or former employee, officer, director, consultant or
independent contractor of the Business;

 

(n)          adoption, modification or termination of any: (i) employment,
severance, retention or other agreement with any current or former employee,
officer, director, independent contractor or consultant of the Business, (ii)
Benefit Plan, or (iii) collective bargaining or other agreement with a Union, in
each case whether written or oral;

 

(o)          any loan to (or forgiveness of any loan to), or entry into any
other transaction with, any current or former directors, officers or employees
of the Business;

 

 18 

 

 

(p)          adoption of any plan of merger, consolidation, reorganization,
liquidation or dissolution or filing of a petition in bankruptcy under any
provisions of federal or state bankruptcy Law or consent to the filing of any
bankruptcy petition against it under any similar Law;

 

(q)          purchase, lease or other acquisition of the right to own, use or
lease any property or assets in connection with the Business except for
purchases of Inventory or supplies in the ordinary course of business consistent
with past practice;

 

(r)          any Contract to do any of the foregoing, or any action or omission
that would result in any of the foregoing.

 

(s)          Seller shall not make any expenditures in excess of $5,000 related
to the Business beginning on or after September 30, 2016 without Buyer’s written
approval; except Seller may make payments for those items enumerated on the
accounts payable list that Seller and Buyer jointly prepared.

 

Section 4.07         Material Contracts.

 

(a)          Section 4.07(a) of the Disclosure Schedules lists each of the
following Contracts (x) by which any of the Purchased Assets are bound or
affected or (y) to which Seller is a party or by which it is bound in connection
with the Business or the Purchased Assets (such Contracts, together with all
Contracts concerning the ownership, lease, occupancy, management or operation of
the Mining Claims and all Intellectual Property Agreements being “Material
Contracts”):

 

(i)          all Contracts with each customer of the Business, including all
Contracts that require Seller to purchase or sell a stated portion of the
requirements or outputs of the Business or that contain “take or pay”
provisions;

 

(ii)         all Contracts with each vendor or supplier of the Business;

 

(iii)        all Contracts that provide for the indemnification of any Person or
the assumption of any Tax, environmental or other Liability of any Person;

 

(iv)        all Contracts that relate to the acquisition or disposition of any
business, a material amount of stock or assets of any other Person or any real
property (whether by merger, sale of stock, sale of assets or otherwise);

 

(v)         all broker, distributor, dealer, manufacturer’s representative,
franchise, agency, sales promotion, market research, marketing consulting and
advertising Contracts;

 

(vi)        all employment agreements and Contracts with independent contractors
or consultants (or similar arrangements);

 

(vii)       except for Contracts relating to trade receivables, all Contracts
relating to indebtedness (including, without limitation, guarantees);

 

 19 

 

 

(viii)      all Contracts with any Governmental Authority (“Government
Contracts”);

 

(ix)         all Contracts that limit or purport to limit the ability of Seller
to compete in any line of business or with any Person or in any geographic area
or during any period of time;

 

(x)          all joint venture, partnership or similar Contracts;

 

(xi)         all Contracts for the sale of any of the Purchased Assets or for
the grant to any Person of any option, right of first refusal or preferential or
similar right to purchase any of the Purchased Assets;

 

(xii)        all powers of attorney with respect to the Business or any
Purchased Asset;

 

(xiii)       all collective bargaining agreements or Contracts with any Union;
and

 

(xiv)      all other Contracts that are material to the Purchased Assets or the
operation of the Business and not previously disclosed pursuant to this
Section 4.07

 

(b)          Each Material Contract is valid and binding on Seller in accordance
with its terms and is in full force and effect. None of Seller or, to Seller’s
Knowledge, any other party thereto is in breach of or default under (or is
alleged to be in breach of or default under) in any material respect, or has
provided or received any notice of any intention to terminate, any Material
Contract. No event or circumstance has occurred that, with notice or lapse of
time or both, would constitute an event of default under any Material Contract
or result in a termination thereof or would cause or permit the acceleration or
other changes of any right or obligation or the loss of any benefit thereunder.
Complete and correct copies of each Material Contract (including all
modifications, amendments and supplements thereto and waivers thereunder) have
been made available to Buyer. There are no material disputes pending or
threatened under any Contract included in the Purchased Assets.

 

Section 4.08         Title to Purchased Assets. Seller has good and valid title
to, or a valid leasehold interest in, all of the Purchased Assets subject to the
paramount title of the United States to the Mining Claims which it has good
record title. All such Purchased Assets (including leasehold interests) are free
and clear of Encumbrances except for the following (collectively referred to as
“Permitted Encumbrances”):

 

(a)          those items set forth in Section 4.08 of the Disclosure Schedules;

 

(b)          liens for Taxes not yet due and payable;

 

(c)          mechanics’, carriers’, workmen’s, repairmen’s or other like liens
arising or incurred in the ordinary course of business consistent with past
practice or amounts that are not delinquent and which are not, individually or
in the aggregate, material to the Business or the Purchased Assets;

 

 20 

 

 

(d)          easements, rights of way, zoning ordinances and other similar
encumbrances affecting the Purchased Assets which are not, individually or in
the aggregate, material to the Business or the Purchased Assets, which do not
prohibit or interfere with the current operation of any Mining Claims, or the
Business and which do not render title to any Purchased Assets unmarketable; or

 

(e)          liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business consistent with past practice which are not, individually or
in the aggregate, material to the Business or the Purchased Assets.

 

Section 4.09         Condition and Sufficiency of Assets. Except as set forth in
the Section 4.09 of the Disclosure Schedules, the buildings, plants, structures,
furniture, fixtures, machinery, equipment, vehicles and other items of tangible
personal property included in the Purchased Assets are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, furniture,
fixtures, machinery, equipment, vehicles and other items of tangible personal
property is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The Purchased
Assets are sufficient for the continued conduct of the Business in substantially
the same manner as conducted by Seller prior to the Closing and constitute all
of the rights, property and assets necessary to conduct the Business as
currently conducted by Seller. None of the Excluded Assets are material to the
Business.

 

Section 4.10         Mining Claims.

 

(a)          Section 4.10(a) of the Disclosure Schedules sets forth all of the
unpatented placer mining claims owned, leased, or legally possessed by Seller
(the “Mining Claims”) on which Seller operates the Business, including but not
limited to the Mining Complex, including all right, title and interest in such
Mining Claims. The property maps attached hereto in Section 4.10(a) of the
Disclosure Schedules depict in a reasonably accurate manner the location and
boundaries of the Mining Claims. True and complete copies of the following have
heretofore been delivered to Buyer: (A) all deeds, title insurance policies,
title insurance commitments, title reports, title opinions, title abstracts,
maps and surveys relating to the Mining Claims, and (B) all documents evidencing
recorded and unrecorded Encumbrances upon the Mining Claims.

 

(b)          Except as otherwise set forth on Section 4.10(b) of the Disclosure
Schedules, Seller is the sole owner of the Mining Claims, free and clear of all
Encumbrances, except paramount title in the United States in connection with the
Mining Claims;

 

(c)          Except as otherwise set forth on Section 4.10(c) of the Disclosure
Schedules, with respect to the Mining Claims held or used in connection with the
Business, all required claim maintenance fees have been paid in the manner
required by Law in order to maintain the Mining Claims in good standing through
the end of the current assessment year and proof thereof has been properly and
timely recorded and filed in accordance with Law;

 

(d)          Except as otherwise set forth on Section 4.10(d) of the Disclosure
Schedules, location certificates for the Mining Claims are in compliance with
applicable Law and were properly recorded and filed with appropriate
Governmental Authorities;

 

 21 

 

 

(e)          Seller acquired the Mining Claims properly and legally and in
accordance with industry standards;

 

(f)          No third party holds rights in the surface of the public lands of
the United States on which the Mining Claims are located, or within the Access
Rights utilized by Seller to operate the Business;

 

(g)          There is no known or suspected adverse claim or challenge by any
Person against or to the ownership of the Purchased Assets, including the Lands
covered by the Mining Claims and the Mining Complex;

 

(h)          There are no outstanding options, rights of first offer or refusal
to purchase or transfer any of the Purchased Assets including the Mining Claims
and Seller has not transferred or otherwise granted to any Person any rights in
the Purchased Assets including the Mining Claims.

 

(i)          Section 4.10(i) of the Disclosure Schedules sets forth a list of
all royalties on or burdening all or any portion of the Mining Claims, whether
such royalty is characterized as an overriding royalty, net profit interest,
gross proceeds royalty, production payment, streaming transaction, share of
mineral product or otherwise. Except as set forth on Section 4.10(i) of the
Disclosure Schedule the royalties are fully paid and there is no liability or
outstanding payment on any such royalty.

 

Section 4.11         Intellectual Property

 

(a)          Section 4.11(a) of the Disclosure Schedules lists all Intellectual
Property included in the Purchased Assets ("Purchased IP"). Seller owns or has
adequate, valid and enforceable rights to use all the Purchased IP, free and
clear of all Encumbrances. Seller is not bound by any outstanding judgment,
injunction, order or decree restricting the use of the Purchased IP, or
restricting the licensing thereof to any person or entity. With respect to the
registered Intellectual Property listed on Section 4.11(a) of the Disclosure
Schedules, (i) all such Intellectual Property is valid, subsisting and in full
force and effect and (ii) Seller has paid all maintenance fees and made all
filings required to maintain Seller's ownership thereof. For all such registered
Intellectual Property, Section 4.11(a) of the Disclosure Schedules lists (A) the
jurisdiction where the application or registration is located, (B) the
application or registration number, and (C) the application or registration
date.

 

(b)          Seller's prior and current use of the Purchased IP has not and does
not infringe, violate, dilute or misappropriate the Intellectual Property of any
person or entity and there are no claims pending or threatened by any person or
entity with respect to the ownership, validity, enforceability, effectiveness or
use of the Purchased IP. No person or entity is infringing, misappropriating,
diluting or otherwise violating any of the Purchased IP, and neither Seller nor
any affiliate of Seller has made or asserted any claim, demand or notice against
any person or entity alleging any such infringement, misappropriation, dilution
or other violation..

 

(c)          Seller’s rights in the Purchased IP are valid, subsisting and
enforceable. Seller has taken all reasonable steps to maintain the Purchased IP
and to protect and preserve the confidentiality of all trade secrets included in
the Purchased IP.

 

 22 

 

 

(d)          There are no Actions settled, pending or threatened alleging any
infringement, misappropriation, dilution or violation of the Purchased IP.

 

(e)          Section 4.11(d) of the Disclosure Schedules lists all Intellectual
Property Agreements. Seller has provided Buyer with true and complete copies of
all such Intellectual Property Agreements, including all modifications,
amendments and supplements thereto and waivers thereunder. Each Intellectual
Property Agreement is valid and binding on Seller in accordance with its terms
and is in full force and effect. None of Seller or, to Seller's Knowledge, any
other party thereto is in breach of or default under (or is alleged to be in
breach of or default under) in any material respect, or has provided or received
any notice of breach or default of or any intention to terminate, any
Intellectual Property Agreement. No event or circumstance has occurred that,
with notice or lapse of time or both, would constitute an event of default under
any Intellectual Property Agreement or result in a termination thereof or would
cause or permit the acceleration or other changes of any right or obligation or
the loss of any benefit thereunder.

 

Section 4.12         Inventory. All Inventory, whether or not reflected in the
Balance Sheet, consists of a quality and quantity usable and salable in the
ordinary course of business consistent with past practice, except for obsolete,
damaged, defective or slow-moving items that have been written off or written
down to fair market value or for which adequate reserves have been established.
All Inventory is owned by Seller free and clear of all Encumbrances, and no
Inventory is held on a consignment basis.

 

Section 4.13         Real Property and Leased Real Property. Seller does not own
and has not agreed to acquire any real property or interest in real property
related to or in connection with the Business and Seller is not a party to any
lease or agreement in the nature of a lease in respect of any real property,
whether as lessor or lessee, in connection with the Business.

 

Section 4.14         Customers and Suppliers.

 

(a)          Section 4.14(a) of the Disclosure Schedules sets forth with respect
to the Business (i) the ten (10) largest customers by aggregate consideration
received by Seller for 2015 and the first eight months of 2016 (collectively,
the “Material Customers”); and (ii) the amount of consideration paid by each
Material Customer during such periods. As of the date of this Agreement, Seller
has not received any written notice that any of the Material Customers with whom
the Seller was doing business has ceased, or intends to cease after the Closing
to use the goods or services of the Business or to otherwise terminate or
materially reduce sales levels.

 

(b)          Section 4.14(a) of the Disclosure Schedules sets forth with respect
to the Business (i) the ten (10) largest suppliers by aggregate consideration
paid by Seller for 2015 and the first eight months of 2016 (collectively, the
“Material Suppliers”); and (ii) the amount of purchases from each Material
Supplier during such periods. As of the date of this Agreement, Seller has not
received any written notice that any of the Material Suppliers has ceased or
intends to cease to supply goods or services to the Business or to otherwise
terminate or materially reduce sales levels.

 

 23 

 

 

Section 4.15         Insurance. Section 4.15 of the Disclosure Schedules sets
forth (a) a true and complete list of all current policies or binders of fire,
liability, product liability, umbrella liability, real and personal property,
workers’ compensation, vehicular, fiduciary liability and other casualty and
property insurance maintained by Seller or its Affiliates and relating to the
Business, the Purchased Assets or the Assumed Liabilities (collectively, the
“Insurance Policies”); and (b) with respect to the Business, the Purchased
Assets or the Assumed Liabilities, a list of all pending claims and the claims
history for Seller since Seller’s inception. There are no claims related to the
Business, the Purchased Assets or the Assumed Liabilities pending under any such
Insurance Policies as to which coverage has been questioned, denied or disputed
or in respect of which there is an outstanding reservation of rights. Neither
Seller nor any of its Affiliates has received any written notice of cancellation
of, premium increase with respect to, or alteration of coverage under, any of
such Insurance Policies. All premiums due on such Insurance Policies have either
been paid or, if not yet due, accrued. All such Insurance Policies (a) are in
full force and effect and enforceable in accordance with their terms; (b) are
provided by carriers who are financially solvent; and (c) have not been subject
to any lapse in coverage. None of Seller or any of its Affiliates is in default
under, or has otherwise failed to comply with, in any material respect, any
provision contained in any such Insurance Policy. The Insurance Policies are of
the type and in the amounts customarily carried by Persons conducting a business
similar to the Business and are sufficient for compliance with all applicable
Laws and Contracts to which Seller is a party or by which it is bound. True and
complete copies of the Insurance Policies have been made available to Buyer.

 

Section 4.16         Legal Proceedings; Governmental Orders.

 

(a)          Except as set forth in Section 4.14(a) of the Disclosure Schedules,
there are no material Actions pending or, to Seller’s Knowledge, threatened
against or by Seller (a) relating to or affecting the Business, including the
Purchased Assets and the Assumed Liabilities; (b) that challenge or seek to
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement; or (c) to Seller’s Knowledge, no event has occurred or circumstances
exist that may give rise to, or serve as a basis for, any such Action.

 

(b)          Except as set forth in Section 4.16(b) of the Disclosure Schedules,
there are no outstanding Governmental Orders and no unsatisfied judgments,
penalties or awards against, relating to or affecting the Business.

 

Section 4.17         Compliance With Laws; Permits.

 

(a)          Except as set forth in Section 4.17(a) of the Disclosure Schedules,
Seller has complied, and is now complying, with all Laws applicable to the
conduct of the Business as currently conducted or the ownership and use of the
Purchased Assets.

 

(b)          All Permits required for Seller to conduct the Business as
currently conducted or for the ownership and use of the Purchased Assets have
been obtained by Seller and are valid and in full force and effect. All fees and
charges with respect to such Permits as of the date hereof have been paid in
full. Section 4.17(b) of the Disclosure Schedules lists all current Permits
issued to Seller which are related to the conduct of the Business as currently
conducted or the ownership and use of the Purchased Assets, including the names
of the Permits and their respective dates of issuance and expiration. No event
has occurred that, with or without notice or lapse of time or both, would
reasonably be expected to result in the revocation, suspension, lapse or
limitation of any Permit set forth in Section 4.17(b) of the Disclosure
Schedules.

 

 24 

 

 

Section 4.18         Environmental Matters.

 

(a)          The operations of Seller with respect to the Business and the
Purchased Assets are currently and have been in compliance with all
Environmental Laws. Seller has not received from any Person, with respect to the
Business or the Purchased Assets, any: (i) Environmental Notice or Environmental
Claim; or (ii) written request for information pursuant to Environmental Law,
which, in each case, either remains pending or unresolved, or is the source of
ongoing obligations or requirements as of the Closing Date.

 

(b)          Seller has obtained and is in material compliance with all
Environmental Permits (each of which is disclosed in Section 4.18(b) of the
Disclosure Schedules) necessary for the conduct of the Business as currently
conducted or the ownership, lease, operation or use of the Purchased Assets and
all such Environmental Permits are in full force and effect and shall be
maintained in full force and effect by Seller through the Closing Date in
accordance with Environmental Law, and Seller is not aware of any condition,
event or circumstance that might prevent or impede, after the Closing Date, the
conduct of the Business as currently conducted or the ownership, lease,
operation or use of the Purchased Assets. With respect to any such Environmental
Permits, Seller has undertaken, or will undertake prior to the Closing Date, all
measures necessary to facilitate transferability of the same, and Seller is not
aware of any condition, event or circumstance that might prevent or impede the
transferability of the same, and has not received any Environmental Notice or
written communication regarding any material adverse change in the status or
terms and conditions of the same.

 

(c)          None of the Business or the Purchased Assets or any real property
currently or formerly owned, leased or operated by Seller in connection with the
Business is listed on, or has been proposed for listing on, the National
Priorities List (or CERCLIS) under CERCLA, or any similar state list.

 

(d)          There has been no Release of Hazardous Materials in contravention
of Environmental Law with respect to the Business or the Purchased Assets or any
real property currently or formerly owned, leased or operated by Seller in
connection with the Business, and Seller has not received an Environmental
Notice that any of the Business or the Purchased Assets or real property
currently or formerly owned, leased or operated by Seller in connection with the
Business (including soils, groundwater, surface water, buildings and other
structure located thereon) has been contaminated with any Hazardous Material
which could reasonably be expected to result in an Environmental Claim against,
or a violation of Environmental Law or term of any Environmental Permit by,
Seller.

 

(e)          Section 4.18(e) of the Disclosure Schedules contains a complete and
accurate list of all active or abandoned aboveground or underground storage
tanks owned or operated by Seller in connection with the Business or the
Purchased Assets.

 

 25 

 

 

(f)          Section 4.18(f) of the Disclosure Schedules contains a complete and
accurate list of all off-site Hazardous Materials treatment, storage, or
disposal facilities or locations used by Seller and any predecessors in
connection with the Business or the Purchased Assets as to which Seller may
retain liability, and none of these facilities or locations has been placed or
proposed for placement on the National Priorities List (or CERCLIS) under
CERCLA, or any similar state list, and Seller has not received any Environmental
Notice regarding potential liabilities with respect to such off-site Hazardous
Materials treatment, storage, or disposal facilities or locations used by
Seller.

 

(g)          Seller has not retained or assumed, by contract or operation of
Law, any liabilities or obligations of any third parties under any Environmental
Law.

 

(h)          Seller has provided or otherwise made available to Buyer and listed
in Section 4.18(h) of the Disclosure Schedules: (i) any and all environmental
reports, studies, audits, records, sampling data, site assessments, risk
assessments, economic models and other similar documents with respect to the
Business or the Purchased Assets or any real property currently or formerly
owned, leased or operated by Seller in connection with the Business which are in
the possession or control of Seller related to compliance with Environmental
Laws, Environmental Claims or an Environmental Notice or the Release of
Hazardous Materials; and (ii) any and all material documents concerning planned
or anticipated capital expenditures required to reduce, offset, limit or
otherwise control pollution and/or emissions, manage waste or otherwise ensure
compliance with current or future Environmental Laws (including, without
limitation, costs of remediation, pollution control equipment and operational
changes).

 

(i)          Seller is not aware of or reasonably anticipates, as of the Closing
Date, any condition, event or circumstance concerning the Release or regulation
of Hazardous Materials that might, after the Closing Date, prevent, impede or
materially increase the costs associated with the ownership, lease, operation,
performance or use of the Business or the Purchased Assets as currently carried
out.

 

Section 4.19         Employee Benefit Plans.

 

(a)          Section 4.18(f) of the Disclosure Schedules contains a true and
complete list of the benefit plans (“Benefit Plans”).

 

(b)          Seller does not maintain, participate in or contribute to, nor has
it ever maintained, participated in, or contributed to, nor is it required to
contribute to any pension plan, and no liens have been imposed pursuant to
Section 412 of the Code or Section 302 of ERISA. Seller does not participate in
or contribute to, nor has it participated in, or contributed to, nor is it
required to contribute to any multiemployer plan.

 

(c)          Except as set forth in Section 4.19(c) of the Disclosure Schedules,
there is no pending or, to Seller’s Knowledge, threatened Action relating to a
Benefit Plan (other than routine claims for benefits), and no Benefit Plan has
within the three (3) years prior to the date hereof been the subject of an
examination or audit by a Governmental Authority or the subject of an
application or filing under, or is a participant in, an amnesty, voluntary
compliance, self-correction or similar program sponsored by any Governmental
Authority.

 

 26 

 

 

(d)          Each Benefit Plan that is subject to Section 409A of the Code has
been administered in compliance with its terms and the operational and
documentary requirements of Section 409A of the Code and all applicable
regulatory guidance (including, notices, rulings and proposed and final
regulations) thereunder. Seller does not have any obligation to gross up,
indemnify or otherwise reimburse any individual for any excise taxes, interest
or penalties incurred pursuant to Section 409A of the Code.

 

(e)          There are no agreements which will provide payments to any officer,
employee, shareholder or highly compensated individual which will be "parachute
payments" under Section 280G of the Code that will be subject to the tax under
Section 4999 of the Code. The transactions contemplated by this Agreement will
not entitle any individual to payment or acceleration of any benefits under any
Benefit Plan.

 

Section 4.20         Employment Matters.

 

(a)          Section 4.20(a) of the Disclosure Schedules contains a list of all
persons who are employees, independent contractors or consultants of the
Business as of the date hereof, including any employee who is on a leave of
absence of any nature, paid or unpaid, authorized or unauthorized, and sets
forth for each such individual the following: (i) name; (ii) title or position
(including whether full or part time); (iii) hire date; (iv) current annual base
compensation rate; (v) commission, bonus or other incentive-based compensation;
and (vi) a description of the fringe benefits provided to each such individual
as of the date hereof. As of the date hereof, all compensation, including wages,
commissions and bonuses payable to all employees, independent contractors or
consultants of the Business for services performed on or prior to the date
hereof have been paid in full and there are no outstanding agreements,
understandings or commitments of Seller with respect to any compensation,
commissions or bonuses.

 

(b)          Seller is not, and has not been for the past five (5) years, a
party to, bound by, or negotiating any collective bargaining agreement or other
Contract with a union, works council or labor organization (collectively,
“Union”), and there is not, and has not been for the past five (5) years, any
Union representing or purporting to represent any employee of Seller, and, to
Seller’s Knowledge, no Union or group of employees is seeking or has sought to
organize employees for the purpose of collective bargaining.

 

Section 4.21         Taxes. Except as set forth in Section 4.21 of the
Disclosure Schedules:

 

(a)          All Tax Returns required to be filed by Seller for any Pre-Closing
Tax Period have been, or will be, timely filed. Such Tax Returns are, or will
be, true, complete and correct in all respects. All Taxes due and owing by
Seller (whether or not shown on any Tax Return) have been, or will be, timely
paid.

 

(b)          Seller has withheld and paid each Tax required to have been
withheld and paid in connection with amounts paid or owing to any Employee,
independent contractor, creditor, customer, shareholder or other party, and
complied with all information reporting and backup withholding provisions of
applicable Law.

 

(c)          No extensions or waivers of statutes of limitations have been given
or requested with respect to any Taxes of Seller.

 

 27 

 

 

(d)          All deficiencies asserted, or assessments made, against Seller as a
result of any examinations by any taxing authority have been fully paid.

 

(e)          Seller is not a party to any Action by any taxing authority. There
are no pending or threatened Actions by any taxing authority.

 

(f)          There are no Encumbrances for Taxes upon any of the Purchased
Assets nor, to Seller’s Knowledge, is any taxing authority in the process of
imposing any Encumbrances for Taxes on any of the Purchased Assets (other than
for current Taxes not yet due and payable).

 

(g)          Seller is not a “foreign person” as that term is used in Treasury
Regulations Section 1.1445-2.

 

(h)          Seller is not, and has not been, a party to, or a promoter of, a
“reportable transaction” within the meaning of Section 6707A(c)(1) of the Code
and Treasury Regulations Section 1.6011 4(b).

 

(i)          Seller shall file its Colorado sales tax return with the Colorado
Department of Revenue no later than ten (10) days after the Closing Date.

 

(j)          Buyer shall prepare the Retail Sales Tax Return for Occasional
Sales with the Colorado Department of Revenue on the tangible personal property
included in this Agreement no later than the twentieth (20th) day of the month
following the Closing Date. Buyer shall provide Seller with evidence of filing
such Tax Return within three (3) business days after Buyer’s receipt of such
evidence.

 

(k)          Buyer shall be entitled to deduct and withhold from the Purchase
Price fifty thousand dollars 00/100 ($50,000) for Withholding Taxes and amounts
for Property Taxes due and payable. All such withheld amounts shall be treated
as delivered to Seller hereunder.

 

Section 4.22         Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document.

 

Section 4.23         Full Disclosure. No representation or warranty by Seller in
this Agreement and no statement contained in the Disclosure Schedules to this
Agreement or any certificate or other document furnished or to be furnished to
Buyer pursuant to this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
misleading.

 

Section 4.24         Capitalization. Section 4.24 of the Disclosure Schedules
sets forth all of the outstanding membership interests, profits interest or
other equity interests in Seller. Except as set forth on Section 4.24 of the
Disclosure Schedules, there are no issued and outstanding membership interests,
profits interest or other equity interests in Seller. All of the outstanding
membership interests, profits interest and other equity interest of Seller have
been duly authorized and validly issued. There are no pre-emptive or other
outstanding rights, options, warrants, conversion rights, rights of first
refusal, unit appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments under with Seller is or may become
obligated to issue or sell or giving any Person a right to subscribe or acquire
or dispose of, any equity interest, membership interest, or any security or
obligations exercisable or exchangeable for or convertible into any equity or
membership interest of Seller and no security or obligations evidencing such
rights are authorized, issued or outstanding. The membership interests of Seller
are not subject to any voting trust agreement or similar arrangement relating to
the voting of such membership interests or other equity interest.

 

 28 

 

 

Section 4.25         Officers and Managers.   Section 4.25 of the Disclosure
Schedules sets forth the names and titles of all the managers and officers of
Seller.

 

Section 4.26         Water Rights and Easements.   Section 4.26 of the
Disclosure Schedules set forth a true and complete list of all Water Rights
owned by Seller and all Access Rights owned by Seller. Seller holds good and
valid title to all Water Rights free and clear of all Encumbrances and each of
the Water Rights is valid and in good standing. All Access Rights are in full
force and effect.

 

Section 4.27         Fines.   Section 4.27 of the Disclosure Schedules sets
forth all outstanding fines imposed on Seller by any Governmental Authority,
including any fines imposed by the United States Mine Safety and Health
Administration (collectively, the “Fines”).

 

Section 4.28         Reclamation Bonds. Section 4.28 of the Disclosure Schedules
sets forth a description of all surety instruments, bonds, letters of credit
guarantees and other instruments or arrangements securing guaranteeing
performance of obligations with respect to the operation, closure, reclamation
or remediation of the Purchased Assets (collectively, the “Reclamation Bonds”).
No Governmental Authority has claimed any deficiency with respect to or called
on any Reclamation Bond.

 

Section 4.29         Reclamation Plan. Section 4.29 of the Disclosure Schedules
contains a complete copy of the Reclamation Plan and any amendments thereto.
Except as set forth in Section 4.29 of the Disclosure Schedules, Seller has
always operated in compliance with the Reclamation Plan.

 

Section 4.30         Plan of Operations. Section 4.30 of the Disclosure
Schedules contains copies of each Plan of Operations Seller has operated under
including any amendments thereto. Except as set forth in Section 4.30 of the
Disclosure Schedules, Seller’s Plans of Operations have always been approved and
authorized as required by Law and Seller is currently and always has been in
compliance with such Plans of Operations.

 

Section 4.31         Seller’s Operations on the Land. Seller’s operations on the
Land do not violate any applicable building code, zoning requirement or
classification, or pollution control ordinance or statute or any other
applicable law, regulation or ordinance.  Seller has all licenses and permits
necessary to operate on the Land.  Seller has obtained all appropriate
certificates of occupancy, licenses, easements and rights of way, required to
use and operate the Land. Seller has not received notice of any intention on the
part of any issuing Governmental Authority to cancel, suspend, or modify any
material approvals, licenses or permits relating to the operations on the Land.
Except as disclosed in Section 4.31 of the Disclosure Schedules, any operations
now or heretofore conducted on the Land, are, and have been, so long as Seller
has occupied the Land, in compliance with all applicable Environmental Laws; all
federal, state and local permits, licenses, registrations and authorizations
required for the use of and operations on the Land have been obtained and
further, there are currently no violations of such permits, licenses,
registrations or authorizations; there are no claimed, alleged or threatened
violations of or liabilities under any Environmental Laws with respect to the
Land, nor are there any present or planned discussions or negotiations with any
agency regarding the release of any Hazardous Materials and the Land has not
been used for the treatment, storage or disposal of any Hazardous Materials as
such treatment, storage or disposal may be regulated under the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. or its state counterparts,
as amended

 

 29 

 

 

Section 4.32         Majority Member and Managers Authorization. Seller
represents and warrants that Peter Babin is the sole Manager and controlling
member of Dartagnan LLC, a Colorado limited liability, and that Dartagnan LLC is
the majority member of Seller (“Majority Member”). Seller further represents and
warrants that it has received all necessary approvals and authorizations from
Peter Babin, John Skadow, and Benjamin Miller, all of its Managers, and the
Majority Member to properly effectuate the transactions contemplated by this
Agreement and that Seller is fully authorized and empowered to enter into this
Agreement, the Transaction Documents and all related documents contemplated
thereby.

 

Section 4.33         Indebtedness. Exhibit E hereto sets forth all of the
Indebtedness of the Seller before giving effect to the repayment thereof on or
before the Closing Date.

 

Article V
Representations and warranties of buyer

 

Buyer represents and warrants to Seller that the statements contained in this
Article V are true and correct as of the date hereof.

 

Section 5.01         Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
its incorporation.

 

Section 5.02         Authority of Buyer. Buyer has full corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which Buyer is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Buyer of this Agreement and any other Transaction
Document to which Buyer is a party, the performance by Buyer of its obligations
hereunder and thereunder and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer, and (assuming due authorization, execution and delivery by
Seller) this Agreement constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms. When each other
Transaction Document to which Buyer is or will be a party has been duly executed
and delivered by Buyer (assuming due authorization, execution and delivery by
each other party thereto), such Transaction Document will constitute a legal and
binding obligation of Buyer enforceable against it in accordance with its terms.

 

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Section 5.03         No Conflicts; Consents. The execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of the certificate of
incorporation, by-laws or other organizational documents of Buyer; (b) conflict
with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to Buyer; or (c) require the consent, notice or
other action by any Person under any Contract to which Buyer is a party. No
consent, approval, Permit, Governmental Order, declaration or filing with, or
notice to, any Governmental Authority is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.

 

Section 5.04         Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document.

 

Section 5.05         Legal Proceedings. There are no Actions pending or, to
Buyer’s knowledge, threatened against or by Buyer or any Affiliate of Buyer that
challenge or seek to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or circumstances exist
that may give rise or serve as a basis for any such Action.

 

Article VI
Covenants

 

Section 6.01         Conduct of Business Prior to the Closing. From the date
hereof until the Closing, except as otherwise provided in this Agreement or
consented to in writing by Buyer (which consent shall not be unreasonably
withheld or delayed), Seller shall (x) conduct the Business in the ordinary
course of business consistent with past practice; and (y) use reasonable best
efforts to maintain and preserve intact its current Business organization,
operations and franchise and to preserve the rights, franchises, goodwill and
relationships of its employees, customers, lenders, suppliers, regulators and
others having relationships with the Business. Without limiting the foregoing,
from the date hereof until the Closing Date, Seller shall:

 

(a)          preserve and maintain all Permits required for the conduct of the
Business as currently conducted or the ownership and use of the Purchased
Assets;

 

(b)          pay the debts, Taxes and other obligations of the Business when
due;

 

(c)          continue to collect Accounts Receivable in a manner consistent with
past practice, without discounting such Accounts Receivable;

 

(d)          maintain the properties and assets included in the Purchased Assets
in the same condition as they were on the date of this Agreement, subject to
reasonable wear and tear;

 

(e)          continue in full force and effect without modification all
Insurance Policies, except as required by applicable Law;

 

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(f)          defend and protect the properties and assets included in the
Purchased Assets from infringement or usurpation;

 

(g)          perform all of its obligations under all Assigned Contracts;

 

(h)          maintain the Books and Records in accordance with past practice;

 

(i)          comply in all material respects with all Laws applicable to the
conduct of the Business or the ownership and use of the Purchased Assets; and

 

(j)          not take or permit any action that would cause any of the changes,
events or conditions described in Section 4.06 to occur.

 

Section 6.02         Access to Information. From the date hereof until the
Closing, Seller shall (a) afford Buyer and its Representatives full and free
access to and the right to inspect all of the Real Property, properties, assets,
premises, Books and Records, Contracts and other documents and data related to
the Business; (b) furnish Buyer and its Representatives with such financial,
operating and other data and information related to the Business as Buyer or any
of its Representatives may reasonably request; and (c) instruct the
Representatives of Seller to cooperate with Buyer in its investigation of the
Business. Without limiting the foregoing, Seller shall permit Buyer and its
Representatives to conduct environmental due diligence of the Land, including
the collecting and analysis of samples of indoor or outdoor air, surface water,
groundwater or surface or subsurface land on, at, in, under or from the Land. No
investigation by Buyer or other information received by Buyer shall operate as a
waiver or otherwise affect any representation, warranty or agreement given by
Seller in this Agreement.

 

Section 6.03         No Solicitation of Other Bids.

 

(a)          Seller shall not, and shall not authorize or permit any of its
Affiliates or any of its or their Representatives to, directly or indirectly,
(i) encourage, solicit, initiate, facilitate or continue inquiries regarding an
Acquisition Proposal; (ii) enter into discussions or negotiations with, or
provide any information to, any Person concerning a possible Acquisition
Proposal; or (iii) enter into any agreements or other instruments (whether or
not binding) regarding an Acquisition Proposal. Seller shall immediately cease
and cause to be terminated, and shall cause its Affiliates and all of its and
their Representatives to immediately cease and cause to be terminated, all
existing discussions or negotiations with any Persons conducted heretofore with
respect to, or that could lead to, an Acquisition Proposal. For purposes hereof,
“Acquisition Proposal” means any inquiry, proposal or offer from any Person
(other than Buyer or any of its Affiliates) relating to the direct or indirect
disposition, whether by sale, merger or otherwise, of all or any portion of the
Business or the Purchased Assets.

 

(b)          Seller shall promptly (and in any event within three (3) Business
Days after receipt thereof by Seller or its Representatives) advise Buyer orally
and in writing of any Acquisition Proposal, any request for information with
respect to any Acquisition Proposal, or any inquiry with respect to or which
could reasonably be expected to result in an Acquisition Proposal, the material
terms and conditions of such request, including the identity of the Person.

 

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(c)          Seller agrees that the rights and remedies for noncompliance with
this Section 6.03 shall include having such provision specifically enforced by
any court having equity jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach shall cause irreparable injury to Buyer and
that money damages would not provide an adequate remedy to Buyer.

 

Section 6.04         Notice of Certain Events.

 

(a)          From the date hereof until the Closing, Seller shall promptly
notify Buyer in writing of:

 

(i)          any fact, circumstance, event or action the existence, occurrence
or taking of which (A) has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (B) has resulted
in, or could reasonably be expected to result in, any representation or warranty
made by Seller hereunder not being true and correct or (C) has resulted in, or
could reasonably be expected to result in, the failure of any of the conditions
set forth in Section 7.02 to be satisfied;

 

(ii)         any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

 

(iii)        any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement; and

 

(iv)        any Actions commenced or, to Seller’s Knowledge, threatened against,
relating to or involving or otherwise affecting the Business, the Purchased
Assets or the Assumed Liabilities that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.16 or that relates to the consummation of the transactions
contemplated by this Agreement.

 

(b)          Buyer’s receipt of information pursuant to this Section 6.04 shall
not operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Seller in this Agreement and shall not be deemed to
amend or supplement the Disclosure Schedules.

 

Section 6.05         Employees and Employee Benefits.

 

(a)          Commencing on the Closing Date, Seller shall terminate all
employees of the Business who are actively at work on the Closing Date, and
Buyer shall offer employment to Justin Olin for 90 days on such terms as it
decides.

 

(b)          Seller shall be solely responsible, and Buyer shall have no
obligations whatsoever for, any compensation or other amounts payable to any
current or former employee, officer, director, manager, independent contractor
or consultant of the Business, including, without limitation, hourly pay,
commission, bonus, salary, accrued vacation, fringe, pension or profit sharing
benefits or severance pay for any period relating to the service with Seller at
any time on or prior to the Closing Date and Seller shall pay all such amounts
to all entitled persons on or prior to the Closing Date.

 

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(c)          Seller shall remain solely responsible for the satisfaction of all
claims for medical, dental, life insurance, health accident or disability
benefits brought by or in respect of current or former employees, officers,
directors, managers, independent contractors or consultants of the Business or
the spouses, dependents or beneficiaries thereof, which claims relate to events
occurring on or prior to the Closing Date. Seller also shall remain solely
responsible for all worker’s compensation claims of any current or former
employees, officers, directors, independent contractors or consultants of the
Business which relate to events occurring on or prior to the Closing Date.

 

(d)          Seller shall remain responsible for all liabilities and obligations
in connection with COBRA with respect to any individual who as a result of the
transactions contemplated by this Agreement, including, any individual who is
participating in any Benefit Plan and who experiences a "qualifying event"
(within the meaning of COBRA) on or before the Closing Date and any individual
who is receiving COBRA coverage as of the Closing Date.

 

Section 6.06         Confidentiality. From and after the Closing, Seller shall,
and shall cause its Affiliates to, hold, and shall use its reasonable best
efforts to cause its or their respective Representatives to hold, in confidence
any and all information, whether written or oral, concerning the Business,
except to the extent that Seller can show that such information (a) is generally
available to and known by the public through no fault of Seller, any of its
Affiliates or their respective Representatives; or (b) is lawfully acquired by
Seller, any of its Affiliates or their respective Representatives from and after
the Closing from sources which are not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation. If Seller or any of
its Affiliates or their respective Representatives are compelled to disclose any
confidential information of Buyer by judicial or administrative process or by
other requirements of Law, Seller shall promptly notify Buyer in writing and
shall cooperate with Buyer, at Buyer’s expense, in any effort by Buyer to obtain
an appropriate protective order or other reasonable assurance that confidential
treatment will be accorded such information. To the extent Seller is ultimately
required to disclose such confidential information, Seller shall only disclose
that portion of such information which Seller is advised by its counsel in
writing is legally required to be disclosed.

 

Section 6.07         Non-competition; Non-solicitation.

 

(a)          For a period of two (2) years commencing on the Closing Date (the
“Restricted Period”), Seller shall not, and shall not permit any of its
Affiliates to, directly or indirectly, (i) engage in or assist others in
engaging in the Restricted Business in the Territory; (ii) have an interest in
any Person that engages directly or indirectly in the Restricted Business in the
Territory in any capacity, including as a partner, shareholder, member,
employee, principal, agent, trustee or consultant; or (iii) cause, induce or
encourage any material actual or prospective client, customer, supplier or
licensor of the Business (including any existing or former client or customer of
Seller and any Person that becomes a client or customer of the Business after
the Closing), or any other Person who has a material business relationship with
the Business, to terminate or modify any such actual or prospective
relationship. Notwithstanding the foregoing, Seller may own, directly or
indirectly, solely as an investment, securities of any Person traded on any
national securities exchange if Seller is not a controlling Person of, or a
member of a group which controls, such Person and does not, directly or
indirectly, own five percent (5%) or more of any class of securities of such
Person.

 

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(b)          During the Restricted Period, Seller shall not, and shall not
permit any of its Affiliates to, directly or indirectly, hire or solicit any
person who is offered employment by Buyer or is or was employed in the Business
during the Restricted Period, or encourage any such employee to leave such
employment or hire any such employee who has left such employment, except
pursuant to a general solicitation which is not directed specifically to any
such employees; provided, that nothing in this Section 6.07(b) shall prevent
Seller or any of its Affiliates from hiring (i) any employee whose employment
has been terminated by Buyer or (ii) after one hundred and eighty (180) days
from the date of termination of employment, any employee who voluntarily
terminates his or her own employment.

 

(c)          Seller acknowledges that a breach or threatened breach of this
Section 6.07 would give rise to irreparable harm to Buyer, for which monetary
damages would not be an adequate remedy, and hereby agrees that in the event of
a breach or a threatened breach by Seller of any such obligations, Buyer shall,
in addition to any and all other rights and remedies that may be available to it
in respect of such breach, be entitled to equitable relief, including a
temporary restraining order, an injunction, specific performance and any other
relief that may be available from a court of competent jurisdiction (without any
requirement to post bond).

 

(d)          Seller acknowledges that the restrictions contained in this
Section 6.07 are reasonable and necessary to protect the legitimate interests of
Buyer and constitute a material inducement to Buyer to enter into this Agreement
and consummate the transactions contemplated by this Agreement. In the event
that any covenant contained in this Section 6.07 should ever be adjudicated to
exceed the time, geographic, product or service or other limitations permitted
by applicable Law in any jurisdiction, then any court is expressly empowered to
reform such covenant, and such covenant shall be deemed reformed, in such
jurisdiction to the maximum time, geographic, product or service or other
limitations permitted by applicable Law. The covenants contained in this
Section 6.07 and each provision hereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant or provision
as written shall not invalidate or render unenforceable the remaining covenants
or provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such covenant or
provision in any other jurisdiction.

 

Section 6.08         Governmental Approvals and Consents.

 

(a)          Each party hereto shall, as promptly as possible, (i) make, or
cause or be made, all filings and submissions required under any Law applicable
to such party or any of its Affiliates; and (ii) use reasonable best efforts to
obtain, or cause to be obtained, all consents, authorizations, orders and
approvals from all Governmental Authorities that may be or become necessary for
its execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement and the other Transaction Documents. Each
party shall cooperate fully with the other party and its Affiliates in promptly
seeking to obtain all such consents, authorizations, orders and approvals.

 

(b)          Seller and Buyer shall use reasonable best efforts to give all
notices to, and obtain all consents from, all Governmental Authorities and third
parties that are described in Section 4.03 of the Disclosure Schedules and
required to transfer all Permits, Assigned Contracts and other Purchased Assets.

 

 35 

 

 

(c)          All analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on behalf of
either party before any Governmental Authority in connection with the
transactions contemplated hereunder (but, for the avoidance of doubt, not
including any interactions between Seller or Buyer with Governmental Authorities
in the ordinary course of business, any disclosure which is not permitted by Law
or any disclosure containing confidential information) shall be disclosed to the
other party hereunder in advance, it being the intent that the parties will
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any such analyses, appearances, meetings,
discussions, presentations, memoranda, briefs, filings, arguments, and
proposals. Each party shall give notice to the other party with respect to any
meeting with any Governmental Authority.

 

(d)          Seller and Buyer agree upon the transfer of the reclamation plan to
Buyer, Seller’s reclamation bond shall be returned to it in the amount of
$172,376.

 

Section 6.09         Books and Records.

 

(a)          Seller shall turn over all books and records related to the
Business on or immediately following the Closing Date to Buyer.

 

(b)          In order to facilitate the resolution of any claims made against or
incurred by Seller prior to the Closing, or for any other reasonable purpose,
for a period of five (5) years after the Closing, Buyer shall:

 

(i)          retain the Books and Records (including personnel files) relating
to periods prior to the Closing in a manner reasonably consistent with the prior
practices of Seller; and

 

(ii)         upon reasonable notice, afford the Seller’s Representatives
reasonable access (including the right to make, at Seller’s expense,
photocopies), during normal business hours, to such Books and Records.

 

(c)          Neither Buyer nor Seller shall be obligated to provide the other
party with access to any books or records (including personnel files) pursuant
to this Section 6.09 where such access would violate any Law.

 

Section 6.10         Closing Conditions. From the date hereof until the Closing,
each party hereto shall use reasonable best efforts to take such actions as are
necessary to expeditiously satisfy the closing conditions set forth in
Article VII.

 

Section 6.11         Public Announcements. Unless otherwise required by
applicable Law or any stock exchange requirements (based upon the reasonable
advice of counsel), no party to this Agreement shall make any public
announcements in respect of this Agreement or the transactions contemplated
hereby.

 

Section 6.12         Bulk Sales Laws. The parties hereby waive compliance with
the provisions of any bulk sales, bulk transfer or similar Laws; it being
understood that any Liabilities arising out of the failure of Seller to comply
with the requirements and provisions of any bulk sales, bulk transfer or similar
Laws shall be treated as Excluded Liabilities.

 

 36 

 

 

Section 6.13         Transfer Taxes. All transfer, documentary, sales, use,
stamp, registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement and the other
Transaction Documents (including any real property transfer Tax and any other
similar Tax) shall be borne and paid by Seller when due.

 

Section 6.14         Permit and Surety Bond Matters.

 

(a)          As promptly as commercially reasonable after the Closing, Buyer
shall file with the appropriate Governmental Authority all applications required
to transfer from Seller to Buyer the Permits that are not transferable until
after Closing and (ii) Buyer shall take commercially reasonable actions under
applicable Law to put in place with the appropriate Governmental Authority as
promptly as commercially reasonable after the Closing financial assurances
necessary to transfer such Permits from the Seller to Buyer. Seller agrees to
diligently provide any cooperation reasonably requested by Buyer to bring about
the transfer of such Permits. From and after the Closing, Buyer shall diligently
pursue the transfer of the Permits to Buyer and Buyer shall operate under the
Permits as the designated operator in accordance with applicable Laws and the
terms and conditions of such Permits and any agreements governing their
transfer; provided, that in no event shall Buyer be obligated to accept any
material amendment to the terms of any Permit or any additional conditions with
respect to any transferred Permit. To the extent allowed by and in accordance
with applicable Laws and the terms and conditions of such Permits and any
agreements governing their transfer, Seller grants Buyer the right to conduct,
at the sole cost and expense of Buyer, mining operations following the Closing
on the Mining Complex as the designated operator until such time as the Permits
are transferred to Buyer (the “Interim Period”). Seller shall have (and Buyer
grants) all rights of entry onto the Mining Complex necessary for Seller to
maintain the Permits prior to transfer.

 

(b)          Buyer, at all times prior to the transfer of the Permits to Buyer
shall: (i) comply with all applicable Laws governing, and all conditions and
requirements of, or pertaining to, any such Permits; and (ii) be solely
responsible for all incidents of violation, non-compliance, and similar
occurrences related to such Permits that arise from the actions of Buyer.

 

(c)          Notwithstanding anything in this Agreement to the contrary, (i)
during the Interim Period, absent the occurrence of an incident of violation,
noncompliance or similar occurrence for which Buyer is responsible pursuant to
Section 6.14(c), Seller shall remain responsible, at its sole cost and expense,
for maintaining any surety bonds or other financial assurances required in
connection with the Permits.

 

Section 6.15         Payments Received from Third Parties. To the extent that,
after the Closing Date, Seller receives any payment that is for the account of
Buyer according to the terms of this Agreement or any other Transaction
Documents or that otherwise relates primarily to the Purchased Assets, Seller
shall promptly deliver such amount or instrument to Buyer. All amounts due and
payable under this Section 6.15 shall be due and payable by Seller in
immediately available funds, by wire transfer to the account designated in
writing by Buyer. Notwithstanding the foregoing, Seller shall use its
commercially reasonable efforts to direct or forward all bills, invoices or like
instruments related to the Business to which Buyer is entitled to. Any payments
received under this Section 6.15 by Seller will be treated by Seller as being
received by Seller in its capacity as agent for Buyer.

 

 37 

 

 

Section 6.16         Further Assurances. Following the Closing, each of the
parties hereto shall, and shall cause their respective Affiliates to, execute
and deliver such additional documents, instruments, conveyances and assurances
and take such further actions as may be reasonably required to carry out the
provisions hereof and give effect to the transactions.

 

Section 6.17         BLM. Following the Closing, Buyer shall file appropriate
transfer documents in the proper BLM Colorado Office and also with the Garfield
County recorder's office. Seller agrees to diligently provide any assistance
reasonably requested by Buyer in order to complete the immediate foregoing.

 

Section 6.18         Accounts Payable. Seller shall pay all accounts payable and
accrued payment obligations to the extent relating to or arising out of the
Business no later than ten (10) days following the Closing Date and provide
evidence in writing thereof to Buyer within the same time period. Prior to
Closing, Seller and Buyer shall use their best efforts to jointly prepare a list
of accounts payable that must be paid by Seller following the Closing.

 

Article VII
Conditions to closing

 

Section 7.01         Conditions to Obligations of All Parties. The obligations
of each party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:

 

(a)          No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order which is in effect and has the effect
of making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.

 

(b)          Seller shall have received any consents, authorizations, orders and
approvals from the Governmental Authorities referred to in Section 4.03 and
Buyer shall have received any consents, authorizations, orders and approvals
from the Governmental Authorities referred to in Section 5.03, in each case, in
form and substance reasonably satisfactory to Buyer and Seller, and no such
consent, authorization, order and approval shall have been revoked.

 

Section 7.02         Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of
each of the following conditions:

 

(a)          Other than the representations and warranties of Seller contained
in Section 4.01, Section 4.02, Section 4.04, Section 4.22, Section 4.24 and
Section 4.32 the representations and warranties of Seller contained in this
Agreement, the other Transaction Documents and any certificate or other writing
delivered pursuant hereto shall be true and correct in all respects (in the case
of any representation or warranty qualified by materiality or Material Adverse
Effect) or in all material respects (in the case of any representation or
warranty not qualified by materiality or Material Adverse Effect) on and as of
the date hereof and on and as of the Closing Date with the same effect as though
made at and as of such date (except those representations and warranties that
address matters only as of a specified date, the accuracy of which shall be
determined as of that specified date in all respects). The representations and
warranties of Seller contained in Section 4.01, Section 4.02, Section 4.04,
Section 4.22, Section 4.24 and Section 4.32 shall be true and correct in all
respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date (except those representations
and warranties that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all respects).

 

 38 

 

 

(b)         Seller shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement and each of the other Transaction Documents to be performed or
complied with by it prior to or on the Closing Date.

 

(c)         No Action shall have been commenced against Buyer or Seller, which
would prevent the Closing. No injunction or restraining order shall have been
issued by any Governmental Authority, and be in effect, which restrains or
prohibits any transaction contemplated hereby.

 

(d)         All approvals, consents and waivers that are listed on Section 4.03
of the Disclosure Schedules shall have been received.

 

(e)         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, could
reasonably be expected to result in a Material Adverse Effect.

 

(f)          Seller shall have delivered to Buyer duly executed counterparts to
the Transaction Documents (other than this Agreement) and such other documents
set forth in Section 3.02(a).

 

(g)         Buyer shall have received all Permits that are necessary for it to
conduct the Business as conducted by Seller as of the Closing Date or, if any
such Permits are not capable of being obtained prior to the Closing, it shall
have received such evidence as it deems satisfactory that it shall be able to
obtain such Permits post-Closing and will be permitted to operate the Business
post-Closing until such Permits are obtained.

 

(h)         All Encumbrances relating to the Purchased Assets shall have been
released in full, other than Permitted Encumbrances, and Seller shall have
delivered to Buyer written evidence, in form satisfactory to Buyer in its sole
discretion.

 

(i)          Buyer shall have received a landman title report from a reputable
landman company covering the Mining Claims and Buyer shall be satisfied with the
results of such landman title report in its sole discretion.

 

(j)          Buyer shall have completed its due diligence of Seller, and shall
be satisfied with the results of such investigation in its sole and absolute
discretion.

 

 39 

 

 

(k)          Buyer shall have received a certificate, dated the Closing Date and
signed by a duly authorized officer of Seller, that each of the conditions set
forth in Section 7.02(a) and Section 7.02(b) have been satisfied (the “Seller
Closing Certificate”).

 

(l)          All Indebtedness shall have been paid on or prior to the Closing
Date.

 

(m)         All payoff letters shall have been delivered to Buyer.

 

(n)          a resolution adopted by Seller and approved by Buyer authorizing
the transaction, naming the current managers of Seller and removing any other
managers;

 

(o)          Buyer shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Seller certifying that attached
thereto are true and complete copies of all resolutions adopted by the members
and managers of Seller authorizing the execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, and that all such resolutions are
in full force and effect.

 

(p)          Buyer shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Seller certifying the names and
signatures of the officers of Seller authorized to sign this Agreement, the
Transaction Documents and the other documents to be delivered hereunder and
thereunder.

 

(q)          Buyer shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Guarantor Entity certifying that
attached thereto are true and complete copies of all resolutions adopted by the
members and managers of Guarantor Entity authorizing the execution, delivery and
performance of the Guaranty Agreement and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force
and effect.

 

(r)          Buyer shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Guarantor Entity certifying the
names and signatures of the officers of Guarantor Entity authorized to sign the
Guaranty Agreement.

 

(s)          Buyer shall have received a certificate pursuant to Treasury
Regulations Section 1.1445-2(b) (the “FIRPTA Certificate”) that Seller is not a
foreign person within the meaning of Section 1445 of the Code duly executed by
Seller.

 

(t)          Seller shall have delivered to Buyer such other documents or
instruments as Buyer reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this Agreement.

 

(u)          Seller shall provide Tax Clearance Certificates to Buyer
demonstrating that Seller has satisfied all Tax obligations in Colorado.

 

(v)         Buyer shall have provided to Seller a copy of the fully-executed
letter of employment, dated as of the Closing Date, as between Buyer and Mr.
Justin Olin.

 

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Section 7.03         Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of
each of the following conditions:

 

(a)          Other than the representations and warranties of Buyer contained in
Section 5.01, Section 5.02 and Section 5.04, the representations and warranties
of Buyer contained in this Agreement, the other Transaction Documents and any
certificate or other writing delivered pursuant hereto shall be true and correct
in all respects (in the case of any representation or warranty qualified by
materiality or Material Adverse Effect) or in all material respects (in the case
of any representation or warranty not qualified by materiality or Material
Adverse Effect) on and as of the date hereof and on and as of the Closing Date
with the same effect as though made at and as of such date (except those
representations and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date in all
respects). The representations and warranties of Buyer contained in
Section 5.01, Section 5.02 and Section 5.04 shall be true and correct in all
respects on and as of the date hereof and on and as of the Closing Date with the
same effect as though made at and as of such date.

 

(b)          Buyer shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement and each of the other Transaction Documents to be performed or
complied with by it prior to or on the Closing Date.

 

(c)          No injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect, which restrains or prohibits any
material transaction contemplated hereby.

 

(d)          Buyer shall have delivered to Seller duly executed counterparts to
the Transaction Documents (other than this Agreement) and such other documents
and deliveries set forth in Section 3.02(b).

 

(e)          Seller shall have received a certificate, dated the Closing Date
and signed by a duly authorized officer of Buyer, that each of the conditions
set forth in Section 7.03(a) and Section 7.03(b) have been satisfied (the “Buyer
Closing Certificate”).

 

(f)          Seller shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Buyer certifying that attached
thereto are true and complete copies of all resolutions adopted by the board of
directors of Buyer authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, and that all such resolutions are
in full force and effect.

 

(g)          Seller shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Buyer certifying the names and
signatures of the officers of Buyer authorized to sign this Agreement, the
Transaction Documents and the other documents to be delivered hereunder and
thereunder.

 

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(h)          Buyer shall have delivered to Seller such other documents or
instruments as Seller reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this Agreement.

 

Article VIII
Indemnification

 

Section 8.01         Survival. Subject to the limitations and other provisions
of this Agreement, the representations and warranties contained herein shall
survive the Closing and shall remain in full force and effect until the date
that is two years from the Closing Date; provided, that the representations and
warranties in (i) Section 4.01, Section 4.02, Section 4.08, Section 4.22,
Section 4.24, Section 4.32, Section 5.01, Section 5.02 and Section 5.04 shall
survive indefinitely, (ii) Section 4.18 shall survive for a period of five (5)
years after the Closing, and (iii) Section 4.09 and Section 4.21 shall survive
for the full period of all applicable statutes of limitations (giving effect to
any waiver, mitigation or extension thereof) plus 60 days. All covenants and
agreements of the parties contained herein shall survive the Closing
indefinitely or for the period explicitly specified therein. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable specificity (to the
extent known at such time) and in writing by notice from the non-breaching party
to the breaching party prior to the expiration date of the applicable survival
period shall not thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until finally resolved.

 

Section 8.02         Indemnification By Seller. Subject to the other terms and
conditions of this Article VIII, Seller and Guarantor Entity (jointly and
severally) shall indemnify and defend each of Buyer and its Affiliates and their
respective Representatives (collectively, the “Buyer Indemnitees”) against, and
shall hold each of them harmless from and against, and shall pay and reimburse
each of them for, any and all Losses incurred or sustained by, or imposed upon,
the Buyer Indemnitees based upon, arising out of, with respect to or by reason
of:

 

(a)          any inaccuracy in or breach of any of the representations or
warranties of Seller contained in this Agreement, the other Transaction
Documents or in any certificate or instrument delivered by or on behalf of
Seller pursuant to this Agreement, as of the date such representation or
warranty was made or as if such representation or warranty was made on and as of
the Closing Date (except for representations and warranties that expressly
relate to a specified date, the inaccuracy in or breach of which will be
determined with reference to such specified date);

 

(b)          any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Seller pursuant to this Agreement, the other
Transaction Documents or any certificate or instrument delivered by or on behalf
of Seller pursuant to this Agreement;

 

(c)          any Excluded Asset or any Excluded Liability; or

 

(d)          any Third Party Claim based upon, resulting from or arising out of
the business, operations, properties, assets or obligations of Seller or any of
its Affiliates (other than the Purchased Assets or Assumed Liabilities)
conducted, existing or arising on or prior to the Closing Date.

 

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Section 8.03         Indemnification By Buyer. Subject to the other terms and
conditions of this Article VIII, Buyer shall indemnify and defend each of Seller
and its Affiliates and their respective Representatives (collectively, the
“Seller Indemnitees”) against, and shall hold each of them harmless from and
against, and shall pay and reimburse each of them for, any and all Losses
incurred or sustained by, or imposed upon, the Seller Indemnitees based upon,
arising out of, with respect to or by reason of:

 

(a)          any inaccuracy in or breach of any of the representations or
warranties of Buyer contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of
the date such representation or warranty was made or as if such representation
or warranty was made on and as of the Closing Date (except for representations
and warranties that expressly relate to a specified date, the inaccuracy in or
breach of which will be determined with reference to such specified date);

 

(b)          any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Buyer pursuant to this Agreement; or

 

(c)          any Assumed Liability.

 

Section 8.04         Certain Limitations. The indemnification provided for in
Section 8.02 and Section 8.03 shall be subject to the following limitations:

 

(a)          Seller shall not be liable to the Buyer Indemnitees for
indemnification under Section 8.02(a) until the aggregate amount of all Losses
in respect of indemnification under Section 8.02(a) exceeds One Hundred Fifty
Thousand Dollars 00/100 $150,000 (the “Basket”), in which event Seller shall be
required to pay or be liable for all such Losses from the first dollar. The
aggregate amount of all Losses for which Seller shall be liable pursuant to
Section 8.02 shall not exceed Nine Hundred Thousand Dollars 00/100 ($900,000)
(the “Cap”).

 

(b)          Buyer shall not be liable to the Seller Indemnitees for
indemnification under Section 8.03(a) until the aggregate amount of all Losses
in respect of indemnification under Section 8.03(a) exceeds the Basket, in which
event Buyer shall be required to pay or be liable for all such Losses from the
first dollar. The aggregate amount of all Losses for which Buyer shall be liable
pursuant to Section 8.03(a) shall not exceed the Cap.

 

(c)          Notwithstanding the foregoing, the limitations set forth in
Section 8.04(a) and Section 8.04(b) shall not apply to Losses based upon,
arising out of, with respect to or by reason of any inaccuracy in or breach of
any representation or warranty in Section 4.01, Section 4.02, Section 4.08,
Section 4.18, Section 4.09, Section 4.21, Section 4.22, Section 4.24,
Section 5.01, Section 5.02 and Section 5.04.

 

(d)          For purposes of this Article VIII, any inaccuracy in or breach of
any representation or warranty shall be determined without regard to any
materiality, Material Adverse Effect or other similar qualification contained in
or otherwise applicable to such representation or warranty.

 

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(e)          The representations, warranties and covenants of Seller and Buyer’s
right to indemnification with respect thereto, shall not be affected or deemed
waived by reason of any investigation made by or on behalf of Buyer or by reason
of the fact that the Buyer knew or should have known that any such
representation or warranty is, was or might be inaccurate or by reason of the
Buyer’s waiver of any conditions set forth in Section 7.02.

 

Section 8.05         Indemnification Procedures. The party making a claim under
this Article VIII is referred to as the “Indemnified Party”, and the party
against whom such claims are asserted under this Article VIII is referred to as
the “Indemnifying Party”.

 

(a)          Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than thirty (30) calendar days after receipt of such notice of such
Third Party Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification obligations,
except and only to the extent that the Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified Party shall
describe the Third Party Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have the right to participate
in, or by giving written notice to the Indemnified Party, to assume the defense
of any Third Party Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in
good faith in such defense; provided, that if the Indemnifying Party is Seller,
such Indemnifying Party shall not have the right to defend or direct the defense
of any such Third Party Claim that (x) is asserted directly by or on behalf of a
Person that is a supplier or customer of the Business, or (y) seeks an
injunction or other equitable relief against the Indemnified Party. In the event
that the Indemnifying Party assumes the defense of any Third Party Claim,
subject to Section 8.05(b), it shall have the right to take such action as it
deems necessary to avoid, dispute, defend, appeal or make counterclaims
pertaining to any such Third Party Claim in the name and on behalf of the
Indemnified Party. The Indemnified Party shall have the right to participate in
the defense of any Third Party Claim with counsel selected by it subject to the
Indemnifying Party’s right to control the defense thereof. The fees and
disbursements of such counsel shall be at the expense of the Indemnified Party,
provided, that if in the reasonable opinion of counsel to the Indemnified Party,
(A) there are legal defenses available to an Indemnified Party that are
different from or additional to those available to the Indemnifying Party; or
(B) there exists a conflict of interest between the Indemnifying Party and the
Indemnified Party that cannot be waived, the Indemnifying Party shall be liable
for the reasonable fees and expenses of counsel to the Indemnified Party in each
jurisdiction for which the Indemnified Party determines counsel is required. If
the Indemnifying Party elects not to compromise or defend such Third Party
Claim, fails to promptly notify the Indemnified Party in writing of its election
to defend as provided in this Agreement, or fails to diligently prosecute the
defense of such Third Party Claim, the Indemnified Party may, subject to
Section 8.05(b), pay, compromise, defend such Third Party Claim and seek
indemnification for any and all Losses based upon, arising from or relating to
such Third Party Claim. Seller and Buyer shall cooperate with each other in all
reasonable respects in connection with the defense of any Third Party Claim,
including making available (subject to the provisions of Section 6.06) records
relating to such Third Party Claim and furnishing, without expense (other than
reimbursement of actual out-of-pocket expenses) to the defending party,
management employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party Claim.

 

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(b)          Settlement of Third Party Claims. Notwithstanding any other
provision of this Agreement, the Indemnifying Party shall not enter into
settlement of any Third Party Claim without the prior written consent of the
Indemnified Party, except as provided in this Section 8.05(b). If a firm offer
is made to settle a Third Party Claim without leading to liability or the
creation of a financial or other obligation on the part of the Indemnified Party
and provides, in customary form, for the unconditional release of each
Indemnified Party from all liabilities and obligations in connection with such
Third Party Claim and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party shall give written notice to that effect to the
Indemnified Party. If the Indemnified Party fails to consent to such firm offer
within ten (10) days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim shall
not exceed the amount of such settlement offer. If the Indemnified Party fails
to consent to such firm offer and also fails to assume defense of such Third
Party Claim, the Indemnifying Party may settle the Third Party Claim upon the
terms set forth in such firm offer to settle such Third Party Claim. If the
Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall
not agree to any settlement without the written consent of the Indemnifying
Party (which consent shall not be unreasonably withheld or delayed).

 

(c)          Direct Claims. Any Action by an Indemnified Party on account of a
Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than thirty (30) days
after the Indemnified Party becomes aware of such Direct Claim. The failure to
give such prompt written notice shall not, however, relieve the Indemnifying
Party of its indemnification obligations, except and only to the extent that the
Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Direct Claim in reasonable
detail, shall include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the Loss that has
been or may be sustained by the Indemnified Party. The Indemnifying Party shall
have thirty (30) days after its receipt of such notice to respond in writing to
such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and
its professional advisors to investigate the matter or circumstance alleged to
give rise to the Direct Claim, and whether and to what extent any amount is
payable in respect of the Direct Claim and the Indemnified Party shall assist
the Indemnifying Party’s investigation by giving such information and assistance
(including access to the Indemnified Party’s premises and personnel and the
right to examine and copy any accounts, documents or records) as the
Indemnifying Party or any of its professional advisors may reasonably request.
If the Indemnifying Party does not so respond within such thirty (30) day
period, the Indemnifying Party shall be deemed to have rejected such claim, in
which case the Indemnified Party shall be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of
this Agreement.

 

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(d)          In the case of any Tax in respect of which there is any procedure
for prior notice to a Tax authority and issuance of a Tax clearance certificate
(or any similar proceeding), the requirements of that procedure have been or
will be satisfied prior to the Closing Date by Seller, and any amounts required
to be paid to eliminate any liability of Buyer with respect to that Tax have
been or will be paid by Seller.

 

Section 8.06         Insurance and Other Recoveries. The amount for which an
Indemnifying Party is ultimately liable to the Indemnified Party pursuant to
Article VIII in respect of any loss shall be limited to the amount of any
liability or damage that remains after deducting therefrom any insurance
proceeds and any indemnity, contribution or other similar payment actually
received by the Indemnified Party in respect of any such claim, less any related
costs and expenses, including the aggregate cost of pursuing any related
insurance claims and any related increases in insurance premium or other
chargebacks. Notwithstanding the foregoing, the parties agree that an
Indemnifying Party shall make any and all indemnification payments initially
without regard to any potential recovery from an insurance company or other
third party, no party shall have any obligation to seek to recover from an
insurance company or other third party in connection with making a claim under
this Article VIII against an Indemnifying Party and that, promptly after the
realization of any insurance proceeds, indemnity, contribution or other similar
payment in respect of any loss for which the Indemnified Party received
indemnification from the Indemnifying Party, the Indemnified Party shall
reimburse the Indemnifying Party for such reduction in losses for which the
Indemnified Party was indemnified prior to the realization of reduction of such
losses.

 

Section 8.07         Payments. Once a Loss is agreed to by the Indemnifying
Party or finally adjudicated to be payable pursuant to this Article VIII, the
Indemnifying Party shall satisfy its obligations within fifteen (15) Business
Days of such final, non-appealable adjudication by wire transfer of immediately
available funds. The parties hereto agree that should an Indemnifying Party not
make full payment of any such obligations within such fifteen (15) Business Day
period, any amount payable shall accrue interest from and including the date of
agreement of the Indemnifying Party or final, non-appealable adjudication to but
excluding the date such payment has been made at a rate per annum equal to
fifteen percent (15%). Such interest shall be calculated daily on the basis of a
365 day year and the actual number of days elapsed.

 

Section 8.08         Tax Treatment of Indemnification Payments. All
indemnification payments made under this Agreement shall be treated by the
parties as an adjustment to the Purchase Price for Tax purposes, unless
otherwise required by Law.

 

Section 8.09         Effect of Investigation. The representations, warranties
and covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its Representatives) or by reason of the fact that the
Indemnified Party or any of its Representatives knew or should have known that
any such representation or warranty is, was or might be inaccurate or by reason
of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or
Section 7.03, as the case may be.

 

 46 

 

 

Section 8.10         Not Exclusive Remedy. The indemnification rights of the
parties under this Article VIII are independent of, and in addition to, such
rights and remedies as the parties may have at Law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any covenant,
agreement or obligation hereunder on the part of any party hereto, including the
right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.

 

Article IX
Termination

 

Section 9.01         Termination. This Agreement may be terminated at any time
prior to the Closing:

 

(a)          by the mutual written consent of Seller and Buyer;

 

(b)          by Buyer by written notice to Seller if:

 

(i)          Buyer is not then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by Seller pursuant to this
Agreement that would give rise to the failure of any of the conditions specified
in Article VII and such breach, inaccuracy or failure has not been cured by
Seller within ten (10) days of Seller’s receipt of written notice of such breach
from Buyer; or

 

(ii)         any of the conditions set forth in Section 7.01 or Section 7.02
shall not have been, or if it becomes apparent that any of such conditions will
not be, fulfilled by November 15, 2016 (the “Drop Dead Date”), unless such
failure shall be due to the failure of Buyer to perform or comply with any of
the covenants, agreements or conditions hereof to be performed or complied with
by it prior to the Closing;

 

(c)          by Seller by written notice to Buyer if:

 

(i)          Seller is not then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by Buyer pursuant to this
Agreement that would give rise to the failure of any of the conditions specified
in Article VII and such breach, inaccuracy or failure has not been cured by
Buyer within ten (10) days of Buyer’s receipt of written notice of such breach
from Seller;

 

(d)          by Buyer or Seller in the event that (i) there shall be any Law
that makes consummation of the transactions contemplated by this Agreement
illegal or otherwise prohibited or (ii) any Governmental Authority shall have
issued a Governmental Order restraining or enjoining the transactions
contemplated by this Agreement, and such Governmental Order shall have become
final and non-appealable.

 

Section 9.02         Effect of Termination. In the event of the termination of
this Agreement in accordance with this Article, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except:

 

(a)          as set forth in this Article IX, and Section 6.06;

 

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(b)          that nothing herein shall relieve any party hereto from liability
for any willful breach of any provision hereof.

 

Article X
Miscellaneous

 

Section 10.01         Expenses. Except as otherwise expressly provided herein,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.

 

Section 10.02         Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been given (a) when delivered by hand (with written confirmation
of receipt); (b) when received by the addressee if sent by a nationally
recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if
sent during normal business hours of the recipient, and on the next Business Day
if sent after normal business hours of the recipient or (d) on the third day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.02):

 

If Buyer, to:

RMR Aggregates, Inc.

9301 Wilshire Blvd., Suite 312

Beverly Hills, California 90210

Attn:  Gregory M. Dangler

E-mail:  gdangler@rmrholdings.com

Fax:  (310) 961-3436

 

With copies to:

Greenberg Traurig LLP

1200 17th Street, Suite 2400

Denver, CO  80202

Attn:  Marc Musyl

E-mail:  musylm@gtlaw.com

Fax:  

 

If Seller, to: CalX Minerals, LLC                       Attn:  Peter Babin, CEO
      E-mail:  peterbabin19@gmail.com

 

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With copies to: CalX Minerals, LLC                       Attn:  John Skadow, CFO
      E-mail:  jskadow@gmail.com

 

Section 10.03         Interpretation. For purposes of this Agreement, (a) the
words “include,” “includes” and “including” shall be deemed to be followed by
the words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles
and Sections of, and Disclosure Schedules and Exhibits attached to, this
Agreement; (y) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and (z) to a
statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. The Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim herein.

 

Section 10.04         Headings. The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.

 

Section 10.05         Severability. If any term or provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Except as provided in Section 6.07(d), upon such
determination that any term or other provision is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible.

 

Section 10.06         Entire Agreement. This Agreement and the other Transaction
Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and
supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the other Transaction Documents, the Exhibits and Disclosure Schedules (other
than an exception expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.

 

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Section 10.07         Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, and subject to the following terms and limitations set forth in this
Section 10.07, Buyer shall be entitled to assign this Agreement to an Affiliate
or an independent third party, or to otherwise designate, an Affiliate or
independent third party (in either case, a “Designated Buyer”), without Seller’s
prior consent.

 

Section 10.08         No Third-party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever.

 

Section 10.09         Amendment and Modification; Waiver. This Agreement may
only be amended, modified or supplemented by an agreement in writing signed by
each party hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and signed by the party so
waiving. No failure to exercise, or delay in exercising, any right, remedy,
power or privilege arising from this Agreement shall operate or be construed as
a waiver thereof.

 

Section 10.10         Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.

 

(a)          This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Colorado without giving effect to any
choice or conflict of law provision or rule (whether of the State of Colorado or
any other jurisdiction).

 

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA OR THE COURTS OF THE STATE OF COLORADO IN EACH CASE LOCATED IN THE
CITY OF DENVER AND COUNTY OF DENVER, AND EACH PARTY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING.
SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S
ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT,
ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

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(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 10.11         Specific Performance. The parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy to
which they are entitled at law or in equity.

 

Section 10.12         Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

Section 10.13         Acknowledgement of Counsel.  Each party hereto
acknowledges and agrees that such party has had the opportunity to be
represented in the negotiations for the preparation of this Agreement by counsel
of such party’s own choosing, and that if such party has elected not to be
represented by counsel in the negotiation and preparation of this Agreement,
such election was made freely and voluntarily with full awareness of the
consequences of the decision.  Each party hereto further acknowledges and agrees
that such party has read this Agreement, and is fully aware of the contents and
legal effect of this Agreement, and that such party has executed this Agreement
after independent investigation and without fraud, duress or undue influence. 
This Agreement shall be construed as if each party were jointly and equally
responsible

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers, managers and
members thereunto duly authorized.

 

  SELLER       Calx Minerals, LLC       By /s/  Peter Babin         Name: Peter
Babin       Title: President/Manager       MAJORITY MEMBER OF SELLER      
DARTAGNAN, LLC, a Colorado limited liability company       By /s/  Peter Babin  
      Name: Peter Babin       Title: Manager

 

 52 

 

 

  PETER BABIN, INDVIDUALLY, IS SIGNING THIS AGREEMENT FOR THE LIMITED PURPOSE OF
PERSONALLY GUARANTEEING THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION
4.02 AND 4.32 OF THE AGREEMENT AND HE FURTHER REPRESENTS AND WARRANTS THAT HE IS
DULY AUTHORIZED AND HAS LEGAL CAPACITY TO EXECUTE AND ENTER INTO ON BEHALF OF
SELLER THIS AGREEMENT, THE TRANSACTION DOCUMENTS AND ALL OTHER RELATED
DOCUMENTS. PETER BABIN HEREBY AGREES BY SIGNING THIS AGREEMENT HERETO THAT HE IS
ABSOLUTELY AND UNCONDITIONALLY GUARANTEERING TO BUYER ANY LOSSES RELATED TO THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS PARAGRAPH AND IN SECTION 4.02
AND SECTION 4.32 OF THE AGREEMENT.  THE FOREGOING OBLIGATIONS SET FORTH ARE
PRIMARY AND INDEPENDENT OF THE OBLIGATIONS OF SELLER UNDER THE AGREEMENT AND
BUYER MAY BE BRING A SEPARATE ACTION DIRECTLY AGAINST PETER BABIN FOR ANY LOSSES
RELATED TO OR THAT ARISE OUT OFTHE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS PARAGRAPH, SECTION 4.02 AND SECTION 4.32 IN THE AGREEMENT. FOR THE
AVOIDANCE OF DOUBT, NONE OF THE CAPS AND BASKETS SET FORTH IN SECTION 8.04 SHALL
APPLY TO THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS PARAGRAPH.      
PETER BABIN       /s/  Peter Babin     Peter Babin, individually

 

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  BUYER

 

  RMR Aggregates, Inc.       By /s/  Gregory Dangler        
Name:  Gregory Dangler       Title:  President

 

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Exhibit A

Transition Services Agreement

[To be attached]

 

 55 

 

 

Exhibit B

Mining Complex

 

 56 

 

 

Exhibit C

Guaranty Agreement

[To be attached]

 

 57 

 

 

Exhibit D

Land

 

 58 

 

 

Exhibit E

Indebtedness

 

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