Document:

Mantra Venture Group Ltd.: Exhibit 10.1 - Filed by newsfilecorp.com

Mantra Venture Group Ltd.
#562 800-15355
24th Ave. Surrey, BC V4A 2H9

CONSULTING AGREEMENT

THIS AGREEMENT (the "Agreement") effective as of
the 01 day of July         , 2013 (the
“Effective Date”), entered into between Mantra Venture Group Ltd.
(the "Company") and 0798465 BC Ltd. (the “Consultant”) in
connection with the provision of Consultant’s services to Company.

WHEREAS:

A. Company is in the business of acquiring and developing
technology for the electrochemical reduction of carbon dioxide. B. Company
wishes to engage the services of Consultant as an independent contractor
of Company; and 

THIS AGREEMENT WITNESSES THAT in
consideration of the premises and mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound
hereby, agree as follows:

1. ENGAGEMENT AS A CONSULTANT

1.1 Company hereby engages Consultant as an independent
contractor of Company, to undertake the duties and exercise those powers as
requested by Company or its subsidiaries from time to time, (collectively the
“Services”) and Consultant accepts such engagement on the terms and
conditions set forth in this Agreement.

2. TERM OF THIS AGREEMENT

2.1 The term of this Agreement shall begin as of the Effective
Date and shall continue until terminated pursuant to Sections 13 or 14 herein
(the “Term”).

3. CONSULTANT SERVICES

3.1 The Services to be provided by Consultant shall include but
shall not be limited to the following executive consulting services:

     (a) Advisory
Board Scientific

3.2 

In providing the Services Consultant shall:

	comply with all applicable federal, provincial, local and foreign
  statutes, laws and regulations; 
 
  
	not make any misrepresentation or omit to state any material fact which
  results in a misrepresentation regarding the business of Company; 

Page 1 of 7

	subject to section 5 herein, not employ any person in any capacity, or
  contract for the purchase or rental of any service, article or material, nor
  make any commitment, agreement or obligation whereby Company shall be required
  to pay any monies or other consideration without Company's prior written
  consent in each instance. 

4. CONSULTANT COMPENSATION

4.1 Shares and Options. In addition to the payment of a
regular consulting fee of CAN$150 per hour, as further compensation for the
provision of the Services, Company shall grant Consultant the following
securities:

	 	(a) 	
      options to purchase up to 300,000 common shares in the
      common stock of Company, previously registered on a Form S-8 registration
      statement, filed with the United States Securities and Exchange Commission
      on November 24, 2009, at a price of USD$0.20 per share, exercisable within
      2 years after the date such option is granted or upon the termination of
      this Agreement, whichever occurs earlier (the “Option”), the whole
      subject to the option agreement between Company and Consultant dated
      concurrently herewith.

5. NO REIMBURSEMENT OF EXPENSES

5.1 The parties agree that the Compensation hereunder
shall be inclusive of any and all fees or expenses incurred by Consultant on
Consultant’s own behalf pursuant to this Agreement including but not limited to
the costs of rendering the Services. Notwithstanding the foregoing, Company
shall reimburse Consultant for any bona fide expenses incurred by Consultant on
behalf of Company in connection with the provision of the Services provided that
Consultant submits to Company an itemized written account of such expenses and
corresponding receipts of purchase in a form acceptable to Company within 10
days after Consultant incurs such expenses. However, Company shall have no
obligation to reimburse Executive for any single expense in excess of CDN$500 or
CDN $3,000.00 in the aggregate without the express prior written approval of the
Board of Directors.

6. HIGH PRIORITY SERVICES

6.1 Consultant shall faithfully and in a professional manner
perform the duties that may be reasonably required of Consultant pursuant to the
terms of this Agreement. Consultant’s services hereunder shall be provided on a
non-exclusive, high priority basis to Company.

7. CONFIDENTIALITY

7.1 Consultant shall not disclose to any third party without
the prior consent of Company any financial or business information concerning
the business, affairs, plans and programs of Company its Directors, officers,
shareholders, employees, or consultants (the "Confidential Information").
Consultant shall not be bound by the foregoing limitation in the event (i) the
Confidential Information is otherwise disseminated and becomes public
information or (ii) Consultant is required to disclose the Confidential
Informational pursuant to a subpoena or other judicial order. As a material
inducement to Company entering into this Agreement, Consultant shall, at
Company’s request, execute a confidentiality and non-disclosure agreement in a
form approved by Company and by Consultant.

Page 2 of 7

8. NON-COMPETITION AND NON-SOLICITATION

8.1 As a material inducement to Company for entering into this
Agreement, Consultant covenants as follows:

	 	(a) 	
      during the Term and for a period of 24 months following
      the Term, Consultant shall not, for any reason, directly or indirectly,
      whether as an individual, partner, joint venturer, executive, employee,
      consultant, principal, affiliate, agent, shareholder, officer or director
      of any individual or entity, solicit or accept business with respect to
      the electrochemical reduction of carbon dioxide from any of Company’s
      customers situate in the Americas.

	 	 	 
	 	(b) 	
      during the Term and for a period of 24 months following
      the Term, Consultant shall not hire or take away or cause to be hired or
      taken away any consultant or employee who was in the employ of Company at
      any time during that period.

	 	 	 
	 	(c) 	
      during the Term and for a period of 24 months following
      the Term, except for academic purposes Consultant shall not, for any
      reason, directly or indirectly, whether as an individual, partner or joint
      venturer, employee, consultant, contractor, affiliate, principal, agent,
      shareholder, officer or director, of any person or entity or in any other
      manner, carry on, be engaged in, concerned with, interested in, advise,
      lend money to, guarantee the debts or obligations of, or permit
      Consultant’s name or likeness to be used or employed by any person or
      entity concerned with the electrochemical reduction of carbon dioxide,
      within the geographical area of North America. Consultant shall, however,
      be entitled, for investment purposes, to purchase and trade shares of a
      public company which are listed and posted for trading on a recognized
      stock exchange the business of which public company is in competition with
      the business of Company, so long as Consultant shall not directly or
      indirectly own more than 10% of the issued share capital of the public
      company, or participate in its management or operation or act in any
      advisory capacity to such public company.

9. GRANTS OF RIGHTS AND INSURANCE

9.1 Consultant agrees that the results and proceeds of the
Services under this Agreement, although not created in an employment
relationship, shall, for the purpose of copyright only, be deemed a work made in
the course of employment under the Canadian law or a work-made-for-hire under
the United States law and all other comparable international intellectual
property laws and conventions. All intellectual property rights and any other
rights (including, without limitation, all copyright) which Consultant may have
in and to any work, materials, or other results and proceeds of the Services
hereunder, concerning the electrochemical reduction of carbon dioxide, shall
vest irrevocably and exclusively with Company and are otherwise hereby assigned
to Company as and when created. Consultant hereby waives any moral rights of
authors or similar rights Consultant may have in or to the
results and proceeds of the Consulting Services hereunder, concerning the
electrochemical reduction of carbon dioxide.

Page 3 of 7

9.2 Company shall have the right to apply for and take out, at
Company's expense, life, health, accident, or other insurance covering
Consultant, in any amount Company deems necessary to protect Company's interest
hereunder. Consultant shall not have any right, title or interest in or to such
insurance.

10. REPRESENTATIONS AND WARRANTIES

10.1 Consultant represents, warrants and covenants to Company
as follows: 

(a) Consultant is not under any
contractual or other restriction which is inconsistent with the execution of
this Agreement, the performance of the Services hereunder or any other rights of
Company hereunder;

(b) Consultant is not under any
physical or mental disability that would hinder the performance of his duties
under this Agreement;

12. NO OBLIGATION TO PROCEED.

12.1 Nothing herein contained shall in any way obligate Company
to use the Services hereunder or to exploit the results and proceeds of the
Services hereunder; provided that, upon the condition that Consultant is not in
material default of the terms and conditions hereof, nothing contained in this
section 12.1 shall relieve Company of its obligation to deliver to Consultant
the Compensation. All of the foregoing shall be subject to the other terms and
conditions of this Agreement (including, without limitation, Company’s right of
termination, disability and default).

13. RIGHT OF TERMINATION.

13.1 Company and Consultant shall each have the right to
terminate this Agreement at any time in its sole discretion by giving not less
than 2 weeks written notice to the other of same. In the event of such
termination, Company shall deliver to Consultant only that portion of the
Compensation that has accrued as calculated on a daily pro-rated basis.
Company’s right of termination pursuant to this section 13.1 shall be in
addition to Company’s rights pursuant to below section 14. 

14. DEFAULT/DISABILITY. 

14.1 No act or omission of Company hereunder shall constitute
an event of default or breach of this Agreement unless Consultant shall first
notify Company in writing setting forth such alleged breach or default and
Company shall cure said alleged breach or default within 10 days after receipt
of such notice (or commence said cure within said ten days if the matter cannot
be cured in ten days, and shall diligently continue to complete said cure). Upon
any material breach or default by Consultant of any of the terms and conditions
hereof, or the terms and conditions of any other agreement between Company and
Consultant for the services of Consultant, Company shall immediately have the
right to suspend or to terminate this Agreement and any other agreement between
Company and Consultant for the services of Consultant. 

Page 4 of 7

14.2 Upon any disability or incapacity of Consultant which
prevents Consultant from fully performing or complying with the terms and
conditions hereof, Company shall immediately have the right to suspend this
Agreement. If such disability or incapacity shall continue for more than 3
consecutive business days or 5 business days in the aggregate, Company shall
immediately have the right, exercisable at any time after such 3 or 5 day
period, to continue such suspension or terminate this Agreement by so notifying
Consultant in writing. 

14.3 During the period of any suspension hereunder or upon any
termination hereof, Consultant shall not be entitled to any further compensation
hereunder; provided, that if such suspension or termination is a result of a
disability or incapacity (and not a default or breach), Consultant shall be
entitled to a portion of the Compensation equal to the fair market value of the
Consulting Services that have been rendered prior to the date of the event
giving rise to such suspension and/or termination, the whole subject to the
Discretion of the Board of Director’s of Company. If Company has the choice to
continue a suspension hereunder or to terminate and Company elects to continue
the suspension, then Company may terminate the Agreement by written notice to
Consultant during the period of any such continued suspension. Nothing contained
hereinabove shall in any manner limit any other remedy which Company may have
against Consultant (including without limitation, the right to offset Company's
damages caused by Consultant's default or breach hereof from and against any
compensation due to Consultant hereunder). Company's failure to suspend and/or
terminate this Agreement during periods when it may do so and/or Company's
payment of the Compensation to Consultant during any period of suspension, shall
not be deemed a waiver of Company's right to later suspend and/or terminate this
Agreement or withhold further compensation due to Consultant. A material breach
of any other agreement between the parties may, at Company's election, be deemed
a material breach of this Agreement.

15. COMPANY'S REMEDIES.

15.1 The services to be rendered by Consultant hereunder and
the rights and privileges herein granted to Company are of a special, unique,
unusual, extraordinary and intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law, it being understood and agreed that a breach by
Consultant of any of the provisions of this Agreement could cause Company
irreparable injury and damages. Consultant expressly agrees that Company shall
be entitled to seek injunctive and/or other equitable relief to prevent a breach
hereof by Consultant. Resort to such equitable relief, however, shall not be
construed as a waiver of any other rights or remedies which Company may have in
the premises for damages or otherwise.

16. CONSULTANT’S REMEDIES.

16.1 In the event of any breach by Company of this Agreement,
Consultant shall be limited to its remedies at law for damages, if any, and
shall not have the right to terminate or rescind this Agreement or to in any way
enjoin or restrain the operations or activities of Company.

17. INDEPENDENT CONTRACTORS.

17.1 Nothing herein shall be construed as creating a
partnership, joint venture, or master-servant relationship between the parties
for any purpose whatsoever. Except as may be expressly provided herein, neither party may be held
responsible for the acts either of omission or commission of the other party,
and neither party is authorized, or has the power, to obligate or bind the other
party by contract, agreement, warranty, representation or otherwise in any
manner. It is expressly understood that the relationship between the parties is
one of independent contractors. 

Page 5 of 7

18. MISCELLANEOUS PROVISIONS

	 	(a) 	
      Time. Time is of the essence of this
      Agreement.

	 	 	 
	 	(b) 	
      Presumption. This Agreement or any section
      thereof shall not be construed against any party due to the fact that said
      Agreement or any section thereof was drafted by said party.

	 	 	 
	 	(c) 	
      Titles and Captions. All article, section
      and paragraph titles or captions contained in this Agreement are for
      convenience only and shall not be deemed part of the context nor affect
      the interpretation of this Agreement.

	 	 	 
	 	(d) 	
      Further Action. The parties hereto shall
      execute and deliver all documents, provide all information and take or
      forbear from all such action as may be necessary or appropriate to achieve
      the purposes of this Agreement.

	 	 	 
	 	(e) 	
      Savings Clause. If any provision of this
      Agreement, or the application of such provision to any person or
      circumstance, shall be held invalid, the remainder of this Agreement, or
      the application of such provision to persons or circumstances other than
      those as to which it is held invalid, shall not be affected
  thereby.

	 	 	 
	 	(f) 	
      Assignment. Company may assign this
      Agreement, in whole or in part, at any time to any party, as Company shall
      determine in its sole discretion; provided that, no such assignment shall
      relieve Company of its obligations hereunder unless consented to by
      Consultant in writing. Consultant may not assign this Agreement without
      the prior written consent of Company in its sole discretion.

	 	 	 
	 	(g) 	
      Notices. All notices required or permitted
      to be given under this Agreement shall be given in writing and shall be
      delivered, either personally or by express delivery service, to the party
      to be notified. Notice to each party shall be deemed to have been duly
      given upon delivery, personally or by courier, addressed to the attention
      of the officer at the address set forth heretofore, or to such other
      officer or addresses as either party may designate, upon at least ten days
      written notice, to the other party.

	 	 	 
	 	(h) 	
      Entire agreement. This Agreement contains
      the entire understanding and agreement among the parties, respecting this
      consultancy. There are no other agreements, conditions or representations,
      oral or written, express or implied, with regard thereto. This Agreement
      may be amended only in writing signed by all parties.

	 	 	 
	 	(i) 	
      Waiver. A delay or failure by any party to
      exercise a right under this Agreement, or a partial or single exercise of
      that right, shall not constitute a waiver of that or any other
    right.

Page 6 of 7

	 	(j) 	
      Counterparts. This Agreement may be
      executed in duplicate counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one and the same
      Agreement. In the event that the document is signed by one party and faxed
      to another the parties agree that a faxed signature shall be binding upon
      the parties to this agreement as though the signature was an
    original.

	 	 	 
	 	(k) 	
      Counsel. The parties expressly acknowledge
      that each has been advised to seek separate counsel for advice in this
      matter and has been given a reasonable opportunity to do
  so.

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

	MANTRA VENTURE GROUP LTD. 	 
	
Per: 	 
	
/s/ Larry
      Kristof 	 
	Larry Kristof, CEO 	 
	  	 
	CONSULTANT: 	 
	  	 
	/s/ Colin
      Oloman 	 
	Per: Colin Oloman, Director 	 

Page 7 of 7Exhibit 10.2 Asset Purchase Agreement

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) dated as of August ____, 2013, by and among SHANNON ANDERSON and HERBERT D. “CHRIS” CHRISTOPHERSON (together “Seller”) on one hand, and HEAVENLY HOT DOGS, INC., a Nevada corporation (“Purchaser”), and ELWOOD SHEPARD, the majority shareholder of the Purchaser (the “Majority Shareholder”) on the other hand.

 

BACKGROUND

 

WHEREAS, Purchaser through Purchaser desires to purchase certain of Seller’s assets, properties and related rights, and Seller desires to sell such assets, properties and related rights on the terms and subject to the conditions set forth in this Agreement (the “Purchase”).

 

WHEREAS, the Board of Directors of the Purchaser, the Majority Shareholder and the Seller have each approved this Agreement and the transactions contemplated and described hereby, including, without limitation, the Purchase.

WHEREAS, at the Closing, the Purchaser will obtain and submit to the Seller resignations of the current officers and Directors and appoint the Directors as nominated by the Seller to the extent outlined in this Asset Purchase Agreement.

 

WHEREAS, it is intended that the sale of the Acquired Assets (as defined below) by the Seller shall qualify for United States federal income tax purposes as a tax-free reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1 

Certain Definitions.  As used in this Agreement, the following terms shall have the respective meanings ascribed to them in this Section in each case:

 

“Acquired Assets” means all of Seller’s and its affiliates’ right, title, and interest in certain of Seller’s assets, properties and related rights of every kind, nature and description existing on the Closing Date, wherever such assets are located and whether such assets are real, personal or mixed, tangible or intangible, all as set forth on Schedule 1.1 .

 

“Affiliate” of any Person means any Person, directly or indirectly controlling, controlled by or under common control with such Person (and includes without limitation all shareholders of such Person).

 

“Authority” means any federal, state, local or foreign governmental or regulatory entity (or any department, agency, authority or political subdivision thereof).“Lien” means any lien, charge, claim, pledge, security interest, conditional sale agreement or other title retention agreement, lease, mortgage, security agreement, option or other encumbrance (including without limitation the filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any jurisdiction).

 

 “Person” means an individual, a corporation, a partnership, an association, an Authority, a trust or other entity or organization.

 

“Taxes” means any federal, state, local and foreign income, payroll, withholding, excise, sales, use, personal property, use and occupancy, business and occupation, mercantile, real estate, gross receipts, license, employment, excise, severance, stamp, premium, windfall profits, social security (or similar unemployment), disability, transfer, registration, value added, alternative, or add-on minimum, estimated, or capital stock and franchise and other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

 

1

ARTICLE 2

THE TRANSACTION

 

2.1 

Sale and Purchase of Assets.  Subject to the terms and conditions of this Agreement, at the Closing referred to in Section 2.2 below, Seller shall (and shall cause each of its respective Affiliates to) sell, assign, transfer, deliver and convey to Purchaser the Acquired Assets, free and clear of all Liens of every kind, nature and description except as set forth in this Agreement for the Purchase Price specified below in Section 2.3.

 

2.2 

Closing.  Subject to the terms and conditions of this Agreement, the closing of the purchase and sale of the Acquired Assets as contemplated herein (the “Closing”) shall take place at the offices of the Purchaser at 10 a.m. local time, on September ___, 2013, or some other time and place as agreed by the parties. Notwithstanding the foregoing, the Closing shall not occur until (i) reasonable completion of “super” 8-K, including consolidated financial statements, and, (ii) subsequent to the filing with the SEC, and mailing to Purchaser’s stockholders, of a DEF14C, if a DEF14C relating to this Agreement shall be deemed required by Purchaser. The date and time on which the Closing occurs is hereinafter referred to as the “Closing Date.”

 

2.3 

Purchase Price.  Subject to the terms and conditions of this Agreement, the aggregate purchase price to be paid by Purchaser for the purchase of the Acquired Assets (the “Purchase Price”) shall be (a) 18,200,000 shares of common stock of the Purchaser, $0.001 par value per share (the “Shares”), (b) the assumption of the Montana Trust Indenture dated March 3, 2006 by and between Floyd W. Short and Kelly D. Johnson / Laurel J. Johnston in the amount of $____,000 (the “Indenture”) and (c) the assumption of the that Agreement for Mining Royalties Pursuant to Real Property Purchase and Sale effective March 4, 2009, pursuant to which Seller conveyed to Floyd W. Short a two and one-half percent (2.5%) Production Royalty (net smelter) derived from the Acquired Assets (the “Royalty”).  The Shares are being issued under Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act and, as a result, the certificate representing the Shares shall be affixed with the appropriate restrictive legend in accordance with the Securities Act.

 

The Purchaser acknowledges that the certificate representing the Shares shall bear the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.

 

2.4 

No Assumption of Liabilities.  Except as set forth in this Agreement, all liabilities and obligations of Seller shall be retained by the Seller.

 

2.5 

Deliveries and Proceedings at Closing.  Subject to the terms and conditions of this Agreement, at the Closing:

 

(a) Deliveries to Purchaser.  Seller will deliver or cause to be delivered to Purchaser:

 

(i) A deed conveying to the Purchaser all of the Seller’s right, title and interests in the Acquired Assets, as reasonably satisfactory to the Purchaser;

 

(ii) A certificate executed by the manager of Seller dated as of the Closing, certifying the effectiveness of the resolutions of the members of Seller authorizing the execution, delivery and performance of this Agreement and the transactions contemplated by this Agreement.

 

(iii) all such other documents, certificates and opinions as the Purchaser or its counsel shall reasonably request.

 

(b) Deliveries By Purchaser to Seller.  Purchaser will deliver to Seller:

 

(i) The Shares, which are required to be delivered within three (3) days of Closing;

 

(ii) assumption by Purchaser of the Indenture and the Royalty pursuant to that Real Property Purchase and Sale effective March 4, 2009;

 

2

(iii) all such other documents, certificates and opinions as Seller or its counsel shall reasonably request.

2.6

Resignation of Old and Appointment of New Board of Directors and Officers. 

(a)

Mr. Elwood Shepard at Closing shall resign from all officer and director positions of Company/Purchaser.

(b)

Mr. Shannon Anderson shall be appointed as President and Chief 

Executive Officer of Company and shall execute an employment agreement with the Company/Purchaser at the Closing.

(c)

The Company/Purchaser and its Board of Directors shall take such 

corporate actions required by its Articles of Incorporation and/or Bylaws to:

(i) 

appoint the below named persons to their respective positions, to be effective on Closing; and

Name

Position

Mr. Shannon Anderson

President & Chief Executive Officer and Director

(ii) 

obtain and submit to the Seller, together with all required corporate actions the resignation of any other current members of the Board of Directors, and any and all other corporate officers and check signers as of the Closing.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Each of The Purchaser and Majority Shareholder, jointly and severally represent and warrant to Seller as follows:

 

3.1 

Qualification.  Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and the State of Idaho, respectively, and have all requisite power and authority to own, lease and operate the assets and properties now owned and leased by Purchaser, including the Acquired Assets and their respective businesses, as and where presently being conducted.  Purchaser is qualified to do business and are in good standing as foreign corporations in all jurisdictions as applicable, wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of the Purchaser taken as a whole (the “Condition of the Purchaser”).

 

3.2 

Capitalization of the Purchaser. The authorized capital stock of the Purchaser 750,000,000 shares of Purchaser’s common stock, $.001 par value (the “Common Stock”), with 4,249,350 shares of Common Stock currently issued and outstanding and such shares are duly authorized, validly issued, fully paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any Person. The Purchaser intends to amend its articles of incorporation to effectuate a 3 for 1 forward stock split. The offer, issuance and sale of such shares of Purchaser’s Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Purchaser’s Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or “Blue Sky” law. The Purchaser has no outstanding options, rights or commitments to issue Purchaser’s Common Stock or other Equity Securities (as defined below) of the Purchaser, and there are no outstanding securities convertible or exercisable into or exchangeable for Purchaser’s Common Stock or other Equity Securities of the Purchaser. For purposes of this Agreement, “Equity Security” shall mean any stock or similar security of an issuer or any security (whether stock or Indebtedness for Borrowed Money (as defined below)) convertible, with or without consideration, into any stock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

 

3

3.3 

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

 

3.4 

Purchaser Stockholders.   The Purchaser has delivered a true and complete list of the names of the record owners of all of the outstanding shares of Purchaser’s Common Stock and other Equity Securities of the Purchaser as of July 31, 2013, together with the number of securities held or to which such Person has rights to acquire. There is no voting trust, agreement or arrangement among any of the beneficial holders of Purchaser’s Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Purchaser’s Common Stock.

 

3.5 

Corporate Acts and Proceedings.  The execution, delivery and performance of this Agreement, has been duly authorized by the Board of Directors of the Purchaser, and all of the corporate acts and other proceedings required for the due and valid authorization, execution, delivery and performance of the Agreement and the consummation of the Purchase have been validly and appropriately taken.

 

3.6 

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

 

3.7 

Financial Statements.  Seller has previously been provided with the Purchaser’s (i) audited balance sheet (the “Balance Sheet”) as of December 31, 2012 (the “Purchaser Balance Sheet Date”), (ii) audited statements of operations and accumulated deficits and cash flows for the period of inception to December 31, 2012, (iii) unaudited balance sheet as of June 30, 2013, and (iv) unaudited statements of operations and accumulated deficits and cash flows for the three months ended June 30, 2013 and June 30, 2012. Such financial statements are collectively referred to as the “Financial Statements”. The Financial Statements (a) are in accordance with the books and records of the Purchaser, (b) present fairly in all material respects the financial condition of the Purchaser at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified and (c) have been prepared in accordance with GAAP applied on a basis consistent with prior accounting periods.

  

3.8 

Absence of Undisclosed Liabilities. The Purchaser has no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing.   Notwithstanding the foregoing, within 7 months of Closing, Purchaser shall be required to pay to Alliance Leasing, Inc., a Utah corporation (“Alliance”) $250,000 which shall settle $124,981 in liabilities set out on the Purchaser’s balance sheet for the period ended June 30, 2013, plus all other claims, known and unknown, held by Alliance.

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3.9 

Changes.  Since the Purchaser Balance Sheet Date, the Purchaser has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Purchase and related transactions and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Purchaser Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the Condition of the Purchaser, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the Condition of the Purchaser other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) has been materially adverse, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Balance Sheet or its statement of income for the period ended on the Purchaser Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $50,000 in the aggregate or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

  

3.10 

Authorization and Enforceability.  Purchaser has full corporate power and corporate authority to make, execute, deliver and perform this Agreement and all other agreements and instruments to be executed by Purchaser in connection herewith (such other agreements and instruments being hereinafter referred to collectively as the “Transaction Documents”), and the execution, delivery and performance of this Agreement and the Transaction Documents by Purchaser has been duly authorized by all necessary corporate action on the part of Purchaser including shareholder approval. This Agreement has been, and as of the Closing Date the Transaction Documents will be, duly executed and delivered by Purchaser. This Agreement is, and as of the Closing Date the Transaction Documents will be, the legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with its respective terms. Except with respect to the consents to be delivered pursuant to Section 2.5(a) hereof, no approval, authorization or consent of any other third party (including any governmental authority) is required in connection with the execution and delivery by Purchaser of this Agreement and the consummation of the Transaction Documents contemplated hereby.

 

3.11 

No Pending Litigation or Proceedings.  There are no actions, suits, investigations or proceedings (public or private) pending against or threatened against or affecting any of the assets of Purchaser or that question the validity of this Agreement or any action taken or to be taken by Purchaser in connection with the consummation of the Transaction Documents before any court or arbitrator or Authority. There are currently no outstanding judgments, decrees, settlement agreements or orders of any court or Authority against Purchaser, or any Affiliate of Purchaser.  All properties leased or otherwise utilized by Purchaser in the course of its business operations (the “Properties”) were maintained in compliant manner and Purchaser does not expect any litigation as a result of the termination of any contracts in connection with such Properties or the Purchaser Projects.

 

3.12 

Consents.  No consent, approval or authorization of, or registration or filing with, any Person is required to be obtained or received by Purchaser in connection with the execution and delivery of this Agreement, the Transaction Documents, or the consummation of the transactions contemplated hereby or thereby by Purchaser.

 

3.13 

No Conflicts.  Neither the execution and delivery by Purchaser of this Agreement nor the consummation by it of the transactions contemplated hereby will: (i) conflict with or result in a breach of Purchaser’s articles of incorporation or by-laws; (ii) violate any statute, law, rule or regulation applicable to Purchaser or any order, writ, injunction or decree of any court or governmental authority applicable to Purchaser or (iii) violate or conflict with or constitute a default under (or give rise to any right of termination, cancellation or acceleration under) or result in the creation of any Lien on any of the properties or assets of the Purchaser pursuant to any agreement, indenture, mortgage, lease, contract or other instrument to which Purchaser is party or by which it or its respective assets, may be bound or affected (whether written or oral).  

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3.14 

Taxes.  Purchaser has (a) timely filed all returns and reports for Taxes, including information returns, that are required to have been filed by them with the appropriate authority, (b) paid all Taxes that are shown to have come due pursuant to such returns or reports including any penalties, deficiencies, interest or other charges or claimed to be due, and (c) paid all other Taxes for which a notice of assessment or demand for payment has been received.  There are no extensions of time within which to file any tax reports or returns and there are no examinations or audits pending or unresolved examinations or audit issues with respect to Purchaser’s federal, state or local tax returns.  There are no pending claims or proceedings relating to, or asserted for, taxes, penalties, interest, deficiencies or assessments against Purchaser.  Purchaser has withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to employees, consultants, independent contractors or other persons.

 

3.15 

Brokerage.  Purchaser has not made any agreement or taken any other action which might cause anyone to become entitled to a broker’s fee or commission as a result of the transactions contemplated hereunder.

 

3.16 

Compliance with Law. Purchaser has been and are in compliance with all applicable laws, regulations and other requirements of all federal and state governmental authorities, and all municipalities and other political subdivisions and agencies thereof that have jurisdiction over Purchaser.

 

3.17 

Licenses, Permits and Agreements.  To the best of Purchaser’s knowledge, there are no presently existing leases, agreements, permits, consents, approvals, licenses, contracts or commitments, whether written or oral (collectively “Documents”), which are required to lawfully conduct the business of the Purchaser.

 

3.18 

Reports.  To the best of Purchaser’s knowledge, all material reports, schedules and/or returns of any administrative agency of the Federal, or any State or local governments required to have been filed in connection with the business of the Purchaser and/or the Purchaser’s assets have been properly filed and all charges, fees and other payments shown by such reports, schedules and/or returns to be due and payable by Purchaser required to have been paid, have been paid. Neither Purchaser nor the Majority Shareholder are a party to any administrative proceeding before any governmental agency which governs the business of the Purchaser or pertaining to the Purchasers assets, nor is any administrative order pending as to any such agency.

 

3.19 

Liabilities.  As of the Closing Date, Purchaser will have paid all amounts, or shall continue to be responsible to pay all amounts due or owing by Purchaser to third parties, including all employees, contractors, suppliers, professionals and the like resulting in no liabilities for the Purchaser as of the Closing Date.

 

3.20 

No Defaults.  The Purchaser is not in material default and Purchaser has not received any notice of any default, under any loan, lease, agreement or contract, nor has any event occurred which, with the passage of time or the giving of notice, would constitute a material default by Purchaser or by any other party thereto under any such loan, lease, agreement or contract.

 

3.21 

Assets and Contracts.   The Purchaser is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Purchaser. The Purchaser is not a party to any written or oral (i) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (ii) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (iii) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Purchaser to any Lien or evidencing any Indebtedness, (iv) guaranty of any Indebtedness, (v) lease or agreement under which the Purchaser is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $5,000 per year, (vi) agreement granting any preemptive right, right of first refusal or similar right to any Person, (vii) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of the Purchaser or any present or former officer, director or stockholder of the Purchaser, (viii) agreement obligating the Purchaser to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (ix) covenant not to compete or other material restriction on its ability to conduct a business or engage in any other activity, (x) agreement to register securities under the Securities Act or (xi) collective bargaining agreement.  For purposes of this Agreement, an “Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

 

3.22 

Employment Relations.  The Purchaser has no outstanding obligations, debts or liabilities (including, without limitation, accrued vacation or other benefits) owing to any employees of the Purchaser or any pension trusts related to such employees.  There are no disputes ongoing with any of Purchaser’s employees.  There are no promises to increase the salaries or benefits of any of the employees.

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3.23 

Personnel.  The Purchaser has complied in all material respects with all laws relating to the employment of labor, and the Purchaser has encountered no material labor union difficulties. Other than pursuant to ordinary arrangements of compensation to personnel, the Purchaser is not under any obligation or liability to any officer, director, consultant or staff member of the Purchaser.

 

3.24 

No Adverse Prospects.  The Purchaser (i) has not engaged in, nor has any knowledge of any other person who has engaged in, any impropriety, undue influence or unlawful activity on behalf of the Purchaser, which would adversely affect the business results, prospects or reputation of the Purchaser, (ii) is not aware of any circumstance or condition which would adversely affect this transaction, the business of the Purchaser or Purchaser’s ability to conduct the business prior to and following the Closing Date, or (iii) has no knowledge of any claims or liabilities of any nature, other than usual and customary accounts payable, against or of the Purchaser.

 

3.25 

No Judgments.  There are no outstanding, unsatisfied or threatened judgments against the Purchaser or the Majority Shareholder.

  

3.26 

Disclosure.  (a)  No representation or warranty by Purchaser in this Agreement or any Schedule or Exhibit hereto, or any statement, list or certificate furnished or to be furnished by Purchaser pursuant to this Agreement contains or shall contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make the statements contained herein or therein not misleading or necessary in order to provide Purchaser with complete information as to the condition of the Acquired Assets.

 

3.27 

Environmental Matters.

 

(a) To the knowledge of the Purchaser has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials (as defined below) on any real property on which it now has or previously had any leasehold or ownership interest, except in compliance with all applicable Environmental Laws (as defined below).

 

(b) To the knowledge of the Purchaser, the historical and present operations of the business of the Purchaser is in compliance with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have a material adverse effect on the Condition of the Purchaser.

 

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

 

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

 

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

 

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(i) “Environmental Laws” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601, et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136, et seq. and comparable state statutes dealing with the registration, labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801, et seq.; as any of the above statutes have been amended as of the date hereof, all rules, regulations and policies promulgated pursuant to any of the above statutes, and any other foreign, federal, state or local law, statute, ordinance, rule, regulation or policy governing environmental matters, as the same have been amended as of the date hereof.

 

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

 

3.28 

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

 

3.29 

Obligations to or by Stockholders.   The Purchaser has no liability or obligation or commitment to any Stockholder or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any Stockholder, nor does any Stockholder or any such Affiliate or associate have any liability, obligation or commitment to the Purchaser.

 

3.30 

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

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser as follows:

 

4.1 

Organization, Good Standing and Qualification.  Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Utah, and has all requisite power and authority to own, lease and operate the Acquired Assets and its respective business as and where presently being conducted.

 

4.2 

Authorization and Enforceability.  Seller has full corporate power and corporate authority to make, execute, deliver and perform this Agreement and the Transaction Documents to which Seller is a party, and the execution, delivery and performance of this Agreement and the Transaction Documents by Seller have been duly authorized by all necessary corporate action on the part of Seller including, if necessary, shareholder approval. This Agreement has been, and as of the Closing Date the Transaction Documents will be, duly executed and delivered by Seller. This Agreement is, and as of the Closing Date the Transaction Documents will be, the legal, valid and binding obligations of Seller enforceable against Seller in accordance with its respective terms.

 

4.3 

Consents.  Other than the consents by Floyd W. Short and Kelly Johnson and Lauren Johnson that may be required for the novation of the Indenture and Royalty hereunder, no consent, approval or authorization of, or registration or filing with, any Person is required of Seller in connection with the execution and delivery of this Agreement, the Transaction Documents, or the consummation of the transactions contemplated hereby or thereby by Seller, the failure to obtain or make which, individually or in the aggregate, could reasonably be expected to (a) have a material adverse effect; or (b) prevent Purchaser or Seller from consummating the transactions contemplated by this Agreement or the Transaction Documents.

 

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4.4 

Compliance with Law. Seller has been and is in compliance with all applicable laws, regulations and other requirements of all federal and state governmental authorities, and all municipalities and other political subdivisions and agencies thereof that have jurisdiction over Seller.

 

4.5 

Licenses, Permits and Agreements.  To the best of Seller’s knowledge and except for various permits needed to operate the mine, there are no presently existing leases, agreements, permits, consents, approvals, licenses, contracts or commitments, whether written or oral (collectively “Documents”), which are required to lawfully conduct the business of the Seller.

 

4.6 

Reports.  To the best of Seller’s knowledge, all material reports, schedules and/or returns of any administrative agency of the Federal, or any State or local governments required to have been filed in connection with the business of the Seller and/or the Acquired Assets have been properly filed and all charges, fees and other payments shown by such reports, schedules and/or returns to be due and payable by Seller required to have been paid, have been paid. Seller is not a party to any administrative proceeding before any governmental agency which governs the business of the Seller or pertaining to the Acquired Assets, nor is any administrative order pending as to any such agency.

 

4.7 

Brokerage.  The Seller has not made any agreement or taken any other action which might cause anyone to become entitled to a broker’s fee or commission as a result of the transactions contemplated hereunder.

 

4.8 

Acquired Assets.  At the Closing, the Acquired Assets constitute all of the assets, and properties, (i) used to operate the business of Seller in accordance with all applicable laws and industry standards and (ii) necessary to operate the business of Seller in accordance with all applicable laws and industry standards.  The Acquired Assets are in good working condition.

 

4.9 

Title to Acquired Assets.  Subject to the Liens described on Schedule 1.1, Seller is the sole and exclusive legal owner of all right, title and interest in and has good title to all of the Acquired Assets, free and clear of all Liens.

 

4.10 

Marketable Title.  Seller acquired the Acquired Assets by way of a quitclaim deed, and Seller will convey the Acquired Assets to the Purchaser pursuant to a quitclaim deed.  To Seller’s knowledge, there are no outstanding or unsatisfied judgments against Seller or Majority Shareholder other then as set forth in this Agreement.

 

4.11

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

4.13 

Absence of Undisclosed Liabilities. To the knowledge of the Seller, the Seller and its affiliates have no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except by the specific terms of any written agreement, document or arrangement identified herein.

 

4.15 

No Pending Litigation or Proceedings.  To the knowledge of the Seller, there are no actions, suits, investigations or proceedings (public or private) pending against or threatened against or affecting any of the assets of Seller or that question the validity of this Agreement or any action taken or to be taken by Seller in connection with the consummation of the Transaction Documents before any court or arbitrator or Authority. There are currently no outstanding judgments, decrees, settlement agreements or orders of any court or Authority against Seller, or any Affiliate of Seller.  All properties leased or otherwise utilized by Seller in the course of its business operations (the “Seller Properties”) were maintained in compliant manner and Seller does not expect any litigation as a result of the termination of any contracts in connection with such Seller Properties.

 

4.16 

No Conflicts.  To the knowledge of the Seller, neither the execution and delivery by Seller or its affiliates of this Agreement nor the consummation by it of the transactions contemplated hereby will: (i) conflict with or result in a breach of Seller’s and its affiliates’ certificate of formation or operating agreement; (ii) violate any statute, law, rule or regulation applicable to Seller and its affiliates or any order, writ, injunction or decree of any court or governmental authority applicable to Seller and its affiliates  or (iii) violate or conflict with or constitute a default under (or give rise to any right of termination, cancellation or acceleration under) or result in the creation of any Lien on any of the properties or assets of the Seller and its affiliates pursuant to any agreement, indenture, mortgage, lease, contract or other instrument to which Seller and its affiliates are parties or by which they or their respective assets, may be bound or affected (whether written or oral).

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4.17 

No Defaults.  To the knowledge of the Seller, the Seller is not in material default and Seller has not received any notice of any default, under any loan, lease, agreement or contract, nor has any event occurred which, with the passage of time or the giving of notice, would constitute a material default by Seller or by any other party thereto under any such loan, lease, agreement or contract.  

 

4.19 

Assets and Contracts.   To the knowledge of the Seller, the Seller is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Seller. The Seller is not a party to any written or oral (i) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (ii) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (iii) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Seller to any Lien or evidencing any Indebtedness, (iv) guaranty of any Indebtedness, (v) lease or agreement under which the Seller is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $5,000 per year, (vi) agreement granting any preemptive right, right of first refusal or similar right to any Person, (vii) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of the Seller or any present or former officer, director or stockholder of the Seller, (viii) agreement obligating the Seller to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (ix) covenant not to compete or other material restriction on its ability to conduct a business or engage in any other activity, (x) agreement to register securities under the Securities Act or (xi) collective bargaining agreement.

 

4.20 

No Adverse Prospects.  The Seller (i) has not engaged in, nor has any knowledge of any other person who has engaged in, any impropriety, undue influence or unlawful activity on behalf of the Seller, which would adversely affect the business results, prospects or reputation of the Seller, (ii) is not aware of any circumstance or condition which would adversely affect this transaction, the business of the Seller or Seller’s ability to conduct the business prior to and following the Closing Date, or (iii) has no knowledge of any claims or liabilities of any nature, other than usual and customary accounts payable, against or of the Seller.

 

4.21 

No Judgments.  To the knowledge of the Seller, there are no outstanding, unsatisfied or threatened judgments against the Seller or its affiliates.

 

4.22 

Disclosure.  (a)  No representation or warranty by Seller in this Agreement or any Schedule or Exhibit hereto, or any statement, list or certificate furnished or to be furnished by Seller pursuant to this Agreement contains or shall contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make the statements contained herein or therein not misleading or necessary in order to provide Seller with complete information as to the condition of the Acquired Assets.

 

4.23 

Environmental Matters.

 

(a) To the knowledge of the Seller, the Seller has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials  on any real property on which it now has or previously had any leasehold or ownership interest, except in compliance with all applicable Environmental Laws.

 

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

 

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

 

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

 

ARTICLE 5

COVENANTS

 

5.1 

Further Action and Covenants.  After the date hereof, each party hereto shall, at its own expense and upon the request of another party hereto, take the actions to do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required to perfect the transactions contemplated herein and to fulfill and implement the terms of this Agreement or realize the benefits intended to be afforded hereby.  Each party shall cooperate with the other’s reasonable requests as they relate to the Acquired Assets being sold hereunder after the Closing Date.

 

5.2 

Certain Taxes and Expenses.  Seller shall be responsible solely for the payment or discharge of all federal, state and local sales, use, transfer, real property transfer, documentary stamp, recording and other similar taxes with respect to the sale of the Acquired Assets.  Whether or not the transactions contemplated by this Agreement are consummated, Seller and Purchaser shall each bear their respective investment banking, accounting, legal and other expenses incurred in connection with the transactions contemplated by this Agreement.

 

5.3 

Access to Information.  Seller and Purchaser shall cooperate fully with each other after the Closing so that (subject to any limitations that are reasonably required to preserve any applicable attorney-client privilege) each party has access to the business records, contracts and other information existing at the Closing Date and relating in any manner to the Acquired Assets (whether in the possession of Seller or Purchaser). No files, books or records existing at the Closing Date and relating in any manner to the Acquired Assets shall be destroyed by any party for a period of six years after the Closing Date (which period shall be extended upon the reasonable request of either party) without giving the other party at least 30 days’ prior written notice, during which time such other party shall have the right (subject to the provisions of the next succeeding paragraph) to examine and to remove any such files, books and records prior to their destruction.  The access to files, books and records contemplated by this Section shall be during normal business hours and upon not less than two days’ prior written request, shall be subject to such reasonable limitations as the party having custody or control thereof may impose to preserve the confidentiality of information contained therein, and shall not extend to material subject to a claim of privilege unless expressly waived by the party entitled to claim the same.

 

5.4 

Indemnification.  Seller and Purchaser agree as follows:

 

(a) General Indemnification Obligations.

 

(i) The Purchaser, the Majority Shareholder and any of their successors and assigns (collectively, “Indemnitors”) shall indemnify and hold harmless Seller and its directors, officers and Affiliates from and against any and all Damages arising out of or resulting from any misrepresentation or breach of any representation, warranty, covenant or agreement made by Purchaser in this Agreement or in any agreement or certificate furnished or to be furnished to Seller by or on behalf of Purchaser pursuant hereto or in connection with the transactions contemplated hereby.  In addition to any rights of offset or setoff that Seller may have at common law or otherwise, any indemnification obligations hereunder of the Indemnitors to the Seller or any other indemnitee may, in the sole discretion of Seller, be offset or setoff by Seller against any shares of common stock held by the Majority Stockholder whereby the shares of common stock held by the Majority Stockholder may be cancelled if such indemnification event occurs.

11

 

(ii) Seller shall indemnify and hold harmless Purchaser and its directors, officers, shareholders and Affiliates from and against any and all Damages arising out of or resulting from any misrepresentation or breach of any representation, warranty, covenant or agreement made by Seller in this Agreement or in any agreement or certificate furnished or to be furnished to Purchaser by or on behalf of Seller pursuant hereto or the transactions contemplated hereby.

 

(iii) For purposes of this Agreement, “Damages” shall mean any and all claims, actions, suits, proceedings, liabilities, obligations, losses, damages (including any fines, penalties or punitive damages, costs of investigation, clean-up, remediation, bodily injury, death and property damage, costs of shutdown, diminution in operations, product withdrawals or discontinuance of distribution of products), settlements, deficiencies, interests, costs and expenses (including reasonable attorneys’ fees, court costs and other expenses incurred in investigating, preparing or defending any of the foregoing or in enforcing rights hereunder) actually suffered or actually incurred (collectively, the “Losses”) as and when incurred or suffered.

 

(b) General Indemnification Procedures.

 

(i) The Seller or Purchaser seeking indemnification pursuant to this Section  (an “Indemnified Party”) shall give prompt notice to the other party (either Purchaser its successors and assigns or Seller, respectively) from whom such indemnification is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any action, suit or proceeding, in respect of which indemnity may be sought hereunder and will give the Indemnifying Party such information with respect thereto as the Indemnifying Party may reasonably request, but failure to give such notice shall relieve the Indemnifying Party of any liability hereunder only to the extent that the Indemnifying Party has suffered actual prejudice thereby. The Indemnifying Party shall have the right, exercisable by written notice to the Indemnified Party within 30 days of receipt of notice from the Indemnified Party of the commencement of or assertion of any claim or action, suit or proceeding by a third party in respect of which indemnity may be sought hereunder (a “Third Party Claim”), to assume the defense of such Third Party Claim.

 

(ii) The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to participate in (but not control), at its own expense, the defense of any Third Party Claim which the other is defending as provided in this Agreement.

 

(iii) The Indemnifying Party, if it shall have assumed the defense of any Third Party Claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, enter into any compromise or settlement which commits the Indemnified Party to take, or to forbear to take, any action. The Indemnified Party shall have the sole and exclusive right to settle any Third Party Claim, on such terms and conditions as it deems reasonably appropriate, to the extent such Third Party Claim involves equitable or other non-monetary relief, and shall have the right to settle any Third Party Claim involving monetary damages with the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld.

 

(iv) Whether or not the Indemnifying Party chooses to defend or prosecute any claim involving a third party, all the parties hereto shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith.

 

5.5 

Further Assurances.  Seller and Purchaser agree as follows:

 

(a) From and after the Closing Date, Seller shall from time to time, at the request of Purchaser and without further cost or expense to Purchaser, execute and deliver or cause to be executed and delivered such other instruments of conveyance and transfer as Purchaser may reasonably request in order to more effectively convey, transfer and assign the Acquired Assets to Purchaser.

 

(b) From and after the Closing Date Purchaser shall from time to time, at the request of Seller and without further cost or expense to Seller, execute and deliver or cause to be executed and delivered such other instruments of conveyance and transfer as Seller may reasonably request in order to more effectively convey, transfer and assign the Acquired Assets to Purchaser.

12

 

ARTICLE 6

MISCELLANEOUS

 

6.1 

Dispute Resolution.  Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled exclusively by arbitration.  Such arbitration shall be conducted before a single arbitrator with at least five (5) years experience in the gold mining industry and in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall take place in Salt Lake City, Utah.  Judgment may be entered on the arbitrator's award in any court having jurisdiction, and the parties irrevocably consent to the jurisdiction of such courts for that purpose.  The parties hereto (collectively, the "Parties" each a "Party") waive personal service in connection with any such arbitration. All decisions of the arbitrator shall be final and binding on the Parties.  The Parties shall equally divide all costs of the American Arbitration Association and the arbitrator.  Each Party shall bear its own legal fees in any dispute.  The arbitrator may grant injunctive or other relief.

 

6.2 

Construction.  Purchaser and Seller have participated jointly in the negotiation and drafting of this Agreement and the Transaction Documents. In the event any ambiguity or question of intent or interpretation arises, this Agreement and the Transaction Documents shall be construed as if drafted jointly by Purchaser and Seller, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. Nothing in the Schedules hereto shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the exception for a specific representation and warranty is described on the Schedule with reasonable particularity.

 

6.3 

Nature and Survival of Representations.  All representations, warranties, covenants and agreements of Purchaser and Seller contained in this Agreement or any exhibit or schedule hereto or any certificate or other document delivered pursuant to this Agreement shall survive the Closing without limitation.

 

6.4 Notice.  Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any party hereunder shall be in writing and shall be deemed given only if delivered to the party personally or sent to the party by telecopy, telegram or by registered or certified mail (return receipt requested) with postage and registration or certification fees thereon prepaid, addressed to the party at its address set forth below:

 

If to Seller, to:

Shannon Anderson

355 S Afghan 

Couer  D Alene ID 83814

Email: b4mcmining@yahoo.com

If to Purchaser:

Heavenly Hot Dogs, Inc.

2469 E. Fort Union Blvd., Suite 214

Salt Lake City, UT 84121

Attention:

Email: 

6.5 

Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.6 

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to its conflict of laws provisions.

 

6.7 

Entire Agreement.  This Agreement, together with the schedules and exhibits hereto, constitutes the entire understanding of the parties, supersedes any prior agreements or understandings, written or oral, between the parties with respect to the subject matter hereof, and is not intended to confer upon any Person other than the parties hereto any benefit, right or remedy.

 

13

6.8 

Amendment and Waiver.  The parties may, by mutual agreement, amend this Agreement in any respect, and any party, as to such party, may (a) extend the time for the performance of any of the obligations of the other party; (b) waive any inaccuracies in representations and warranties by the other party; (c) waive compliance by the other party with any of the agreements contained herein and performance of any obligations by the other party; and (d) waive the fulfillment of any condition that is precedent to the performance by such party of any of its obligations under this Agreement. To be effective, any such amendment or waiver must be in writing and be signed by the party against whom enforcement of the same is sought.

 

6.9 

Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.

 

6.10 

Headings.  The headings preceding the text of the sections and subsections hereof are inserted solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first written above.

 

				
	 

	SHANNON ANDERSON

	 

	 

	 

	 

	 

	 

	By: 

	/s/ Shannon Anderson

	 

	 

	 

	 
	 

	 

	HEAVENLY HOT DOGS, INC.

	 

	 

	 

	 

	 

	 

	By:

	/s/ Elwood Shepard

	 

	 

	Name:

	Elwood Shepard

	 

	 

	Title:

	CEO

	 

	 

	

HERBERT CHRISTOPHERSON

	 

	 

	 

	 

	 

	 

	By:

	/s/ Herbert Christopherson

	 

	 

	

MAJORITY SHAREHOLDER OF HEAVENLY HOT DOGS, INC.

	 

	 

	 

	 

	 

	 

	By:

	/s/ Elwood Shepard

	 

	 

	 

	Elwood Shepard

	 

14

SCHEDULES

 

Schedule 1.1   Acquired Assets

REAL PROPERTY

That certain real property in the County of Mineral, State of Montana, described as follows:

PARCEL I:

A tract of land located in the South one-half and the Northeast one-quarter of Section 31, Township 15 North, Range 25 West, and designated as Tract 2 of Certificate of Survey No. 559B, records of Mineral County.   Excepting therefrom any veins or loads of quartz or other rock in place bearing gold, silver, cinnabar, lead, tin, copper or other valuable deposits within the land above described, which may have been discovered or known to exist on or prior to August 20, 1979.

PARCELL II:

Together with an easement for ingress and egress over, along and across Quartz Creek Road No. 345, St. Pats Road No. 7783 and Upper Quartz Creek Road No. 7781, as depicted on Certificate Of Survey No. 559B.

Parcel No. Reference 131100

 CHATTEL

235C excavator                                                   

$30,000.00 

Price source: internet and auction.

6ft x 40ft self powered 200tph trommel        

$150,000.00 to $200,000.00.

Price source: classifieds and manufacturer 

Oscillating panning deck:                               

$20,000.00

Price source: manufacturer.

4ft x 20ft reverse helix trommel:                 

$35,000.00

Price source: classifieds

Fabtech pro-screen 200tph                            

$45,000.00

Price source: manufacturer

25 ton articulated dump truck                       

$25,000.00

Price source: auction

175s skidsteer                                                   

$18,000.00

Price source: manufacturer

Terex 8240 dozer                                         

$12,000.00

Price source: auction

20k generator                                                

$8,000.00

Price source: manufacturer 

Diesel water pump   1500gpm                     

$9,000.00

Price source: classifieds

Misc: tools, hoses, fuel storage tanks     

$40,000.00

Price source: receipts    

15

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