Document:

Unassociated Document

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of the 18th day of July, 2011 (the “Signing Date”) by and among (i) Ruby Creek Resources, Inc., a Nevada corporation, with an address at 750 Third Avenue, 11th Floor, New York, New York, 10017 (hereinafter referred to as the “Buyer” which where the context so requires includes its agents, assigns and successors in title), (ii) Gold Standard Ltd., a Cayman Islands exempted company with Liability Limited by Shares with a registered office situated at the offices of Maples Corporate Services Limited  at P.O Box 309, Ugland House  Grand Cayman KY1-1104, Cayman Islands (hereinafter referred to as “GS” which where the context so requires includes its agents, assigns and successors in title), (iii) Gold Standard Tanzania Ltd., a private limited liability Tanzanian Company with address at P.O. Box 33444, Dar es Salaam, Tanzania (hereinafter referred to as “GST” which where the context so requires includes its agents, assigns and successors in title) and (iv) Robert J. Moriarty, a natural person (hereinafter referred to as “Moriarty” which where the context so requires include his agents, assigns and successors in title).  GS, GST are referenced herein and are together referred to as “Sellers or Company.”

 

WITNESSETH:

 

WHEREAS, GS and Maita entered into the Joint Venture Agreements (as defined below); and

 

WHEREAS, GS and GST commissioned and completed the Environmental Impact Assessment (as defined below); and

 

WHEREAS, GST holds the Mining License; and

WHEREAS, GS and GST have conducted mining operations on the Properties pursuant to the Mining License and Prospecting Licenses, set up the Camp and have purchased and used the Mining Equipment; and

WHEREAS, GS and/or GST owe to Maita the Malta Obligations; and

WHEREAS, Moriarty is the President of GS and GST; and

WHEREAS, Buyer wishes to purchase and take assignment of and Sellers wish to sell, transfer and assign to Buyer, all of their right, title and interest to the Shares and Prospecting Licenses, Mining Licenses, Joint Venture Interests, Environmental Impact Assessment, Mining Equipment and the Camp;

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements, and upon the terms and conditions hereinafter set forth, the parties do hereby agree as follows:

  

1

  

ARTICLE I

DEFINITIONS

 

1.1           Defined Terms.  For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I:

 

“Acquired Assets” means the Prospecting Licenses, Mining Licenses, Joint Venture Interests, Environmental Impact Assessment, Mining Equipment and the Camp.

 

“Action” means any suit, action, judicial or administrative action or proceeding.

 

“Affiliate” shall mean (x) any Person directly or indirectly controlling, controlled by, or under common control with another Person, (y) any director, officer, manager, partner, Employee, shareholder or member of a Person, or (z) any father, mother, brother, sister or descendant of a natural person or any spouse thereof.  A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through ownership of voting securities, by contract, or otherwise.

 

“Business Day” shall mean any day other than a Saturday, Sunday and all legal public holidays in the United States specified in 5 U.S.C. § 6103(a), as amended from time to time.

 

“Claims” means all actions, suits, proceedings, investigations, claims or grievances.

 

“Camp” means the mining camp established on the Properties by GS and GST, and all items, materials and equipment contained therein, as described in Schedule 5.

 

“Environmental Impact Assessment” means the environmental impact assessment annexed hereto as Schedule 3 relating to the Properties.

“Governmental Authority” shall mean any governmental regulatory or administrative body, department, commission, board, bureau, agency or instrumentality, any court or judicial authority or any public, private or industry regulatory authority.

 

“Indemnified Party” shall mean (i) with respect to Losses described in Section 8.1, Buyer, and (ii) with respect to Losses described in Section 8.2, Company.

 

“Indemnifying Party” shall mean (i) with respect to Losses described in Section 8.1, Company, and (ii) with respect to Losses described in Section 8.2, Buyer.

 

“Indebtedness” means all indebtedness of GST for borrowed money, whether current or funded, or secured or unsecured and all amounts owed by GST to any Person.

 

  

2

  

 

 “Joint Venture Agreements” means the joint venture agreements annexed hereto as Schedules 1 and 2, by and between GS and Maita, dated August 14, 2009 (the “First Joint Venture”) and by and between GST and Maita dated August 10, 2010 (the “Second Joint Venture”) relating to the Properties.

“Joint Venture Interests” means all right, title and interest in and to any interest in Joint Venture Agreements owned by GS or GST.

“Knowledge” shall mean, with respect to Company, any fact, circumstance, event or other matter that (i) any of the officers or members of Company actually knows (hereinafter referred to as “Actual Knowledge”), or (ii) any of the foregoing parties should reasonably know in the normal discharge of his or her assigned duties and responsibilities.

 

“Laws” shall mean any law, statute, ordinance, rule, regulation, order, decree or mandatory guideline of any Governmental Authority, as the same may be amended or revised from time to time.

 

“Liens” means all liens, mortgages, pledges, security interests, charges, Claims, options, grant-backs, judgments, court orders or other encumbrances.

 

“Losses” means all damages, losses, obligations, liabilities, Claims, deficiencies, costs, Taxes, penalties, fines, interest, monetary sanctions and expenses incurred by an Indemnified Party, including, without limitation, reasonable attorneys’ fees and costs incurred to comply with injunctions and other court and agency orders, and other costs and expenses incident to any suit, action, investigation, claim or proceeding or to establish or enforce an Indemnified Party’s right to indemnification hereunder.

 

“Maita” means Mr. Mkuvia Maita, a natural person and citizen of the United Republic of Tanzania.

“Malta Obligations” means the obligations owed by GS and/or GST to Maita as detailed on Schedule 6.

“Material Adverse Effect” means any change or effect which, individually or in the aggregate with all other such changes and effects, is materially adverse to the Business or to the condition (financial or otherwise), assets, operations, financial condition, results of operations or prospects of Company, taken as a whole, or that would materially and adversely effect the ability of Company to perform its obligations hereunder or that would prevent or delay the consummation of the transactions contemplated hereunder.

 

“Mining Equipment” means all mining equipment, parts, tools and materials owned and/or in the possession of GS and/or GST, including, but not limited to those listed and detailed on Schedule 7.

 

  

3

  

“Mining License” means the mining license annexed hereto as Schedule 4 dated September 16, 2010.

“Permits” means any licenses, certificates, approvals, permits and other authorizations issued or to be issued by any Governmental Authority.

“Person” means any corporation, partnership, association, trust, limited liability company, joint venture, Governmental Authority or natural person.

 

“Properties” means the property described in the Annextures to the Joint Venture Agreements and covered by the Prospecting Licenses No. PLR. 6011/2009 covering the area of 49.75 square kilometers and Prospecting License No. PLR. 6310/2010 covering the area of 89.06 square kilometers, both located in Liwale District, Lindi Region in the United Republic of Tanzania.

 

“Prospecting Licenses” means Prospecting License No. PLR. 6011/2009 covering the area of 49.75 square kilometers and Prospecting License No. PLR. 6310/2010 covering the area of 89.06 square kilometers, both located in Liwale District, Lindi Region in the United Republic of Tanzania.

“Representatives” of a Person means their directors, officers, managers, partners, shareholders, members, employees, consultants, contractors, representatives, agents, accountants, bankers, attorneys and other advisors.

 

“Shares” means 95% of all equity interests of GST.

 

“Subsidiary” or “Subsidiaries” of any Person means any other Person of which a majority of the outstanding voting securities or other voting equity interests, or a majority of any other interests having the power to direct or cause the direction of the management and policies of such other Person, are owned, directly or indirectly, by such first Person.

 

“Tax” or “Taxes” means any federal, foreign, state, county, and local income, gross receipts, excise, import, property, franchise, ad valorem, license, value added, sales or use tax or other withholding, social benefit, unemployment compensation or other employment-related tax, or any other tax, together with all deficiencies, penalties, additions, interest, assessments, and other governmental charges with respect thereto.

 

“Transaction Documents” means this Agreement (including the Schedules hereto), the Disclosure Memorandum, the Bill of Sale, the Restrictive Covenant Agreements, and all other documents, instruments and certificates contemplated by Article VI.

 

  

4

  

 

ARTICLE II

PURCHASE AND SALE

 

2.1           Purchase of Mining Equipment, Assets and Interests.  Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 6.1), GS and GST shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from Company the Shares and the Acquired Assets, free and clear of all Liens, including, but not limited to:

 

(a)           All books and records related to the Acquired Assets; and

 

(b)          All transferable warranties or similar rights in favor of GS or GST relating to the Acquired Assets.

 

2.2           No Assumption of Liabilities.  The Parties hereby agree that Buyer shall not assume, become liable for or inherit any liability relating to the Acquired Assets or Shares other than the Maita Obligations and as may specifically be set forth herein.

 

2.3           Purchase Price and Allocation.

 

(a)           Amount of Purchase Price. In full and complete consideration for the acquisition of the Shares and Acquired Assets, in addition to the Prior Payments (as defined in Section 2.3(b) below) at the Closing Buyer shall (i) pay to GS or its assignee the sum of Nine Hundred Thousand United States dollars ($900,000), as may be adjusted by any additional deposits made by Buyer after the date of execution of this Agreement, and before Closing, as well as any advances made by Buyer since January 1, 2011 (the “Closing Cash Amount”), (ii) issue a United States Dollars One Million (US$1,000,000) convertible promissory note in the form annexed hereto as Schedule 8 in the name of GS or its assignee (the “Mining Equipment Note”) and (iii) issue a United States Dollars One Million (US$1,000,000) convertible promissory note in the form annexed hereto as Schedule 9 in the name of GS or its assignee (the “Shares Note”).

 

(b)           Acknowledgement of Prior Payments.  Sellers hereby acknowledge the prior receipt from Buyer of One Hundred Thousand United States Dollars ($100,000), $50,000 of which was paid to Sellers as payment for the purchase of the Mining Equipment and $50,000 of which was paid to Sellers as payment with respect to the Shares (collectively the “Prior Payments”).

(c)           Payment of Closing Cash Amount.  On the Closing Date, the Closing Cash Amount shall be payable in such amounts and to such bank accounts as may be directed in writing by GS at least three (3) Business Days prior to the Closing in immediately available funds.

2.4           Allocation of Consideration Among Acquired Assets and Shares.  The purchase price paid hereunder shall be allocated as follows:

 

  

5

  

(a)           $450,000 of the Closing Cash Amount, $50,000 previously paid and the Mining Equipment Note shall be allocated to payment for the Mining Equipment; and

(b)           $450,000 of the Closing Cash Amount, $50,000 previously paid,  the Shares Note and the Maita Obligations shall be allocated to payment for the Shares.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF

SELLERS

 

Each of the Sellers, and Moriarty hereby agree that each of the representations, warranties and statements in the following paragraphs of this Article III is true and correct as of the date of this Agreement and as of the Closing Date:

3.1           Existence and Good Standing.

 

(a)          GST is a corporation duly organized, validly existing and in good standing under the laws of the United Republic of Tanzania and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as currently contemplated to be conducted.

 

(b)          GST is qualified or licensed as a foreign corporation in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary.

 

(c)          GST has no Subsidiaries or otherwise owns any interest in any other Person.

 

3.2           Authorization.  Sellers have full power, capacity and authority to execute this Agreement and all other agreements and documents contemplated hereby to which it is or will be a party.  The execution and delivery of this Agreement and such other agreements and documents by Sellers and the consummation by them of the transactions contemplated hereby has been duly authorized by Sellers, and no other action on the part of Sellers is necessary to authorize the transactions contemplated hereby.  This Agreement, when duly executed and delivered by Sellers, will constitute the valid and binding obligation of Sellers, enforceable in accordance with its terms.

 

3.3           No Violation.  The execution, delivery and performance of this Agreement and the other agreements and documents contemplated hereby by Sellers and the consummation of the transactions contemplated hereby will not (i) violate any provision of the charter, bylaws or other governing documents of Sellers, (ii) violate any Laws by which Sellers or any of their properties or assets are bound, or (iii) result in a violation or breach of, or constitute a default under, or result in the creation of any Lien upon, or create any rights of termination, cancellation or acceleration in any Person with respect to the Joint Venture Agreements.

 

  

6

  

 

3.4           Consents; Shareholder Approvals.  No consent from any Governmental Authority is necessary for the transfer of the Shares.  No consent from Maita is necessary for the transfer of the Shares pursuant to the terms of the Joint Venture Agreements or under applicable Laws.

 

3.5           Consent to Transfer of the First Joint Venture.  GS and GST have obtained all consents required for the transfer of GS’s interest in the First Joint Venture to GST and no Person has or can have any claim as to the validity of such transfer.

3.6           Transfer of the First Joint Venture.  All necessary steps have been taken under applicable Law such that GS’s interest in the First Joint Venture has been transferred to GST.

 

3.7           Shares.  All of the Shares are owned by GS and are free of all Liens and may be conveyed to Buyer without any consents or approvals from any Person or Governmental Authority.

 

3.8           Tax Matters.  All Taxes relating to the Shares and Acquired Assets have been paid in full and there are no Tax Liens as of the date hereof upon any of the Acquired Assets or the Shares.

 

3.9           Licenses.  Each of the Mining and Prospecting Licenses are valid and in good standing and provide the rights which are stated therein and in accordance with applicable Laws.

 

3.10           Litigation.  There is no current litigation with respect to the Acquired Assets, Shares or the transfer of the First Joint Venture to GST, pending or threatened.

 

3.11           Joint Venture Agreements.  Each of the Joint Venture Agreements remains a valid and enforceable agreement under applicable Laws and there is no existing breach by any of the parties thereto nor any fact existing which gives rise to a right of any party to terminate either of the Joint Venture Agreements prior to the end of their respective terms.  Each of the Joint Venture Agreements has been registered with the Ministry of Energy and Minerals of Tanzania.  Schedule 11 lists each of the officers, directors and employees appointed or serving pursuant to each Joint Venture Agreement.

 

3.12           Indebtedness.   Schedule 12 lists all Indebtedness of GST.

 

3.13           No Insolvency or Bankruptcy.  No Seller has filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against GS or GST.

 

3.14           Broker Fees.  No agent, advisor, broker or other Person acting on behalf of Sellers or any of their Affiliates is, or will be, entitled to any commission or broker’s, advisor’s or finder’s fees from Buyer, or from any of its Affiliates, in connection with any of the transactions contemplated hereby.

 

3.15           Disclosure.  To the Knowledge of Sellers, there is no fact (excluding facts with respect to general business, economic or political conditions and facts that are publicly known) which materially and adversely affects the Shares or Acquired Assets, that has not been set forth or disclosed in this Agreement (including the Schedules).

 

  

7

  

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 Buyer represents and warrants to Company as follows:

 

4.1           Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.

 

4.2           Authorization.

 

(a)            Buyer has full power, capacity and authority to execute and deliver this Agreement and all other agreements and documents contemplated hereby.  The execution and delivery of this Agreement and such other agreements and documents by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by Buyer and no other action on the part of Buyer is necessary to authorize the transactions contemplated hereby.

 

(b)           This Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and (ii) the remedies of specific performance and injunctive relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings may be brought.

 

4.3           No Violation.  The execution and delivery of this Agreement and the other agreements and documents contemplated hereby by Buyer and the consummation of the transactions contemplated hereby will not (i) violate any provision of the certificate of incorporation or bylaws of Buyer, or (ii) violate any statute, rule, regulation, order or decree of any public body or authority by which Buyer or its properties or assets are bound.

 

4.4           Consents.  No consent, approval or other authorization of any Governmental Authority or third party is required as a result of or in connection with the execution and delivery of this Agreement.

 

4.5           Broker Fees.  No agent, advisor, broker, person or firm acting on behalf of Buyer is, or will be, entitled to any commission or broker’s, advisor’s or finder’s fees from any of the parties hereto, or from any of their respective Affiliates in connection with any of the transactions contemplated hereby.

 

  

8

  

 

ARTICLE V

CLOSING

 

5.1           Closing.  Unless this Agreement is first terminated as provided in Section 6.1 hereof, and subject to the satisfaction or waiver of all conditions to the consummation of the transactions contemplated hereby, the closing of the transactions contemplated hereby (the “Closing”) shall take place: (i) at 900 Third Avenue, New York, NY on July 29, 2011; or (ii) at such other place, time and date as Buyer and Sellers may mutually agree in writing (the “Closing Date”).

 

5.2           Conditions to Buyer’s Obligations.  The obligation of Buyer to effect the Closing shall be subject to the satisfaction of each of the following conditions at or prior to the Closing (any of which may be waived by Buyer, in whole or in part):

 

(a)           Definitive Agreement.  This Agreement shall have been executed by Sellers and delivered to Buyer.

 

(b)           Representations, Warranties and Compliance with Covenants.  Each representation and warranty of Company contained in this Agreement shall be true and correct in all respects (in the case of any representations or warranties containing any materiality or Material Adverse Effect qualifiers) or in all material respects (in the case of any representations or warranties without any materiality or Material Adverse Effect qualifiers) on and as of the date of this Agreement and on and as of the Closing Date, with the same effect as though such representation and warranty had been made on and as of the Closing Date.  Each of the covenants and agreements herein on the part of Sellers to be complied with or performed on or before the Closing Date shall have been complied with and performed.  Buyer shall have received a certificate, dated the Closing Date, of Company to the foregoing effect.

 

(c)           Absence of Litigation.  No inquiry, action, suit or proceeding shall have been asserted, threatened or instituted (i) in which it is sought to restrain or prohibit the carrying out of the transactions contemplated by this Agreement or to challenge the validity of such transactions or any part thereof, or (ii) which could reasonably be expected to have, if adversely determined, a Material Adverse Effect.

 

(d)           Consents and Approvals.  Sellers shall have obtained and delivered to Buyer copies of all consents, approvals or Permits required to be obtained for the consummation of this Agreement and no such consents or consents, approvals or Permits shall have been withdrawn or suspended.

 

(e)           Bill of Sale and Assignments.  Company shall have executed and delivered to Buyer: (i) a bill of sale, assignment and assumption agreement in substantially the form and substance of Schedule 10 attached hereto (the “Bill of Sale”), and (ii) such  assignments and other instruments of conveyance with respect to the Acquired Assets and Shares as Buyer reasonably requests.

 

(f)          No Material Adverse Effect.  There shall not have been (i) any change resulting in a Material Adverse Effect, or (ii) any damage, destruction or loss affecting the Acquired Assets, whether or not covered by insurance, which could reasonably be expected to result in a Material Adverse Effect.

 

  

9

  

 

(g)           Transfer of the First Joint Venture.  All steps shall have been completed by Sellers to transfer the interest in the First Joint Venture owned by GS to GST.

5.3           Conditions to Obligations of Sellers.  The obligation of Company to effect the Closing shall be subject to the satisfaction of each of the following conditions at or prior to the Closing (any of which may be waived by Company, in whole or in part):

 

(a)           Definitive Agreement.  This Agreement shall have been executed by Buyer and delivered to Company.

 

(b)           Accuracy of Representations and Warranties and Compliance with Covenants.  Each representation and warranty of Buyer contained in this Agreement shall be true and correct in all respects (in the case of any representations or warranties containing any materiality or Material Adverse Effect qualifiers) or in all material respects (in the case of any representations or warranties without any materiality or Material Adverse Effect qualifiers) on and as of the date of this Agreement and on and as of the Closing Date, with the same effect as though such representation and warranty had been made on and as of the Closing Date.  Each of the covenants and agreements herein on the part of Buyer to be complied with or performed on or before the Closing Date shall have been fully complied with and performed.

 

(c)           Absence of Litigation.  No inquiry, action, suit or proceeding shall have been asserted, threatened or instituted in which it is sought to restrain or prohibit the carrying out of the transactions contemplated by this Agreement or to challenge the validity of such transactions or any part thereof.

 

(d)           Purchase Price.  Buyer shall have delivered the Closing Cash Amount and the Mining Equipment and Shares Notes to GS.

ARTICLE VI

TERMINATION PRIOR TO CLOSING

 

6.1           Right of Termination.  This Agreement may be terminated and abandoned at any time prior to the Closing:

 

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

 

(b)           by Buyer, upon written notice to Company, if any of the conditions set forth in Section 5 shall not have been fulfilled in all material respects at the time at which the Closing would otherwise occur or if satisfaction of such a condition is or becomes impossible;

 

(c)           by Sellers, upon written notice to Buyer, if any of the conditions set forth in Section 5 shall not have been fulfilled in all material respects at the time at which the Closing would otherwise occur or if satisfaction of such a condition is or becomes impossible;

 

6.2           Effect of Termination.  In the event of a termination of this Agreement, all further obligations of the parties under this Agreement shall terminate, no party shall have any right under this Agreement against any other party, all deposits paid by Buyer shall be returned and each party shall bear its own costs and expenses.

 

  

10

  

 

ARTICLE VII

INDEMNIFICATION AND OFFSET

 

7.1           Obligation of Company to Indemnify Buyer.  GS hereby agrees to indemnify and hold harmless Buyer and its Representatives from, against and in respect of any and all Losses suffered, sustained, incurred or required to be paid by any of them by reason of:

 

(a)           any representation or warranty made by Sellers in or pursuant to this Agreement or any of the other Transaction Documents being untrue or incorrect in any respect;

 

(b)           any failure by Sellers to observe or perform any covenants and agreements set forth in this Agreement or any other agreement or document executed by them in connection with the transactions contemplated hereby;

 

(c)           any liability of Sellers to the extent it is not expressly assumed hereunder, arising from the operation of the business of GST or one of the Joint Ventures prior to the Closing;

 

(d)           any Taxes of one of the Joint Ventures or GST for all periods prior to the Closing Date, and any Tax liability of Sellers or their shareholders arising in connection with the transactions contemplated hereby;

 

(e)           any failure of Sellers to have good, verified marketable title to the Acquired Assets free and clear of all Liens; or

 

(f)           any challenge to the transaction by any shareholder of Sellers.

 

7.2           Obligation of Buyer to Indemnify Sellers.   Buyer agrees to indemnify and hold harmless Company and its Representatives from, against, for and in respect of any all Losses suffered, sustained, incurred or required to be paid by any of them by reason of:

 

(a)           any representation or warranty made by Buyer in or pursuant to this Agreement being untrue or incorrect in any respect; or

 

(b)           any failure by Buyer to observe or perform its covenants and agreements set forth in this Agreement or any other agreement or document executed by it in connection with the transactions contemplated hereby.

 

7.3           Claim Notice.

 

(a)           A party will not have any liability under the indemnity provisions of this Agreement with respect to a particular matter unless (i) a written notice (the “Claim Notice”) setting forth in reasonable detail the specific nature of the Losses and the estimated amount of such Losses  (the “Claimed Amount”) has been given to the Indemnifying Party (as defined below) and, (ii) in addition, if such matter arises out of a third party suit, action, investigation, proceeding or claim, such Claim Notice is given promptly, but in any event within thirty (30) days after the Indemnified Party (as defined below) is given notice of the claim or the commencement of the suit, action, investigation or proceeding.  Notwithstanding the preceding sentence, failure of the Indemnified Party to give a Claim Notice hereunder shall not release the Indemnifying Party from its obligations under this Article VIII, except to the extent the Indemnifying Party is materially prejudiced by such failure to give such Claim Notice.

 

  

11

  

 

(b)           With respect to Losses described in Section 7.1, GS shall be the “Indemnifying Party” and Buyer and its Representatives shall be the “Indemnified Parties”. With respect to Losses described in Section 7.2, Buyer shall be the “Indemnifying Party” and GS and its Representatives shall be the “Indemnified Party”.

 

7.4           Defense of Third Party Claims.

 

(a)           Upon receipt of Claim Notice of any third party suit, action, investigation, claim or proceeding for which indemnification might be claimed by an Indemnified Party, the Indemnifying Party shall be entitled to defend, contest or otherwise protect against any such suit, action, investigation, claim or proceeding at its own cost and expense, and the Indemnified Party must reasonably cooperate in any such defense or other action.  The Indemnified Party shall have the right, but not the obligation, to participate at its own expense in defense thereof by counsel of its own choosing, but the Indemnifying Party shall be entitled to control the defense unless the Indemnified Party has relieved the Indemnifying Party from liability with respect to the particular matter or the Indemnifying Party fails to assume defense of the matter.

 

(b)           In the event the Indemnifying Party shall fail to defend, contest or otherwise protect in a timely manner against any such suit, action, investigation, claim or proceeding, the Indemnified Party shall have the right, but not the obligation, thereafter to defend, contest or otherwise protect against the same and make any compromise or settlement thereof and recover the entire cost thereof from the Indemnifying Party including, without limitation, reasonable attorneys’ fees, disbursements and all amounts paid as a result of such suit, action, investigation, claim or proceeding or the compromise or settlement thereof; provided, however, that the Indemnified Party must send a written notice to the Indemnifying Party of any such proposed settlement or compromise, which settlement or compromise the Indemnifying Party may reject within thirty (30) days of receipt of such notice.  Failure to reject such notice within such thirty (30) day period shall be deemed an acceptance of such settlement or compromise.  Consent of the Indemnifying Party to such proposed settlement or compromise may not be unreasonably withheld, delayed or conditioned. The Indemnified Party shall have the right to effect a settlement or compromise over the objection of the Indemnifying Party; provided, that if (i) the Indemnifying Party is contesting such claim in good faith or (ii) the Indemnifying Party has assumed the defense from the Indemnified Party, the Indemnified Party waives any right to indemnity therefor unless consent of the Indemnifying Party to such proposed settlement or compromise was unreasonably withheld, delayed or conditioned.

 

(c)           If the Indemnifying Party undertakes the defense of such matters then the Indemnified Party shall not, so long as the Indemnifying Party does not abandon the defense thereof, be entitled to recover from the Indemnifying Party any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than the reasonable costs of investigation undertaken by the Indemnified Party with the prior written consent of the Indemnifying Party.

 

  

12

  

 

(d)          Buyer, Sellers and each of their successors and assigns shall cooperate with each other in the defense of any suit, action, investigation, proceeding or claim by a third party, shall keep each other informed of all settlement negotiations with third parties and the progress of any litigation and, during normal business hours, shall afford each other access to their books and records and employees relating to such suit, action, investigation, proceeding or claim and shall furnish each other all such further information that they have the right and power to furnish as may reasonably be necessary to defend such suit, action, investigation, proceeding or claim.

 

7.5            Survival.  Notwithstanding anything to the contrary in this Agreement, the representations and warranties of each of the parties set forth in this Agreement shall survive the Closing.

 

7.6           Offset.

(a)           Notwithstanding anything to the contrary contained herein, in the event that Buyer sustains any Losses for which it may be indemnified hereunder, Buyer may, at its option, offset the amount of such losses against the remaining principal and interest due under the Mining Equipment Note and/or the Shares Note, as set forth herein.  All Losses shall be offset first against the Mining Equipment Note and then against the Shares Note.  All offsets shall be first against any remaining principal and then, if there is no remaining principal amount, against interest accrued and payable.

(b)           Offset Procedure.  For any offset against the Mining Equipment Note or Shares Note, Buyer shall provide written notice to GS and the then-holder of each note being offset (an “Offset Notice”) and such offset shall take effect on the date of receipt of the Offset Notice pursuant to the terms of Section 9.1 below.

 

ARTICLE VIII

OTHER COVENANTS

 

Cooperation.  Sellers and Moriarty shall make commercially reasonable efforts to respond to requests by Buyer for information regarding the Shares and Acquired Assets for a period of twenty-four (24) months following the Closing.

ARTICLE IX

MISCELLANEOUS

 

9.1           Notices.

 

(a)           Any notice, consent, request or other communication required or provided for by this Agreement shall be in writing and shall be deemed to have been duly and properly given or served for any purpose only if (i) delivered personally (with written confirmation of receipt), (ii) sent by telecopier (with written confirmation of receipt), (iii) sent by registered or certified mail, return receipt requested, or (iv) sent by an internationally recognized courier service, postage and charges prepaid, in each case to the appropriate addresses and telecopier numbers set forth below:

 

  

13

  

	
  

	
If to Buyer:

	 	
Ruby Creek Resources, Inc.

750 Third Avenue, 11th Floor

New York, New York, 10017

Attn:   Robert Slavik, CEO

Email: RSlavik@rubycreekresources.com

Facsimile: +1.877.819.8858

	
  

	
With a copy to:

	 	
Guzov Ofsink, LLC

600 Madison Avenue, 14th Floor

New York, New York 10022

Attn: Darren L. Ofsink, Esq.

Facsimile:  (212) 688-7273

	
  

	
If to Sellers to: 

	 	
 
Gold Standard, Ltd.

 

 
[address]

Attn: Mr. Robert Moriarty

 
Facsimile:

	
  

	
With a copy to: 

	 	
 
Maples and Calder

P.O. Box 309, Ugland House

Grand Cayman

KY1-1104

Cayman Islands

Attn: Simon Firth c/o

Gold Standard, Ltd.

 
Facsimile:  (345) 949-8080

 

 

A party may change his or her address for the purpose of this Section 9.1 by written notice to the other parties in the manner provided for above.

(b)           All such notices, requests, consents and other communications shall be deemed to have been given (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of mailing by an internationally recognized express courier service, if sent by next day delivery providing receipt of delivery, on the second Business Day following the date of such mailing, (iii) in the case of registered or certified mailing, postage and charges prepaid, return receipt requested, on the third Business Day following the date of such mailing and (iv) in the case of telecopy, when received.

9.2           Entire Agreement.  This Agreement together with the other Transaction Documents constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof, and no party shall be liable or bound to the other in any manner by any representations or warranties not set forth herein.

 

  

14

  

 

9.3           Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.  Neither this Agreement nor any rights, interests, or obligations hereunder may be assigned by any party hereto without the prior written consent of all other parties hereto.

 

9.4           Headings.  The headings of the articles and sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

 

9.5           Modification and Waiver.  Any of the terms or conditions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof, and this Agreement may be modified or amended by a written instrument executed by all parties hereto.  No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

9.6           Schedules, Etc.  All Exhibits and Schedules annexed hereto are expressly made a part of this Agreement as though fully set forth herein, and all references to this Agreement herein or in any such Exhibits or Schedules shall refer to and include all such Exhibits and Schedules.

 

9.7           Governing Law.  This Agreement shall be construed, enforced, and governed by the internal laws of the State of New York, without regard to its conflicts of laws principles.

 

9.8           Consent to Jurisdiction. Each party to this Agreement irrevocably consents and agrees that any legal action or proceeding with respect to this Agreement and any action for enforcement of any judgment in respect thereof will be brought in the federal courts located in the State of New York, and, by execution and delivery of this Agreement, each party to this Agreement hereby submits to and accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any appeal thereof.  .

 

9.9           Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement.

 

9.10           Responsibility for Taxes.  Each party shall be responsible for any Taxes that such party may incur pursuant to the transactions contemplated hereby and specifically Company shall be responsible for and pay all sales, use and other transfer Taxes resulting from the transactions contemplated hereunder.

 

  

15

  

 

9.11           Fees and Expenses.  Each party shall pay all of its own fees and expenses incurred by it in connection with the transactions contemplated hereby.

 

9.12           Third Party Beneficiaries.  Except as otherwise specifically provided in Article VII, no Person shall be a third-party beneficiary of the representations, warranties, covenants and agreements made by any party hereto.

 

9.13           Further Assurances. From time to time after the Closing, at the request of any other party but at the expense of the requesting party, the parties hereto shall execute and deliver any such other instruments of conveyance, assignment and transfer, and take such other action as such requesting party may reasonably request in order to consummate the transactions contemplated hereby.

 

9.14           Counterparts; Facsimile Signatures.  This Agreement may be executed in one or more counterparts, including by means of facsimile, electronic mail or similar means, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

 

9.15           Waiver of Jury Trial.  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

[SIGNATURE PAGE FOLLOWS]

 

  

16

  

 

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

 

	 	 
BUYER:

	 
	 	 	 
	 	RUBY CREEK RESOURCES, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name: Robert Slavik	 
	 	Title: President & CEO	 
	 	 	 
	 	 
SELLERS:

	 
	 	 	 
	 	GOLD STANDARD, LTD.	 
	 	 	 
	 	 
By: 

	 	 
	 	Name: 	 
	 	 
Title:

	 
	 	 	 
	 	 	 
	 	 
GOLD STANDARD TANZANIA LTD.

	 
	 	 	 
	 	By:  	 	 
	 	Name:	 
	 	
Title:

	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 
Robert Moriarty

As to Articles III and VIII only

	 

 

  

17

  

	
List of Schedules

	
Schedule 1-

	
Joint venture agreement by and among GS, GST and Maita, dated August 14, 2009 “First Joint Venture”

	
Schedule 2-

	
Joint venture agreement by and among GS, GST and Maita, dated August 10, 2010 (the “Second Joint Venture”)

	
Schedule 3-

	
Environmental Impact Assessment

	
Schedule 4-

	
Mining License dated September 16, 2010

	
Schedule 5-

	
All items, materials and equipment contained in the Mining camp established on the Properties by GS and GST

	
Schedule 6-

	
Obligations owed by GS and/or GST to Maita

	
Schedule 7-

	
All mining equipment, parts, tools and materials owned and/or in the possession of GST

	
Schedule 8-

	
Form of a US$1,000,000 convertible promissory note (the “Mining Equipment Note”)

	
Schedule 9-

	
Form of a US$1,000,000 convertible promissory note in the (the “Shares Note”).

	
Schedule 10-

	
Bill of Sale and Assignments

	
Schedule 11-

	
List of Joint Venture Officers, Directors and Employees

 

	
Schedule 12 - 

	
All Indebtedness of GST.

 

  

18Unassociated Document

EXHIBIT 10.1

 

ARNO THERAPEUTICS, INC.

2005 Stock Option Plan

(as amended through April 25, 2011)

1.           Purpose.  The purpose of the 2005 Stock Option  Plan (the “Plan”) of Arno Therapeutics, Inc. (the “Company”) is to increase shareholder value and to advance the interests of the Company by furnishing a variety of economic incentives (“Incentives”) designed to attract, retain and motivate employees, directors and consultants.  Incentives may consist of opportunities to purchase or receive shares of Common Stock, $0.0001 par value, of the Company (“Common Stock”), monetary payments or both on terms determined under this Plan.

2.           Administration.

2.1           The Plan shall be administered by a committee of the Board of Directors of the Company (the “Committee”).  The Committee shall consist of not less than two directors of the Company who shall be appointed from time to time by the board of directors of the Company.  Each member of the Committee shall be a “non-employee director” within the meaning of Rule 16b-3 of the Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), and an “outside director” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).  The Committee shall have complete authority to determine all provisions of all Incentives awarded under the Plan (as consistent with the terms of the Plan), to interpret the Plan, and to make any other determination which it believes necessary and advisable for the proper administration of the Plan.  The Committee’s decisions and matters relating to the Plan shall be final and conclusive on the Company and its participants.  No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentives granted under the Plan.  The Committee will also have the authority under the Plan to amend or modify the terms of any outstanding Incentives in any manner; provided, however, that the amended or modified terms are permitted by the Plan as then in effect and that any recipient on an Incentive adversely affected by such amended or modified terms has consented to such amendment or modification.  No amendment or modification to an Incentive, however, whether pursuant to this Section 2 or any other provisions of the Plan, will be deemed to be a re-grant of such Incentive for purposes of this Plan.  If at any time there is no Committee, then for purposes of the Plan the term “Committee” shall mean the Company’s Board of Directors.

2.2           In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other similar change in corporate structure or shares, (ii) any purchase, acquisition, sale or disposition of a significant amount of assets or a significant business, (iii) any change in accounting principles or practices, or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected participant, amend or modify the vesting criteria of any outstanding Incentive that is based in whole or in part on the financial performance of the Company (or any subsidiary or division thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect.

 

  

-1-

  

 

3.           Eligible Participants.  Employees of the Company or its subsidiaries (including officers and employees of the Company or its subsidiaries), directors and consultants, advisors or other independent contractors who provide services to the Company or its subsidiaries (including members of the Company’s scientific advisory board) shall become eligible to receive Incentives under the Plan when designated by the Committee.  Participants may be designated individually or by groups or categories (for example, by pay grade) as the Committee deems appropriate.  Participation by officers of the Company or its subsidiaries and any performance objectives relating to such officers must be approved by the Committee.  Participation by others and any performance objectives relating to others may be approved by groups or categories (for example, by pay grade) and authority to designate participants who are not officers and to set or modify such targets may be delegated.

4.           Types of Incentives.  Incentives under the Plan may be granted in any one or a combination of the following forms:  (a) incentive stock options and non-statutory stock options (Section 6); (b) stock appreciation rights (“SARs”) (Section 7); (c) stock awards (Section 8); (d) restricted stock (Section 8); and (e) performance shares (Section 9).

5.           Shares Subject to the Plan.

5.1.           Number of Shares.  Subject to adjustment as provided in Section 11.6, the number of shares of Common Stock which may be issued under the Plan shall not exceed 7,000,000 shares of Common Stock.  Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentives will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan.

5.2.           Cancellation.  To the extent that cash in lieu of shares of Common Stock is delivered upon the exercise of an SAR pursuant to Section 7.4, the Company shall be deemed, for purposes of applying the limitation on the number of shares, to have issued the greater of the number of shares of Common Stock which it was entitled to issue upon such exercise or on the exercise of any related option.  In the event that a stock option or SAR granted hereunder expires or is terminated or canceled unexercised or unvested as to any shares of Common Stock, such shares may again be issued under the Plan either pursuant to stock options, SARs or otherwise.  In the event that shares of Common Stock are issued as restricted stock or pursuant to a stock award and thereafter are forfeited or reacquired by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired shares may again be issued under the Plan, either as restricted stock, pursuant to stock awards or otherwise.  The Committee may also determine to cancel, and agree to the cancellation of, stock options in order to make a participant eligible for the grant of a stock option at a lower price than the option to be canceled.

6.           Stock Options.  A stock option is a right to purchase shares of Common Stock from the Company.  The Committee may designate whether an option is to be considered an incentive stock option or a non-statutory stock option.  To the extent that any incentive stock option granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such incentive stock option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a non-statutory stock option.  Each stock option granted by the Committee under this Plan shall be subject to the following terms and conditions:

6.1.           Price.  The option price per share shall be determined by the Committee, subject to adjustment under Section 11.6.

 

  

-2-

  

6.2.           Number.  The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to adjustment as provided in Section 11.6.  The number of shares of Common Stock subject to a stock option shall be reduced in the same proportion that the holder thereof exercises a SAR if any SAR is granted in conjunction with or related to the stock option.  No individual may receive options to purchase more than 7,000,000 shares in any year.

 

6.3.           Duration and Time for Exercise.  Subject to earlier termination as provided in Section 11.4, the term of each stock option shall be determined by the Committee but shall not exceed ten years and one day from the date of grant.  Each stock option shall become exercisable at such time or times during its term as shall be determined by the Committee at the time of grant.  The Committee may accelerate the exercisability of any stock option.  Subject to the foregoing and with the approval of the Committee, all or any part of the shares of Common Stock with respect to which the right to purchase has accrued may be purchased by the Company at the time of such accrual or at any time or times thereafter during the term of the option.

6.4.           Manner of Exercise.  Subject to the conditions contained in this Plan and in the agreement with the recipient evidencing such option, a stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased and accompanied by the full purchase price for such shares.  The exercise price shall be payable (a) in United States dollars upon exercise of the option and may be paid by cash; uncertified or certified check; bank draft; (b) at the discretion of the Committee, by delivery of shares of Common Stock that are already owned by the participant in payment of all or any part of the exercise price, which shares shall be valued for this purpose at the Fair Market Value on the date such option is exercised; or (c) at the discretion of the Committee, by instructing the Company to withhold from the shares of Common Stock issuable upon exercise of the stock option shares of Common Stock in payment of all or any part of the exercise price and/or any related withholding tax obligations, which shares shall be valued for this purpose at the Fair Market Value or in such other manner as may be authorized from time to time by the Committee.  The shares of Common Stock delivered by the participant pursuant to Section 6.4(b) must have been held by the participant for a period of not less than six months prior to the exercise of the option, unless otherwise determined by the Committee.  Prior to the issuance of shares of Common Stock upon the exercise of a stock option, a participant shall have no rights as a shareholder.  Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to such stock options as to which there is a record date preceding the date the participant becomes the holder of record of such shares, except as the Committee may determine in its discretion.

6.5.           Incentive Stock Options.  Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options (as such term is defined in Section 422 of the Code):

(a)           The aggregate Fair Market Value (determined as of the time the option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any participant during any calendar year (under the Plan and any other incentive stock option plans of the Company or any subsidiary or parent corporation of the Company) shall not exceed $100,000.  The determination will be made by taking incentive stock options into account in the order in which they were granted.

(b)           Any Incentive Stock Option certificate authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the options as Incentive Stock Options.

 

  

-3-

  

(c)           All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by board of directors or the date this Plan was approved by the Company’s shareholders.

(d)           Unless sooner exercised, all Incentive Stock Options shall expire no later than 10 years after the date of grant.  No Incentive Stock Option may be exercisable after ten (10) years from its date of grant (five (5) years from its date of grant if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

(e)           The exercise price for Incentive Stock Options shall be not less than 100% of the Fair Market Value of one share of Common Stock on the date of grant with respect to an Incentive Stock Option; provided that the exercise price shall be 110% of the Fair Market Value if, at the time the Incentive Stock Option is granted, the participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company.

7.           Stock Appreciation Rights.  An SAR is a right to receive, without payment to the Company, a number of shares of Common Stock, cash or any combination thereof, the amount of which is determined pursuant to the formula set forth in Section 7.4.  An SAR may be granted (a) with respect to any stock option granted under this Plan, either concurrently with the grant of such stock option or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the stock option), or (b) alone, without reference to any related stock option.  Each SAR granted by the Committee under this Plan shall be subject to the following terms and conditions:

7.1.           Number; Exercise Price.  Each SAR granted to any participant shall relate to such number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 11.6.  In the case of an SAR granted with respect to a stock option, the number of shares of Common Stock to which the SAR pertains shall be reduced in the same proportion that the holder of the option exercises the related stock option.  The exercise price of an SAR will be determined by the Committee, in its discretion, at the date of grant but may not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant.

7.2.           Duration.  Subject to earlier termination as provided in Section 11.4, the term of each SAR shall be determined by the Committee but shall not exceed ten years and one day from the date of grant.  Unless otherwise provided by the Committee, each SAR shall become exercisable at such time or times, to such extent and upon such conditions as the stock option, if any, to which it relates is exercisable.  The Committee may in its discretion accelerate the exercisability of any SAR.

7.3.           Exercise.  An SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of SARs which the holder wishes to exercise.  Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver to the exercising holder certificates for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled pursuant to Section 7.4.

  

-4-

  

7.4.           Payment.  Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock (which, as it pertains to officers and directors of the Company, shall comply with all requirements of the Exchange Act), the number of shares of Common Stock which shall be issuable upon the exercise of an SAR shall be determined by dividing:

(a)           the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares (for this purpose, the “appreciation” shall be the amount by which the Fair Market Value of the shares of Common Stock subject to the SAR on the exercise date exceeds (1) in the case of an SAR related to a stock option, the exercise price of the shares of Common Stock under the stock option or (2) in the case of an SAR granted alone, without reference to a related stock option, an amount which shall be determined by the Committee at the time of grant, subject to adjustment under Section 11.6); by

(b)           the Fair Market Value of a share of Common Stock on the exercise date.

In lieu of issuing shares of Common Stock upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR cash equal to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable.  No fractional shares of Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise.

8.           Stock Awards and Restricted Stock.  A stock award consists of the transfer by the Company to a participant of shares of Common Stock, without other payment therefor, as additional compensation for services to the Company.  The participant receiving a stock award will have all voting, dividend, liquidation and other rights with respect to the shares of Common Stock issued to a participant as a stock award under this Section 8 upon the participant becoming the holder of record of such shares.  A share of restricted stock consists of shares of Common Stock which are sold or transferred by the Company to a participant at a price determined by the Committee (which price shall be at least equal to the minimum price required by applicable law for the issuance of a share of Common Stock) and subject to restrictions on their sale or other transfer by the participant, which restrictions and conditions may be determined by the Committee as long as such restrictions and conditions are not inconsistent with the terms of the Plan.  The transfer of Common Stock pursuant to stock awards and the transfer and sale of restricted stock shall be subject to the following terms and conditions:

8.1.           Number of Shares.  The number of shares to be transferred or sold by the Company to a participant pursuant to a stock award or as restricted stock shall be determined by the Committee.

8.2.           Sale Price.  The Committee shall determine the price, if any, at which shares of restricted stock shall be sold or granted to a participant, which may vary from time to time and among participants and which may be below the Fair Market Value of such shares of Common Stock at the date of sale.

8.3.           Restrictions.  All shares of restricted stock transferred or sold hereunder shall be subject to such restrictions as the Committee may determine, including, without limitation any or all of the following:

 

  

-5-

  

 

(a)           a prohibition against the sale, transfer, pledge or other encumbrance of the shares of restricted stock, such prohibition to lapse at such time or times as the Committee shall determine (whether in annual or more frequent installments, at the time of the death, disability or retirement of the holder of such shares, or otherwise);

(b)           a requirement that the holder of shares of restricted stock forfeit, or (in the case of shares sold to a participant) resell back to the Company at his or her cost, all or a part of such shares in the event of termination of his or her employment or consulting engagement during any period in which such shares are subject to restrictions; or

(c)           such other conditions or restrictions as the Committee may deem advisable.

8.4.           Escrow.  In order to enforce the restrictions imposed by the Committee pursuant to Section 8.3, the participant receiving restricted stock shall enter into an agreement with the Company setting forth the conditions of the grant.  Shares of restricted stock shall be registered in the name of the participant and deposited, together with a stock power endorsed in blank, with the Company.  Each such certificate shall bear a legend in substantially the following form:

The transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the 2005 Stock Option  Plan of Arno Therapeutics, Inc., (the “Company”), and an agreement entered into between the registered owner and the Company.  A copy of the 2005 Stock Option Plan and the agreement is on file in the office of the secretary of the Company.

8.5.           End of Restrictions.  Subject to Section 11.5, at the end of any time period during which the shares of restricted stock are subject to forfeiture and restrictions on transfer, such shares will be delivered free of all restrictions to the participant or to the participant’s legal representative, beneficiary or heir.

8.6.           Shareholder.  Subject to the terms and conditions of the Plan, each participant receiving restricted stock shall have all the rights of a shareholder with respect to shares of stock during any period in which such shares are subject to forfeiture and restrictions on transfer, including without limitation, the right to vote such shares.  Dividends paid in cash or property other than Common Stock with respect to shares of restricted stock shall be paid to the participant currently.  Unless the Committee determines otherwise in its sole discretion, any dividends or distributions (including regular quarterly cash dividends) paid with respect to shares of Common Stock subject to the restrictions set forth above will be subject to the same restrictions as the shares to which such dividends or distributions relate.  In the event the Committee determines not to pay dividends or distributions currently, the Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions.  In addition, the Committee in its sole discretion may require such dividends and distributions to be reinvested (and in such case the participant consents to such reinvestment) in shares of Common Stock that will be subject to the same restrictions as the shares to which such dividends or distributions relate.

9.           Performance Shares.  A performance share consists of an award which shall be paid in shares of Common Stock, as described below.  The grant of a performance share shall be subject to such terms and conditions as the Committee deems appropriate, including the following:

 

  

-6-

  

9.1.           Performance Objectives.  Each performance share will be subject to performance objectives for the Company or one of its operating units to be achieved by the participant before the end of a specified period.  The number of performance shares granted shall be determined by the Committee and may be subject to such terms and conditions, as the Committee shall determine.  If the performance objectives are achieved, each participant will be paid in shares of Common Stock or cash as determined by the Committee.  If such objectives are not met, each grant of performance shares may provide for lesser payments in accordance with formulas established in the award.

9.2.           Not Shareholder.  The grant of performance shares to a participant shall not create any rights in such participant as a shareholder of the Company, until the payment of shares of Common Stock with respect to an award.

9.3.           No Adjustments.  No adjustment shall be made in performance shares granted on account of cash dividends which may be paid or other rights which may be issued to the holders of Common Stock prior to the end of any period for which performance objectives were established.

9.4.           Expiration of Performance Share.  If any participant’s employment or consulting engagement with the Company is terminated for any reason other than normal retirement, death or disability prior to the achievement of the participant’s stated performance objectives, all the participant’s rights on the performance shares shall expire and terminate unless otherwise determined by the Committee.  In the event of termination of employment or consulting by reason of death, disability, or normal retirement, the Committee, in its own discretion may determine what portions, if any, of the performance shares should be paid to the participant.

10.           Change of Control.

10.1           Change in Control.  For purposes of this Section 10, a “Change in Control” of the Company will mean the following:

 

(a)           the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company;

 

(b)           the approval by the shareholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;

 

(c)           any person becomes after the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (i) 20% or more, but not 50% or more, of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the Continuing Directors (as defined below), or (ii) 50% or more of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuing Directors); provided that a traditional institution or venture capital financing transaction shall be excluded from this definition;

 

(d)           a merger or consolidation to which the Company is a party if the shareholders of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), immediately following the effective date of such merger or consolidation, of securities of the surviving corporation representing (i) 50% or more, but less than 80%, of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the Continuing Directors, or (ii) less than 50% of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuing Directors); or

 

  

-7-

  

(e)           after the date the Company’s securities are first sold in a registered public offering, the Continuing Directors cease for any reason to constitute at least a majority of the Board.

 

10.2           Continuing Directors.  For purposes of this Section 10, “Continuing Directors” of the Company will mean any individuals who are members of the Board on the effective date of the Plan and any individual who subsequently becomes a member of the Board whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Continuing Directors (either by specific vote or by approval of the Company’s proxy statement in which such individual is named as a nominee for director without objection to such nomination).

 

10.3           Acceleration of Incentives.  Without limiting the authority of the Committee under the Plan, if a Change in Control of the Company occurs whereby the acquiring entity or successor to the Company does not assume the Incentives or replace them with substantially equivalent incentive awards, then, unless otherwise provided by the Committee in its sole discretion in the agreement evidencing an Incentive at the time of grant, then as of the date of the Change of Control (a) all outstanding options and SARs will vest and will become immediately exercisable in full and will remain exercisable for the remainder of their terms, regardless of whether the participant to whom such options or SARs have been granted remains in the employ or service of the Company or any subsidiary of the Company or any acquiring entity or successor to the Company; (b) the restrictions on all shares of restricted stock awards shall lapse immediately; and (c) all performance shares shall be deemed to be met and payment made immediately.

 

10.4           Cash Payment for Options.  If a Change in Control of the Company occurs, then the Committee, if approved by the Committee in its sole discretion either in an agreement evidencing an option at the time of grant or at any time after the grant of an option, and without the consent of any participant affected thereby, may determine that:

 

(a)           some or all participants holding outstanding options will receive, with respect to some or all of the shares of Common Stock subject to such options, as of the effective date of any such Change in Control of the Company, cash in an amount equal to the excess of the Fair Market Value of such shares immediately prior to the effective date of such Change in Control of the Company over the exercise price per share of such options; and

 

(b)           any options as to which, as of the effective date of any such Change in Control, the Fair Market Value of the shares of Common Stock subject to such options is less than or equal to the exercise price per share of such options, shall terminate as of the effective date of any such Change in Control.

 

	
  

	
If the Committee makes a determination as set forth in subparagraph (a) of this Section 10.4, then as of the effective date of any such Change in Control of the Company such options will terminate as to such shares and the participants formerly holding such options will only have the right to receive such cash payment(s).  If the Committee makes a determination as set forth in subparagraph (b) of this Section 10.4, then as of the effective date of any such Change in Control of the Company such options will terminate, become void and expire as to all unexercised shares of Common Stock subject to such options on such date, and the participants formerly holding such options will have no further rights with respect to such options.

 

  

-8-

  

11.           General.

11.1.           Effective Date.  The Plan will become effective upon approval by the Company’s board of directors.

11.2.           Duration.  The Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or the payment of cash or been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed.  No Incentives may be granted under the Plan after the tenth anniversary of the date the Plan is approved by the shareholders of the Company.

11.3.           Non-transferability of Incentives.  Except, in the event of the holder’s death, by will or the laws of descent and distribution to the limited extent provided in the Plan or the Incentive, unless approved by the Committee, no stock option, SAR, restricted stock or performance award may be transferred, pledged or assigned by the holder thereof, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, and the Company shall not be required to recognize any attempted assignment of such rights by any participant.  During a participant’s lifetime, an Incentive may be exercised only by him or her or by his or her guardian or legal representative.

11.4.           Effect of Termination or Death.  In the event that a participant ceases to be an employee of or consultant to the Company, or the participants other service with the Company is terminated, for any reason, including death, any Incentives may be exercised or shall expire at such times as may be determined by the Committee in its sole discretion in the agreement evidencing an Incentive.  Notwithstanding the other provisions of this Section 10.4, upon a participant’s termination of employment or other service with the Company and all subsidiaries, the Committee may, in its sole discretion (which may be exercised at any time on or after the date of grant, including following such termination), cause options and SARs (or any part thereof) then held by such participant to become or continue to become exercisable and/or remain exercisable following such termination of employment or service and Restricted Stock Awards, Performance Shares and Stock Awards then held by such participant to vest and/or continue to vest or become free of transfer restrictions, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee; provided, however, that no Incentive may remain exercisable or continue to vest beyond its expiration date.  Any Incentive Stock Option that remains unexercised more than one (1) year following termination of employment by reason of death or disability or more than three (3) months following termination for any reason other than death or disability will thereafter be deemed to be a Non-Statutory Stock Option.

11.5.           Additional Conditions.  Notwithstanding anything in this Plan to the contrary: (a) the Company may, if it shall determine it necessary or desirable for any reason, at the time of award of any Incentive or the issuance of any shares of Common Stock pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire the Incentive or the shares of Common Stock issued pursuant thereto for his or her own account for investment and not for distribution; and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.  Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to any Incentives granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other regulatory body which the Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

 

  

-9-

  

11.6.           Adjustment.  In the event of any merger, consolidation or reorganization of the Company with any other corporation or corporations, there shall be substituted for each of the shares of Common Stock then subject to the Plan, including shares subject to restrictions, options, or achievement of performance share objectives, the number and kind of shares of stock or other securities to which the holders of the shares of Common Stock will be entitled pursuant to the transaction.  In the event of any recapitalization, reclassification, stock dividend, stock split, combination of shares or other similar change in the corporate structure of the Company or shares of the Company, the exercise price of an outstanding Incentive and the number of shares of Common Stock then subject to the Plan, including shares subject to restrictions, options or achievements of performance shares, shall be adjusted in proportion to the change in outstanding shares of Common Stock in order to prevent dilution or enlargement of the rights of the participants.  In the event of any such adjustments, the purchase price of any option, the performance objectives of any Incentive, and the shares of Common Stock issuable pursuant to any Incentive shall be adjusted as and to the extent appropriate, in the discretion of the Committee, to provide participants with the same relative rights before and after such adjustment.

11.7.           Incentive Plans and Agreements.  Except in the case of stock awards or cash awards, the terms of each Incentive shall be stated in a plan or agreement approved by the Committee.  The Committee may also determine to enter into agreements with holders of options to reclassify or convert certain outstanding options, within the terms of the Plan, as Incentive Stock Options or as non-statutory stock options and in order to eliminate SARs with respect to all or part of such options and any other previously issued options.

11.8.           Withholding.

 

(a)           The Company shall have the right to (i) withhold and deduct from any payments made under the Plan or from future wages of the participant (or from other amounts that may be due and owing to the participant from the Company or a subsidiary of the Company), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all foreign, federal, state and local withholding and employment-related tax requirements attributable to an Incentive, or (ii) require the participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Incentive.  At any time when a participant is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with a distribution of Common Stock or upon exercise of an option or SAR, the participant may satisfy this obligation in whole or in part by electing (the “Election”) to have the Company withhold from the distribution shares of Common Stock having a value up to the amount required to be withheld.  The value of the shares to be withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined (“Tax Date”).

  

-10-

  

 

(b)           Each Election must be made prior to the Tax Date.  The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive.  An Election is irrevocable.

 

(c)           If a participant is an officer or director of the Company within the meaning of Section 16 of the Exchange Act, then an Election is subject to the following additional restrictions:

(1)           No Election shall be effective for a Tax Date which occurs within six months of the grant or exercise of the award, except that this limitation shall not apply in the event death or disability of the participant occurs prior to the expiration of the six-month period.

(2)           The Election must be made either six months prior to the Tax Date or must be made during a period beginning on the third business day following the date of release for publication of the Company’s quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date.

11.9.           No Continued Employment, Engagement or Right to Corporate Assets.  No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation.  Nothing contained in the Plan shall be construed as giving an employee, a consultant, such persons’ beneficiaries or any other person any equity or interests of any kind in the assets of the Company or creating a trust of any kind or a fiduciary relationship of any kind between the Company and any such person.

11.10.           Deferral Permitted.  Payment of cash or distribution of any shares of Common Stock to which a participant is entitled under any Incentive shall be made as provided in the Incentive.  Payment may be deferred at the option of the participant if provided in the Incentive.

11.11.           Amendment of the Plan.  The Board may amend, suspend or discontinue the Plan at any time; provided, however, that no amendments to the Plan will be effective without approval of the shareholders of the Company if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the rules of any stock exchange or Nasdaq or similar regulatory body.  No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive without the consent of the affected participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Section 11.6 of the Plan.

 

  

-11-

  

 

11.12.           Definition of Fair Market Value. For purposes of this Plan, the “Fair Market Value” of a share of Common Stock at a specified date shall, unless otherwise expressly provided in this Plan, be the amount which the Committee or the board of directors of the Company determines in good faith in the exercise of its reasonable discretion to be 100% of the fair market value of such a share as of the date in question; provided, however, that notwithstanding the foregoing, if such shares are listed on a U.S. securities exchange or are quoted on the Nasdaq National Market System or Nasdaq SmallCap Stock Market (“Nasdaq”), then Fair Market Value shall be determined by reference to the last sale price of a share of Common Stock on such U.S. securities exchange or Nasdaq on the applicable date.  If such U.S. securities exchange or Nasdaq is closed for trading on such date, or if the Common Stock does not trade on such date, then the last sale price used shall be the one on the date the Common Stock last traded on such U.S. securities exchange or Nasdaq.

11.13           Breach of Confidentiality, Assignment of Inventions, or Non-Compete Agreements.  Notwithstanding anything in the Plan to the contrary, in the event that a participant materially breaches the terms of any confidentiality, assignment of inventions, or non-compete agreement entered into with the Company or any subsidiary of the Company, whether such breach occurs before or after termination of such participant’s employment or other service with the Company or any subsidiary, the Committee in its sole discretion may immediately terminate all rights of the participant under the Plan and any agreements evidencing an Incentive then held by the participant without notice of any kind.

11.13           Governing Law.  The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Minnesota, notwithstanding the conflicts of laws principles of any jurisdictions.

11.14           Successors and Assigns.  The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the participants in the Plan.

 

  

-12-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}]]