Document:

Unassociated Document

Exhibit 10.12

 

 

 

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

 

 

AMONG:

 

FOCUS GOLD CORP.

 

- and -

 

FOCUS CELTIC GOLD CORPORATION

 

- and -

 

METALLUM RESOURCES PLC

 

- and -

 

METALLUM EXPLORATION LIMITED

 

- and -

 

PACIFIC ORIENT CAPITAL INC.

 

February 27, 2012

 

 

 

  

  

	
 

	
 

	  	 

 

TABLE OF CONTENTS

 

 

	ARTICLE 1 DEFINITIONS	2
	1.1	Definitions	2
	1.2	Hereof, Herein, etc.	7
	1.3	Computation of Time Periods	7
	1.4	Knowledge	7
	1.5	Schedules	7
	ARTICLE 2 AGREEMENT TO EXCHANGE	7
	2.1	Share Exchange	7
	2.2	Closing and Delivery of Certificates	8
	2.3	Escrow	8
	2.4	Effective Date	8
	2.5	Share Capital	8
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE VENDING PARTIES	8
	3.1	No Other Agreement to Purchase	8
	3.2	Absence of Certain Changes	8
	3.3	Indebtedness to Directors, Officers and Others	10
	3.4	Rights of Directors, Officers and Others	10
	3.5	Taxes	10
	3.6	Property Rights	10
	3.7	Joint Ventures	11
	3.8	Restrictive Covenants	11
	3.9	Material Contracts	11
	3.10	Necessary Licenses and Permits	11
	3.11	Compliance with Law	12
	3.12	Employees	12
	3.13	Employee Benefit Plans	12
	3.14	Litigation	12
	3.15	No Material Adverse Change	12
	3.16	No Limitations	12
	3.17	Reporting Issuer Status	13
	3.18	Regulatory Compliance	13
	3.19	Environmental Compliance	13
	3.20	Condition of Assets.	13
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF FOCUS	13
	4.1	Organization and Existence	14
	4.2	Capacity	14
	4.3	Enforceability	14
	4.4	No Violation	14
	4.5	Authorized Capital	14
	4.6	Celtic Shares	14
	ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CELTIC	15
	5.1	Organization and Existence	15
	5.2	Capacity	15
	5.3	Enforceability	15
	5.4	No Violation	15
	5.5	Authorized Capital	16
	5.6	No Other Agreement to Purchase	16
	5.7	Corporate Records	16
	5.8	Shareholder Agreements	16

    	i

    	 

    

 

	5.9	Records	16
	5.10	Non-Arm’s Length Transactions	16
	5.11	Consents	16
	ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF METALLUM RESOURCES	17
	6.1	Organization and Existence	17
	6.2	Capacity	17
	6.3	Enforceability	17
	6.4	No Violation	17
	6.5	Authorized Capital	17
	6.6	No Other Agreement to Purchase	18
	6.7	Corporate Records	18
	6.8	Shareholder Agreements	18
	6.9	Records	18
	6.10	Non-Arm’s Length Transactions	18
	6.11	Consents	18
	ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF METALLUM EXPLORATION	18
	7.1	Organization and Existence	19
	7.2	Capacity	19
	7.3	Enforceability	19
	7.4	No Violation	19
	7.5	Authorized Capital	19
	7.6	No Other Agreement to Purchase	19
	7.7	Corporate Records	20
	7.8	Shareholder Agreements	20
	7.9	Records	20
	7.10	Non-Arm’s Length Transactions	20
	7.11	Consents	20
	ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF POC	20
	8.1	Organization and Existence	21
	8.2	Authorization	21
	8.3	Consents	21
	8.4	Authorized Capital	21
	8.5	No Material Adverse Change	21
	8.6	Reporting Issuer Status	22
	8.7	TSXV Listing	22
	8.8	Reports and POC Financial Statements	22
	8.9	Absence of Certain Changes	22
	8.10	Corporate Documents, Books and Records	23
	8.11	No Other Agreement to Purchase	23
	8.12	Shareholder Loans	24
	8.13	Indebtedness and Liens	24
	8.14	Indebtedness to Officers, Directors and Others	24
	8.15	Taxes	24
	8.16	Title to Assets	24
	8.17	Material Contracts	24
	8.18	Title to Property	24
	8.19	Necessary Licenses and Permits	25
	8.20	Compliance with Law	25
	8.21	Employees	25
	8.22	Litigation	25

    	ii

    	 

    

 

	8.23	Employee Benefit Plans	25
	8.24	Inventory	25
	8.25	Insurance	26
	8.26	No Limitations	26
	8.27	Regulatory Compliance	26
	8.28	Non-Arm’s Length Transactions	26
	8.29	Enforceability	26
	ARTICLE 9 COVENANTS	26
	9.1	Filings	26
	9.2	Additional Agreements	27
	9.3	Access to Information	27
	9.4	Conduct of Business of Celtic	28
	9.5	Conduct of Business of POC	29
	9.6	Non-Solicitation	30
	ARTICLE 10 CONDITIONS TO OBLIGATION TO CLOSE	30
	10.1	POC’s Closing Conditions	30
	10.2	Focus’s Closing Conditions	32
	ARTICLE 11 TERMINATION	34
	11.1	Termination	34
	11.2	Effect of Termination	34
	11.3	Waivers and Extensions	34
	ARTICLE 12 TRANSACTION COSTS	34
	12.1	Transaction Costs	34
	ARTICLE 13 NOTICES	35
	13.1	Notices	35
	ARTICLE 14 INDEMNIFICATION	36
	14.1	Survival of Covenants, Agreements, Etc.	36
	14.2	Indemnification by the Vending Parties	36
	14.3	Indemnification by POC	36
	14.4	Notice of Claim	37
	14.5	Direct Claims	37
	14.6	Third Party Claims	37
	14.7	Settlement of Third Party Claims	38
	14.8	Co-operation	38
	14.9	Exclusivity	38
	ARTICLE 15 MISCELLANEOUS	38
	15.1	Amendments and Waivers	38
	15.2	Consent to Jurisdiction	38
	15.3	Governing Law	39
	15.4	Further Assurances	39
	15.5	Time	39
	15.6	Assignment	39
	15.7	Public Announcement; Disclosure	39
	15.8	Entire Agreement, Counterparts, Section Headings	39
	15.9	Regulatory Approval	39

 

 

SCHEDULES:

Schedule A      -      Property Rights

    	iii

    	 

    

SHARE EXCHANGE AGREEMENT

 

THIS AGREEMENT made as of the 27th day of February, 2012,

 

AMONG:

FOCUS GOLD CORP.,

a corporation existing under the laws of the State of Nevada

(“Focus”)

AND

FOCUS CELTIC GOLD CORPORATION,

a corporation existing under the federal laws of Canada

(“Celtic”)

AND

METALLUM RESOURCES PLC,

a corporation existing under the laws of England and Wales

(“Metallum Resources”)

AND

METALLUM EXPLORATION LIMITED,

a corporation existing under the laws of Northern Ireland

(“Metallum Exploration”)

AND

PACIFIC ORIENT CAPITAL INC.,

a corporation existing under the laws of the Province of Ontario

(“POC”)

 

WHEREAS Focus is the registered and beneficial owner of all the issued and outstanding shares of Celtic (each, a “Celtic Share” and collectively, the “Celtic Shares”);

 

AND WHEREAS Celtic is the registered and beneficial owner of approximately 98.67% of the issued and outstanding shares of Metallum Resources;

 

AND WHEREAS Metallum Resources is the registered and beneficial owner of all the issued and outstanding shares of Metallum Exploration;

 

AND WHEREAS Metallum Exploration is the registered and beneficial owner of the Property Rights (as defined herein);

 

  

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AND WHEREAS POC is a reporting issuer in the provinces of British Columbia, Alberta and Ontario whose common shares are listed on the TSX Venture Exchange (the “TSXV”);

 

AND WHEREAS POC and Focus wish to exchange securities on the terms and conditions herein contained;

 

AND WHEREAS immediately following such transactions, POC will indirectly own all of the Celtic Assets (as herein defined), and Focus will in the aggregate own approximately 84.13% of the aggregate number of common shares of POC (the “POC Shares”), prior to giving effect to the Financing (as defined herein);

 

AND WHEREAS the Acquisition (as defined herein) is intended to serve as POC’s “Qualifying Transaction” pursuant to the CPC Policy (as defined herein).

 

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby covenant and agree as follows.

 

ARTICLE 1

DEFINITIONS

 

1.1          Definitions

 

For all purposes of this Agreement the following capitalized terms shall have the meanings set forth in this Article 1:

 

“Acquisition” means the acquisition by POC of all of the issued and outstanding Celtic Shares in exchange for the issuance of POC Shares to Focus for the purposes of effecting a “Reverse Take-Over” within the meaning of TSXV Policy 5.2 – Change of Business and Reverse Take-Overs.

 

“Affiliate” of an entity means any Person directly or indirectly controlling, controlled by or under direct or indirect common control with such entity.

 

“Articles” means the certificate and articles of incorporation (as amended), certificate and articles of organization (as amended), constitution, operating agreement, joint venture or partnership agreement or articles or other constituting document of any Person other than an individual, each as from time to time amended or modified.

 

“Business Day” means a day, excluding Saturday and Sunday, on which banking institutions are open for business in Toronto, Ontario.

 

“Canadian GAAP” means accounting principles which are: (a) consistent with the principles promulgated or adopted by the Canadian Institute of Chartered Accountants and its predecessors, in effect from time to time; and (b) applied, unless otherwise required by Canadian GAAP, on a basis consistent with prior periods; for greater certainty, as at the date of this agreement, Canadian GAAP means IFRS.

 

“Canadian GAAS” means generally accepted auditing standards determined with reference to the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time.

 

“CPC Policy” means Policy 2.4 Capital Pool Companies of the TSXV.

 

  

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“CBCA” means the Canada Business Corporations Act, as amended.

 

“Celtic Assets” means all assets owned by Celtic, including but not limited to the Property Rights and cash.

 

“Celtic Convertible Debt” means the convertible debenture in the principal amount of $300,000 issued by Celtic effective February 17, 2012 inclusive of 1,333,333 warrants to purchase Celtic Shares.

 

“Celtic Shares” means, collectively, all of the issued and outstanding shares of Celtic.

 

“Change of Control” means the acquisition, directly or indirectly, of beneficial ownership of voting securities that results in a holding of more than 20% of the issued and outstanding voting securities of an issuer by a third party, other than in connection with this Agreement or an internal corporate reorganization.

 

“Charter” means the certificate and articles of incorporation (as amended), certificate and articles of organization (as amended), statute, constitution, operating agreement, joint venture or partnership agreement or articles or other constituting document of any Person other than an individual, each as from time to time amended or modified.

 

“Claim” has the meaning set forth in Section 14.4.

 

“Closing” means the closing of the Acquisition pursuant to the terms of this Agreement.

 

“Closing Date” means such date as Focus and POC shall determine for Closing.

 

“Closing Time” means 10:00 a.m. (Toronto time) on the Closing Date.

 

“Consent” means a license, permit, approval, consent, certificate, registration or authorization (including, without limitation, those made or issued by a regulatory authority or otherwise).

 

“Control” in respect of a Person (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 ownership of voting securities, by contract or by other arrangement.

 

“Direct Claim” has the meaning set forth in Section 14.4.

 

“Distribution” means: (a) the declaration or payment of any dividend in cash, securities or property on or in respect of any class of securities of the Person or its Subsidiaries; (b) the purchase, redemption or other retirement of any securities of the Person or its Subsidiaries, directly or indirectly; or (c) any other distribution on or in respect of any class of securities of the Person or its Subsidiaries.

 

“Dollars” and “$” means Canadian dollars, unless otherwise specified.

 

“Environmental Consents” means all Consents issued by or issuable by any regulatory authority under Environmental Laws.

 

“Environmental Laws” means all applicable Laws relating to the protection of human health and safety, the environment or natural environment (as defined in all such Laws including air, surface water, ground water, land surface, soil, and subsurface strata), or hazardous or toxic substances or wastes, pollutants or contaminants.

 

  

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“Financing” means an equity financing of POC Shares to be completed on a private placement basis, on or prior to the Closing Date, for aggregate gross proceeds of not less than $1,000,000 at an issue price per security of not less than $0.30, or such other amount as may be required by the TSXV to meet initial listing requirements for a Tier 2 mining issuer; for certainty, the parties agree that the aggregate gross proceeds of the financing shall not be less than $1,000,000 absent the written consent of Focus.

 

“Hazardous Substance” means any chemical, material or substance in any form, whether waste material, raw material, finished product, intermediate product, by-product or any other material or article, that is listed or regulated under any Environmental Laws as a hazardous substance, toxic substance, deleterious substance, waste, pollutant or contaminant or is otherwise listed or regulated under any Environmental Laws because it poses a hazard to human health or the environment, including petroleum and petroleum products, urea formaldehyde foam insulation, asbestos, polychlorinated biphenyls, and flammable and radioactive materials.

 

“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

“Income Tax Act” means the Income Tax Act (Canada), as amended from time to time.

 

“Indebtedness” means all obligations, contingent (to the extent required to be reflected in financial statements prepared in accordance with Canadian GAAP) and otherwise, which in accordance with Canadian GAAP should be classified on the obligor’s balance sheet as liabilities, including without limitation, in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all agreements of guarantee, support, indemnification, assumption or endorsement and other contingent obligations whether direct or indirect in respect of Indebtedness or performance of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agreement to purchase goods, supplies or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise; (d) obligations to reimburse issuers of any letters of credit; and (e) capital leases.

 

“Indemnified Party” has the meaning set forth in Section 14.4.

 

“Insider” has the meaning given to such term in Policy 1.1 – Interpretation of the TSXV.

 

“Laws” mean all federal, provincial, state, municipal or local laws, rules, regulations, statutes, by-laws, ordinances, policies or orders of any federal, provincial, state, regional or local government or any subdivision thereof or any arbitrator, court, administrative or regulatory agency, commission, department, board or bureau or body or other government or authority or instrumentality or any entity or Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Lien” means: (a) any encumbrance, mortgage, pledge, hypothec, prior claim, lien, charge or other security interest of any kind upon any property or assets of any character, or upon the income or profits therefrom; (b) any acquisition of or agreement to have an option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement (including a capitalized lease); or (c) any sale, assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse.

 

  

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“Losses”, in respect of any matter, means all claims, demands, proceedings, losses, damages, liabilities, deficiencies, costs and expenses (including, without limitation, all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising directly or indirectly as a consequence of such matter.

 

“Market Price” means, in respect of a class of securities, the market price of such class of securities determined in accordance with Policy 1.1  – Interpretation of the TSXV.

 

“Material Adverse Effect” in respect of a Person means any change, effect, event, occurrence, condition or development that has or could reasonably be expected to have, individually or in the aggregate, a material and adverse impact on the business, operations, results of operations, assets, capitalization or financial condition of such Person, other than any change, effect, event, occurrence or state of facts relating to the global economy or securities markets in general.

 

“Metallum Exploration” means Metallum Exploration Limited, a corporation existing under the laws of Northern Ireland.

 

“Metallum Resources” means Metallum Resources plc, a limited liability company existing under the laws of England and Wales.

 

“Permitted Encumbrances” means:

 

	
(a)  

	
servitudes, easements, restrictions, rights of parties in possession, zoning restrictions, encroachments, reservations, rights-of-way and other similar rights in real property or any interest therein, provided the same are not of such nature as to materially adversely affect the validity of title to or the value, marketability or use of the Property Rights;

 

	
(b)  

	
liens for Taxes either not due and payable or due but for which notice of assessment has not been given; and

 

	
(c)  

	
undetermined or inchoate liens, charges and privileges incidental to current construction or current operations and Liens claimed or held by any regulatory authority that have not at the time been filed or registered against the title to the Property Rights or served upon Metallum Resources pursuant to law or that relate to obligations not due or delinquent.

 

“Permitted Liens” means:

 

	
(a)  

	
undetermined or inchoate Liens and charges incidental to construction, maintenance or operations or otherwise relating to the ordinary course of business which have not at the time been filed pursuant to law;

 

	
(b)  

	
Liens for taxes and assessments for the then current year, Liens for taxes and assessments not at the time overdue, Liens securing worker’s compensation assessments and Liens for specified taxes and assessments which are overdue (and which have been disclosed to the other parties to this Agreement) but the validity of which is being contested at the time in good faith, if the Person shall have made on its books provision reasonably deemed by it to be adequate therefor;

 

	
(c)  

	
cash or governmental obligations deposited in the ordinary course of business in connection with contracts, bids, tenders or to secure worker’s compensation, unemployment insurance, surety or appeal bonds, costs of litigation, when required by law, public and statutory obligations, Liens or claims incidental to current construction, and mechanics’, warehousemen’s, carriers’ and other similar Liens;

 

  

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(d)  

	
all rights reserved to or vested in any governmental body by the terms of any lease, licence, franchise, grant or permit held by it or by any statutory provision to terminate any such lease, licence, franchise, grant or permit or to require annual or periodic payments as a condition of the continuance thereof or to distrain against or to obtain a Lien on any of its property or assets in the event of failure to make such annual or other periodic payments; and

 

	
(e)  

	
Purchase Money Obligations.

 

“Person” means an individual, partnership, corporation, association, trust, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof.

 

“POC Assets” means all assets owned by POC, including but not limited to cash.

 

“POC Filing Statement” means the filing statement to be prepared by POC in accordance with Form 3B2 in respect of the Qualifying Transaction.

 

“POC Financial Statements” has the meaning set forth in Section 8.8(a).

 

“POC Options” means options to acquire POC Shares.

 

“POC Plan” means the stock option plan of POC.

 

“POC Shares” means the common shares in the capital of POC.

 

“POC Shareholders” means, collectively, the registered and beneficial holders of all the POC Shares.

 

“Property Rights” means the freehold title, mining leases, mining concessions, mining claims or participating interests or other conventional property or proprietary interests or rights, recognized in the United Kingdom and Northern Ireland in respect of ore bodies and mineral assets of Metallum Exploration, as further described in Schedule “A” attached hereto.

 

“Purchase Money Obligations” means Indebtedness of a debtor, reflected in the debtor’s financial statements, and incurred or assumed to finance the purchase or acquisition, in whole or in part, of any tangible real or personal property or incurred to finance the cost, in whole or in part, of the construction or installation of any tangible personal property, provided, however, that such Indebtedness is incurred or assumed at the time of or within 30 days after the purchase of such property or the completion of such construction or installation, as the case may be, and include any extension, renewal or refinancing of any such Indebtedness so long as the principal amount thereof outstanding at the date of such extension, renewal or refinancing is not increased.

 

“Share Exchange” means the exchange of Celtic Shares for POC Shares, all as provided for herein, pursuant to which POC will own all of the Celtic Shares and Focus will in the aggregate own approximately 84.1% of the aggregate number of POC Shares, prior to giving effect to the Financing.

 

“subsidiary” shall have the same meaning as the term “subsidiary companies” in the Securities Act (Ontario).

 

  

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“Tax” or “Taxes” means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative net worth, transfer, profits, withholding, payroll, employer health, employer safety, workers compensation, excise, immovable property and moveable property taxes, and any other taxes, customs duties, fees, assessments or similar charges in the nature of a tax including Canada Pension Plan, Social Security and provincial plan contributions and workers compensation premiums, together with any interest, fines and penalties imposed by any governmental authority (including federal, provincial, municipal and foreign governmental authorities), and whether disputed or not.

 

“Tax Returns” has the meaning set forth in Section 3.5.

 

“Third Party Claim” has the meaning set forth in Section 14.4.

 

“Vending Parties” means, collectively, Focus, Celtic, Metallum Resources and Metallum Exploration.

 

1.2          Hereof, Herein, etc.

 

The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting.  All references as to “Sections”, “Subsections”, “Articles”, “Schedules” and “Exhibits” shall be to Sections, Subsections, Articles, Schedules and Exhibits, respectively, of this Agreement unless otherwise specifically provided.

 

1.3          Computation of Time Periods

 

In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein, the words “commencing on” mean “commencing on and including”, the word “from” means “from and including” and the words “to” and “until” each means “to and including”.

 

1.4          Knowledge

 

Whenever used in this Agreement, a statement qualified by the phrase “to the knowledge of” or similar statement is intended to be a statement of the knowledge of the Person or senior officers of the Person regarding the facts or circumstances to which the phrase relates, after having made due inquiries and investigations with respect to such facts or circumstances.

 

1.5          Schedules

 

The following Schedules are attached hereto and form part of this Agreement:

 

Schedule A    -     Property Rights

ARTICLE 2   

AGREEMENT TO EXCHANGE

 

2.1          Share Exchange

 

	
(a)  

	
The parties agree that as consideration for the exchange, transfer and assignment of all of the Celtic Shares to POC, POC shall issue to Focus an aggregate of twenty-six million five hundred thousand (26,500,000) POC Shares.

 

  

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(b)  

	
Fractional POC Shares shall not be issued or otherwise provided for.

 

2.2 Closing and Delivery of Certificates

 

	
(a)  

	
The Closing shall take place at the Toronto offices of Heenan Blaikie LLP, at the Closing Time on the Closing Date, or as Celtic and POC may otherwise agree in writing.

 

	
(b)  

	
Subject to the satisfaction of the conditions to the obligation to close the transactions contemplated herein set forth in Article 7 Focus shall transfer and deliver to POC at the Closing Time certificates representing the Celtic Shares  endorsed in blank for transfer or accompanied by a duly executed power of attorney for transfer in blank;

 

	
(c)  

	
Subject to compliance with Section 2.2(b), POC shall deliver to Focus at the Closing Time a certificate or certificates evidencing 26,500,000 POC Shares and shall enter Focus on the books of POC as the registered holder of such POC Shares.

 

2.3          Escrow

 

Focus acknowledges that the POC Shares acquired by it pursuant to this Agreement may be escrowed pursuant to the policies of the TSXV.

 

2.4          Effective Date

 

The exchange of Celtic Shares for POC Shares shall take effect at and from the Closing Time.

 

2.5          Share Capital

 

For greater certainty, the parties acknowledge that approximately 31,500,000 POC Shares will be issued and outstanding after the Closing, but before taking into account the POC Shares issued in connection with the Financing, of which (i) an aggregate of 26,500,000 POC Shares shall be held by Focus, and (ii) an aggregate of 5,000,000 POC Shares shall be held by the current shareholders of POC.

 

ARTICLE 3     

REPRESENTATIONS AND WARRANTIES OF THE VENDING PARTIES

 

In order to induce POC to enter into this Agreement and to consummate the transactions contemplated by this Agreement, each of the Vending Parties jointly and severally hereby represent and warrant as follows to and in favour of POC and acknowledge that POC is relying upon such representations and warranties in connection with the Share Exchange:

 

3.1          No Other Agreement to Purchase

 

Other than as contemplated herein, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon Focus or Celtic to issue any equity securities or any securities convertible or exchangeable, directly or indirectly, into any equity securities of Celtic.  There are no shareholders’ agreements, pooling agreements, voting trusts or other agreements or understandings with respect to the voting of the Celtic Shares, or any of them.

 

  

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3.2          Absence of Certain Changes

 

Since November 30, 2011, no Vending Party has (except as may be disclosed in writing to POC):

 

	
(a)  

	
other than the Celtic Convertible Debt, issued, sold, or agreed to issue, sell, pledge, hypothecate, lease, dispose of or encumber any Celtic Shares or other corporate securities or any right, option or warrant with respect thereto;

 

	
(b)  

	
amended or proposed to amend its Articles or by-laws;

 

	
(c)  

	
split, combined or reclassified any of its securities or declared or made any Distribution;

 

	
(d)  

	
suffered any material loss relating to litigation or, to the knowledge of the Vending Parties, been threatened with litigation;

 

	
(e)  

	
other than as disclosed to POC, entered into or amended any employment contracts with any director, officer or senior management employee, created or amended any employee benefit plan, made any increases in the base compensation, bonuses, paid vacation time allowed or fringe benefits for its directors or officers;

 

	
(f)  

	
suffered damage, destruction or other casualty, loss, or forfeiture of, any property or assets, whether or not covered by insurance;

 

	
(g)  

	
made any capital expenditures, additions or improvements or commitments for the same, except those in the ordinary course of each Vending Party’s business;

 

	
(h)  

	
other than in the ordinary course of business: (i) entered into any contract, commitment or agreement under which it has outstanding Indebtedness for borrowed money or for the deferred purchase price of property; or (ii) made any loan or advance to any Person;

 

	
(i)  

	
other than as contemplated in the this Agreement, acquired or agreed to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or assets or otherwise) any Person, corporation, partnership, joint venture or other business organization or division or acquired or agreed to acquire any material assets;

 

	
(j)  

	
entered into any material contracts regarding its business operations, including joint ventures, partnerships or other arrangements;

 

	
(k)  

	
created any stock option or bonus plan, paid any bonuses, deferred or otherwise, or deferred any compensation to any of its directors or officers other than such payments made in the ordinary course of business;

 

	
(l)  

	
made any material change in accounting procedures or practices;

 

	
(m)  

	
other than in respect of the Celtic Convertible Debt, mortgaged, hypothecated or pledged any of the Celtic Assets, or subjected them to any Lien other than a Permitted Lien;

 

	
(n)  

	
entered into any other material transaction, or any amendment of any contract, lease, agreement or license which is material to its business;

 

	
(o)  

	
sold, leased, subleased, assigned or transferred any of the Celtic Assets;

 

	
(p)  

	
cancelled, waived or compromised any debts or claims, including accounts payable to and receivable from its Affiliates;

 

  

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(q)  

	
failed to pay or satisfy when due any liability of Celtic where the failure to do so would have a Material Adverse Effect on Celtic;

 

	
(r)  

	
other than the Celtic Convertible Debt, entered into any agreement or understanding to do any of the foregoing; or

 

	
(s)  

	
discharged or satisfied any liens or paid any obligation or liability other than liabilities shown in the Financial Statements of the Vending Parties (other than Focus) or otherwise in the ordinary course of business.

 

3.3          Indebtedness to Directors, Officers and Others

 

None of the Vending Parties is indebted to any director, officer, employee or consultant of any Vending Party, except for amounts due as normal compensation or reimbursement of ordinary business expenses.

 

3.4          Rights of Directors, Officers and Others

 

No director, officer, Insider or other non-arm’s length party to any Vending Party (or any associate or affiliate thereof) has any right, title or interest in (or the right to acquire any right, title or interest in) any royalty interest, carried interest, participation interest or any other interest whatsoever which are based on production from or in respect of the Property Rights.

 

3.5          Taxes

 

All returns, declarations, reports, estimates, statements, schedules or other information or documents with respect to Taxes (collectively, “Tax Returns”) required to be filed by or with respect to each Vending Party have been filed within the prescribed time, with the appropriate tax authorities and all such Tax Returns are true, correct, and complete in all material respects.  No Tax Return of a Vending Party is being audited by the relevant taxing authority, and there are no outstanding waivers, objections, extensions, or comparable consents regarding the application of the statute of limitations or period of reassessment with respect to any Taxes or Tax Returns that have been given or made by any Vending Party (including the time for filing of Tax Returns or paying Taxes) and no Vending Party has any pending requests for any such waivers, extensions, or comparable consents.  No Vending Party has received a ruling from any taxing authority or signed an agreement with any taxing authority that could reasonably be expected to have a Material Adverse Effect on Celtic or the Celtic Assets.  No Vending Party does not owe any Taxes to the federal government, a provincial government, a municipal government or any other governmental authority.

 

3.6          Property Rights

 

	
(a)  

	
Metallum Exploration holds either freehold title, development and production leases, exploration licences, participating interests or other conventional property or proprietary interests or rights, recognized in the United Kingdom and Northern Ireland in respect of the minerals located in or under the Property Rights under valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, sufficient to permit Celtic to explore the mineral resources relating thereto.

 

	
(b)  

	
To the knowledge of the Vending Parties, there are no disputes, adverse claims, actions, suits or proceedings that have been commenced or, to the knowledge of the Vending Parties, that are pending or threatened, affecting or which could affect the title to or right to explore or develop any of the Property Rights that might involve the possibility of any judgment or liability affecting the Property Rights.  The Property Rights are free and clear of all Liens other than (i) Permitted Liens, and (ii) such Liens that would not reasonably be expected to have a Material Adverse Effect on Celtic and the Celtic Assets.

 

  

-10-

  

	
(c)  

	
All property, leases, concessions or claims in connection with the Property Rights have been validly located and recorded in accordance, in all material respects, with all applicable laws and are valid and subsisting except where the failure to be so would not have a Material Adverse Effect on Celtic.

 

	
(d)  

	
Metallum Exploration has all necessary surface rights, access rights and other necessary rights and interests relating to the Property Rights granting Metallum Exploration the right and ability to explore for minerals, ore and metals for development purposes as are appropriate in view of the rights and interest therein of Metallum Exploration, with only such exceptions as do not interfere in any material way with the use made by Metallum Exploration of the rights or interest so held.

 

	
(e)  

	
Each of the proprietary interests or rights and each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing in the name of Metallum Exploration or has been validly assigned thereto, except where the failure to be so would not have a Material Adverse Effect on Celtic or Metallum Exploration.

 

3.7          Joint Ventures

 

No Vending Party has entered into any joint ventures with any third party in respect of the Property Rights.

 

3.8          Restrictive Covenants

 

No Vending Party is a party to or bound or affected by any commitment, agreement or document containing any covenant expressly limiting its freedom to compete in any line of business, compete in any geographic region, transfer or move any of its assets or operations.

 

3.9          Material Contracts

 

All material contracts, agreements, leases and commitments of the Vending Parties in respect of the Property Rights are valid, binding and in full force and effect, and no Vending Party is in breach or violation of, or default under, the terms of any such contract, agreement, lease or commitment, except where such breach, violation or default would not have a Material Adverse Effect on the Property Rights, and no event has occurred which constitutes or, with the lapse of time or the giving of notice, or both, would constitute, such a breach, violation or default by any Vending Party.

 

3.10        Necessary Licenses and Permits

 

Metallum Exploration has all necessary and required licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, provincial, or local, required to own and lease their respective properties and assets and to conduct their business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on the Property Rights.  Metallum Exploration is not in default, nor has it received any notice of any claim or default with respect to any such license, permit, consent, concession or authorization.  No registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind is required by virtue of the execution and delivery of this Agreement, or of the consummation of the transactions contemplated hereby: (a) to avoid the loss of any license, permit, consent, concession or other authorization or any asset, property or right pursuant to the terms thereof, or the violation or breach of any law applicable thereto, or (b) to enable Metallum Exploration to hold and enjoy the same immediately after the Closing Date in the conduct of its business as conducted prior to the Closing Date.

 

  

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3.11        Compliance with Law

 

No Vending Party is in default under, or in violation of, and has not violated (and failed to cure) any law including, without limitation, laws relating to the issuance or sale of securities, privacy and intellectual property, or any licenses, franchises, permits, authorizations or concessions granted by, or any judgment, decree, writ, injunction or order of, any governmental or regulatory authority, applicable to its business or any of its properties or assets, except where such default or violation would not have a Material Adverse Effect on the Property Rights.  No Vending Party has received any notification alleging any violations of any of the foregoing with respect to which adequate corrective action has not been taken.

 

3.12        Employees

 

None of Celtic, Metallum Resources nor Metallum Exploration has any employees or independent contractors (other than professional advisors engaged by such parties to provide accounting services or in connection with the Share Exchange) and there are no agreements, written or oral, between Celtic and any other party relating to payment, remuneration or compensation for work performed or services provided (other than professional advisors engaged by such parties to provide accounting services or in connection with the Share Exchange) or payment relating to a Change of Control of any such party.

 

3.13        Employee Benefit Plans

 

None of Celtic, Metallum Resources nor Metallum Exploration has any employee benefit plans (or any plan which may be in any way regarded as an employee benefit plan) of any nature whatsoever nor has it ever had any such plans.

 

3.14        Litigation

 

There is no suit, claim, action, proceeding or, to the knowledge of the Vending Parties, investigation pending or threatened against or affecting any of the Vending Parties, or any of the Celtic Assets or any officer or director thereof in his capacity as an officer or director thereof.

 

3.15        No Material Adverse Change

 

Since November 30, 2011, no change has occurred in the business, operations, results of operations, assets, capitalization or condition (financial or otherwise) of any Vending Party, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on any such Vending Party.

 

3.16        No Limitations

 

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place, whether written or oral, to which any Vending Party is a party or is otherwise bound that would now or hereafter, in any way limit the use of or operation of Celtic Assets.

 

  

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3.17        Reporting Issuer Status

 

None of the Vending Parties is a “reporting issuer” (or the equivalent status) in any province or territory of Canada. No order has been issued ceasing or suspending trading or prohibiting the issue of any securities of Celtic, Metallum Resources or Metallum Exploration and no such proceedings are pending, or to the knowledge of the Vending Parties, threatened.

 

3.18        Regulatory Compliance

 

Each Vending Party is in compliance with all regulatory orders, directives and decisions that have application to the Celtic Assets except where such non-compliance would not have a Material Adverse Effect on the Celtic Assets and no Vending Party has received notice from any governmental or regulatory authority that it is not in compliance with any such regulatory orders, directives or decisions.

 

3.19        Environmental Compliance

 

	
(a)  

	
Metallum Exploration and the Celtic Assets have been and are in compliance with all Environmental Laws, including all Environmental Consents.

	
(b)  

	
None of the Vending Parties has been charged with or convicted of any offence for non-compliance with Environmental Laws and there are no judgments, orders, notices, proceedings or investigations of any nature relating to any breach or alleged breach of Environmental Laws by any Vending Party.

	
(c)  

	
The Vending Parties have obtained all Environmental Consents necessary to own, use and operate the Celtic Assets.

	
(d)  

	
None of the Vending Parties has used any of the Celtic Assets to produce, generate, manufacture, treat, store, handle, transport or dispose of any Hazardous Substances except in compliance with Environmental Laws.

3.20        Condition of Assets.

 

All material tangible personal property comprising the Celtic Assets is in good operating condition, repair and proper working order, having regard to the use and age thereof, except only for reasonable wear and tear.  No Persons other than the Vending Parties own any assets which are being used in the business of the Vending Parties (other than Focus) and there are no agreements or commitments by the Vending Parties to purchase property or assets, other than in the ordinary course of their business.  The Vending Parties have not received notice of any material defect in its title or claim to the Celtic Assets or any notice from any third party claiming such an interest, and, for the period of time that the Vending Parties have owned the Celtic Assets, as applicable, all material relevant obligations of the Vending Parties in relation to the Celtic Assets have been performed and observed.

ARTICLE 4  

REPRESENTATIONS AND WARRANTIES OF FOCUS

 

Focus represents and warrants, but only as to itself, to POC as follows:

 

  

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4.1          Organization and Existence

 

Focus is a corporation duly incorporated, organized and validly existing under the laws of its jurisdiction of incorporation and has the corporate power to own its properties and to carry on its business as now conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which it is subject, except where the failure to make such filing would not have a Material Adverse Effect on Focus. No proceedings have been instituted or are pending for the dissolution or liquidation of Focus.

 

4.2          Capacity

 

Focus has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

4.3          Enforceability

 

This Agreement and any other agreement contemplated by this Agreement has been duly executed and delivered by Focus and will result in legally binding obligations of Focus enforceable against Focus in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

 

4.4          No Violation

 

The execution and delivery of this Agreement, the transfer of the Celtic Shares and the performance, observance or compliance with the terms of this Agreement by Focus will not violate, constitute a default under, conflict with, or give rise to any requirement for a waiver or consent under:

 

	
(a)  

	
any provision of law or any order of any court or other governmental agency applicable to Focus;

 

	
(b)  

	
the Articles of Focus;

 

	
(c)  

	
any provision of any agreement, instrument or other obligation to which Focus is a party or by which Focus is bound; or

 

	
(d)  

	
any applicable judgment, writ, decree, order or Laws applicable to Focus.

 

4.5          Authorized Capital

 

The authorized capital of Focus consists of 100,000,000 shares of preferred stock and 250,000,000 shares of common stock of which nil shares of preferred stock and l shares are issued and outstanding as at the date hereof.

 

4.6          Celtic Shares

 

	
(a)  

	
Focus has good and marketable title to the Celtic Shares held by Focus, free of all mortgages, charges, liens, pledges, claims, security interests and agreements and other encumbrances of whatsoever nature and no person or entity has any agreement or option or right capable of becoming an agreement or option for the purchase from Focus of any of the Celtic Shares except as provided for herein, and Focus has good right, full power and absolute authority to sell and assign all of the Celtic Shares to POC for the purpose and in the manner as provided for in this Agreement and the Celtic Shares constitute all of the Celtic Shares owned or controlled, directly or indirectly, by Focus. The Celtic Shares held by Focus are not subject to any shareholder, pooling, escrow or similar agreements.

 

  

-14-

  

	
(b)  

	
There is no suit, action, litigation, arbitration proceeding or governmental proceeding, including appeals and applications for review, in progress or, to the knowledge of Focus, threatened against or related to the Celtic Shares held by Focus or which would affect Focus’ ability to sell the Celtic Shares as provided for in this Agreement

 

ARTICLE 5      

REPRESENTATIONS AND WARRANTIES OF CELTIC

 

Celtic represents and warrants, but only as to itself, to POC as follows:

 

5.1          Organization and Existence

 

Celtic is a corporation duly incorporated, organized and validly existing under the laws of its jurisdiction of incorporation and has the corporate power to own its properties and to carry on its business as now conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which it is subject, except where the failure to make such filing would not have a Material Adverse Effect on Focus. Other than Metallum Resources, Celtic has no direct subsidiaries.  No proceedings have been instituted or are pending for the dissolution or liquidation of Celtic.

 

5.2          Capacity

 

Celtic has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

5.3          Enforceability

 

This Agreement and any other agreement contemplated by this Agreement has been duly executed and delivered by Celtic and will result in legally binding obligations of Celtic enforceable against Celtic in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

 

5.4          No Violation

 

The execution and delivery of this Agreement and the performance, observance or compliance with the terms of this Agreement by Celtic will not violate, constitute a default under, conflict with, or give rise to any requirement for a waiver or consent under:

 

	
(a)  

	
any provision of law or any order of any court or other governmental agency applicable to Celtic;

 

	
(b)  

	
the Articles of Celtic;

 

	
(c)  

	
any provision of any agreement, instrument or other obligation to which Celtic is a party or by which Celtic is bound; or

 

  

-15-

  

	
(d)  

	
any applicable judgment, writ, decree, order or Laws applicable to Celtic.

 

5.5          Authorized Capital

 

The authorized capital of Celtic consists of an unlimited number shares of common stock of which 26,500,500 shares are issued and outstanding as at the date hereof, all of which are held by Focus.

 

5.6          No Other Agreement to Purchase

 

Other than the Focus Convertible Debt, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon Celtic to issue any shares or any securities convertible or exchangeable, directly or indirectly, into shares of Celtic.

 

5.7          Corporate Records

 

The corporate records of Celtic are complete and accurate in all material respects and all corporate proceedings and actions reflected therein have been conducted or taken in compliance with all applicable laws and with the Articles of Celtic, except where the failure to so comply would not have a Material Adverse Effect.

 

5.8          Shareholder Agreements

 

There are no shareholders’ agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the shares of Celtic.

 

5.9          Records

 

The technical, business and financial records of Celtic have been duly maintained in accordance with all applicable legal requirements and contain full and accurate records of all material matters relating to Celtic.  All material financial transactions relating to Celtic have been accurately recorded in the records in accordance with generally accepted accounting principles.  No records are maintained by, or otherwise dependent on, any other Person.  Any records in the possession of, or recorded or stored by any other Person are available to Celtic upon commercially reasonable terms and conditions.

 

5.10        Non-Arm’s Length Transactions

 

	
(a)  

	
Celtic has not made any payment or loan to, or has borrowed any monies from or is otherwise indebted to, any officer, director, employee, shareholder or any other Person with whom Celtic is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing; and

 

	
(b)  

	
Celtic is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom Celtic is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing, except for incentive stock option agreements.

 

5.11        Consents

 

The execution, delivery and performance by Celtic of this Agreement does not and will not require the authorization, approval or consent of, or any filing with, any governmental authority or agency or any other Person, except those required by applicable securities laws and the rules and policies of the TSXV.

 

  

-16-

  

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF METALLUM RESOURCES

 

Metallum Resources represents and warrants, but only as to itself, to POC as follows: DIRECTOR FEES (3.3)

 

6.1          Organization and Existence

 

Metallum Resources is a corporation duly incorporated, organized and validly existing under the laws of its jurisdiction of incorporation and has the corporate power to own its properties and to carry on its business as now conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which it is subject, except where the failure to make such filing would not have a Material Adverse Effect on Metallum Resources.  Other than Metallum Exploration, Metallum Resources has no subsidiaries.  No proceedings have been instituted or are pending for the dissolution or liquidation of Metallum Resources.

 

6.2          Capacity

 

Metallum Resources has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

6.3          Enforceability

 

This Agreement and any other agreement contemplated by this Agreement has been duly executed and delivered by Metallum Resources and will result in legally binding obligations of Metallum Resources enforceable against Metallum Resources in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

 

6.4          No Violation

 

The execution and delivery of this Agreement and the performance, observance or compliance with the terms of this Agreement by Metallum Resources will not violate, constitute a default under, conflict with, or give rise to any requirement for a waiver or consent under:

 

	
(a)  

	
any provision of law or any order of any court or other governmental agency applicable to Metallum Resources;

 

	
(b)  

	
the Articles of Metallum Resources;

 

	
(c)  

	
any provision of any agreement, instrument or other obligation to which Metallum Resources is a party or by which Metallum Resources is bound; or

 

	
(d)  

	
any applicable judgment, writ, decree, order or Laws applicable to Metallum Resources.

 

6.5          Authorized Capital

 

The authorized capital of Metallum Resources consists of 376,800,000 Class A shares and 50,000,000 Class B shares of which [73,812,457] Class A shares and nil Class B shares are issued and outstanding as at the date hereof, of which 98.67% of such Class A shares are owned by Celtic.

 

  

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6.6          No Other Agreement to Purchase

 

There are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon Metallum Resources to issue any shares or any securities convertible or exchangeable, directly or indirectly, into shares of Metallum Resources.

 

6.7          Corporate Records

 

The corporate records of Metallum Resources are complete and accurate in all material respects and all corporate proceedings and actions reflected therein have been conducted or taken in compliance with all applicable laws and with the Articles of Metallum Resources, except where the failure to so comply would not have a Material Adverse Effect.

 

6.8          Shareholder Agreements

 

There are no shareholders’ agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the shares of Metallum Resources.

 

6.9          Records

 

The technical, business and financial records of Metallum Resources have been duly maintained in accordance with all applicable legal requirements and contain full and accurate records of all material matters relating to Metallum Resources.  All material financial transactions relating to Metallum Resources have been accurately recorded in the records in accordance with generally accepted accounting principles.  No records are maintained by, or otherwise dependent on, any other Person.  Any records in the possession of, or recorded or stored by any other Person are available to Metallum Resources upon commercially reasonable terms and conditions.

 

6.10        Non-Arm’s Length Transactions

 

	
(a)  

	
Metallum Resources has not made any payment or loan to, or has borrowed any monies from or is otherwise indebted to, any officer, director, employee, shareholder or any other Person with whom Metallum Resources is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing; and

 

	
(b)  

	
Metallum Resources is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom Metallum Resources is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing, except for incentive stock option agreements.

 

6.11        Consents

 

The execution, delivery and performance by Metallum Resources of this Agreement does not and will not require the authorization, approval or consent of, or any filing with, any governmental authority or agency or any other Person, except those required by applicable securities laws and the rules and policies of the TSXV.

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF METALLUM EXPLORATION

 

Metallum Exploration represents and warrants, but only as to itself, to POC as follows:

 

  

-18-

  

7.1          Organization and Existence

 

Metallum Exploration is a corporation duly incorporated, organized and validly existing under the laws of its jurisdiction of incorporation and has the corporate power to own its properties and to carry on its business as now conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which it is subject, except where the failure to make such filing would not have a Material Adverse Effect on Metallum Exploration. Metallum Exploration has no subsidiaries. No proceedings have been instituted or are pending for the dissolution or liquidation of Metallum Exploration.

 

7.2          Capacity

 

Metallum Exploration has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

7.3          Enforceability

 

This Agreement and any other agreement contemplated by this Agreement has been duly executed and delivered by Metallum Exploration and will result in legally binding obligations of Metallum Exploration enforceable against Metallum Exploration in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

 

7.4          No Violation

 

The execution and delivery of this Agreement and the performance, observance or compliance with the terms of this Agreement by Metallum Exploration will not violate, constitute a default under, conflict with, or give rise to any requirement for a waiver or consent under:

 

	
(a)  

	
any provision of law or any order of any court or other governmental agency applicable to Metallum Resources;

 

	
(b)  

	
the Articles of Metallum Exploration;

 

	
(c)  

	
any provision of any agreement, instrument or other obligation to which Metallum Exploration is a party or by which Metallum Exploration is bound; or

 

	
(d)  

	
any applicable judgment, writ, decree, order or Laws applicable to Metallum Exploration.

 

7.5          Authorized Capital

 

The authorized capital of Metallum Exploration consists of [an unlimited number common shares] of which l shares are issued and outstanding as at the date hereof, all of which are owned by Metallum Resources.

 

  

-19-

  

7.6          No Other Agreement to Purchase

 

Other than as set out herein, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon Metallum Exploration to issue any shares or any securities convertible or exchangeable, directly or indirectly, into shares of Metallum Exploration.

 

7.7          Corporate Records

 

The corporate records of Metallum Exploration are complete and accurate in all material respects and all corporate proceedings and actions reflected therein have been conducted or taken in compliance with all applicable laws and with the Articles of Metallum Exploration, except where the failure to so comply would not have a Material Adverse Effect.

 

7.8          Shareholder Agreements

 

There are no shareholders’ agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the shares of Metallum Exploration.

 

7.9          Records

 

The technical, business and financial records of Metallum Exploration have been duly maintained in accordance with all applicable legal requirements and contain full and accurate records of all material matters relating to Metallum Exploration.  All material financial transactions relating to Metallum Exploration have been accurately recorded in the records in accordance with generally accepted accounting principles.  No records are maintained by, or otherwise dependent on, any other Person.  Any records in the possession of, or recorded or stored by any other Person are available to Metallum Exploration upon commercially reasonable terms and conditions.

 

7.10        Non-Arm’s Length Transactions

 

	
(a)  

	
Except as disclosed to POC, Metallum Exploration has not made any payment or loan to, or has borrowed any monies from or is otherwise indebted to, any officer, director, employee, shareholder or any other Person with whom Metallum Exploration is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing; and

 

	
(b)  

	
Metallum Exploration is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom Metallum Exploration is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing, except for incentive stock option agreements.

 

7.11        Consents

 

The execution, delivery and performance by Metallum Exploration of this Agreement does not and will not require the authorization, approval or consent of, or any filing with, any governmental authority or agency or any other Person, except those required by applicable securities laws and the rules and policies of the TSXV.

 

ARTICLE 8

REPRESENTATIONS AND WARRANTIES OF POC

 

In order to induce the Vending Parties Focus to enter into this Agreement and to consummate the transactions contemplated by this Agreement, POC hereby represents and warrants as follows to and in favour of each Vending Party and acknowledges that the Vending Parties are relying upon such representations and warranties in connection with the Share Exchange:

 

  

-20-

  

8.1          Organization and Existence

 

POC is a corporation duly incorporated, organized and validly existing under the laws of the Province of Ontario and has the corporate power to own its properties and to carry on its business as now conducted and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which POC is subject, except where the failure to make such filing would not have a Material Adverse Effect on POC.  POC does not have any Subsidiaries.  No proceedings have been instituted or are pending for the dissolution or liquidation of POC.  No articles of amendment have been or will be filed or authorized by the shareholders of POC and no amendments to the by-laws of POC have been enacted since December 15, 2010.

 

8.2          Authorization

 

	
(a)  

	
The execution, delivery and performance by POC of this Agreement and the Share Exchange: (i) are within its corporate power and authority; (ii) have been, or will be duly authorized by all necessary corporate proceedings; and (iii) do not and will not conflict with or result in any breach of any provision of, or the creation of any Lien upon any of the property of POC pursuant to the Articles or by-laws of POC, any Laws, order, judgment, injunction, license or permit applicable to POC or any indenture, lease, agreement, contract, instrument or Lien, to which POC is a party or by which the property of POC may be bound or affected.

 

	
(b)  

	
The POC Shares, when delivered to Focus in accordance with the terms of this Agreement, will be validly issued and outstanding as fully paid and non-assessable POC Shares.

 

8.3          Consents

 

The execution, delivery and performance by POC of this Agreement does not and will not require the authorization, approval or consent of, or any filing with, any governmental authority or agency or any other Person, except those required by applicable securities laws and the rules and policies of the TSXV.

 

8.4          Authorized Capital

 

	
(a)  

	
The authorized capital of POC consists of an unlimited number of POC Shares of which 5,000,000 POC Shares are issued and outstanding as at the date hereof.  POC may issue up to an additional 300,000 POC Shares pursuant to the exercise of existing POC Options.  In addition, POC may issue additional POC Shares and securities convertible into POC Shares pursuant to the Share Exchange and the Financing as contemplated hereunder.

 

	
(b)  

	
The POC Shares issued and outstanding as at the Closing Time have been, or will at the Closing Time be, duly authorized and validly issued and outstanding as fully paid and non-assessable shares.  None of the POC Shares or POC Options have been issued in violation of any Laws, the policies of the TSXV, POC’s Articles or by-laws or any agreement to which POC is a party or by which it is bound.

 

8.5          No Material Adverse Change

 

Since September 30, 2011, except as disclosed by POC on SEDAR, no change has occurred in the business, operations, results of operations, assets, capitalization or condition (financial or otherwise) of POC, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on POC.

 

  

-21-

  

8.6          Reporting Issuer Status

 

POC is a reporting issuer under the securities legislation of the provinces of British Columbia, Alberta and Ontario and is not listed as a defaulting issuer under the legislation or any regulation of any such jurisdiction.  No order has been issued ceasing or suspending trading or prohibiting the issue of the POC Shares and no proceedings for such are pending or, to the knowledge of POC, threatened.

 

8.7          TSXV Listing

 

The POC Shares are listed for trading on the TSXV and the TSXV has accepted notice of the POC Plan.

 

8.8          Reports and POC Financial Statements

 

	
(a)  

	
POC has filed on SEDAR  true and complete copies of its audited financial statements for the period ended September 30, 2011 (the “POC Financial Statements”).

 

	
(b)  

	
The POC Financial Statements were prepared in accordance with Canadian GAAP; the balance sheet included in such POC Financial Statements fairly presents the financial condition of POC as at the close of business on the date thereof, and the statement of operations and deficit included in the POC Financial Statements fairly presents the results of operations of POC for the fiscal period then ended.

 

	
(c)  

	
There were no liabilities, contingent, contractual or otherwise, of POC as of September 30, 2011, other than those disclosed in the POC Financial Statements and the notes thereto.

 

8.9          Absence of Certain Changes

 

Since September 30, 2011, POC has not (except as disclosed by POC on SEDAR or as disclosed in this Agreement):

 

	
(a)  

	
issued, sold, or agreed to issue, sell, pledge, hypothecate, lease, dispose of or encumber any POC Shares or other corporate securities or any right, option or warrant with respect thereto;

 

	
(b)  

	
amended or proposed to amend its Articles or by-laws;

 

	
(c)  

	
split, combined or reclassified any of its securities or declared or made any Distribution;

 

	
(d)  

	
suffered any material loss relating to litigation or, to the knowledge of POC, been threatened with litigation;

 

	
(e)  

	
entered into or amended any employment contracts with any director, officer or senior management employee, created or amended any employee benefit plan, made any increases in the base compensation, bonuses, paid vacation time allowed or fringe benefits for its directors or officers other than the adoption of the POC Plan and the Amendment to the POC Stock Option Agreements;

 

	
(f)  

	
suffered damage, destruction or other casualty, loss, or forfeiture of, any property or assets, whether or not covered by insurance;

 

	
(g)  

	
made any capital expenditures, additions or improvements or commitments for the same, except legal fees or those which do not exceed $5,000 per month;

 

  

-22-

  

	
(h)  

	
other than in the ordinary course of business: (i) entered into any contract, commitment or agreement under which it has outstanding Indebtedness for borrowed money or for the deferred purchase price of property; or (ii) made any loan or advance to any Person;

 

	
(i)  

	
acquired or agreed to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or assets or otherwise) any Person, corporation, partnership, joint venture or other business organization or division or acquired or agreed to acquire any material assets;

 

	
(j)  

	
entered into any material contracts regarding its business operations, including joint ventures, partnerships or other arrangements;

 

	
(k)  

	
except for the adoption of the POC Plan, created any stock option or bonus plan, paid any bonuses, deferred or otherwise, or deferred any compensation to any of its directors or officers other than such payments made in the ordinary course of business;

 

	
(l)  

	
made any material change in accounting procedures or practices;

 

	
(m)  

	
mortgaged, hypothecated or pledged any of the POC Assets, or subjected them to any Lien;

 

	
(n)  

	
entered into any other material transaction, or any amendment of any contract, lease, agreement or license which is material to its business;

 

	
(o)  

	
sold, leased, subleased, assigned or transferred any of the POC Assets;

 

	
(p)  

	
cancelled, waived or compromised any debts or claims, including accounts payable to and receivable from its Affiliates;

 

	
(q)  

	
failed to pay or satisfy when due any liability of POC where such failure would have a Material Adverse Effect on POC;

 

	
(r)  

	
entered into any agreement or understanding to do any of the foregoing; or

 

	
(s)  

	
discharged or satisfied any liens or paid any obligation or liability other than liabilities shown in the POC Financial Statements or otherwise in the ordinary course of business.

 

8.10        Corporate Documents, Books and Records

 

Complete and correct copies of the Articles and by-laws and of all amendments thereto, of POC have been previously delivered to Focus.  The minute book of POC contains complete and accurate records in all material respects of all meetings and consents in lieu of meetings of the board of directors (and its committees) and shareholders of POC since incorporation.  Except as reflected in such minute books, there are no minutes of meetings or consents in lieu of meetings of the board of directors (or its committees) or of the shareholders of POC.

 

8.11        No Other Agreement to Purchase

 

Other than as set out herein and other than the POC Options, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon POC to issue any shares or any securities convertible or exchangeable, directly or indirectly, into any POC Shares.  There are no shareholders’ agreements, pooling agreements, voting trusts or other agreements or understandings with respect to the voting of POC Shares, or any of them.

 

  

-23-

  

8.12        Shareholder Loans

 

There are no loans or other liabilities of POC to any shareholder or to any previous shareholder of POC.

 

8.13        Indebtedness and Liens

 

Other than in the ordinary course of business or in connection with the transactions contemplated hereby, since September 30, 2011, POC has not incurred any: (i) Indebtedness; or (ii) Liens upon any of the POC Assets.

 

8.14        Indebtedness to Officers, Directors and Others

 

POC is not indebted to any director, officer, employee or consultant of POC, except for amounts due as normal compensation or reimbursement of ordinary business expenses and only as permitted pursuant to the CPC Policy.

 

8.15        Taxes

 

All Tax Returns required to be filed by or with respect to POC have been filed within the prescribed time, with the appropriate tax authorities and all such Tax Returns are true, correct, and complete in all material respects.  No Tax Return of POC is being audited by the relevant taxing authority, and there are no outstanding waivers, objections, extensions, or comparable consents regarding the application of the statute of limitations or period of reassessment with respect to any Taxes or Tax Returns that have been given or made by POC (including the time for filing of Tax Returns or paying Taxes) and POC has no pending requests for any such waivers, extensions, or comparable consents.  POC has not received a ruling from any taxing authority or signed an agreement with any taxing authority that could reasonably be expected to have a Material Adverse Effect on POC.  POC does not owe any Taxes to the federal government, a provincial government, a municipal government or any other governmental authority.

 

8.16        Title to Assets

 

POC has good title to all POC Assets, free of all Liens except for Permitted Liens.

 

8.17        Material Contracts

 

All contracts, agreements, leases and commitments required to be disclosed to POC pursuant to this Section 8.17 are valid, binding and in full force and effect as to POC, and POC is not in breach or violation of, or default under, the terms of any such contract, agreement, plan, lease or commitment, except where such breach, violation or default would not have a Material Adverse Effect on POC, and no event has occurred which constitutes or, with the lapse of time or the giving of notice, or both, would constitute, such a breach, violation or default by POC.

 

8.18        Title to Property

 

	
(a)  

	
POC does not own any real property.

 

	
(b)  

	
The POC Assets are owned legally and beneficially by POC with good and marketable title thereto, free and clear of all Liens whether contingent or absolute, except as disclosed in the POC Financial Statements or as provided for herein.  POC is the sole and unconditional owner of, and has good and marketable title to, the POC Assets.

 

  

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8.19        Necessary Licenses and Permits

 

POC has all necessary and required licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, provincial, or local, required to own and lease its properties and assets and to conduct its business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on POC.  POC is not in default, nor has it received any notice of any claim or default with respect to any such license, permit, consent, concession or authorization.  No registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind is required by virtue of the execution and delivery of this Agreement, or of the consummation of the transactions contemplated hereby: (a) to avoid the loss of any license, permit, consent, concession or other authorization or any asset, property or right pursuant to the terms thereof, or the violation or breach of any law applicable thereto, or (b) to enable POC to hold and enjoy the same immediately after the Closing Date in the conduct of its business as conducted prior to the Closing Date.

 

8.20        Compliance with Law

 

POC is not in default under, or in violation of, and has not violated (and failed to cure) any law including, without limitation, laws relating to the issuance or sale of securities, privacy and intellectual property, or any licenses, franchises, permits, authorizations or concessions granted by, or any judgment, decree, writ, injunction or order of, any governmental or regulatory authority, applicable to its business or any of its properties or assets, except where such default or violation would not have a Material Adverse Effect on POC.  POC has not received any notification alleging any material violations of any of the foregoing with respect to which adequate corrective action has not been taken.

 

8.21        Employees

 

POC does not have any employees or independent contractors (other than professional advisors engaged by POC in connection with the Share Exchange) and there are no agreements, written or oral, between POC and any other party relating to payment, remuneration or compensation for work performed or services provided (other than professional advisors engaged by POC in connection with the Share Exchange) or payment relating to a Change of Control or other event in respect of POC.

 

8.22        Litigation

 

There is no suit, claim, action, proceeding or, to the knowledge of POC, investigation pending or threatened against or affecting POC, or any of its assets or properties, or any officer or director thereof in his capacity as an officer or director thereof.

 

8.23        Employee Benefit Plans

 

Except for the POC Plan, POC does not have any employee benefit plans (or any plan which may be in any way regarded as an employee benefit plan) of any nature whatsoever nor has it ever had any such plans.

 

8.24        Inventory

 

POC does not have (nor has it ever had) any inventory of any nature whatsoever.

 

  

-25-

  

8.25        Insurance

 

POC does not have (nor has it ever had) any insurance of any nature whatsoever relating to it or its directors or officers.

 

8.26        No Limitations

 

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place, whether written or oral, to which POC is a party or is otherwise bound that would now or hereafter, in any way limit the business, use of assets or operations of POC.

 

8.27        Regulatory Compliance

 

POC is in compliance with all regulatory orders, directives and decisions that have application to POC except where such non-compliance would not have a Material Adverse Effect on POC and POC has not received notice from any governmental or regulatory authority that POC is not in compliance with any such regulatory orders, directives or decisions.

 

8.28        Non-Arm’s Length Transactions

 

	
(a)  

	
Except as disclosed by POC on SEDAR, POC has not made any payment or loan to, or has borrowed any monies from or is otherwise indebted to, any officer, director, employee, shareholder or any other Person with whom POC is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing; and

 

	
(b)  

	
POC is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom POC is not dealing at arm’s length (within the meaning of the Income Tax Act) or any Affiliate of any of the foregoing, except for incentive stock options granted to former officers and directors of POC that expire February 8, 2013.

 

8.29        Enforceability

 

The execution and delivery by POC of this Agreement and any other agreement contemplated by this Agreement will result in legally binding obligations of POC enforceable against POC in accordance with the respective terms and provisions hereof and thereof subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

 

ARTICLE 9

COVENANTS

 

9.1          Filings

 

POC and Focus shall prepare and file, or cause to be filed, any filings required under any applicable laws or rules and policies of the TSXV or other regulatory bodies relating to the Share Exchange. POC covenants and agrees to take, in a timely manner, all commercially reasonable actions and steps necessary in order that effective as at the Closing Date: (i) the POC Shares, including for greater certainty, the POC Shares issuable pursuant to the Share Exchange and the Financing be listed and posted for trading on the TSXV; (ii) when received, POC shall provide Focus with copies of the conditional and final approval of the TSXV respecting the Share Exchange and the Financing and, the listing and posting for trading of the additional POC Shares; and (iii) the distribution of POC Shares to Focus is exempt from the prospectus and registration requirements of applicable securities laws.

 

  

-26-

  

9.2          Additional Agreements

 

Each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and to cooperate with each other in connection with the foregoing, including using commercially reasonable efforts to:

 

	
(a)  

	
obtain all necessary waivers, consents and approvals from other parties to material agreements, leases and other contracts or agreements;

 

	
(b)  

	
obtain all necessary consents, approvals, and authorizations as are required to be obtained under any federal, provincial or foreign law or regulations;

 

	
(c)  

	
defend all lawsuits or other legal proceedings challenging this Agreement or the consummation of the transactions contemplated hereby;

 

	
(d)  

	
cause to be lifted or rescinded any injunction or restraining order or other remedy adversely affecting the ability of the parties to consummate the transactions contemplated hereby;

 

	
(e)  

	
effect all necessary registrations and other filings and submissions of information requested by governmental authorities;

 

	
(f)  

	
comply with all provisions of this Agreement; and

 

	
(g)  

	
provide such officers’ certificates as may be reasonably requested by the other parties hereto in respect of the representations, warranties and covenants of a party hereto.

 

9.3          Access to Information

 

	
(a)  

	
Upon reasonable notice, the Vending Parties shall afford to POC’s directors, officers, counsel, accountants and other authorized representatives and advisers complete access (or, where necessary, the provision of the information requested), during normal business hours and at such other time or times as the parties may reasonably request, from the date hereof and until the earlier of the Closing Date and the termination of this Agreement, to its properties, books, contracts and records as well as to management personnel of the Vending Parties as POC may require or may reasonably request.

 

	
(b)  

	
Upon reasonable notice, POC shall afford to Focus’ directors, officers, counsel, accountants and other authorized representatives and advisers complete access (or, where necessary, the provision of the information requested), during normal business hours and at such other time or times as the parties may reasonably request, from the date hereof and until the earlier of the Closing Date and the termination of this Agreement, to its properties, books, contracts and records as well as to management personnel of POC as Focus may require or may reasonably request.

 

  

-27-

  

9.4          Conduct of Business of Celtic

 

The Vending Parties (other than Focus) covenant and agree that, during the period from the date of this Agreement until the earlier of the Closing Date and the date this Agreement is terminated in accordance with its terms, unless POC shall otherwise consent in writing (such consents not to be unreasonably withheld or delayed), except as required by law or as otherwise expressly permitted or specifically contemplated by this Agreement:

 

	
(a)  

	
they shall use their commercially reasonable efforts to maintain and preserve their respective businesses, the Celtic Assets and business relationships;

 

	
(b)  

	
they shall notify POC of any Material Adverse Effect on their respective businesses; and

 

	
(c)  

	
they shall not directly or indirectly:

 

	
        (i)  

	
take any action which may interfere with or be inconsistent with the successful completion of the transactions contemplated herein or take any action or fail to take any action which may result in a condition precedent to the transactions described herein not being satisfied;

 

	
         (ii)  

	
issue, sell, pledge, hypothecate, lease, dispose of or encumber any of their securities or any right, option or warrant with respect thereto;

 

	
          (iii)  

	
amend or propose to amend their Articles;

 

	
         (iv)  

	
split, combine or reclassify any of its securities or declare or make any Distribution or distribute any of its properties or assets to any Person;

 

	
        (v)  

	
other than in the ordinary course of business, enter into or amend any employment contracts with any director, officer or senior management employee, create or amend any employee benefit plan, make any increases in the base compensation, bonuses, paid vacation time allowed or fringe benefits for its directors, officers, employees or consultants;

 

	
         (vi)  

	
acquire or agree to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or assets or otherwise) any Person, partnership, joint venture or other business organization or division or acquire or agree to acquire any material assets;

 

	
          (vii)  

	
create any option or bonus plan, pay any bonuses, deferred or otherwise, or defer any compensation to any of its directors, officers or employees; 

 

	
           (viii)  

	
make any material change in accounting procedures or practices; 

 

	
         (ix)  

	
mortgage, pledge or hypothecate any of the Celtic Assets, or subject them to any Lien, except Permitted Liens;

 

	
        (x)  

	
enter into any agreement or arrangement granting any rights to purchase or lease any of the Celtic Assets or requiring the consent of any Person to the transfer, assignment or lease of any of the Celtic Assets;

 

  

-28-

  

	
         (xi)  

	
sell, lease, sublease, assign or transfer (by tender offer, exchange offer, merger, amalgamation, sale of shares or assets or otherwise) any of the Celtic Assets, or cancel, waive or compromise any debts or claims, including accounts payable to and receivable from Affiliates;

 

	
          (xii)  

	
enter into any other material transaction or any amendment of any contract, lease, agreement, license or sublicense which is material to its business;

 

	
           (xiii)  

	
settle any outstanding claim, dispute, litigation matter, or tax dispute;

 

	
           (xiv)  

	
transfer any assets to Focus or any of its Subsidiaries or Affiliates or assume any Indebtedness from Focus or any of its Subsidiaries or Affiliates or enter into any other related party transactions; or

 

	
         (xv)  

	
enter into any agreement or understanding to do any of the foregoing.

 

9.5          Conduct of Business of POC

 

POC covenants and agrees that during the period from the date of this Agreement until the earlier of the Closing Date and the date this Agreement is terminated in accordance with its terms, unless Focus otherwise consents in writing (such consent not to be unreasonably withheld or delayed):

 

	
(a)  

	
the business of POC shall be conducted in the ordinary course;

 

	
(b)  

	
POC shall notify Focus of any Material Adverse Effect on its business;

 

	
(c)  

	
POC shall at all times comply with all applicable policies of the TSXV, including but not limited to the CPC Policy and all applicable securities laws, rules, regulations, policies and instruments;

 

	
(d)  

	
POC shall not directly or indirectly:

 

	
       (i)  

	
take any action which may interfere with or be inconsistent with the successful completion of the transactions contemplated herein or take any action or fail to take any action which may result in a condition precedent to the transactions described herein not being satisfied;

 

	
        (ii)  

	
issue, sell, pledge, hypothecate, lease, dispose of or encumber any POC Shares or other securities of POC or any right, option or warrant with respect thereto, except for the issuance of POC Shares issued pursuant to the exercise of previously issued POC options or warrants;

 

	
         (iii)  

	
amend or propose to amend its Articles or by-laws except as contemplated in this Agreement;

 

	
         (iv)  

	
split, combine or reclassify any of its securities or declare or make any Distribution, or distribute any of its property or assets to any Person;

 

	
        (v)  

	
enter into or amend any employment contracts with any director, officer or senior management employee, create or amend any employee benefit plan, make any increases in the base compensation, bonuses, paid vacation time allowed or fringe benefits for its directors, officers, employees or consultants;

 

  

-29-

  

	
         (vi)  

	
other than as contemplated herein, acquire or agree to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or assets or otherwise) any Person, partnership, joint venture or other business organization or division or acquire or agree to acquire any material assets;

 

	
          (vii)  

	
create any stock option or bonus plan, pay any bonuses, deferred or otherwise, or defer any compensation to any of its directors or officers;

 

	
           (viii)  

	
make any material change in accounting procedures or practices;

 

	
         (ix)  

	
engage in any business that is outside of the business that is being currently conducted by POC, whether as a partner, joint venture participant or otherwise;

 

	
        (x)  

	
settle any outstanding claim, dispute, litigation matter, or tax dispute; or

 

	
         (xi)  

	
enter into any agreement or understanding to do any of the foregoing.

 

9.6          Non-Solicitation

 

Prior to the termination of this Agreement in accordance with its terms, none of the parties hereto shall, directly or indirectly, through any officer, director, employee, financial advisor or agent, solicit, initiate or encourage (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) the initiation of, or participate in or take any other action to facilitate, any inquiries, discussions, negotiations, proposals or offers from any Person in respect of any matter or thing inconsistent with the successful completion of the Acquisition and related transactions contemplated by this Agreement.

 

ARTICLE 10

CONDITIONS TO OBLIGATION TO CLOSE

 

10.1        POC’s Closing Conditions

 

POC’s obligation to issue POC Shares in exchange for the Celtic Shares on the Closing Date pursuant to Article 2 is subject to compliance by the Vending Parties with their agreements herein contained and to the satisfaction, on or prior to the Closing Date, of the following conditions:

 

	
(a)  

	
Constating Documents and Certificate of Corporate Existence.  POC shall have received from each Vending Party: (i) a copy, certified by one duly authorized officer of such Vending Party to be true and complete as of the Closing Date, of the Articles of such Vending Party; and (ii) a certificate or the equivalent, dated not more than three days prior to the Closing Date, of the government of such Vending Parties jurisdiction of incorporation as to such Vending Party’s corporate good standing.

 

	
(b)  

	
TSXV Issuer.  Following the Closing of the Share Exchange (concurrently with the Financing), POC satisfying the initial listing requirements of the TSXV for a Tier 1 or Tier 2 Issuer, as evidenced before Closing by a conditional listing letter issued by the TSXV.

 

	
(c)  

	
Compliance with Sponsorship Requirement.  POC shall have complied with the sponsorship requirements set out in TSXV Policy 2.2 Sponsorship and Sponsorship Requirements and shall have engaged a sponsor in accordance therewith, and the TSXV shall have accepted the sponsor’s report in respect of the Acquisition, or POC shall have obtained an exemption from the TSXV in respect of compliance with such obligations.

 

  

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(d)  

	
Required Approvals.  Each Vending Party shall have obtained the approval of the board of directors of such Vending Party, of the shareholders of such Vending Party (if applicable) and any other necessary approvals for this Agreement and the Acquisition.

 

	
(e)  

	
Proof of Corporate Action.  POC shall have received from each Vending Party a copy, certified by a duly authorized officer thereof to be true and complete as of the Closing Date, of the records of all corporate action taken to authorize the execution, delivery and performance of this Agreement.

 

	
(f)  

	
Incumbency Certificates. POC shall have received from each Vending Party an incumbency certificate, dated the Closing Date, signed by a duly authorized officer thereof and giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in the name and on behalf of respectively, each Vending Party who is not an individual, this Agreement and any other ancillary documents.

 

	
(g)  

	
Representations and Warranties.  The representations and warranties of the Vending Parties contained herein shall be true and correct in all material respects, on and as of the Closing Date with the same force and effect as if such representations and warranties were made at such time, and POC shall have received on the Closing Date certificates to this effect, signed by one authorized officer of each Vending Party.

 

	
(h)  

	
Covenants.  All of the terms, covenants and conditions of this Agreement to be complied with or performed by each Vending Party at or before the Closing Date shall have been complied with or performed and POC shall have received on the Closing Date certificates to this effect signed by authorized officers of each Vending Party.

 

	
(i)  

	
Regulatory and Other Consents.  There shall have been obtained from all appropriate federal, provincial, municipal or other governmental or administrative bodies such licences, permits, consents, approvals, certificates, registrations and authorizations as are required to be obtained to permit the transfer of the Celtic Shares to POC.  Additionally, all required approvals, consents, authorizations and waivers relating to the consummation of the transactions contemplated by this Agreement shall have been obtained from the TSXV, including the acceptance, by the TSXV of the transactions contemplated in this Agreement and the Acquisition.

 

	
(j)  

	
No Action or Proceeding.  No bona fide legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the exchange by Focus of the Celtic Shares for POC Shares or the right of any Vending Party or POC from and after the Closing Time to conduct, expand and develop the business of Celtic.

 

	
(k)  

	
Financing.  POC shall have completed the Financing.

 

	
(l)  

	
TSXV Approval.  The TSXV shall have approved the Acquisition and agreed to list the POC Shares issued in connection with this Agreement and the Financing.

 

	
(m)  

	
Due Diligence.  Prior to l, 2012, POC, and its agents or representatives, shall have conducted and completed to its satisfaction, acting reasonably, a due diligence investigation of the Celtic Assets.

 

  

-31-

  

	
(n)  

	
No Material Adverse Change.  No change shall have occurred in the business, affairs, financial condition or operations of any Vendor Party between the date hereof and the Closing Date which would have a Material Adverse Effect.

 

	
(o)  

	
General.  All instruments and corporate proceedings in connection with the transactions contemplated by this agreement (including the Acquisition) shall be satisfactory in form and substance to POC and its counsel, acting reasonably, and POC shall have received copies of all documents, including, without limitation, all documentation required to be delivered to POC at or before the Closing Time in accordance with this Agreement, records of corporate or other proceedings, opinions of counsel and consents which POC may have reasonably requested in connection therewith.

 

The agreements, certificates, documents, other evidence of compliance and opinions described in this Section 10.1 shall be in form and substance satisfactory to POC, acting reasonably, and shall, except as otherwise provided, be delivered to POC at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by POC.

 

10.2        Focus’s Closing Conditions

 

The obligation of Focus to complete the Acquisition is subject to compliance by POC with its agreements herein contained and to the satisfaction, on or before the Closing Date of the following conditions:

 

	
(a)  

	
Constating Documents and Certificate of Corporate Existence.  Each Vending Party shall have received from POC: (i) a copy, certified by a duly authorized officer of POC, to be true and complete as of the Closing Date, of the Articles of POC; (ii) a copy, certified by a duly authorized officer of POC, to be true and complete as of the Closing Date, of the by-laws thereof; and (iii) a certificate dated not more than three days prior to the Closing Date, of the government of Ontario as to POC’s corporate good standing.

 

	
(b)  

	
TSXV Issuer.  Following the Closing of the Share Exchange (concurrently with the Financing), POC satisfying the initial listing requirements of the TSXV for a Tier 1 or Tier 2 Issuer, as evidenced before Closing by a conditional listing letter issued by the TSXV.

 

	
(c)  

	
Compliance with Sponsorship Requirement.  POC shall have complied with the sponsorship requirements set out in Policy 2.2 Sponsorship and Sponsorship Requirements of the TSXV and shall have engaged a sponsor in accordance therewith, and the TSXV shall have accepted the sponsor’s report in respect of the Acquisition, or POC shall have obtained an exemption from the TSXV in respect of compliance with such obligations

 

	
(d)  

	
Required Approvals.  POC shall have obtained the approval of the board of directors of POC and, if applicable of the shareholders of POC and any other necessary approvals for this Agreement and the Acquisition.

 

	
(e)  

	
Due Diligence.  Prior to l, 2012, Focus and its agents or representatives, shall have conducted and completed to its satisfaction, acting reasonably, a legal and financial due diligence investigation of POC.

 

	
(f)  

	
Proof of Corporate Action.  Each Vending Party shall have received from POC copies, certified by a duly authorized officer thereof to be true and complete as of the Closing Date, of the records of all corporate action taken to authorize the execution, delivery and performance of this Agreement.

 

  

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(g)  

	
Incumbency Certificate. Each Vending Party shall have received from POC an incumbency certificate, dated the Closing Date, signed by a duly authorized officer thereof and giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in the name and on behalf of POC, this Agreement and any other ancillary documents.

 

	
(h)  

	
Representations and Warranties.  The representations and warranties of POC contained herein shall be true and correct in all material respects on and as of the Closing Date with the same force and effect, as if such representations and warranties were made at such time, and each Vending Party shall have received on the Closing Date certificates to this effect signed by one authorized officer of POC.

 

	
(i)  

	
Covenants.  All of the terms, covenants and conditions of this Agreement to be complied with or performed by POC at or before the Closing Date shall have been complied with or performed and each Vice President shall have received on the Closing Date certificates to this effect signed by an authorized officer of POC.

 

	
(j)  

	
Regulatory Consents.  All required approvals, consents, authorizations and waivers relating to the consummation of the transactions contemplated by this Agreement shall have been obtained from the TSXV, including the acceptance by the TSXV of the transactions contemplated in this Agreement and the Acquisition.

 

	
(k)  

	
No Action or Proceeding.  No bona fide legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the exchange by Focus of the Celtic Shares for POC Shares.

 

	
(l)  

	
Financing.  POC shall have completed the Financing.

 

	
(m)  

	
TSXV Approval.  The TSXV shall have approved this Agreement and the Acquisition and agreed to list the POC Shares issued in connection with this Agreement and the Acquisition and the POC Shares to be issued in connection with the Financing.

 

	
(n)  

	
No Material Adverse Change.  No change shall have occurred in the business, affairs, financial condition or operations of POC between the date hereof and the Closing Date which would have a Material Adverse Effect.

 

	
(o)  

	
Management Agreements.  POC shall have entered into employment or consulting agreements with each of Grant White and Dorian Nicol on terms reasonably satisfactory to each party thereto.

 

	
(p)  

	
Stock Option Plan.  POC shall have adopted a stock option plan pursuant to the policies of the TSXV allowing for the grant, by the board of POC, of that number of options equal to not less than 10% of the issued and outstanding POC Shares as at the Closing Date.

 

	
(q)  

	
Board Composition.  Effective not later than the Closing Date, POC shall reconstitute its board of directors to be comprised of the following five (5) directors: (i) Grant White, (ii) Dorian Nicol, (iii) one nominee of the current POC management, and (iv) two independent directors to be nominated by Focus.

 

	
(r)  

	
General.  All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to Celtic and its counsel, acting reasonably, and Celtic shall have received copies of all documents as provided for herein, including, without limitation, records of corporate or other proceedings and consents which Celtic may have reasonably requested in connection therewith.

 

  

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The agreements, certificates, documents and other evidence of compliance described in this Section 10.2 shall be in form and substance satisfactory to Vending Parties, acting reasonably, and shall, except as otherwise provided, be delivered to Celtic at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by Celtic.

 

ARTICLE 11

TERMINATION

 

11.1        Termination

 

This Agreement may be terminated by written notice given by the terminating party to the other party hereto, at any time prior to the Closing:

 

	
(a)  

	
by mutual written consent;

 

	
(b)  

	
by either Foucs or POC, if there has been a misrepresentation, breach or non-performance by the breaching party of any representation, warranty, covenant or obligation contained in this Agreement, which could reasonably be expected to have a Material Adverse Effect on the terminating party, provided the breaching party has been given notice of and thirty (30) days to cure any such misrepresentation, breach or non-performance;

 

	
(c)  

	
by either Focus or POC, if a condition for the terminating party’s benefit has not been satisfied or waived;

 

	
(d)  

	
by either Focus or POC, if the Closing has not occurred on or before July 2, 2012, or such later date as may be agreed to by Focus and POC (provided, that the right to terminate this Agreement under this Section 11.1(d) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement has been the cause of or resulted in the failure to consummate the transactions contemplated hereby by such date).

 

11.2        Effect of Termination

 

In the event of the termination of this Agreement as provided in Section 11.1, this Agreement shall forthwith have no further force or effect and there shall be no obligation on the part of the parties hereunder except with respect to (i) Section 12.1, which will survive such termination, and (ii) a breach arising from the fraud or wilful misconduct of any party.

 

11.3        Waivers and Extensions

 

At any time prior to the Closing Time, any of the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of another party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein.  Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby

 

  

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ARTICLE 12

TRANSACTION COSTS

 

12.1        Transaction Costs

 

In the event of the termination of this Agreement pursuant to Section 11.1 hereof, all costs of the Share Exchange incurred by each party hereto, in connection with this Agreement, including legal fees, financial advisor fees and all disbursements by such parties and their advisors shall be born and paid by the party incurring the costs.  Notwithstanding the foregoing, and for greater certainty, POC shall be responsible for all costs associated with the Financing as well as all costs associated with obtaining any necessary regulatory approvals for any of the transactions contemplated hereunder from the applicable securities commissions and the TSXV.

 

ARTICLE 13

NOTICES

 

13.1        Notices

 

Any demand, notice or communication to be made or given under or pursuant to this Agreement is to be in writing, except as otherwise expressly permitted or required under this Agreement, and may be made or given by personal delivery, by registered mail or by transmittal by facsimile machine addressed to the respective parties as follows:

 

If to POC, then to the following address:

 

1 Adelaide Street East, Suite 801

Toronto, Ontario  M5C 2V9

Attention: Martin Bernholtz

or at such other address as POC shall have specified by notice actually received by the addressor;

 

with a copy (which shall not constitute notice) to:

Garfinkle, Biderman LLP

1 Adelaide Street East, Suite 801

Toronto, Ontario  M5C 2V9

Attention: Robbie Grossman

 

If to a Vending Party, then to the following address:

 

388 Spadina Road

Toronto, Ontario  M5P 2V9

Attention: Grant White

 

  

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with a copy (which shall not constitute notice) to:

Heenan Blaikie LLP

P.O. Box 2900, 333 Bay Street, Suite 2900

                             Toronto, Ontario  M5H 2T4

Attention:  Corey MacKinnon

or to such other mailing or facsimile machine address as any party may from time notify the others of in accordance with this paragraph. Any demand, notice or communication made or given by personal delivery is conclusively deemed to have been given on the day of actual delivery thereof, or, if made or given by registered mail, on the fifth business day following the deposit thereof in the mail or, if made or given by facsimile transmission, on the first business day following the transmittal thereof and receipt of the appropriate answer back.  If the party making or giving such demand, notice or communication knows or ought reasonably to know, of difficulties with the postal system which might affect the delivery of mail, any such demand, notice or communication is not to be mailed but is to be made or given by personal delivery or by facsimile transmission.

 

ARTICLE 14

INDEMNIFICATION

 

14.1        Survival of Covenants, Agreements, Etc.

 

All covenants, agreements, indemnities, representations and warranties made herein to POC or Celtic or in any other document referred to herein or delivered to POC or Celtic pursuant hereto shall be deemed to have been relied on by POC or Celtic, as the case may be, notwithstanding any investigation made by POC or Celtic and shall survive the execution and delivery of this Agreement and the deliveries described in Section 2.1; provided that any claim for a breach of the representations and warranties made by POC or Celtic is made before (a) the expiration of the later of (i) two years from the Closing Date, and (ii) the latest date under the applicable Canadian securities laws, or if the applicable Canadian securities laws do not specify such date, the latest date under the Limitations Act, 2002 (Ontario) that such party may be entitled to commence an action for breach of a representation or warranty under this Agreement, or (b) if applicable, the date this Agreement is terminated per Section 11.1, except for the representations and warranties contained in Sections 3.5 and 8.15, which shall survive indefinitely until the expiry of the applicable limitation period.

 

14.2        Indemnification by the Vending Parties

 

	
(a)  

	
Each Vending Party jointly and severally agrees to indemnify and save harmless POC and its shareholders, directors, officers, agents and representatives (the “POC Indemnified Persons”) from all Losses suffered or incurred by the POC Indemnified Persons as a result of or arising directly or indirectly out of or in connection with:

 

	
       (i)  

	
any breach by the Vending Parties of or any inaccuracy of any representation or warranty of the Vending Parties contained in ARTICLE 3 of this Agreement or in any agreement, certificate or other document delivered pursuant hereto, provided that, the Vending Parties shall not be required to indemnify or save harmless the POC Indemnified Persons in respect of any breach or inaccuracy of any representation or warranty unless POC shall have provided notice to the Vending Parties in accordance with Section 14.4 within six months of the expiration of the applicable time period related to such representation and warranty set out in Section 14.1;

 

  

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        (ii)  

	
any breach or non-performance by any Vending Party of any covenant to be performed by them which is contained in this Agreement or in any agreement, certificate or other document delivered pursuant hereto.

 

	
          (iii)  

	
any failure of a Vending Party to transfer good and valid title to the Celtic Shares to POC, free and clear of all Liens, for which a notice of claim under Section 14.4 has been provided to Focus.

 

14.3        Indemnification by POC

 

POC agrees to indemnify and save harmless the Vending Parties from all Losses suffered or incurred by Celtic or Focus as a result of or arising directly or indirectly out of or in connection with:

 

	
(a)  

	
any breach by POC of or any inaccuracy of any representation or warranty contained in Article 5 of this Agreement or in any agreement, instrument, certificate or other document delivered pursuant hereto (provided that POC shall not be required to indemnify or save harmless the Vending Parties in respect of any breach or inaccuracy of any representation or warranty unless the Vending Parties shall have provided notice to POC in accordance with Section 14.4 within six months of the expiration of the applicable time period relating to such representation and warranty set out in Section 14.1; and

 

	
(b)  

	
any breach or non-performance by POC of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other document delivered pursuant hereto.

 

14.4        Notice of Claim

 

	
        (a)  

	
In the event that a party (the “Indemnified Party”) shall become aware of any claim, proceeding or other matter (a “Claim”) in respect of which another party (the “Indemnifying Party”) agreed to indemnify the Indemnified Party pursuant to this Agreement, the Indemnified Party shall promptly give written notice thereof to the Indemnifying Party.  Such notice shall specify whether the Claim arises as a result of a claim by a person against the Indemnified Party (a “Third Party Claim”) or whether the Claim does not so arise (a “Direct Claim”), and shall also specify with reasonably particularity (to the extent that the information in available) the factual basis for the Claim and the amount of the Claim, if known.

 

	
        (b)  

	
If, through the fault of the Indemnified Party, the Indemnifying Party does not receive notice of any Claim in time to contest effectively the determination of any liability susceptible of being contested, the Indemnifying Party shall be entitled to set off against the amount claimed by the Indemnified Party the amount of any Losses incurred by the Indemnifying Party resulting from the Indemnified Party’s failure to give such notice on a timely basis.

 

14.5        Direct Claims

 

With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have 60 days to make such investigation of the Claim as is considered necessary or desirable.  For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request.  If both parties agree at or prior to the expiration of such 60-day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the claim, failing which the matter shall be referred to binding arbitration in such manner as the parties may agree or shall be determined by a court of competent jurisdiction.

 

  

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14.6        Third Party Claims

 

With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defence of the Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified Party’s out-of-pocket expenses as a result of such participation or assumption.  If the Indemnifying Party elects to assume such control, the Indemnified Party shall have the right to participate in the negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and the representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to the actual or potential differing interests between them (such as the availability of different defences).  If the Indemnifying Party, having elected to assume such control, thereafter fails to defend the Third Party Claim within a reasonable time, the Indemnified Party shall be entitled to assume such control, and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim.

 

14.7        Settlement of Third Party Claims

 

If the Indemnifying Party fails to assume control of the defence of any Third Party Claim, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed.  Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the liability of the Indemnifying Party shall be limited to the proposed settlement amount if any such consent is not obtained for any reason.

 

14.8        Co-operation

 

The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, and shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it become available).

 

14.9        Exclusivity

 

The provision of this Article 14 shall apply to any Claim for breach of any covenant, representation, warranty or other provision of this Agreement or any agreement, certificate or other document delivered pursuant hereto (other than a claim for specific performance or injunctive relief) with the intent that all such Claims shall be subject to the limitations and other provisions contained in this Article 14.

 

  

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ARTICLE 15  

MISCELLANEOUS

 

15.1        Amendments and Waivers

 

Except as otherwise expressly provided herein, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each of Focus and POC, or in the case of a waiver, by the party against whom the waiver is to be effective.  Any amendment or waiver effected in accordance with this Section 15.1 shall be binding upon each party hereto pursuant to this Agreement.

 

15.2        Consent to Jurisdiction

 

Each party hereby agrees to submit to the non-exclusive jurisdiction of the courts in and of the Province of Ontario and to the courts to which an appeal of the decisions of such courts may be taken.

 

15.3        Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein without giving effect to any choice or conflict of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

 

15.4        Further Assurances

 

Each Part, upon the request of any other party hereto, whether before or after the Closing, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary or desirable to effect complete consummation of the Share Exchange and the Acquisition.

 

15.5        Time

 

Time is of the essence of this Agreement.

 

15.6        Assignment

 

This Agreement may not be assigned by any of the parties hereto without the prior written consent of the other parties hereto, such consents not to be unreasonably withheld or delayed.

 

15.7        Public Announcement; Disclosure

 

No Vending Party shall make any public announcement concerning this Agreement or the matters contemplated herein, their discussions or any other memoranda, letters or agreements between the parties relating to the matters contemplated herein without the prior consent of the other parties, which consent shall not be unreasonably withheld, and the public announcement shall not make any announcement concerning this Agreement or the matters contemplated herein, its discussions or any other memoranda, letters or agreements between the parties relating to the matters contemplated herein without the prior consent of Celtic, which consent shall not be unreasonably withheld, provided that no party shall be prevented from making any disclosure which is required to be made by law or any rules of a stock exchange or similar organization to which it is bound.

 

  

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15.8        Entire Agreement, Counterparts, Section Headings

 

This Agreement, and the Schedules hereto, sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby and supersedes any prior written or oral understandings with respect thereto.  This Agreement may be executed by facsimile or electronic mail and in one or more counterparts thereof, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.

 

15.9        Regulatory Approval

 

This Agreement is subject to regulatory approval, including, without limitation, that of the TSXV.

 

 

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
FOCUS GOLD CORP.

 

	
Per:

	
/s/Grant R. White

	  	
Authorized Signing Officer

 

	
FOCUS CELTIC GOLD CORPORATION

 

	
Per:

	
/s/Grant R. White

	  	
Authorized Signing Officer

 

	
METALLUM RESOURCES PLC

 

	
Per:

	
/s/Grant R. White

	  	
Authorized Signing Officer

 

	
METALLUM EXPLORATION LIMITED

 

	
Per:

	
/s/Grant R. White

	  	
Authorized Signing Officer

 

	
PACIFIC ORIENT CAPITAL INC.

 

	
Per:

	  
	  	
Authorized Signing OfficerUnassociated Document

 Exhibit 10.13

SECURED CONVERTIBLE PROMISSORY NOTE

$2,110,000 PLUS INTEREST DUE & PAYABLE

DOCUMENT A-03222012

THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.

Issue Date:  March 22, 2012

 

FOR VALUE RECEIVED, Focus Gold Corporation as Obligor ("Borrower,” or “Obligor”), hereby promises to pay to the Lender (“Lender” or “Holder”), as defined below on the signature page, the Principal Sum, as defined below, along with the Interest Rate, as defined below, according to the terms herein.

	
 

The "Lender" shall be:

	
 

JMJ Financial / Its Principal, or Its Assignees

 

	
 

The "Principal Sum" shall be:

	
 

$2,110,000 (two million one hundred ten thousand US Dollars) Subject to the following: accrued, unpaid interest shall be added to the Principal Sum.  The Principal Sum shall be prorated based on the Consideration actually funded by Lender as set forth in the attached funding schedule and taking into account a 10% original issue discount.

	
 

The “Consideration” shall be:

 

	
 

$1,900,000 (one million nine hundred thousand US dollars) in the form of cash payment by wire or check as set forth in the attached funding schedule.

	
 

The "Interest Rate" shall be:

	
 

10% (ten percent) one time interest charge on the Principal Sum.  No interest or principal payments are required until the Maturity Date, but both principal and interest may be included in conversion prior to maturity date.

	
 

The "Conversion Price" shall be the following price:

	
 

As applied to the Conversion Formula set forth in 2.2, 80% (eighty percent) of the average of the three lowest trade prices in the 20 trading days previous to the conversion.

	
 

The “Conversion Floor” shall be the following price:

 

	
 

$0.15 (subject to adjustment herein)

	
 

The "Maturity Date" is the date upon which the Principal Sum of this Note, as well as any unpaid interest shall be due and payable, and that date shall be:

	
 

March 22, 2015.

	
 

Registration Rights shall be:

 

	
 

Piggyback Registration Rights as set forth in document SPA-03222012.

 

	
 

The “Prepayment Terms” shall be:

	
 

So long as no default exists or has occurred (regardless of whether an official default notice was issued), this Note may be prepaid in the amount of 150% of the Principal Sum, interest, OID, and any other fees or damages.

  

1

  

ARTICLE 1 PAYMENT-RELATED PROVISIONS

1.1 Interest Rate. Subject to the Holder's right to convert, interest payable on this Note will accrue interest at the Interest Rate and shall be applied to the Principal Sum.

1.2 Default.  In the event of any default, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount.  Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law.  In connection with such acceleration described herein, the Holder need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the note until such time, if any, as the Holder receives full payment pursuant to this Section 1.2.  No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon.  The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Note, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher VWAP, or (ii) 130% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages, fees and other amounts hereon.

ARTICLE 2 CONVERSION RIGHTS

The Holder will have the right to convert the Principal Sum and accrued interest under this Note into Shares of the Borrower's Common Stock as set forth below.

2.1 Conversion Rights and Cashless Exercise.  The Holder will have the right at its election from and after the Effective Date, and then at any time, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and nonassessable shares of common stock of Focus Gold Corporation (as such stock exists on the date of issuance of this Note, or any shares of capital stock of Focus Gold Corporation into which such stock is hereafter changed or reclassified, the "Common Stock") as per the Conversion Formula set forth in Section 2.2.  Any such conversion shall be cashless, and shall not require further payment from Holder.  Unless otherwise agreed in writing by both the Borrower and the Holder, at no time will the Holder convert any amount of the Note into common stock that would result in the Holder owning more than 4.99% of the common stock outstanding of Focus Gold Corporation.  Shares from any such conversion will be delivered to Holder (in any name directed by Holder) by 2:30pm EST within 2 (two) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer.

  

2

  

2.2. Conversion Formula. The number of shares issued through conversion is the conversion amount divided by the conversion price, as illustrated below.  The Holder and the Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s).  If no objection is delivered from Borrower to Holder regarding any variable or calculation of the conversion notice within 24 (twenty-four) hours of delivery of the conversion notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such Notice of Conversion and waive any objection thereto.  The Company acknowledges and agrees that, absent a duly delivered objection notice as required above, the Holder shall materially rely on the confirmation and ratification of the conversion price and, notwithstanding subsequent information to the contrary that such computation was made in error, such deemed conversion price shall thereafter be the conversion price for purposes of such conversion.

# Shares =  Conversion Amount

     Conversion Price

2.3. This section 2.3 intentionally left blank.

2.4. Conversion Floor.  The Borrower has the right to enforce a conversion floor of $0.15 per share as follows. If B orrower receives a conversion notice in which the conversion price is less than $0.15 per share and elects to enforce the conversion floor of $0.15, the holder will incur a conversion loss, defined as follows, which Borrower must make whole by either of the following options:

Conversion Loss = [(High trade price on the day of conversion) x (Number of shares that would have been received if there was no floor)] – [(High trade price on the day of conversion) x (number of shares being received with the floor)].

Option A - Pay Conversion Loss in Cash.  The borrower may pay the conversion loss by cash payment, and any such cash payment must be made by the third party day from the time of the conversion notice.

Option B – Add Conversion Loss to Balance. The Borrower may pay the conversion loss by adding the conversion loss to the balance of the Note (under JMJ Financial’s and the Borrower’s expectation that any make whole amounts will tack back to the original date of the note as that amount was originally funded at the original tacking date).

In the event that any Borrower default occurs among any of the agreements between the parties, inclusive of the terms of conversion, the terms of this Conversion Floor shall automatically and permanently terminate.

In the event that the Borrower either (a) issues stock at any price (if any type of issuance or sale including but not limited to sale, conversion, exchange, and compensation) below $0.15, or (b) if any Borrower enters into any agreement that may in the future provide for such issuance at any price (in any type of issuance or sale including but not limited to sale, conversion, exchange, and compensation) below $0.15, then the floor referenced herein will automatically reset to that lower price.

In the event that the Borrower enters into any agreement that provides for a floorless conversion, or floorless convertible, or floorless exchangeable security, then the terms of this Coversion Floor shall automatically and permanently terminate.

  

3

  

2.5 Reservation of Shares.  As set forth in Section 2.2 of document SPA-03222012, as of the issuance date of this Note and for the remaining period during which the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note.  The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.  The Borrower agrees that its issuance of this Note constitutes full authority to its officers, agents and transfer agents who are charged with the duty of executing and issuing shares to execute and issue the necessary shares of Common Stock upon the conversion of this Note.

2.6. Delivery of Conversion Shares.  Shares from any such conversion will be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (such date, the “Share Delivery Date”).  For example, if Holder delivers a conversion notice to Borrower at 5:15 pm eastern time on Monday January 1st, Borrower’s transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic transfer by no later than 2:30 pm eastern time on Wednesday January 3rd.  If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, or for any other reason at Holder’s discretion (including but not limited to a decrease in share price), Holder, at any time prior to selling those shares (in whole or in part), may rescind that particular conversion (in whole or in part) and have the conversion amount (in whole or in part) returned to the note balance with the conversion shares (in whole or in part) returned to the Borrower (under Holder and Borrower’s expectation that any returned conversion amounts will tack back to the original date of the note).  The Company will make its best efforts to deliver shares to Holder same day / next day.

2.6.1 Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder (including election to pursue its rights under this Section 2.6 and subsections), at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower’s failure to timely deliver shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.

2.6.2 Conversion Delay Penalties.  Holder may assess, at its election, penalties or liquidated damages (both referred to herein as “penalties”) as follows.

2.6.2.A. For each conversion, Borrower agrees to deliver share issuance instructions to its transfer agent same day or next day.  In the event that the share issuance instructions are not delivered to the Borrower’s transfer agent by the next day, a penalty of $2,000 per day will be assessed for each day until share issuance instructions are delivered to the transfer agent ($2,000 per day inclusive of the day of conversion); and such penalty will be added to the principal balance of the Note (under Holder and Borrower’s expectation that any penalty amounts will tack back to the original date of the note).

2.6.2.B.  For each conversion, in the event that shares are not delivered by the third business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the principal balance of the Note (under Holder and Borrower’s expectation that any penalty amounts will tack back to the original date of the note).  Borrower will not be subjected to any penalties once its transfer agent processes the shares to the DWAC system.

  

4

  

2.6.3 If failure to deliver Conversion Shares occurs as follows, Holder may elect to enforce one or more of these remedies at its sole election.

2.6.3.A.  In addition to any other rights available to the Holder, if the Borrower fails to cause its transfer agent to transmit to the Holder the shares on or before the Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or if the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Borrower shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions and other fees, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Shares that the Borrower was required to deliver to the Holder in connection with the conversion at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either (x) reinstate the portion of the Note and equivalent number of shares for which such conversion was not honored (in which case such conversion shall be deemed rescinded), (y) deliver to the Holder the number of shares of Common Stock that would have been issued had the Borrower timely complied with its conversion and delivery obligations hereunder, or (z) pay in cash to the Holder the amount obtained by multiplying (1) the number of Shares that the Borrower was required to deliver to the Holder in connection with the conversion at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed.  The Holder shall provide the Borrower written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Borrower, evidence of the amount of such loss.

2.6.3.B.  If the Borrower fails for any reason to deliver to the Holder the Shares by DWAC/FAST electronic transfer (such as by delivering a physical stock certificate) and if the Holder incurs a Market Price Loss, then at any time subsequent to incurring the loss the Holder may provide the Borrower written notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the Borrower must make the Holder whole by either of the following options at Holder’s election:

Market Price Loss = [(High trade price on the day of conversion) x (Number of shares receivable from the conversion)] – [(Sales price realized by Holder) x (Number of shares receivable from the conversion)].

Option A – Pay Market Price Loss in Cash.  The Borrower must pay the Market Price Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Borrower.

Option B – Add Market Price Loss to Principal Sum.  The Borrower must pay the Market Price Loss by adding the Market Price Loss to the balance of the Principal Sum (under Holder’s and the Borrower’s expectation that any Market Price Loss amounts will tack back to the original date of issue of this Note).

  

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2.6.3.C.  If the Borrower fails for any reason to deliver to the Holder the Shares within 2 (two) business days of the Share Delivery Date and if the Holder incurs a Failure to Deliver Loss, then at any time subsequent to incurring the loss the Holder may provide the Borrower written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Borrower must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any time on or after the day of conversion) x (Number of shares receivable from the conversion)].

The Borrower must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Borrower.

2.7. This section 2.7 intentionally left blank.

ARTICLE 3 MISCELLANEOUS

3.1. Notices. Any notice required or permitted hereunder must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier.  Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

3.2 Subsequent Equity Sales or Agreements.  The Borrower shall provide the Holder, whenever the Holder requests at any time while this Note is outstanding, a schedule of all issuances of Common Stock or any debt, preferred stock, right, option, warrant or other instrument that is convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (a “Common Stock Equivalent”) since the date of issuance of this Note, including the applicable issuance price, or applicable reset price, exchange price, conversion price, exercise price and other pricing terms.  The term issuances shall also include all agreements to issue, or prospectively issue Common Stock or Common Stock Equivalents, regardless of whether the issuance contemplated by such agreement is consummated.  The Borrower shall notify the Holder in writing of any issuances within seventy-two (72) hours of such issuance.

3.3. Amendment Provision.  The term "Note" and all reference thereto, as used throughout this instrument, means this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

3.4. Assignability.  The Borrower may not assign this Note.  This Note will be binding upon the Borrower and its successors, and will inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder to anyone of its choosing without Borrower’s approval.

3.5. Governing Law.  This Note will be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to the conflict of laws principles thereof.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida.  Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

  

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3.6. Delivery of Process by Holder To Borrower.  In the event of any action or proceeding by Holder against Borrower, and only by Holder against Borrower, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by Holder via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Borrower at its last known address or to its last known attorney set forth in its most recent SEC filing.

3.7. No Rights as Stockholder Until Conversion.  This Note does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the conversion hereof as set forth in Section 2.1.  So long as this Note is unconverted, this Note carries no voting rights and does not convey to the Holder any “control” over the Company, as such term may be interpreted by the SEC under the Securities Act or the Exchange Act, regardless of whether this Note is currently convertible.

3.8. Maximum Payments. Nothing contained herein may be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum will be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

3.9. Attorney Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

3.10. Nonwaiver.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.

3.11. No Public Announcement. Except as required by securities law, no public announcement may be made regarding this Note, payments, or conversions without written permission by both Borrower and Holder.

3.12. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Holder has the right to have any such opinion provided by its counsel.  Holder also has the right to have any such opinion provided by Borrower’s counsel.

3.13. Director’s Resolution.  Once effective, Borrower will execute and deliver to Holder a copy of a Board of Director’s resolution resolving that this note is validly issued, paid, and effective.

3.14. No Shorting.  Holder agrees that so long as any Note from Borrower to Holder remains outstanding, Holder will not enter into or effect any “short sales” of the common stock or hedging transaction which establishes a net short position with respect to the common stock of Focus Gold Corporation.  Borrower acknowledges and agrees that upon submission of conversion notice as set forth in Section 3.1 (up to the amount of cash paid in under the Note), Holder immediately owns the common shares described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

  

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BORROWER[S]:

FOCUS GOLD CORPORATION

By: /s/Grant R. White

Grant R. White

Chief Executive Officer

LENDER/HOLDER:

/s/Justin Keener     

Justin Keener

JMJ Financial / Its Principal

FUNDING SCHEDULE

	
·  

	
Total financing of $1,900,000 structured as follows:

	
o  

	
$275,000 paid to Borrower as the Purchase Price under document SPA-03222012.

	
o  

	
$125,000 within 90 days of execution and closing of this Note provided all things equal and JMJ’s conditions are met

	
o  

	
$500,000 when the Note balance is converted down to zero provided all things equal and JMJ’s conditions are met

	
o  

	
$500,000 when the Note balance is converted down to zero provided all things equal and JMJ’s conditions are met

	
o  

	
$500,000 when the Note balance is converted down to zero provided all things equal and JMJ’s conditions are met

	
·  

	
Lender’s conditions required to be eligible for the additional payments set forth above include but are not limited to (a) the applicable conversion price must be greater than $0.10 per share, and (b) the monthly dollar trading volume must be greater than $750,000 per month for the three months previous to the payment.

  

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·  

	
The determination of whether the condition that all things are equal is satisfied for purpose of Lender’s making a payment shall be made by Lender in its sole discretion after considering such factors that include, but are not limited to, the Borrower’s financial condition, the results of Borrower’s mineral exploration activities, the existence of an event of default under any agreement between the Borrower and the Lender, the Borrower’s corporate initiatives, whether Borrower is in default under any other financing arrangements, whether Borrower is DWAC eligible, and the speed and efficiency of share delivery upon conversion.

	
·  

	
The Borrower understands and agrees that other than the $275,000 payment above, any additional payments that may be made are solely at Lender’s election.  Lender does not guarantee that it will make any additional payments.

	
·  

	
The total Consideration of $1,900,000 for the Principal Sum of $2,110,000 reflects a 10% original issue discount (“OID”).  The Principal Sum on the Note shall be prorated based on the amounts actually funded by Lender taking into account the OID.

	
·  

	
If Lender has not made a payment to the Borrower of at least $25,000 in the last six months, the Borrower may, at its election, by providing written notice to the Lender, decline to accept any additional payments of consideration and cancel the remaining unfunded Principal Sum.  Any payment of consideration of $25,000 or more automatically resets the six month period.

 

 

 

 

 

 

 

 

 

 

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