Document:

mine_ex102.htm

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the "Agreement") is entered into as of the 16th day of December, 2010 between Sam J Messina III ("Employee") and Minerco Resources, Inc., a Nevada Corporation, it’s affiliates, predecessors and subsidiaries (the "Company”).

 

WHEREAS, Employee and the Company desire to enter into this Agreement setting forth the terms and conditions for the employment relationship of Employee with the Company during the Employment Term (as defined below).  This agreement shall replace the Consulting Agreement dated July 26, 2010 between Employee and Company.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties to this Agreement hereby agree as follows:

 

	
1.

	
Services

 

1.1           Employment. During the Employment Term (as defined below), the Company hires Employee to perform such services as the Company may from time to time reasonably request consistent with Employee's position with the Company (as set forth in Section 1.1 and 1.5 hereof) and Employee's stature and experience as a Certified Public Accountant(the "Services"). The Services and authority of Employee shall include, but not necessarily be limited to, management and supervision of (A) the general accounting, reporting, financial management and regulatory compliance of the of the Company, (B) the general accounting, reporting, financial management and regulatory compliance of future acquisitions and Affiliates.  For purposes of this Agreement, "Affiliates" shall mean, as to any person, any other person controlled by or under common control with (or, where applicable, controlling), directly or indirectly, such person; and "person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof, or any other entity; whereas such person in the normal course of business shall be deemed an affiliate of the Company.

 

1.2            Location. During the Term, Employee's Services shall be performed in the Houston, Texas area or any other area of Employee’s convenience which permits regular communication via telephone, Internet or other popular medium with employees, officers, directors, customers and other affiliates as needed to effectively carry out duties as described herein.  Employee acknowledges and understands that the Company’s current headquarters are located in Houston, Texas and that officers and other participants critical to the Company’s business are dispersed nationally and internationally, and that such dispersion will increase substantially as the Company grows. The parties therefore acknowledge and agree that the nature of Employee's duties hereunder may require domestic and international travel from time to time.

 

                1.3           Term. The term of Employee's employment under this Agreement (the "Employment Term") shall commence on the 16th day of December, 2010 (the "Effective Date") and shall end on December 15, 2015 unless sooner extended or terminated in accordance with the provisions of this Agreement.

 

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For purposes of this Agreement, "Employment Year" shall mean each twelve-month period during the Term commencing on December 16th, and ending on December 15th, of the following year. In the event the parties decide to extend this Agreement for an additional one year Employment Term, any extension agreed upon must be done so in writing and executed by the Company and Employee no later than 5 p.m. Eastern Standard Time on December 15, 2015.

 

1.4           Exclusive Employment; Non-Competition.  Employee agrees that his employment hereunder is on an exclusive basis, and that as long as Employee is employed by the Company, Employee will not engage in any other business activity which is in conflict with Employee’s duties and obligations hereunder.  Employee agrees that during the Employment Term, Employee shall not directly or indirectly engage in or participate as an owner, partner, shareholder, officer, employee, director, agent of or consultant for any business that competes with any of the principal activities of the Company.  Provided however, that Employee may acquire and/or retain, as an investment, and take customary actions (including the exercise or conversion of any securities or rights) to maintain and preserve Employee's ownership of any one or more of the following (provided such actions, other than passive investment activities, do not unreasonably interfere with Employee's Services hereunder): (i) securities of any corporation that are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and that are publicly traded as long as Employee is not part of any control group of such corporation and, in the case of public corporations in competition with the Company, such securities do not constitute more than five percent of the voting power of that public corporation; (ii) any ownership interest in a partnership, trust, corporation or other person so long as Employee remains a passive investor in that entity and so long as such entity is not, directly or indirectly, in competition with the Company, (iii) securities or other interests now owned or controlled, in whole or in part, directly or indirectly, by Employee in any corporation or other person and which are identified on Schedule 1.4 hereto; and (iv) securities of the Company or any of its Affiliates. Nothing in this Agreement shall be deemed to prevent or restrict Employee's ownership interest in the Company and any of its Affiliates or Employee’s ability to render charitable or community services not in competition with the Company.

 

                1.5           Power and Authority.

 

1.5.1        During the Employment Term, Employee shall be Employed as Chief Financial Officer, Secretary and Treasurer of the Company, Employee shall report directly to the President, Chief Executive Officer and Company’s Board of Directors. Employee shall be a member of the Board of Directors of the Company (the "Board") and a member of the executive or supervisory committee(s) or comparable committee(s), (the "Executive Committee").

 

                1.5.2        During the Employment Term, all accounting officers and employees of the Company shall report to Employee (directly or through such channels as Employee and the Board may designate).

 

1.5.3        The Company may from time to time during the Term appoint Employee to one or more additional offices of the Company. Employee agrees to accept such offices if consistent with Employee's stature and experience and position with the Company.

 

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1.6           Indemnification. The Company shall indemnify Employee to the fullest extent allowed by applicable law. Without limiting the foregoing, Employee shall be entitled to the benefit of the indemnification provisions contained on the date hereof in the Bylaws of the Company and any applicable Bylaws of any Affiliate, notwithstanding any future changes therein.

 

2.             Compensation.

 

As compensation and consideration for the Services provided by Employee during the Term pursuant to this Agreement, the Company agrees to pay to Employee the compensation set forth below.

 

2.1           Fixed Annual Compensation. The Company shall pay to Employee salary ("Fixed Annual Compensation") at the rate beginning on December 27, 2010 and continuing for the term of this agreement as follows:

 

2.1.1           120,000.00 per annum at such times and in such amounts as the Company may designate in accordance with the Company’s usual salary practices, but in no event less than twice monthly.

 

2.1.2           If annual revenues exceed $10,000,000.00, 240,000.00 per annum at such times and in such amounts as the Company may designate in accordance with the Company’s usual salary practices, but in no event less than twice monthly.

 

2.1.3           If annual revenues exceed $20,000,000.00, 360,000.00 per annum at such times and in such amounts as the Company may designate in accordance with the Company’s usual salary practices, but in no event less than twice monthly.

 

2.2           Stock. The Company shall grant to Employee Thirty Million (30,000,000) shares of the Company’s common stock upon the effective date of this agreement.  The stock shall be fully paid, non-assessable and shall contain other customary rights and privileges, including piggy back registration rights.

 

2.2.1           If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 Bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 12 months of the date of this agreement, all shares granted under this section shall be returned to the Company.

 

2.2.2           If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 Bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 24 months of the date of this agreement, Twenty-four Million (24,000,000) shares granted under this section shall be returned to the Company.

 

2.2.3           If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 Bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 36 months of the date of this agreement, Eighteen Million (18,000,000) shares granted under this section shall be returned to the Company.

 

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2.2.4           If Employee voluntarily terminates his employment with the Company or if a petition for Chapter 7 Bankruptcy is filed by the Company resulting in an adjudication of bankruptcy within 48 months of the date of this agreement, Twelve Million (12,000,000) shares granted under this section shall be returned to the Company.

 

2.3           Bonus. Under this Agreement, Employee shall be entitled to participate in the highest bonus incentive program (hereafter “BIP”) set up by the Board. While the specific structure and trigger mechanisms for the BIP are at the sole discretion of the Board, the BIP shall afford Employee the opportunity to earn a cash and/or stock bonus through the Employee’s accomplishment of specific pre-identified reasonable milestones in the development of the Company’s business. Any payments under the BIP shall be paid annually to Employee and shall be paid no later than the end of the first quarter following the Company’s fiscal year-end. In addition to the BIP, Employee shall also be entitled to such additional bonus, if any, as may be granted by the Board (with Employee abstaining from any vote thereon) or compensation or similar committee thereof in the Board's (or such committee's) sole discretion based upon Employee's performance of his Services under this Agreement.

 

3.             Expenses; Additional Benefits

 

3.1           Vacation. Employee shall be entitled to an aggregate of six weeks of paid vacation during each year of the Contract Year. Employee shall take vacation at times determined by the Employee, however, with appropriate consideration for the Company’s business needs. In addition, Employee shall be entitled to holidays generally observed in the United States and the State of Texas.

 

3.2           Employee Business Expense Reimbursement. Employee shall be entitled to reimbursement of all business expenses for which Employee makes a submission for and provides an adequate accounting to the Company beginning on the effective date of this Agreement. The determination of the adequacy of the accounting of the foregoing expenses shall be within the reasonable discretion of the Company’s independent certified accountants taking into consideration the substantiation requirements of the Internal Revenue Code of 1986, as amended (the "Code"). Employee shall be entitled to cash reimbursement for expense items, including extended travel. Employee shall be entitled to cash or stock reimbursement for ordinary expenses, including phone and local travel, as approved in advance by the Board. Such reimbursement of business expenses shall be payable to Employee at the end of each calendar month for the business expenses incurred by the Employee for the month prior for each specific submission for reimbursement during the Term of this Agreement,

 

3.3           Stock Option Plan and Agreement. Within 12 months of the execution of this Agreement and in consideration for the execution thereof, Employee and the Company shall develop, implement and enter into a Stock Option Plan and Agreement, which represents a material inducement to Employee's willingness to enter into this Agreement.

 

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3.4           Directors and Officers Liability Insurance.  During the Term of this agreement, Employee shall be entitled to the protection of any insurance policies the Company or any of its Affiliates may elect to maintain generally for the benefit of its directors and officers against all costs, charges and expenses whatsoever incurred or sustained by Employee in connection with any action, suit or proceeding to which Employee may be made a party by reason of Employee being or having been a director or officer of the Company or any of its Affiliates or Employee serving or having served any other enterprises as a director, officer or employee at the request of the Company.  In the event the Company elects to maintain such directors and officers liability insurance, the policy shall be issued by a reputable and financially-sound insurance carrier of national standing which is acceptable to Employee, and providing coverage in the amount of at least $1,500,000.

 

3.5           Medical and Dental Insurance. In the event that the Company, with the approval of the Board of Directors, elects to establish a Medical Insurance Benefit Plan for the benefit of the Company’s employment staff, Employee shall be entitled to participate in such plan which shall include comprehensive medical and dental insurance (from a reputable and financially-sound insurance carrier of national standing) for himself and his immediate family. Such insurance shall cover at the minimum 100% of all hospitalization costs after payment of deductibles and 80% of other medical costs, with the annual deductible not exceeding $500 per person. There shall be no cap on benefits for the medical insurance, and the annual cap for dental insurance benefits shall not be less than $3,000. The Company may either provide these benefits directly to Employee or promptly reimburse Employee for the cost of such benefits, at the Company’s election.

 

3.6           General. Employee shall be entitled to participate in any profit-sharing, pension, health, sick leave, holidays, personal days, insurance or other plans, benefits or policies (not duplicative of the benefits provided hereunder) available to the employees of the Company or its Affiliates on the terms generally applicable to such employees.

 

3.7           No Reduction of Benefit or Payment. No payment or benefit made or provided under this Agreement shall be deemed to constitute payment to Employee or his legal representative or guardian in lieu of, or in reduction of, any benefit or payment under an insurance, pension or other benefit plan, and no payment under any such plan shall reduce any payment or benefit due under this Agreement except as set forth in Section 5.3 of this Agreement.

 

3.8           Asset Sale or Merger. In the event of an arm’s length transaction sale of all or substantially all of the assets or a merger in which the Company is not the surviving entity, Employee shall be entitled to receive and the Company shall issue, additional amount of shares of common stock in the Company which would equal Five percent (5%) of the final value of the transaction.

 

3.9           Covenant Not To Solicit.  Employee agrees that for a period of two (2) years following any termination of the employment of the Employee with the Company, Employee will not, directly or indirectly, without the prior written consent of the Company:  solicit, entice, persuade or induce any employee, consultant, agent or independent contractor of the Company or of any of its subsidiaries or Affiliates to terminate his or her employment by the Company or such subsidiary or Affiliate to become employed by any person, corporation or other entity other than the Company or such subsidiary or Affiliate,  or approach any such employee, consultant, agent or independent contractor for any of the foregoing purposes, or hire any such employee, consultant, agent or independent contractor or authorize or assist in the taking of any such actions by any third party.

 

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                3.10        Confidentiality.  During the Term of Employment and continuously thereafter, Employee shall keep secret and retain in strictest confidence and not use or disclose, furnish or make accessible to anyone outside the Company and any of its Affiliates, directly or indirectly, or use for the benefit of Employee or others except in conjunction with the business of the Company and the business of any of its subsidiaries or Affiliates, any Protected Information.  The term “Protected Information” shall mean trade secrets, confidential or proprietary information and all other knowledge, technology, know-how, information, documents or materials owned, developed or possessed by the Company or any of its subsidiaries or Affiliates, whether in tangible or intangible form, pertaining to the business of the Company or any of its subsidiaries or Affiliates, including, but not limited to, research and development, operations, systems, databases, computer programs and software, designs, models, operating procedures, knowledge of the organization, products and services (including prices, costs, sales or  content), processes, techniques, contracts, financial information or measures, business methods, future business plans, details of consultant contracts, new personnel acquisition plans, business acquisition plans, customers and suppliers (including identities of customers and prospective customers and suppliers, identities of individual contacts at business entities which are customers  or prospective customers or suppliers, preferences, businesses or habits), and business relationships.  Provided however, that Protected Information shall not include information that shall become generally known to the public or the trade without violation of this Section 1.6.

 

3.11         Company Ownership.  The results and proceeds of Employee’s services hereunder, including, without limitation, any works of authorship resulting from Employee’s services during his employment with the Company or any of the Company’s Affiliates and any works in progress, shall be works-made-for-hire, and the Company shall be, and shall be deemed, the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Company determines in its sole discretion without any further payment to Employee whatsoever.  If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Employee hereby irrevocably assigns and agrees to assign any and all of Employee’s right, title and interest thereto, including, without limitation, to any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed to the Company, and the Company shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines without any further payment to Employee whatsoever.  Provided however, that if the Company elects not to utilize any work(s) of authorship resulting from Employee’s services during his Employment Term, the Company shall wave and release all rights to said work(s) and assign all rights thereto to Employee.

 

Employee shall, from time to time, as may be requested by the Company, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments.  To the extent Employee has any rights in the results and proceeds of Employee’s services that cannot be assigned in the manner described above, Employee unconditionally and irrevocably waives the enforcement of such rights.  This Section 3.11 is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by the Company of any rights of ownership to which the Company may be entitled by operation of law by virtue of the Company’s being the employer of Employee.

 

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3.12         Litigation.  Employee agrees that, during the Employment Term, for two (2) year thereafter and, if longer, during the pendency of any litigation or other proceeding, (i) Employee shall not communicate with anyone (other than his personal attorney(s) and/or tax advisor(s)) and, except to the extent necessary in the performance of Employee’s duties hereunder, with respect to the facts or subject matter of any pending or potential litigation, or regulatory or administrative proceeding involving the Company or any of its Affiliates, or any of their officers, directors, shareholders, representatives, agents, employees, suppliers or customers, other than any litigation or other proceeding in which Employee is a party-in-opposition, without giving prior notice to the Company’s Board of Directors or General Counsel and receiving a response, and (ii) in the event that any other party attempts to obtain information or documents from Employee with respect to matters possibly related to such litigation or other proceeding, Employee shall promptly so notify the Company’s Board of Directors  or General Counsel and await any response .

 

3.13         No right to Give Interviews or to Write Books, Articles, etc.    Employee agrees that during the   Employment Term and for a period of two (2) years thereafter, except with the Company’s prior written authorization, Employee shall not (i) give any interviews or speeches, or (ii) prepare or assist any person or entity in the preparation of any books, articles, television or motion picture productions or other creations, in either case, concerning the Company or any of its Affiliates, or any of their officers, directors, shareholders, representatives, agents, employees, suppliers or customers.

 

3.14         Return of Property.  All documents, date books, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for Employee and/or utilized by Employee in the course of Employee’s employment with the Company shall remain the exclusive property of the Company.  In the event of the termination of Employee’s employment for any reason, the Company reserves the right, to the extent permitted by law and in addition to any other remedy the Company may have, to deduct from any monies otherwise payable to Employee by the Company the following:  (i) the full amount of any debt Employee owes to the Company or to any of the Company’s Affiliates at the time of or subsequent to the termination of Employee’s employment with the Company;  and (ii) the value of the Company’s property which is retained in Employee’s possession after the termination of Employee’s employment with the Company.  In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement and the Employee’s signature hereon shall serve, and be deemed to serve, as such consent. Employee acknowledges and agrees that the foregoing remedy shall not be the sole and/or exclusive remedy of the Company with respect to a breach of this Section 3.14.

 

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3.15         Non-Disparagement.  Employee agrees that he shall not, during the Employment Term and for a period of two (2) years thereafter, criticize, ridicule or make any statement which disparages or is derogatory of the Company or any of its Affiliates, or of any of their officers, directors, shareholders, representatives, agents, employees, suppliers or customers.

 

3.16         Injunctive Relief/Specific Enforcement. The Company has entered into this Agreement in order to obtain the benefit of Employee’s unique skills, talent, and experience.  Employee acknowledges that the services to be rendered by Employee are of a special, unique and extraordinary character and, in connection with such services, Employee will have access to confidential or proprietary information or trade secret vital to the Company’s business and the businesses of its subsidiaries and Affiliates.  By reason of this, Employee acknowledges, consents and agrees that any violation of Sections 1.4 and 3.10 – 3.16 of this Agreement will result in irreparable harm to the Company and its subsidiaries or Affiliates, and that money damages will not provide adequate remedy to the Company, and that the Company shall be entitled to have those sections specifically enforced by any court having competent jurisdiction. Accordingly, Employee agrees that the Company may obtain injunctive and/or other equitable relief for any breach or threatened breach of those sections, in addition to any other remedies, including the recovery of money damages from Employee available to the Company.

 

3.17         Non-Renewal Notice.  The Company shall notify Employee in writing in the event that the Company elects not to extend or renew this Agreement.  If the Company gives Employee such notice less than three (3) months before the end of the Employment Term, or Employee’s employment terminates pursuant to Section 4.1 hereof during the three (3) months of the Employment Term, Employee shall be entitled to receive his Salary as provided in Section 2.1, payable in accordance with the Company’s then-effective payroll practices, subject to applicable withholding requirements, for the period commencing after the end of  the Employment Term which, when added to the portion of the Employment Term, if any, remaining when the notice is given or the termination occurs, equals three (3) months.  The payments provided for in this Section 3.17 are in lieu of any severance or income continuation or protection under any Company plan that may now or hereafter exist.  Employee shall be required to mitigate the amount of any payment provided for in this Section 3.17 by seeking other employment or otherwise, and the amount of any such payment provided hereunder shall be reduced by any compensation earned by Employee from any third person.

 

3.18         The provisions of Sections 1.4 and 3.11-3.18 shall, without any limitation as to time, survive the expiration of Employee’s employment hereunder, irrespective of the reason for any termination.

 

4.            Termination for Cause by the Company:

 

4.1           Cause.  Reasons and process for termination for Cause.  Executive may be terminated from employment with “Cause.”  For purposes of this Agreement, the term “Cause” shall mean:

 

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(i)  

	
Gross negligence or willful misconduct in the performance of duties to the Company that has resulted or is likely to result in substantial and material damage to the Company,

 

	
(ii)  

	
Repeated unexplained or unjustified absence from the Company;

 

	
(iii)  

	
A material or willful violation of any federal, state or local law;

 

	
(iv)  

	
commission of any act of fraud with respect to the Company, or

 

	
(v)  

	
conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company, in each case as determined in good faith by the Board of Directors of the Company; or

 

	
(vi)  

	
substantial or continued unwillingness to perform duties as reasonable directed by Company’s Board of Directors.

 

       4.2            Effects of Termination for Cause.  In the event this Agreement is terminated for Cause, all of the Company’s obligations under this agreement shall cease as of the date in which the Employee’s receives the Notice of Termination.  The Company shall pay the Fixed Annual Compensation  up to the date of termination, and have no further obligations to Employee under this Agreement.  Additionally, in the event this Agreement is terminated for Cause, the Employee is prohibited from taking Employment with a direct competitor of the Company for a period of two years from the date of termination.  The Company may also pursue damages and injunctive relief from Employee as compensation for its damages.

 

5.            Termination for Not-for-Cause by the Company:

 

5.1           Reasons and process for termination for Not-for-Cause.  The Company may terminate this Agreement, for Not-for-Cause (with the ramifications described below), subject to the Provisions of this Section 5.

 

5.2           Effects of Termination Not-for-Cause.  Employee’s obligations to provide Employee’s Services under this Agreement shall cease as of date in which the Employee receives the Notice of Termination for Not-for-Cause.  Employee shall be entitled for a pro-rated Additional Annual Compensation under Sections 2.1 – 2.3 for the balance of the then current term and all and any unvested stock and options Employee or any of Employee’s assigns holds in the Company or its Affiliates shall vest immediately.  Employee shall be entitled to the Employee’s Benefits until the end of the then current term.  Employee shall have no restrictions to furnish the Services of the Employee and the Employee shall have no restrictions with respect to accepting other Employment (even with companies directly competing with the Company), except upon the receipt of comparable health and dental insurance through another company, the Company’s obligations to provide these benefits shall end.  Employee’s restrictions under 3.1.2 and 3.1.7 of this agreement shall remain in full force and effect.

 

5.3           No Mitigation.  In the event of Termination-Not-for-Cause, Employee shall not be required to mitigate the amount of any payment provided for in this Section 5 in any way whatsoever, nor shall the amount any payment or benefit provided for in this Section 5 be reduced by any compensation earned by Employee as the result of employment by another employer or by retirement benefits after the termination date.  The Company shall not be entitled to any rights to offset, mitigate or otherwise reduce the amounts owing to Employee by virtue of this Section 5 with respect to any rights, claims, or damages that the Company or its Affiliates may have against Employee, including, without limitation, any claims by reason of any breach or alleged breach of this Agreement by Employee.

 

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6.             Termination for Disability or Death of Employee

6.1.           Employee’s incapacity. If, as a result of Employee's incapacity to materially perform the Services required under this Agreement because of physical or mental illness, as evidenced by Employee having been absent from his duties for three (3) consecutive months or for more than an aggregate of five (5) months in any Contract Year, the Board may give Employee a Disability Notice, which will be the first step in the parties attempts to terminate or amend this Agreement with mutual consent.

6.2.          Mandatory good faith dialogue. Upon the receipt of the Disability Notice by Employee, Employee and the Company shall engage in a good faith dialogue to agree on a resolution to the matter that is sensitive to the Company’s business needs as well as the Employee’s situation.

6.3.          Termination for Disability. In the event the parties after 30 days have not reached an agreement on the necessary amendments to this Agreement or terms for a mutual separation agreement, and the Employee’s incapacity persists, by unanimous decision by the Board (excluding Employee) the Company shall have the right to terminate the Employee for Disability, by sending Employee a Notice of Termination for Disability.

6.4.           Effects of Termination for Disability. Upon the termination of this Agreement for Disability of Employee, Employee shall be entitled to receive (i) the Fixed Annual Compensation that would otherwise be payable hereunder to the end of the month in which such termination occurs and for six months thereafter; (ii) any bonus and or Additional Annual Compensation due and earned throughout the then Employment Year; and (iii) any amounts earned pursuant to the terms of this Agreement but unpaid at the time of termination. The payments specified in this Section 6.4 shall commence as soon as practicable but no later than one month after the date of termination. The payments

shall be made in cash, company check or certified funds. Whenever compensation is payable to Employee hereunder during a time when Employee is partially or totally disabled and such disability (except for the provisions hereof) would entitle Employee to disability income or other special compensation according to the terms of any plan now or hereafter provided by the Company or according to any policy of the Company in effect at the time of such disability, the payments to Employee hereunder shall be inclusive of any such disability income or other special compensation and shall not be in addition thereto. If disability income is payable directly to Employee by an insurance company under an insurance policy paid for by the Company, then any such disability income paid during the twenty four (24) months following the Date of Termination shall be considered to be part of the payments to be made by the Company pursuant to this Section 6.4, and not in addition thereto, and shall be paid to the Company, up to but not to exceed the amount of payments actually made by the Company pursuant to this Section 6.4.  All disability income paid to Employee by said insurance company (i) during the twenty four (24) months following the termination date in excess of the payments actually made by the Company pursuant to this Section 6.4, and (ii) after twenty four (24) months following the termination shall be the sole property of Employee, as the case may be, pursuant to the terms of such insurance policy and shall not be required to be paid to the Company.

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6.5.           Termination in Case of Death. In case of Employee's death, any and all unvested stock or options granted to Employee under Section 2.2 of this Agreement shall vest in favor of Employee's estate as provided for in this Section(s) 6.51, 6.5.2, 6.5.3, and 6.5.4 herein. Company shall also continue any health benefits for family for one year.

6.5.1           If the Employee's death occurs within 12 months of the date of this agreement, Six Million (6,000,000) shares granted under Section 2.2 shall immediately vest in favor of Employee's estate and Twenty-Four Million (24,000,000) shall be returned to the Company;

6.5.2           If the Employee's death occurs within 24 months of the date of this agreement, Twelve Million (12,000,000) shares granted under Section 2.2 shall immediately vest in favor of Employee's estate and Eighteen Million (18,000,000) shall be returned to the Company;

6.5.3           If the Employee's death occurs within 36 months of the date of this agreement, Eighteen Million (18,000,000) shares granted under Section 2.2 shall immediately vest in favor of Employee's estate and Twelve Million (12,000,000) shall be returned to the Company;

6.5.4           If the Employee's death occurs within 48 months of the date of this agreement, Twenty-four Million (24,000,000) shares granted under Section 2.2 shall immediately vest in favor of Employee's estate and Six Million (6,000,000) shall be returned to the Company;

6.5.5           Any unvested additional shares granted for past performance under Sections 2.3 and 3.3 shall immediately vest in favor of Employee’s estate.

7. Termination by Employee for Material Breach

7.1.          Employee shall have the right to terminate this Agreement only in the event of a verifiable Material Breach by the Company. For purposes of this Agreement, "Material Breach" shall mean any of the following:

(A) The breach by the Company of a material term, condition or covenant of this Agreement;

(B) The assignment to Employee of any duties inconsistent in any material respect with his status set forth in Sections 1.1 and 1.5 hereof;

(C) A reduction by the Company in the Fixed Annual Compensation set forth in Section 2.1;

(D) A unanimous decision by the Board of Directors and a majority vote of the shareholders of all classes of stock in the Company, who are entitle to vote in such matters, that would result in a significant change to the core business of the Company which having been effectuated without Employee's consent would cause the Company’s business is to fundamentally depart from the purpose in which the Employee was originally contracted for.

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7.2.          Material Breach Notice by Employee. In the event Employee wishes to pursue a termination of the Agreement on the account of a material breach by the Company as defined in this Section 7.1 (a)(b)( c) and (d), Employee may send to the Board a Notice of Material Breach describing in detail the nature of the alleged breech and the required corrective action to cure the alleged breach. Unless the Board formally objects to the Notice of Material Breach or responds and cures the breach within sixty (60) days from the receipt thereof, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for Breach to that effect no earlier than the latest date by which the Company could still object or cure the Notice of Material Breach, but no later than sixty (60) days from the Company’s receipt of the Notice of Material Breach.

7.3.          Effect of the Company’s objection. In the event the Company receives a Notice of Breach from Employee and does not consider the allegations in the notice to be valid, it has the right to object to the contents of the Notice by informing Employee to such effect in writing within two weeks of receipt of the Notice of Material Breach. In the event of an objection by the Company to a Notice of Material Breach, the following process shall apply:

(a) The Board shall call a special meeting to allow Employee to state Employee's position on the matter and to allow for the parties to resolve the situation. The Employee shall abstain from voting during such meeting. Employee shall be allowed to have outside legal counsel present at such meeting.

(b) In the event the parties fail to resolve the matter in such meeting, the parties shall submit the dispute to binding arbitration in accordance with Section12hereunder. In the event the arbitration does not find that a material breach by the Company existed, the Company shall not be required to pay the Fixed Annual Compensation for any period during which Employee did not provide the Employee’s Services as called for in this Agreement.

7.4.          Effects of Termination by Employee for Material Breach. An effective termination by Employee resulting from a material breach of the Company shall be considered a Termination Not-for-Cause by the Company.

8. Termination by Employee for Change in Control

8.1.          Definition of "Change in Control." For purposes of this Agreement, "Change in Control of the Company ” means a change in control (except Changes in Control effected with the express consent of Employee) of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Company is then subject to

such reporting requirement, including, but not limited to (i) a transaction or series of related transactions resulting in a change in beneficial

ownership of more than 51% of the outstanding equity securities of the Company; (ii) or a sale of all or substantially all of the assets of the Company.

Page 12 of  17

  

  

8.2.          Termination Notice for Change of Control. In the event of an occurrence of Change of Control (as defined above), Employee shall have the right for a 30 day period upon becoming aware of the Change of Control to notify the Company of Employee's intention to terminate this Agreement based on this occurrence by sending a the Board a Notice of Disputed Change of Control. Unless the Board formally responds to the Notice of Disputed Change in Control with an offer to address the Employee's concerns by amending this Agreement in two weeks from its receipt, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for

Change of Control to that effect no earlier than the latest date by which the Company could still object or cure the Notice of Disputed Change of Control but no later than sixty (60) days from the Company’s receipt of the Notice of Disputed Change of Control

8.3.          In the event the Board has responded to the Notice of Disputed Change in Control with an offer to address Employee's concerns, the parties shall engage in meaningful good faith negotiations for a period of 60 days to amend or renew this Agreement to the satisfaction of both parties. In the event no agreement has been reached after the 60-day period, Employee shall have the right to terminate this Agreement by sending a Notice of Termination for Change of Control.

8.4.          Effect of termination for Change of Control. An effective termination by Employee resulting from a Change in Control of the Company shall be considered a Termination Not-for-Cause by the Company.

8.5.          For the sake of clarity, a Change in Control does not give the Company (or the company acquiring it) any new rights.  Anything herein contained to the contrary notwithstanding, in the event the Company experiences either a “change in control” transaction as defined herein, including, but not limited to, a merger, acquisition or sale of a controlling interest in the corporation as stated above, the terms and conditions of this Agreement shall remain in effect and in full force, all stock, options, warrants and any other consideration due Employee, or Employee's assignee. Employee shall become fully vested and such action the Company shall not in any way diminish, affect or compromise Employee’s rights under this Agreement.

 

9.             General

 

9.1           Governing Law. Venue The laws of the State of Texas shall govern the interpretation, construction and applicability of this Agreement in any arbitration or judicial proceeding.

 

9.2           Attorneys’ Fees. In the event that any legal (judicial or arbitral) proceeding is instituted in connection with any controversy arising out of this Agreement or the enforcement of any rights hereunder, the prevailing party (as defined by the courts of Texas) shall be entitled to recover, in addition to court and other costs, such sums as the court or arbitrator may decide are reasonable as attorneys’ fees.

 

9.3           Indemnification.  In the event Employee is made, or threatened to be made, a witness or party to any civil, criminal or administrative action, proceeding or investigation of the fact that Employee is or was a director or officer of the Company, or serves on the Board of another corporation fifty percent (50%) or more owned by the Company in any capacity at the Company’s request, or serves or served as a director of any other corporation at the request, or serves as a fiduciary of any ERISA plan at the Company’s request, Employee shall be indemnified by the Company for all amounts paid as a fine or settlement, including the cost of defense.

 

Page 13 of  17

  

  

 

                9.4          Waiver.  Neither party shall, by mere lapse of time, without giving notice be deemed to have waived any breach by the other party of any of this Agreement.  Further, the waiver by either party of a particular breach of this Agreement shall be construed or deemed as a continuing waiver of such breach.

 

9.5           Entire Agreement. The parties agree that this instrument constitutes and contains the entire agreement between the parties concerning the subject matter and contents of this Agreement, and that this instrument supersedes all prior negotiations, proposed agreement, or understandings, if any, between the parties concerning any of the provisions or contents of this Agreement.  No amendment to this Agreement shall be effective unless it is in writing and signed by a duly authorized representative of each of the parties to this Agreement.

 

9.6           Fair Meaning. The parties agree that the wording of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against the party that drafted this Agreement.

 

9.7           Counterparts.  This Agreement may be executed in any number of counterparts which shall be deemed an original, and all of which taken together constitutes one and the same Agreement.

 

9.8           Severability.  The parties agree that if any provision of this Agreement should ever be declared or determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby, and said illegal or invalid part, term or provision shall be automatically conformed to the law, if possible, or if not possible, be deemed to be stricken from this Agreement.

 

9.9           Waiver/Estoppel. Any party hereto may waive the benefit of any term, condition or covenant in this Agreement or any right or remedy at law or in equity to which any party may be entitled, but only by an instrument in writing signed by the parties to be charged. No estoppel may be raised against any party except to the extent the other parties rely on an instrument in writing, signed by the party to be charged, specifically reciting that the other parties may rely thereon. The parties' rights and remedies under and pursuant to this Agreement or at law or in equity shall be cumulative and the exercise of any rights or remedies under any provision hereof or rights or remedies at law or in equity shall not be deemed an election of remedies; and any waiver or forbearance of any breach of this Agreement or remedy granted hereunder or at law or in equity shall not be deemed a waiver of any preceding or succeeding breach of the same or any other provision hereof or of the opportunity to exercise such right or remedy or any other right or remedy, whether or not similar, at any preceding or subsequent time.

 

Page 14 of  17

  

  

 

9.10         Notices. Any notice that the Company is required to give or may desire to give to Employee hereunder shall be in writing and may be served by delivering it to Employee, or by sending it to Employee by certified mail, return receipt requested (effective five days after mailing) or overnight delivery of the same by delivery service capable of providing verified receipt (effective the next business day), or facsimile (effective twenty-four hours after receipt is confirmed by person or machine), at the address set forth below, or such substitute address as Employee may from time to time designate by notice to the Company. Any notice that Employee is required or may desire to serve upon the Company hereunder shall be in writing and may be served by delivering it personally or by sending it certified mail, return receipt requested or overnight delivery, or facsimile (with receipt confirmed by person or machine) to the address set forth below, or such other substitute address as the Company may from time to time designate by notice to Employee. Such notices by Employee shall be effective at the same times as specified in this Section 9.10 for notices by the Company.

 

The Company:

 

Minerco Resources, Inc.

16225 Park Ten Place, Suite 500

Houston, TX 77084

 

 

Employee:

 

Sam J Messina III

9268 E. Dreyfus Place

Scottsdale, AZ 85260

 

 

9.11         Captions. The paragraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

9.12         No Partnership or Joint Venture. Nothing herein contained shall constitute a partnership between or joint venture by the parties hereto.

 

9.13         Assignability.  Successors.

 

(a) The obligations of employee may not be delegated and, except as expressly provided in this Section 9.13 relating to the designation of beneficiaries, Employee may not, without the Company’s prior written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest herein.  Any such attempted delegation or disposition shall be null and void and without effect.  Provided however, that Employee may assign all or any portion of his rights to receive compensation hereunder to any corporation of which at least fifty percent (50%) of the capital stock of which is owned or controlled by Employee, to any other entity in which Employee owns or controls at least fifty percent (50%) of the total ownership interests, to trusts for the benefit of the family of Employee, to charitable trusts or to trusts for the benefit of any charitable purpose, or to any charity or non-profit organization. Notwithstanding any other provision hereof, Employee shall not be permitted to establish loan-out companies to provide his services to the Company and assign this Agreement thereto.

 

Page 15 of  17

  

  

 

(b) The Company and Employee agree that this Agreement and each of the Company’s rights and obligations hereunder may be assigned or transferred by the Company to, and shall be assumed by and be binding upon, any Successor to the Company.  The term “Successor” shall mean any corporation or other business entity which succeeds to the assets or conducts the business of the Company, whether directly or indirectly, by purchase, merger, consolidation or otherwise.  In the event another corporation or other business entity becomes a Successor of the Company, then the Successor shall expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Company is required to perform if there had been no merger.

 

9.14         No Mitigation; No Offset. Without limiting any other provision hereof, the Company agrees that any income and other employment benefits received by Employee from any and all sources (other than as set forth in Section 5.2) before, or during this Agreement shall in no way reduce or otherwise affect the Company's obligation to make payments and afford benefits hereunder.

 

10.           Arbitration.

 

(a)           In the event of any controversy arising from or concerning the interpretation of this Agreement or its subject matter (including, without limitation, the interpretation, application, or enforceability of this Agreement or the arbitrability of the controversy), the parties agree that such controversy shall be resolved exclusively by binding arbitration before a single neutral arbitrator selected jointly by the parties.  The Company and Employee shall each be responsible for 50% of the fees and expenses of the arbitrator.  Each party shall be responsible for its own attorneys’ fees and any other costs arising from the arbitration, without regard to which party thereto prevails.  Provided however, that the arbitrator may award attorneys’ fees and costs to the prevailing party.  The parties to the arbitration shall have all rights, remedies, and defenses available to them in a civil action before a court.  If, for any legal reason, a controversy arising from or concerning the interpretation, application, or enforceability of this Agreement requires judicial intervention, the parties agree that the controversy shall be brought in the Harris County Superior Court or the U.S. District Court for the District of Texas.

 

(b)           The parties hereby waive and agree not to assert (by way of motion, as a defense or otherwise) (a) any and all objections to jurisdiction that they may have under the laws of the State of Texas or the United States, and (b) any claim (i) that it or [he/she] is not subject personally to jurisdiction of such court, (ii) that such forum is inconvenient, (iii) that venue is improper, or (iv) that this Agreement or its subject matter may not for any reason be arbitrated or enforced as provided in this Section 6.0 (b).

 

(c)           Within ten (10) business days after receipt of the notice submitting a dispute or controversy to arbitration, the parties shall attempt in good faith to agree upon an arbitrator to whom the dispute will be referred and on a joint statement of contentions. Each party hereby agrees that service of process in such action will be deemed accomplished and completed when a copy of the documents is sent in accordance with the notice provisions in Section 5.10 hereof.

 

Page 16 of  17

  

  

 

(d)           The arbitration shall be held within sixty (60) days of the appointment of the arbitrator.  Discovery shall be conducted in accordance with the Texas Rules of Civil Procedure regarding discovery. The arbitrator shall establish the discovery schedule promptly following submission of the joint statement of contentions (or the filing of the answer to the demand for arbitration) which schedule shall be strictly adhered to. To the extent the contentions of the parties relate to custom or practice in the Company’s business model, or the technical industry generally, or to accounting matters, each party may select an independent expert or accountant (as applicable) with substantial experience in the industry segment involved to render an expert opinion or opinions. All decisions of the arbitrator shall be final and in writing.  The arbitrator shall make all rulings in accordance with Texas law and shall have authority equal to that of a Superior Court judge, to grant equitable relief in an action pending in Superior Court in which all parties have appeared.

 

11.           Contractual Nomenclature. All references herein to "Dollars" or "$" shall mean Dollars of the United States of America, its legal tender for all debts public and private. Wherever used herein and to the extent appropriate, the masculine, feminine or neuter gender shall include the other two genders, the singular shall include the plural, and the plural shall include the singular.

 

12.           Publicity. Neither party shall issue any press release or announcement of or relating to the execution of, or any terms, provisions or conditions contained in this Agreement without the other party's prior approval of the content and timing of any such announcement or announcements.

 

13.           Proof of Right to Work.  For purposes of federal immigration law, Employee will be required to provide the Company with documentary evidence of his identity and eligibility for employment in the United States within three (3) business days of Employee’s date of hire; otherwise, the Company may terminate the employment relationship and this Agreement.

 

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

 

 

 

	Minerco Resources, Inc., a Nevada Corporation	 
	 	 	 
	
By: 

		 
	 	 V. Scott Vanis, President, Director	 

 

	Employee	 
	 	 	 
	
By: 

		 
	 	V. Scott Vanis, an Individual	 

 

 

 

 

Page 17 of  17mine_ex103.htm

Exhibit 10.3

 

ASSET PURCHASE AGREEMENT

DATED AS OF JANUARY 5, 2011

MINERCO RESOURCES, INC.

AND

ENERGETICA DE OCCIDENTE S.A. de C.V.

 

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page  i

 

  

  

  

 

TABLE OF CONTENTS

	
ARTICLE

	 	
PAGE

 

	
  

	
1.

	
Purchase and Sale of Asset (The “Iscan Hydro-Electric Project”).

	
1

	
  

	
1.1

	
Agreement to Purchase and Sell.

	
1

	
  

	
1.2

	
Purchase Price.

	
1

	
  

	
1.3

	
Payment of Purchase Price.

	
1

	
  

	
1.4

	
Closing.

	
2

	
  

	
2.

	
Representations and Warranties of Seller.

	
2

	
  

	
2.2

	
Corporate Authority.

	
2

	
  

	
2.3

	
Compliance with Law.

	
2

	
  

	
2.4

	
Validity and Effect of Agreements.

	
2

	
  

	
2.5

	
No Required Consents or Defaults.

	
2

	
  

	
2.6

	
Affiliated Entities.

	
3

	
  

	
2.8

	
Jurisdictions.

	
3

	
  

	
2.9

	
Records.

	
3

	
  

	
2.10

	
Officers and Directors.

	
3

	
  

	
2.12 

2.13

	
Undisclosed Liabilities.

Absence of Certain Changes or Events Since the Date of the Unaudited Balance Sheet.

	
3

3

	 	
3

	
  

	
2.14

	
Taxes.

	
4

	
  

	
2.15

	
Title to Property and Assets.

	
5

	
  

	
2.16

	
Condition of Personal Property.

	
5

	
  

	
2.17

	
Real Estate and Leases.

	
5

	
  

	
2.18

	
List of Contracts and Other Data.

	
5

	
  

	
2.19

	
Business Property Rights.

	
6

	
  

	
2.20

	
No Breach or Default.

	
6

	
  

	
2.21

	
Labor Controversies.

	
6

	
  

	
2.22

	
Litigation.

	
6

	
  

	
2.23

	
Powers of Attorney.

	
7

	
  

	
2.24

	
Insurance.

	
7

	
  

	
2.25

	
No Brokers.

	
7

	
  

	
2.26

	
No Misrepresentation or Omission.

	
7

	
  

	
3.

	
Representations and Warranties of Buyer.

	
7

	
  

	
3.1

	
Existence and Good Standing.

	
8

	
  

	
3.2

	
Corporate Authority.

	
8

	
  

	
3.3

	
Compliance with Law.

	
8

	
  

	
3.4

	
Authorization; Validity and Effect of Agreements.

	
8

	
  

	
4.

	
Other Covenants and Agreements.

	
8

	
  

	
4.1

	
Indemnification by Seller.

	
8

	
  

	
4.2

	
Indemnification by Buyer.

	
8

	
  

	
4.3

	
Tax Indemnity.

	
9

	
  

	
4.4

	
Conditions of Indemnification.

	
9

	
  

	
4.5

	
Taxes and Expenses.

	
10

	
  

	
4.6

	
Exclusive Dealing.

	
10

	
  

	
4.7

	
Public Announcements.

	
11

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page ii

 

  

  

  

 

	
  

	
5.

	
Conditions of Closing.

	
11

	
  

	
5.1

	
Buyer’s Conditions of Closing.

	
11

	
  

	
5.2

	
Seller’s Conditions of Closing.

	
12

	
  

	
6.

	
Termination.

	
13

	
  

	
6.1

	
Methods of Termination.

	
13

	
  

	
6.2

	
Procedure Upon Termination.

	
13

	
  

	
7.

	
Miscellaneous.

	
14

	
  

	
7.1

	
Notice.

	
14

	
  

	
7.2

	
Execution of Additional Documents.

	
15

	
  

	
7.3

	
Binding Effect; Benefits.

	
15

	
  

	
7.4

	
Entire Agreement.

	
15

	
  

	
7.5

	
Choice of Law and Venue, Jurisdiction, Attorneys’ fees.

	
15

	
  

	
7.6

	
Fair Meaning.

	
15

	
  

	
7.7

	
Mutual Drafting.

	
15

	
  

	
7.8

	
Jurisdiction Service of Process.

	
16

	
  

	
7.9

	
Survival.

	
16

	
  

	
7.10

	
Counterparts.

	
16

	
  

	
7.11

	
Headings.

	
16

	
  

	
7.12

	
Waivers.

	
16

	
  

	
7.13

	
Merger of Documents.

	
16

	
  

	
7.14

	
Incorporation of Exhibits and Schedules

	
16

	
  

	
7.15

	
Severability

	
16

	
  

	
7.16

	
Assignability

	
17

	
  

	
7.17

	
Binding on  Successors and Assigns

	
17

	
  

	
7.18

	
Third Party Beneficiaries

	
17

	
  

	
7.19

	
Authority of Signers

	
17

	SCHEDULE 2.0 	ISCAN HYDRO-ELECTRIC PROJECT DESCRIPTION

 

	SCHEDULE 2.6 	AFFILIATED ENTITIES OF THE PROJECT

	
SCHEDULE 2.8

	
JURISDICTIONS WHERE THE PROJECT IS LICENSED TO DO BUSINESS

	
SCHEDULE 2.12

	
UNDISCLOSED LIABILITIES

	
SCHEDULE 2.5

	
REAL PROPERTY OWNED/LEASED BY THE PROJECT

	
SCHEDULE 2.17

	
REAL ESTATE AND LEASES

	
SCHEDULE 2.18

	
LIST OF CONTRACTS AND OTHER DATA

	
SCHEDULE 2.19

	
BUSINESS PROPERTY RIGHTS

	
SCHEDULE 2.22

	
PENDING LITIGATION

	
SCHEDULE 2.23

	
BANK ACCOUNTS

	
SCHEDULE 2.25

	
INSURANCE POLICIES

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page iii 

 

  

  

  

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is dated the 5th day of January, 2011, by and among Minerco Resources, Inc., a Nevada corporation which is publicly traded on the Over-The -Counter Bulletin Board (OCTBB: MINE) hereinafter referred to as the “Buyer”, and Energetica de Occidente S.A. de C.V., a Corporation formed and operated under the laws of Honduras hereinafter referred to as the “Seller”, (hereinafter sometimes referred to collectively as the “Parties”).

WHEREAS, Seller desire to sell Buyer, and Buyer desires to purchase from Seller, One Hundred percent (100%) of all of the Seller’s rights, title and interest in and to a certain Hydro-Electric Project located in Honduras known as the “Iscan Hydro-Electric Project” more specifically defined in Schedule 2.0 attached hereto and incorporated herein by reference, (hereinafter sometimes referred to as the “Project”) for the consideration and upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the provisions and the respective agreements hereinafter set forth, the parties hereto hereby agree as follows:

1.              Purchase and Sale of Assets.

1.1           Agreement to Purchase and Sell.  Upon the terms and subject to the conditions set forth in this Agreement and upon the representations and warranties made herein by each of the parties to the other, on the Closing Date (as such term is hereinafter defined), Seller shall sell to Buyer, and Buyer shall  acquire from Seller, One Hundred percent (100%) of all of the Seller’s rights, title and interest in and to a certain Hydro-Electric Project located in Honduras known as the “Iscan Hydro-Electric Project” more specifically defined in Schedule 2.0 attached hereto and incorporated herein by reference.

1.2           Purchase Price.  Upon the terms and subject to the conditions set forth in this Agreement, in reliance upon the representations, warranties, covenants and agreements of the Seller contained herein, and in exchange for  One Hundred percent (100%) of all of the Seller’s rights, title and interest in and to the Project , Buyer agrees to deliver to Seller a total of 1,000,000 shares of the Buyer’s $.001 par value common stock of Buyer (“Buyer’s Shares”) to be distributed to the Seller(s) based upon Seller(s) respective pro rata percentage interest in the Project (the “Purchase Price”). The shares shall be fully paid for and non-assessable when issued and bear a restrictive legend in accordance with Rule 144 of the Securities and Exchange Act of 1933 as amended.

 

1.3           Payment of Purchase Price.  The Purchase Price shall be payable as follows:

(a)           Five Hundred Thousand (500,000) shares of the Buyer’s common stock shall be delivered to Seller or Seller assign’s within 30 days of the transfer of title as defined in Section 1.4 herein.

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page 1

 

  

  

  

(b)           Five Hundred Thousand (500,000) shares of the Buyer’s common stock shall be delivered to Seller or Seller assign’s upon the Company having successfully raised a total of Eight Million Five Hundred Thousand Dollars US ($8,500,000) in funding for the Project no later than Thirty – Six (36) months from the Closing Date as defined in Section 1.4 herein subject to the terms and conditions set forth in Section 6 of this Agreement.

(c)           As additional consideration for this Agreement, Buyer shall pay to Seller a royalty of 10% of the adjusted gross revenues, derived after all applicable taxes, from the Project to prior to the completion of the payout.

 

1.4           Closing.  The closing of the transaction contemplated herein (the "Closing") will be at the office of Buyer on or before January 5, 2011, or at such other place or at such other date and time as Seller and Buyer may mutually agree.  Such date and time of Closing is herein referred to as the "Closing Date."

2.              Representations and Warranties of Seller.  The Seller, represents and warrants to Buyer as follows:

2.1           Existence and Good Standing.  As of the Closing,  The Project is duly licensed or qualified to do business and is in good standing under the laws of all other jurisdictions in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary.

2.2           Corporate Authority.   As of the Closing, the Project has all requisite corporate power and authority to own its properties and carry on its business as now conducted.

2.3           Compliance with Law.   As of the Closing, the Project is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal to which the Project and or the Seller is a party or is subject, and the Project is not in violation of any laws, ordinances, governmental rules or  regulations to which it is subject.  The Seller has obtained all licenses, permits and other authorizations and has taken all actions required by applicable laws or governmental regulations in connection with its business as now conducted which are required and necessary for the Project viability.

2.4           Validity and Effect of Agreements.  This Agreement constitutes, and all agreements and documents contemplated hereby when executed and delivered pursuant hereto will constitute, the valid and legally binding obligations of the Seller enforceable in accordance with their terms, except that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws of general application now or hereafter in effect relating to the enforcement of creditors' rights generally and except that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefore may be brought.

2.5           No Required Consents or Defaults.  The execution and delivery of this Agreement by the Seller does not and the consummation of the transactions contemplated hereby will not (i) require the consent of any person not a party to this Agreement, (ii) result in the breach of any term or provision of, or constitute a default under, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or the lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any part of the  Project pursuant to any provision of, any order, judgment, arbitration award, injunction, decree, indenture, mortgage, lease, license, lien, or other agreement or instrument to which Seller or the Project is a party or by which any of them is bound, or violate or conflict with any provision of the by-laws or articles/certificate of incorporation which may relate to the Project as amended to the date of this Agreement.

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page 2

 

  

  

  

2.6           Affiliated Entities.  Except as otherwise disclosed in Schedule 2.6 attached hereto, the Project does not own, directly or indirectly, any interest in any corporation, business trust, joint stock corporation, partnership or other business organization or association.

2.7           Jurisdictions.  Schedule 2.8 contains a list of all jurisdictions in which the Project is presently licensed or qualified to do business.  Both the Seller and the Project has complied in all material respects with all applicable laws of each such jurisdiction and all applicable rules and regulations of each regulatory agency therein.  The Project has not been denied admission to conduct any type of business in any jurisdiction in which it is not presently admitted as set forth in such Schedule 2.8, has not had its license or qualifications to conduct business in any jurisdiction revoked or suspended, and has not been involved in any proceeding to revoke or suspend a license or qualification.

2.8           Records.  The corporate minute books of the Project to be delivered to Buyer at the Closing shall contain true and complete copies of the articles of incorporation, as amended to the Closing Date, bylaws, as amended to the Closing Date, and the minutes of all meetings of directors and Seller and certificates reflecting all actions taken by the directors or Seller without a meeting, from the date of incorporation of the Project to the Closing Date is applicable.

2.11           Financial Statements.  Seller has furnished to Buyer (i) a compiled balance sheet and related statement of income as of the end of the last fiscal quarter (the "Compiled Balance Sheet"), and (ii) an unaudited balance sheet and related statement of income as of March 30, 2010 (the "Unaudited Balance Sheet") (collectively the "Financial Statements").  The Compiled Balance Sheet and the Unaudited Balance Sheet are hereinafter collectively referred to as the "Balance Sheets."  The Financial Statements fully and fairly set forth the financial condition of the Project as of the dates indicated, and the results of its operations for the periods indicated, in accordance with GAAP consistently applied, except as otherwise stated therein and in the related reports of independent accountants.

2.12           Undisclosed Liabilities.  The Project has no liabilities or obligations whatsoever, whether accrued, absolute, contingent or otherwise, which are not reflected or provided for in the Financial Statements except (i) accounts payable and accrued expenses arising after the date of the Unaudited Balance Sheet which were incurred in the ordinary course of business, in each case in normal amounts and none of which is materially adverse, and (ii) liabilities as and to the extent specifically described in Schedule 2.12.

2.13           Absence of Certain Changes or Events Since the Date of the Unaudited Balance Sheet.  Since the date of the Unaudited Balance Sheet, the Project has not:

(A)           incurred any liability whatsoever, whether accrued, absolute, contingent or otherwise, except those liabilities and obligations referred to in Section 2.12 above, and except in connection with this Agreement and the transactions contemplated hereby;

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page 3

 

  

  

  

(B)           discharged or satisfied any lien, security interest or encumbrance or paid any obligation or liability (fixed or contingent), other than in the ordinary course of business and consistent with past practice;

(C)           mortgaged, pledged or subjected to any lien, security interest or other encumbrance any of its assets or properties;

(D)           transferred, leased or otherwise disposed of any of its assets or properties except for a fair consideration in the ordinary course of business and consistent with past practice or, except in the ordinary course of business and consistent with past practice, acquired any assets or properties;

(E)           canceled or compromised any debt or claim, except in the ordinary course of business and consistent with past practice;

(F)           waived or released any rights of material value;

(G)           except pursuant to those contracts listed on Schedules 2.18 and 2.19 hereto, transferred or granted any rights under any concessions, leases, licenses, agreements, patents, inventions, trademarks, trade names, service marks or copyrights or with respect to any know-how;

(H)           made or granted any wage or salary increase applicable to any group or classification of employees or contract labor generally, entered into any employment contract with, or made any loan to, or entered into any material transaction of any other nature with, any officer or employee of the Project;

(I)             entered into any transaction, contract or commitment, except (i) contracts listed on Schedules 2.18 and 2.19 hereto and (ii) this Agreement and the transactions contemplated hereby;

(J)            suffered any casualty loss or damage (whether or not such loss or damage shall have been covered by insurance) which affects in any material respect its ability to conduct business, or suffered any casualty loss or damage in excess of $25,000.00 and which is not covered by insurance; or

(K)           declared any royalties, bonuses to profit sharing commitments, relating to the Project or taken any steps looking toward the dissolution or liquidation of the Project.

Between the date of this Agreement and the Closing, the Project will not, without prior written notice to Buyer, do any of the things listed in sub-paragraphs (A) through (K) above.

2.14          Taxes.  The Project (i) has duly and timely filed or caused to be filed all federal, state, local and foreign tax returns (including, without limitation, consolidated and/or combined tax returns) required to be filed by it prior to the date of this Agreement which relate to the Project or with respect to which the Project or the assets or properties of the Project are liable or otherwise in any way subject, (ii) has paid or fully accrued for all taxes shown to be due and payable on such returns (which taxes are all the taxes due and payable under the laws and regulations pursuant to which such returns were filed), and (iii) has properly accrued for all such taxes accrued in respect of the Project or the assets and properties of the Project for periods subsequent to the periods covered by such returns.  No deficiency in payment of taxes for any period has been asserted by any taxing body and remains unsettled at the date of this Agreement.  Copies of all federal, state, local and foreign tax returns of the Project have been made available for inspection by Buyer.

 

	
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2.15          Title to The Project Property and Assets.  The Project has good and marketable title to all of the properties and assets reflected in the Balance Sheets and the Business Property Rights (as defined in Section 2.20).  None of such properties or assets is, except as disclosed in said Balance Sheets or the Schedules hereto, subject to a contract of sale not in the ordinary course of business, or subject to security interests, mortgages, encumbrances, liens or charges of any kind or character.

2.16          Condition of Personal Property.  All tangible personal property, equipment, fixtures and inventories included within the assets of the Project are in good, merchantable or in reasonably repairable condition and are suitable for the purposes for which they are used.  No value in excess of applicable reserves has been given to any inventory with respect to obsolete or discontinued products.  To the best of the Seller’s knowledge, all of the inventories and equipment, including equipment leased to others, are well maintained and in good operating condition.

2.17          Real Estate and Leases.  Schedule 2.17 contains a list of all real property owned by the Seller relating to the Project or in which the Project has a leasehold or other interest (whether as landlord, tenant or otherwise) and of any lien, charge or encumbrance thereupon.  Such Schedule also contains a substantially accurate description identifying all such real property and the significant rental terms (including rents, termination dates and renewal conditions).  The improvements upon such properties and use thereof by the Project conform to all applicable lease restrictions, zoning and other local ordinances.

2.18          List of Contracts and Other Data.  Schedule 2.18 sets forth the following:

(A)           (i) all computer software, patents and registrations for trademarks, trade names, service marks and copyrights which are unexpired as of the date of this Agreement and which are owned by the Seller or the Project for the benefit of the Project, as well as all applications pending on said date for patents or for trademark, trade name, service mark or copyright registrations, and all other proprietary rights, owned or held by the Seller or the Project for the benefit of the Project, and (ii) all licenses granted by or to the Project and all other agreements to which the Seller or the Project for the benefit of the Project is a party and which relate, in whole or in part, to any items of the categories mentioned in sub-paragraph (A) above or to other proprietary rights of the Seller or the Project for the benefit of the Project which are reasonably necessary to, or used in connection with, the business of the Project;

(B)           all collective bargaining agreements, employment and consulting agreements, executive compensation plans, bonus plans, profit-sharing plans, deferred compensation agreements, employee pension or retirement plans, employee stock purchase and stock option plans, group life insurance, hospitalization insurance or other plans or arrangements providing for benefits to employees of the Project;

 

	
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(C)           all contracts, understandings and commitments (including, without limitation, mortgages, indentures and loan agreements) to which the Project or the Seller for the benefit of the Project is a party, or to which it or any of its assets or properties are subject and which are not specifically referred to in sub-paragraphs (A) or (B) above or in Schedule 2.18 hereof;

(D)           the names and current annual compensation rates of all employees of the Project; and

(E)           all customer backlog which is represented by firm purchase orders, identifying the customers, products and purchase prices.

True and complete copies of all documents and complete descriptions of all oral understandings, if any, referred to in Schedules 2.17 and 2.18 have been provided or made available to Buyer and its counsel.

2.19          Business Property Rights.  The property referred to in Section 2.19(A) above, together with (i) all designs, methods, inventions and know-how related thereto and (ii) all trademarks, trade names, service marks, and copyrights claimed or used by the Project which have not been registered (collectively "Business Property Rights"), constitute all such proprietary rights owned or held by the Project.  The Project or the Seller for the benefit of the Project owns or has valid rights to use all such Business Property Rights without, to the best of Seller’ knowledge, conflict with the rights of others.  Except as set forth in Schedule 2.19 hereto, no person or corporation has made or, to the knowledge of Seller or the Project, threatened to make any claims that the operation of the business of the Project is in violation of or infringes any Business Property Rights or any other proprietary or trade rights of any third party.  To the knowledge of Seller or the Project, no third party is in violation of or is infringing upon any Business Property Rights.

2.20          No Breach or Default.   As of the Closing, the Project is not in default under any contract to which it is a party or by which it is bound, nor has any event occurred which, after the giving of notice or the passage of time or both, would constitute a default under any such contract.  Seller have no reason to believe that the parties to such contracts will not fulfill their obligations under such contracts in all material respects or are threatened with insolvency.

2.21          Labor Controversies.   As of the Closing, the Project is not a party to any collective bargaining agreement.  There are not any controversies between the Project and any of its employees which might reasonably be expected to materially adversely affect the conduct of its business, or any unresolved labor union grievances or unfair labor practice or labor arbitration proceedings pending or threatened relating to its business, and there are not any organizational efforts presently being made or threatened involving any of the Project's employees.  The Seller on behalf of the Project has not received notice of any claim that the Project has not complied with any laws relating to the employment of labor, including any provisions thereof relating to wages, hours, collective bargaining, the payment of social security and similar taxes, equal employment opportunity, employment discrimination and employment safety, or that the Project is liable for any arrears of wages or any taxes or penalties for failure to comply with any of the foregoing.

 

	
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2.22          Litigation.  As of the Closing, Except as set forth in Schedule 2.22, there are no actions, suits or proceedings with respect to the Project involving claims by or against Seller or the Project which are pending or threatened against Seller or the Project, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality in any jurisdiction in  the world.  No basis for any action, suit or proceeding exists, and there are no orders, judgments, injunctions or decrees of any court or governmental agency with respect to which Seller or the Project has been named or to which Seller or the Project is a party, which apply, in whole or in part, to the business of the Project, or to any of the assets or properties of the Project or which would result in any material adverse change in the business or prospects of the Project.

 

2.23          Bank Accounts.  The name of each bank, savings institution or other person with which the Project has an account or safe deposit box and the names and identification of all persons authorized to drawn thereon or to have access thereto are as set forth on Schedule 2.23.

2.24          Powers of Attorney.  There are no persons holding powers of attorney from the Project.

2.25          Insurance.  A list of all insurance policies owned by the Project, together with a brief statement of the coverage thereof, are as set forth on Schedule 2.25.

2.26          No Brokers.  Neither Seller nor the Project has entered into any contract, arrangement or understanding with any person or firm which may result in the obligation of Buyer or the Project to pay any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby, and neither Seller nor the Project are aware of any claim or basis for any claim for payment of any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby.

2.27          No Misrepresentation or Omission.  No representation or warranty by Seller in this Article 2 or in any other Article or Section of this Agreement, or in any certificate or other document furnished or to be furnished by Seller pursuant hereto, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained therein not misleading or will omit to state a material fact necessary in order to provide Buyer with accurate information as to the Project.

3.           Representations and Warranties of Buyer.  Buyer represents and warrants to Seller as follows:

3.1           Existence and Good Standing.  As of the Closing, Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada.  Buyer is duly licensed or qualified to do business as a foreign corporation and is in good standing under the laws of all other jurisdictions in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary.

 

	
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3.2           Corporate Authority.  As of the Closing, Buyer has all requisite corporate power and authority to own its properties and carry on its business as now conducted.

3.3           Compliance with Law.  As of the Closing Buyer is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal to which Buyer is a party or is subject, and Buyer is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject.  Buyer has obtained all licenses, permits or other authorizations and has taken all actions required by applicable laws or governmental regulations in connection with its business as now conducted.

3.4           Authorization; Validity and Effect of Agreements.  The execution and delivery of this Agreement and all agreements and documents contemplated hereby by Buyer, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all requisite corporate action.  This Agreement constitutes, and all agreements and documents contemplated hereby when executed and delivered pursuant hereto will constitute, the valid and legally binding obligations of Buyer enforceable in accordance with their terms, except that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws of general application now or hereafter in effect relating to the enforcement of creditors' rights generally and except that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefore may be brought.  The execution and delivery of this Agreement by Buyer does not and the consummation of the transactions contemplated hereby will not (i) require the consent of any third party, (ii) result in the breach of any term or provision of, or constitute a default under, or result in the acceleration of or entitle any party to accelerate (whether after the giving of notice or the lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any part of the Project pursuant to any provision of, any order, judgment, arbitration award, injunction, decree, indenture, mortgage, lease, license, lien, or other agreement or instrument to which Buyer is a party or by which it is bound, and (iii) violate or conflict with any provision of the by-laws or articles of incorporation of Buyer as amended to the date of this Agreement.

4.           Other Covenants and Agreements.

4.1           Indemnification by Seller.  Upon the terms and subject to the conditions set forth in Section 4.4 hereof, Seller agree to indemnify and hold Buyer and the Project harmless against, and will reimburse Buyer (or the Project if Buyer so requests) on demand for, any payment, loss, damage (including incidental and consequential damages), cost or expense (including reasonable attorney's fees and reasonable costs of investigation incurred in defending against such payment, loss, damage, cost or expense or claim therefore) made or incurred by or asserted against Buyer or the Project at any time after the Closing Date in respect of any omission, misrepresentation, breach of warranty, or nonfulfillment of any term, provision, covenant or agreement on the part of Seller contained in this Agreement, or from any misrepresentation in, or omission from, any certificate or other instrument furnished or to be furnished to Buyer pursuant to this Agreement.

 

	
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4.2           Indemnification by Buyer.  Upon the terms and subject to the conditions set forth in Section 4.4 hereof, Buyer agrees to indemnify and hold Seller harmless against, and will reimburse Seller on demand for, any payment, loss, damage (including incidental and consequential damages), cost or expense (including reasonable attorney's fees and reasonable costs of investigation incurred in defending against such payment, loss, damage, cost or expense or claim therefore) made or incurred by or asserted against Seller at any time after the Closing Date in respect of any omission, misrepresentation, breach of warranty, or nonfulfillment of any term, provision, covenant or agreement on the part of Buyer contained in this Agreement, or from any misrepresentation in, or omission from, any certificate or other instrument furnished or to be furnished to Seller pursuant to this Agreement.

4.3           Tax Indemnity.  Upon the terms and subject to the conditions set forth in Section 4.4 hereof, Seller agree to indemnify and hold Buyer and the Project harmless against, and will reimburse Buyer (or the Project if Buyer so requests) on demand for:

(A)           any and all tax deficiencies in any jurisdiction in respect of federal, state, local and foreign sales, use, income or franchise tax or taxes based on or measured by income, including any interest or penalties thereon and legal fees and expenses incurred by Buyer and the Project with respect to the taxable year ended December 31, 2010, and all prior taxable years; and

(B)           any and all such taxes, interest, penalties and legal fees and expenses in respect of the period from January 1, 2010 up to and including the Closing Date, but only to the extent that such deficiencies, taxes, interest, penalties and legal fees and expenses exceed, in the aggregate, the amount of the aggregate reserves for such taxes, if any, shown as liabilities on the Closing Balance Sheet.

The indemnity provided for in this Section 4.3 shall be independent of and in addition to any other indemnity provision of this Agreement and, anything in this Agreement to the contrary notwithstanding [including Section 4.4B)(ii) hereof], shall survive indefinitely.

4.4           Conditions of Indemnification.  With respect to any actual or potential claim, any written demand, the commencement of any action, or the occurrence of any other event which involves any matter or related series of matters (a "Claim") against which a party hereto is due to be indemnified (the "Indemnified Party") by the other party (the "Indemnifying Party") under Sections 4.1, 4.2 or 4.3 hereof:

(A)           Promptly (and in no event no more than 30 days) after (i) Seller (if Seller are the Indemnified Party), or (ii) the President of the Buyer or the Project (if Buyer or the Project is the Indemnified Party) first receives written documents pertaining to the Claim, or if such Claim does not involve a third party Claim (a "Third Party Claim"), promptly (and in no event no more than 30 days) after (i) Seller (if Seller are the Indemnified Party), or (ii) the President of the Buyer or the Project (if Buyer or the Project is the Indemnified Party) first has actual knowledge of such Claim, the Indemnified Party shall give notice to the Indemnifying Party of such Claim in reasonable detail and stating the amount involved, if known, together with copies of any such written documents.

(B)           The Indemnifying Party shall have no obligation to indemnify the Indemnified Party with respect to any Claim if the Indemnified Party fails to give the notice with respect thereto in accordance with Section 4.4(A) hereof.

 

	
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(C)           If the Claim involves a Third Party Claim, then the Indemnifying Party shall have the right, at its sole cost, expense and ultimate liability regardless of the outcome, and through counsel of its choice (which counsel shall be reasonably satisfactory to the Indemnified Party), to litigate, defend, settle or otherwise attempt to resolve such Third Party Claim; provided, however, that if in the Indemnified Party's reasonable judgment a conflict of interest may exist between the Indemnified Party and the Indemnifying Party with respect to such Third Party Claim, then the Indemnified Party shall be entitled to select counsel of its own choosing, reasonably satisfactory to the Indemnifying Party, in which event the Indemnifying Party shall be obligated to pay the fees and expenses of such counsel.  Notwithstanding the preceding sentence, the Indemnified Party may elect, at any time and at the Indemnified Party's sole cost, expense and ultimate liability, regardless of the outcome, and through counsel of its choice, to litigate, defend, settle or otherwise attempt to resolve such Third Party Claim.  If the Indemnified Party so elects (for reasons other than the Indemnifying Party's failure or refusal to provide a defense to such Third Party Claim), then the Indemnifying Party shall have no obligation to indemnify the Indemnified Party with respect to such Third Party Claim, but such disposition will be without prejudice to any other right the Indemnified Party may have to indemnification under Section 4.1, 4.2 or 4.3 hereof, regardless of the outcome of such Third Party Claim.  If the Indemnifying Party fails or refuses to provide a defense to any Third Party Claim, then the Indemnified Party shall have the right to undertake the defense, compromise or settlement of such Third Party Claim, through counsel of its choice, on behalf of and for the account and at the risk of the Indemnifying Party, and the Indemnifying Party shall be obligated to pay the costs, expenses and attorney's fees incurred by the Indemnified Party in connection with such Third Party Claim.  In any event, Buyer, the Project and Seller shall fully cooperate with each other and their respective counsel in connection with any such litigation, defense, settlement or other attempted resolution.

4.5           Taxes and Expenses.

(A)           Seller hereby covenant and agree to assume and pay all taxes arising from or relating to the transactions as contemplated by this Agreement.  Except as otherwise specifically provided for in this Agreement, Seller shall be individually responsible for and shall personally pay all costs, liabilities and other obligations incurred by Seller in connection with the performance of and compliance with all transactions, agreements and conditions contained in this Agreement to be performed or complied with by Seller, including legal and accounting fees.  In no event shall any of such taxes, costs, liabilities or other obligations be paid by or incurred on behalf of the Project.

(B)           Except as otherwise specifically provided for in this Agreement, Buyer will assume and pay all costs, liabilities and other obligations incurred by Buyer in connection with the performance of and compliance with all transactions, agreements and conditions contained in this Agreement to be performed or complied with by Buyer, including legal and accounting fees.

4.6           Exclusive Dealing.

(A)           Prior to the termination of this Agreement, Seller shall not authorize or permit, and shall not allow the Project or any officer, director or employee of, or any investment banker, attorney or other advisor or representative of any of the foregoing, to (i) solicit or initiate or encourage the submission of any Acquisition Proposal (as herein defined) or (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonable be expected to lead to any Acquisition Proposal.  For purposes of this Agreement, “Acquisition Proposal” means any inquiry about or proposal for the acquisition to purchase of a substantial amount of assets of the Project or any type of exchange offer or other offer that if consummated would result in any person beneficially owning any equity interest in the Project, or any merger, consolidation, business combination, sale of any material assets, recapitalization, liquidation, dissolution or similar transaction involving the Project (or equity securities thereof) other than transactions contemplated by this Agreement, or any other transaction the consummation of which would reasonable be expected to impede, interfere with, prevent or materially delay the transaction contemplated by this Agreement, or which would reasonably be expected to dilute materially the benefits to Buyer of the transaction contemplated by this Agreement.

 

	
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(B)           During the term of this Agreement, Seller shall not, nor permit the Project to, (i) approve or recommend, consider or evaluate or cause to be considered or evaluated, any Acquisition Proposal or (ii) enter into any agreement or understanding with respect to any Acquisition Proposal.  Seller acknowledge and agree that they are not required or obligated in order to comply with any fiduciary or other duty to review, consider or take any action with respect to any Acquisition Proposal (including, without limitation, any action prohibited by this Section) during the term of this Agreement.

4.8           Public Announcements.  Neither Seller nor Buyer will at any time, without the prior written consent of the other, make any announcement, issue any press release or make any statement with respect to this Agreement or any of the terms or conditions hereof except as may be necessary to comply with any law, regulation or order; provided, however, that subsequent to the Closing Buyer may disclose the consummation of the transaction herein contemplated without the consent of the Seller.

5.           Conditions of Closing.

5.1           Buyer’s Conditions of Closing.    The obligation of Buyer to purchase and pay for the Project shall be subject to and conditioned upon the satisfaction (or waiver by Buyer) at the Closing of each of the following conditions:

(A)             All representations and warranties of Seller contained in this Agreement and the Schedules hereto shall be true and correct at and as of the Closing Date, Seller shall have performed all agreements and covenants and satisfied all conditions on its part to be performed or satisfied by the Closing Date pursuant to the terms of this Agreement, and Buyer shall have received a certificate of the Seller dated the Closing Date to such effect.

(B)           There shall have been no material adverse change since the date of the Unaudited Balance Sheet in the financial condition, business or affairs of the Project, and the Project shall not have suffered any material loss (whether or not insured) by reason of physical damage caused by fire, earthquake, accident or other calamity which materially affects the value of its assets, properties or business, and Buyer shall have received a certificate of the Seller dated the Closing Date to such effect.

(C)           Seller shall have delivered to Buyer evidence, satisfactory to the Buyer in the sole and exclusive judgment of Buyer, of the Project's certifying as of a date reasonably close to the Closing Date that the Project has filed all required reports, paid all required fees and taxes, and is, as of such date, in good standing and authorized to transact business.

 

	
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(D)           Seller shall have delivered to Buyer certificates and other instruments together with all other documents necessary or appropriate to validly transfer the Project to Buyer free and clear of all security interests, liens, encumbrances and adverse claims.

(E)           Neither any investigation of the Project by Buyer, nor the Schedules attached hereto or any supplement thereto nor any other document delivered to Buyer as contemplated by this Agreement, shall have revealed any facts or circumstances which, in the sole and exclusive judgment of Buyer and regardless of the cause thereof, reflect in an adverse way on the Project or its financial condition, assets, liabilities (absolute, accrued, contingent or otherwise), reserves, business, operations or prospects.

(F)           The approval and all consents from third parties and governmental agencies required to consummate the transactions contemplated hereby shall have been obtained.

(G)           No suit, action, investigation, inquiry or other proceeding by any governmental body or other person or legal or administrative proceeding shall have been instituted or threatened which questions the validity or legality of the transactions contemplated hereby.

(H)           As of the Closing, there shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as so provided or imposing any conditions on the consummation of the transactions contemplated hereby, which is unduly burdensome on Buyer.

                                (I)           As of the Closing, there shall have been no material adverse change in the amount of issued and outstanding common stock of the Project.

5.2           Seller’s Conditions of Closing.  The obligation of Seller to sell the Project shall be subject to and conditioned upon the satisfaction (or waiver by Seller) at the Closing of each of the following conditions:

(A)           All representations and warranties of Buyer contained in this Agreement shall be true and correct at and as of the Closing Date and Buyer shall have performed all agreements and covenants and satisfied all conditions on its part to the performed or satisfied by the Closing Date pursuant to the terms of this Agreement.

(B)           Buyer shall have effected payment of the Purchase Price in accordance with Section 1.3 of this Agreement by delivering to Seller certificates and other instruments representing Buyer’s Shares, duly endorsed for transfer or accompanied by appropriate stock powers (in either case executed in blank or in favor of Seller with the execution thereof guaranteed by a bank or trust), together with all other documents necessary or appropriate to validly transfer the Buyer’s Shares to Seller free and clear of all security interests, liens, encumbrances and adverse claims.

(C)           Buyer shall have delivered to Seller a Certificate of its corporate Secretary certifying:

 

	
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(1)           Resolutions of its Board of Directors authorizing execution of this Agreement and the execution, performance and delivery of all agreements, documents and transactions contemplated hereby; and

 

(2)           The incumbency of its officers executing this Agreement and all agreements and documents contemplated hereby.

(D)           The approval and all consents from third parties and governmental agencies required to consummate the transactions contemplated hereby shall have been obtained.

(E)            No suit, action, investigation, inquiry or other proceeding by any governmental body or other person or legal or administrative proceeding shall have been instituted or threatened which questions the validity or legality of the transactions contemplated hereby.

                (F)           As of the Closing, there shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as so provided or imposing any conditions on the consummation of the transactions contemplated hereby, which is unduly burdensome on Seller.

                                (G)           As of the Closing, there shall have been no material adverse change in the amount of issued and outstanding common stock of Buyer.

 

6.           Termination.

6.1           Methods of Termination.   The transactions contemplated herein may be terminated and/or abandoned at any time before or after approval thereof by Seller and Buyer, but not later than the Closing:

6.1.1           By mutual consent of Buyer and Seller; or

6.1.2           By Buyer, if any of the conditions provided for in Section 5.1 hereof shall not have been met or waived in writing by Buyer at or prior to Closing; or

6.1.3           By Seller, if any of the conditions provided for in Section 5.2 hereof shall not have been met or waived in writing by Seller at or prior to Closing.

6.2           Procedure Upon Termination.  In the event of termination by Buyer or Seller, as applicable, pursuant to Section 6.1 hereof, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated without further action by Buyer or Seller.  If the transactions contemplated by this Agreement are so terminated:

6.2.1           Each party will redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution of this Agreement, to the party furnishing the same; and

 

	
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6.2.2           No party hereto shall have any liability or further obligation to any other party to this Agreement except that if such termination is a result of the failure of any condition set forth in (i) Sections 5.1(A) through 5.1(F) and 5.1(I) hereof, then Buyer shall be entitled to recover from Seller all out-of-pocket costs which Buyer has incurred (including reasonable attorney's fees, accounting fees and expenses); and (ii) Sections 5.2(A) through 5.2(D) hereof, then Seller shall be entitled to recover from Buyer all out-of-pocket costs which Seller has incurred (including reasonable attorney's fees, accounting fees and expenses).

7              Miscellaneous.

	 	
7.1           Notices.  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be deemed given to a party when:

(i)   delivered by hand or by a nationally recognized overnight courier service  (costs prepaid),

(ii)   sent by facsimile with confirmation of transmission by the transmitting equipment, or;

(iii)   received or rejected by the addressee, if sent by certified mail, postage prepaid and return receipt requested, in each case to the following:

 

If to Buyer:            ________________________

________________________

________________________

________________________

Attention: _________, President

If to Seller:             Minerco Resources, Inc.

16225 Park Ten Place Dr., Suite 500

Houston, Texas 77095

Attention: V. Scott Vanis, President

7.2           Execution of Additional Documents.  The parties hereto will at any time, and from time to time after the Closing Date, upon request of the other party, execute, acknowledge and deliver all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required to carry out the intent of this Agreement, and to transfer and vest title to the Project being transferred hereunder, and to protect the right, title and interest in and enjoyment of all of the Project sold, granted, assigned, transferred, delivered and conveyed pursuant to this Agreement; provided, however, that this Agreement shall be effective regardless of whether any such additional documents are executed.

 

	
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7.3           Binding Effect; Benefits.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors, executors, administrators and assigns.  Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective heirs, successors, executors, administrators and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

7.4            Entire Agreement.  This Agreement, together with the Exhibits, Schedules and other documents contemplated hereby, constitute the final written expression of all of the agreements between the parties, and is a complete and exclusive statement of those terms.  It supersedes all understandings and negotiations concerning the matters specified herein.  Any representations, promises, warranties or statements made by either party that differ in any way from the terms of this written Agreement and the Exhibits, Schedules and other documents contemplated hereby, shall be given no force or effect.  The parties specifically represent, each to the other, that there are no additional or supplemental agreements between them related in any way to the matters herein contained unless specifically included or referred to herein.  No addition to or modification of any provision of this Agreement shall be binding upon any party unless made in writing and signed by all parties.

7.5            Choice of Law; Venue; Jurisdiction; Attorneys’ Fees.  The parties acknowledge and agree that this Agreement has been made in Texas, and that it shall be governed by, construed, and enforced in  accordance with the laws of the State of Texas, without reference to its conflicts of laws principles.  The parties also acknowledge and agree that any action or proceeding arising out of or relating to this Agreement or the enforcement thereof shall be brought in the Harris County Superior Court, and each of the parties irrevocably submits to the exclusive jurisdiction of that Court in any such action or proceeding, waives any objection the party may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such action or proceeding shall be heard and determined only in that Court, and agrees not to bring any action or proceeding arising out of or relating to this Agreement or the enforcement hereof in any other court.  The parties also acknowledge and agree that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or convenience of forum, or to personal or subject matter jurisdiction.  The parties also acknowledge and agree that any action or proceeding referred to above may be served on any party anywhere in the world without any objection thereto.  The parties also acknowledge and agree that the prevailing party in any such action or proceeding shall be awarded the party’s reasonable attorneys’ fees and costs (including, but not limited to, costs of court).

 

7.6           Fair Meaning.  The parties agree that the wording of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties to this Agreement, including the party responsible for drafting the Agreement.

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

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7.7           Mutual Drafting.   The parties hereto acknowledge and agree that they are sophisticated and have been represented by attorneys who have carefully negotiated the provisions of this Agreement. As a consequence, the parties also agree that they do not intend that the presumptions of any laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement and therefore waive their effect.

7.8           Jurisdiction, Service of Process.  Any action or proceeding arising out of or relating to this Agreement shall be governed by Section 7.5 of this Agreement, and each of the parties irrevocably submits to the exclusive jurisdiction of each court identified therein in any such action or proceeding; waives any objection the party may now or hereafter have to venue or to convenience of forum; agrees that all claims in respect of the action or proceeding shall be heard and determined only in any such court; and agrees not to bring any action or proceeding arising out of or relating to this Agreement or any transaction contemplated hereby in any other court.  The parties agree that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum.  Process in any action or proceeding referred to in the first sentence of this Section 10 may be served on any party anywhere in the world.

7.9           Survival.  All of the terms, conditions, warranties and representations contained in this Agreement shall survive the Closing.

7.10          Counterparts.   This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

7.11          Headings.  Headings of the Articles and Sections of this Agreement are for the convenience of the parties only, and shall be given no substantive or interpretive effect whatsoever.

7.12          Waivers.  Either Buyer or Seller may, by written notice to the other, (i) extend the time for the performance of any of the obligations or other actions of the other under this Agreement; (ii) waive any inaccuracies in the representations or warranties of the other contained in this Agreement or in any document delivered pursuant to this Agreement; (iii) waive compliance with any of the conditions or covenants of the other contained in this Agreement; or (iv) waive performance of any of the obligations of the other under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.  The waiver by any party hereto of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

7.13          Merger of Documents.  This Agreement and all agreements and documents contemplated hereby constitute one agreement and are interdependent upon each other in all respects

7.14          Incorporation of Exhibits and Schedules.  All Exhibits and Schedules attached hereto are by this reference incorporated herein and made a part hereof for all purposes as if fully set forth herein.

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

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7.15          Severability.  If for any reason whatsoever, any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid as applied to any particular case or in all cases, such circumstances shall not have the effect of rendering such provision invalid in any other case or of rendering any of the other provisions of this Agreement inoperative, unenforceable or invalid.

7.16          Assignability.  Neither this Agreement nor any of the parties' rights hereunder shall be assignable by any party hereto without the prior written consent of the other parties hereto.

7.17          Binding on Successors and Assigns.  This Agreement shall be binding on and shall inure to the benefit of each party, its successors, and assigns.  This Agreement and the rights and obligations hereunder shall not be assignable or transferable by either party without the prior written consent of the other party.

7.18          Third-Party Beneficiaries.  This Agreement is for the sole benefit of the parties hereto and their permitted successors or assigns, and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such successors or assigns, any legal or equitable rights, remedy or claim hereunder.

7.19          Authority of Signers.  The parties represent and warrant that the person whose signature is set forth below on behalf of a party is fully authorized to execute this Agreement on behalf of that party.

 

IN WITNESS WHEREOF, the parties have executed this Agreement and caused the same to be duly delivered on their behalf on the day and year first above written.

 

 

	 	 SELLER:	 
	 	 	 
	 	
Energetica de Occidente S.A. de C.V.

 

	 
	 	By:	 /s/ Leonardo Molina Romero	 
	 	 	Leonardo Molina Romero	 
	 	Its:	 President	 
	 	 	 
	 	 	 

 

 

	 	 BUYER:	 
	 	 	 
	 	

MINERCO RESOURCES, INC., a Nevada Corporation

	 
	 	 	 
	 	By:	 /s/ V.Scott Vanis	 
	 	 	 V.Scott Vanis	 
	 	Its:	 President	 
	 	 	 
	 	 	 

 

 

	
MINE-ISCAN ASSET PURCHASE AGREEMENT 

	 	Page 17 

 

  

  

  

	
SCHEDULE 2.0

ISCAN HYDRO-ELECTRIC PROJECT DESCRIPTION

 

	Project:    	
Rio Iscan

	Type:   	Run of the River

              

	Location:  	Guata, Olancho, Honduras

	
Status:

	
Pre Study

	Potential:  	4.0 MWh

	Estimated Cost: 	$ 10,000,000

	US$ / MWh: 	$ 2,500,000

	Construction Start: 	Pending

 

Project Detail:

 

The Rio Iscan Project (hereinafter the “Project”) is a 4,000 kWh (4.0 MWh) run of the river project.

 

The Project was originated by a group engineers from Honduras. Currently Minerco Resources is in negotiations to acquire up to 90% of the Project’s right, title and interest in consideration of restricted stock and cash.

 

The Project is located in the Department of Olancho, Honduras and has favorable topography. The basin is over 80 km2 with good extension and encompasses several protected areas. The basin also enjoys an excellent state of forest conservation which helps maintain water volume and quality.

 

Based on the favorable basin, the Project is anticipated to produce 26,000 MWh of renewable power generation per year.

 

The Project is currently in the Application Phase of Development and is in the process of completing all studies and obtaining all necessary permits and approvals.

 

Project Status:

	
Completed:

	
Pre-study

	
In Process:

	
Feasibility Study, Environmental Impact Study

	
Remaining:

	
Topography Study, Interconnect Study, National Commission Energy (CNE) Approval, 20 Year Operations Contract, Community Approval, Municipal Approval, Land Purchase, Water Contract, Environmental License , Secretary of Natural Resources & Environment (SERNA) Final Approval, Interconnect Permit, PPA, Congressional Approval

Project Highlights:

 

The Project is certified for Carbon Development Mechanism (CDM) which translates to Carbon Emission Reduction (CER) Credits. CERs total over 16,000 tons CO2 per year from generation and forestation.

	
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Based on ongoing measurements and the Project’s favorable basin, the Project will likely be capable of additional installed capacity (up to 6.0 MWh total). The conservative 4.0 MWh is based on the Project’s pre-Study.

 

 

 

 

 

	
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SCHEDULE 2.6

AFFILIATED ENTITIES OF THE PROJECT

 

 

 

 

 

  

  

  

 

 

 

SCHEDULE 2.8

JURISDICTIONS WHERE THE PROJECT IS LICENSED TO DO BUSINESS

Whole of Honduras

 

 

 

  

  

  

 

 

 

 

SCHEDULE 2.12

UNDISCLOSED LIABILITIES

None

  

  

  

 

 

SCHEDULE 2.5

REAL PROPERTY OWNED/LEASED BY THE PROJECT

  None

 

 

 

 

  

  

  

 

SCHEDULE 2.17

REAL ESTATE AND LEASES

None

 

 

 

  

  

  

 

 

SCHEDULE 2.18

LIST OF CONTRACTS AND OTHER DATA

  Municipality Rights

 

 

 

  

  

  

 

SCHEDULE 2.19

BUSINESS PROPERTY RIGHTS

None

 

 

 

  

  

  

 

SCHEDULE 2.22

PENDING LITIGATION

 None

 

 

 

  

  

  

 

SCHEDULE 2.23

BANK ACCOUNTS

 

 None

 

  

  

  

 

 

SCHEDULE 2.25

INSURANCE POLICIES

NONE

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