Document:

Offer to the shareholders and warrant holders in Niscayah Group AB (publ)

 Exhibit 10.1 
 

 

 THIS OFFER DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 

This offer document, including the related acceptance form, contains important information and should be read carefully before any decision is made
with respect to the offer by Stanley Black & Decker, Inc. (“Stanley Black & Decker”), through its indirect wholly-owned subsidiary SBD Holding AB, company registration number 556853-6303, (“SBD Holding”), to the
shareholders and warrant holders in Niscayah Group AB (publ), company registration number 556436-6267 (“Niscayah” or the “Company”) to tender all shares and warrants in Niscayah to SBD Holding (the “Offer”). References
to Stanley Black & Decker shall include references to SBD Holding where appropriate. 
 The information in this
offer document purports to be accurate only as of the date of this offer document. No representation is made that it was or will remain accurate on any other date. The information in this offer document is furnished solely for the purpose of the
Offer and may not be relied upon for any other purposes. 
 The information regarding Niscayah included on pages 15–28
in this offer document has been reviewed by the board of directors of Niscayah. Stanley Black & Decker does not represent that the information included herein with respect to Niscayah is accurate or complete, and does not take any
responsibility for such information being accurate or complete. 
 Barclays Capital, Inc. (“Barclays Capital”),
Handelsbanken Capital Markets, a business area of Svenska Handelsbanken AB (publ) (“Handelsbanken Capital Markets”) and J.P. Morgan Securities LLC (“J.P. Morgan”) are acting as financial advisors only to Stanley Black &
Decker in relation to the Offer and will not be responsible to anyone other than Stanley Black & Decker for providing the protections afforded to clients of Barclays Capital, Handelsbanken Capital Markets and J.P. Morgan, nor for providing
advice in relation to the Offer, or any other matter or arrangement referred to in this document. No legal relationships that exist between Barclays Capital, Handelsbanken Capital Markets or J.P. Morgan and Stanley Black & Decker will, or
will be deemed to, exist between any of those entities and any other party. No information in this offer document has been audited or reviewed by the auditors of Niscayah or Stanley Black & Decker except for the information provided in the
auditors’ report regarding a summary of financial information on page 51, or where otherwise explicitly stated. 
 Applicable law, disputes and
translation 
 This offer document has been prepared in accordance with the laws of Sweden, as well as relevant rules and regulations
applicable to public offers in Sweden. Swedish law, NASDAQ OMX Stockholm’s (“NASDAQ OMX”) rules regarding public offers on the stock market (the “Takeover Rules”), the Swedish Securities Council’s (Sw.
Aktiemarknadsnämnden) rulings regarding interpretation and application of the Takeover Rules, and, where applicable, the Swedish Securities Council’s former rulings regarding interpretation and application of the Swedish Industry
and Commerce Stock Exchange Committee’s (Sw. Näringslivets Börskommitté) rules on public offers, are applicable to the Offer. In accordance with the Swedish Act on Public Takeovers on the Stock Market (Sw. lag
(2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), SBD Holding has on June 23, 2011 undertaken towards NASDAQ OMX to comply with the Takeover Rules, the Swedish Securities Council’s rulings regarding
interpretation and application of the Takeover Rules, and, where applicable, the Swedish Securities Council’s former rulings regarding interpretation and application of the Swedish Industry and Commerce Stock Exchange Committee’s rules on
public offers, and submit to the sanctions that NASDAQ OMX may decide upon in event of infringement of the Takeover Rules. SBD Holding informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”) about
the Offer and the above mentioned undertaking on June 27, 2011. Any dispute relating to, or arising in connection with, the Offer shall be settled exclusively by Swedish courts, with the district court of Stockholm (Sw. Stockholms
tingsrätt) as the court of first instance. 
 This offer document is available in Swedish and English. The Swedish
language version has been approved by and registered with the SFSA in accordance with the provisions of Chapter 2, Section 3 of the Takeover Act and Chapter 2 a, Section 9 of the Swedish Financial Instruments Trading Act (Sw. lag
(1991:980) om handel med finansiella instrument). SFSA’s approval and registration does not imply that the SFSA guarantees that the factual information provided in this offer document is correct or complete. In the event of any
discrepancy between the English and the Swedish language versions, the English language version shall prevail. 
 Information for holders of shares
and/or warrants in Niscayah outside Sweden 
 The Offer, pursuant to the terms and conditions presented in this offer document, is not
being made to (and acceptances will not be accepted from) persons whose participation in the Offer requires that an additional offer document is prepared or registration effected or that any other measures are taken in addition to those required
under Swedish law, except where there is an applicable exemption. This offer document, the acceptance form or any other documentation related to the Offer will not be distributed in and must not be mailed to or otherwise distributed or sent into any
country in which such distribution would require any such additional measures or would be in conflict with any law or regulation in such country. SBD Holding will not permit or sanction any such distribution. Any acceptance of the Offer resulting
directly or indirectly from a violation of these restrictions may be disregarded. 
 The Offer is not being made, directly
or indirectly, by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, e-mail, telex, telephone and the Internet) in or into Australia, Japan, Canada, South Africa, Hong Kong or New Zealand and
the Offer cannot be accepted in or from Australia, Japan, Canada, South Africa, Hong Kong or New Zealand. As a result, this offer document, the acceptance form or other documentation relating to the Offer will not, and may not, be sent by mail or in
any other way be distributed, forwarded or transmitted to, from or within Australia, Japan, Canada, South Africa, Hong Kong or New Zealand. SBD Holding will not pay any consideration pursuant to the Offer to, or accept acceptance forms from,
Australia, Japan, Canada, South Africa, Hong Kong or New Zealand. 
 Notwithstanding the foregoing, SBD Holding reserves
the right to permit the Offer to be accepted by persons not resident in Sweden if, in its sole discretion, SBD Holding is satisfied that such transaction can be undertaken in compliance with applicable laws and regulations. 

Forward-looking statements 
 Stanley
Black & Decker makes forward-looking statements in this offer document which represent its expectations or beliefs about future events and financial performance. Forward-looking statements are identifiable by words such as
“believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other similar expressions. In addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking statements. Forward looking statements made in this offer document, include, but are not limited to, statements concerning: the consummation of the acquisition; Niscayah’s
business complementing and expanding Stanley Black & Decker’s existing operations and international presence; cost savings; and earnings per share. 

You are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are not
guarantees of future events and involve risks, uncertainties and other known and unknown factors that may cause actual results and performance to be materially different from any future results or performance expressed or implied by such
forward-looking statements, including, but not limited to, the failure to consummate, or a delay in the consummation of, the transaction for various reasons. 
 Forward-looking statements made in this offer document are also subject to risks and uncertainties, described in: Stanley Black & Decker’s 2010 Annual Report on Form 10-K, its Quarterly Report on Form
10-Q for the quarter ended April 2, 2011; and other filings the company makes with the Securities and Exchange Commission. In addition, actual results could differ materially from those suggested by the forward-looking statements, and therefore
you should not place undue reliance on the forward-looking statements. Stanley Black & Decker makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of
any forward-looking statement. 

					
	 Table of Contents
  
	  			
	The Offer in brief	  	 	3	  
	The Offer to the shareholders and warrant holders in Niscayah	  	 	4	  
	Background and reasons for the Offer	  	 	7	  
	Terms, conditions and instructions	  	 	8	  
	Statement by the independent committee of Niscayah’s board of directors	  	 	11	  
	Fairness opinion from UBS Limited	  	 	14	  
	Information about Niscayah	  	 	17	  
	Summary of financial information	  	 	19	  
	Share capital and shareholder structure etc.	  	 	22	  
	Board, senior executives and auditors	  	 	26	  
	Niscayah’s articles of association	  	 	28	  
	The interim report of Niscayah, January – March 2011	  	 	31	  
	Report by Niscayah’s board of directors	  	 	48	  
	Description of Stanley Black & Decker and SBD Holding and the financing of the Offer	  	 	49	  
	Tax issues in Sweden	  	 	51	  
	Auditor’s report regarding summary of historical financial information	  	 	53	  
	Agreement with Niscayah	  	 	54	  
	Addresses	  	 	58	  

  

			
	 
	 The Offer in
brief
  

	 For each share of class A
and class B in Niscayah, SEK 18.00 is offered in cash. For each warrant in Niscayah, SEK 0.05 is offered in cash.
  

	Acceptance period:	 	July 25 – September 1, 2011
	 Preliminary date of settlement:

 
	 	September 9, 2011

  

	
	  
 Helpline regarding the Offer for holders of shares and/or
 warrants in Niscayah Group AB
(publ): +46 480 40 41 09

 The Offer to the shareholders and 
 warrant holders in Niscayah 

 

 THE OFFER 
 On
June 27, 2011, Stanley Black & Decker, Inc. (“Stanley Black & Decker”), through its indirect wholly-owned subsidiary SBD Holding AB (“SBD Holding”), announced a recommended all-cash offer to the
shareholders and warrant holders in Niscayah Group AB (publ) (“Niscayah” or the “Company”) to tender all class A and class B shares and warrants in Niscayah to SBD Holding (the “Offer”). The class B shares in Niscayah
are listed on NASDAQ OMX Stockholm (“NASDAQ OMX”), Mid Cap. 
 SBD Holding offers SEK 18.00 in cash per
class A share and class B share in Niscayah and SEK 0.05 in cash per warrant in Niscayah.1) The total value of the Offer amounts to approximately SEK 6.5 billion.2)  
 The Offer in relation to the class A shares and class B shares represents a premium of:

  

	•	 	 approximately 23.8 per cent compared to the all-share offer made by Securitas AB (“Securitas”) on May 16, 2011, based on the closing price of
SEK 60.90 for the class B shares in Securitas on NASDAQ OMX on June 23, 2011 (being the last trading day prior to the announcement of the Offer on June 27, 2011); 

	•	 	 approximately 46.9 per cent compared to the closing price of SEK 12.25 for the class B shares in Niscayah on NASDAQ OMX on May 13, 2011 (being the last
trading day prior to the announcement of Securitas’ offer on May 16, 2011); 

	•	 	 approximately 50.6 per cent compared to the volume-weighted average price of the class B shares in Niscayah on NASDAQ OMX during the three months up to and
including May 13, 2011, of approximately SEK 11.95 3); and

	•	 	 approximately 14.6 per cent compared to the closing price of SEK 15.70 for the class B shares in Niscayah on NASDAQ OMX on June 23, 2011 (being the
last day of trading prior to announcement of the Offer).

 The acceptance period for the Offer is scheduled to run from and including July 25, 2011 up to and including
September 1, 2011, at 17.00 CET. The expected date for the settlement is September 9, 2011, provided that each of the conditions for completion of the Offer have previously been fulfilled or waived by such time. 

No commission will be charged in connection with the Offer. 

The acquisition of Niscayah requires clearance from relevant competition authorities in the European Union and the United
States. The necessary clearances are expected to be received prior to or around the end of the acceptance period.4) 
 Completion of the Offer is conditional upon the conditions that are set forth in the section
Terms and conditions on pages 6–8 in this offer document. 
 STANLEY BLACK & DECKER’S AND SBD HOLDING’S OWNERSHIP OF
SECURITIES IN NISCAYAH 
 When the Offer was announced, neither Stanley Black & Decker nor SBD Holding owned or controlled any shares or
warrants in Niscayah and had not acquired any shares or warrants in Niscayah during the six month period immediately prior to announcement of the Offer. 
 Following the announcement of the Offer on June 27, 2011, SBD Holding acquired in Europe, through purchases made outside the Offer, 21,720,171 class B shares of Niscayah at prices not exceeding SEK 18.00.
Consequently, Stanley Black & Decker indirectly, through SBD Holding, currently holds shares in Niscayah representing approximately 5.95 per cent of the shares and approximately 4.42 per cent of the votes in Niscayah.5) 

In accordance with, and subject to the restrictions under, applicable laws, rules and regulations, Stanley Black & Decker and its affiliates and any advisor, broker or other person acting as the
agent for, or on behalf of, Stanley Black & Decker or any of its affiliates have and 

 

  
  

	1)	The offered price is subject to adjustment should Niscayah pay any dividend or make any other value transfer prior to the settlement of the Offer and will accordingly be reduced
by the amount per share of any such dividend or value transfer. The offer price for the warrants would in such case be adjusted based on the new offer price for the underlying shares. 

	2)	Based on 363,258,897 outstanding shares in Niscayah (excluding Niscayah’s holding of 1,800,000 treasury shares). 

	3)	Adjusted for a dividend in Niscayah of SEK 0.30 per share. 

	4)	On July 18, 2011, Stanley Black & Decker announced the expiration of the mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the
Offer and that all U.S. antitrust conditions to the Offer had been satisfied. On July 22, 2011, Stanley Black & Decker announced that it had notified the proposed acquisition with the European Commission under the simplified merger
notification procedure (Short Form CO). Following the formal review period of 25 business days, clearance of the acquisition under the EU merger regulation is expected by August 29, 2011. The Company is able to proceed under the simplified
procedure because completion of the Offer is not expected to give rise to any competition concerns, as indicated by low post-acquisition market concentration levels. 

	5)	Based on 365,058,897 shares in Niscayah (including 1,800,000 treasury shares). 

  
 4 

 The Offer to the shareholders and warrant holders in Niscayah 

 

 

 may continue to make arrangements to purchase class B shares in Niscayah outside of the United States, including
purchases in the open market at prevailing prices or in private transactions at negotiated prices. Such purchases or arrangements to purchase have been made from the time of the announcement of this Offer and may continue to be made through the
expiry of the acceptance period and following the Offer. Such purchases will be made in compliance with applicable laws, rules and regulations. 
 No such purchases may be made at prices higher than the consideration offered under the Offer or on terms more favorable than the terms of the Offer, unless the consideration and other terms and conditions of the
Offer are revised accordingly. Stanley Black & Decker will promptly disclose information regarding such purchases of or arrangements to purchase Niscayah shares in the United States by means of a press release, to the extent that such
information is made public in Sweden pursuant to applicable Swedish regulations, and will provide such information to holders of or beneficial owners of Niscayah shares upon their request without charge. 

STATEMENT BY THE INDEPENDENT COMMITTEE OF THE BOARD OF DIRECTORS OF NISCAYAH 
 On May 16, 2011, after the announcement of Securitas’ offer, Niscayah issued a press release stating that the board of directors of Niscayah had decided to appoint an independent committee, consisting of
the board members Tomas Franzén, Eva Lindqvist and Håkan Kirstein, to, among other things, evaluate Securitas’ offer and other potential offers. 
 The independent committee of the board of directors of Niscayah has unanimously decided to recommend that shareholders and warrant holders in Niscayah accept the Offer from SBD Holding. See the section Statement
by the independent committee of the board of directors of Niscayah on pages 9–11. 
 The independent
committee has received a fairness opinion from UBS Limited
(“UBS”)1). See the section Fairness opinion on pages
12–14. 
 UNDERTAKINGS FROM SHAREHOLDERS IN NISCAYAH 
 Two significant shareholders in Niscayah, Triton III ( Nimble) S.à.r.l and Noonday Asset Management LLP,

 
who together hold 70,820,129 class B shares in Niscayah, representing approximately 19.5 per cent of the shares and 13.7 per cent of the votes in Niscayah,2) have each entered into an irrevocable undertaking with SBD Holding to accept the Offer
and tender their shares to SBD Holding in the Offer. These undertakings are conditional on no other party announcing a competing offer for shares in Niscayah at a price which is at least 7.5 per cent higher than the price under the Offer, which
SBD Holding decides not to match (i.e. offer a price that at least corresponds to the price in the competing offer) within five business days. 

AGREEMENT WITH NISCAYAH 
 On June 26, 2011, Niscayah
made an undertaking to Stanley Black & Decker under which Niscayah, among other things, undertook, subject to certain conditions, to notify Stanley Black & Decker of competing proposals for public offers for Niscayah and not to
recommend a superior offer until Stanley Black & Decker has had an opportunity to match the superior offer (i.e. announce an amended offer with a price that at least corresponds to the price in the competing offer) within three days
from when Niscayah informed Stanley Black & Decker of the superior proposal. See the section Agreement with Niscayah on pages 52–55. 

THE FINANCING OF THE OFFER 
 The Offer is not subject to any
financing condition. The Offer will be financed by Stanley Black & Decker from existing cash and a credit facility. 
 Stanley
Black & Decker is an A/Baa1 rated company with USD 1.9 billion in cash and equivalents on its balance sheet as of July 2, 2011. On July 22, 2011, Stanley Black & Decker entered into a 364-Day Credit Agreement to obtain
extensions of credit and commitments aggregating US 1.25 billion (the “Credit Facility”). Stanley Black & Decker’s existing cash resources together with the funds available under the Credit Facility are more than sufficient
to fund the entire amount to be paid under the Offer. Notwithstanding the above, Stanley Black & Decker reserves the right to raise funds through, for example, the issuance of commercial paper and/or capital markets offerings and use such
funds, in place of some or all of the amount provided for under the facility described above. 

 

  
  

	1)	UBS is acting exclusively for Niscayah and no one else in connection with the Offer and will not regard any other person (whether or not a recipient of this document) as its
client in relation to the Offer and will not be responsible to anyone other than Niscayah for providing the protections afforded to clients of UBS, or for providing advice in relation to the Offer or any transaction or arrangement referred to in
this document. 

	2)	Based on 363,258,897 outstanding shares in Niscayah (excluding Niscayah’s holding of 1,800,000 treasury shares). 

  
 5 

 The Offer to the shareholders and warrant holders in Niscayah 

 

 

 Stanley Black & Decker has undertaken to provide SBD Holding with necessary funds to
settle the Offer. 
 See further in the section Description of Stanley Black & Decker and SBD Holding and the financing of the
Offer on page 47. 
 DUE DILIGENCE 
 Stanley
Black & Decker has, in connection with the preparation of the Offer, conducted a limited, confirmatory due diligence exercise and, in connection therewith, met with the management of Niscayah. During due diligence Stanley Black &
Decker has, amongst other things, reviewed certain agreements and certain financial information. Niscayah has informed Stanley Black & Decker that, during this process, no information that has not previously been publicly disclosed and that
can reasonably be expected to affect the share price of Niscayah has been disclosed to Stanley Black & Decker, SBD Holding or its affiliates. 

APPLICABLE LAW AND DISPUTES 
 Swedish law, NASDAQ OMX’s
rules regarding public offers on the stock market (the “Takeover Rules”), the Swedish Securities Council’s rulings regarding interpretation and application of the Takeover Rules, and, where applicable, the Swedish Securities
Council’s former rulings regarding interpretation and application of the Swedish Industry and Commerce Stock Exchange Committee’s rules on public offers, are applicable to the Offer.

 In accordance with the Swedish Act on Public Takeovers on the Stock Market (Sw. lag
(2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), on June 23, 2011, SBD Holding entered into an undertaking towards NASDAQ OMX to comply with the Takeover Rules, the Swedish Securities Council’s rulings
regarding interpretation and application of the Takeover Rules, and, where applicable, the Swedish Securities Council’s former rulings regarding interpretation and application of the Swedish Industry and Commerce Stock Exchange Committee’s
rules on public offers, and to submit to the sanctions that NASDAQ OMX may decide upon in event of infringement of the Takeover Rules. SBD Holding informed the Swedish Financial Supervisory Authority about the Offer and the above mentioned
undertaking on June 27, 2011. 
 Any dispute relating to, or arising in connection with, the Offer shall be settled exclusively by
Swedish courts, with the district court of Stockholm (Sw. Stockholms tingsrätt) as the court of first instance.

 

  
 6 

 Background and reasons for the Offer 

 

 The process leading to the making of the Offer was initiated after the public offer from Securitas to acquire
Niscayah on May 16, 2011. Following Securitas’ offer, the independent committee of the board of directors of Niscayah, supported by Lazard, conducted a structured process with a limited number of interested parties designed to maximize
value for the Niscayah shareholders and warrant holders. During this process, interested parties were provided with access to management of Niscayah and were allowed to perform a limited, confirmatory due diligence, as described in the section
The Offer to the shareholders and warrant holders in Niscayah. 
 Stanley Black & Decker is an S&P 500 company and
diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, engineered fastening systems, infrastructure solutions and more. 

Stanley Black & Decker has nearly a decade of experience in the security market sector through its Stanley Securities Solutions platform
which offers a broad set of mechanical and electronic security systems and services primarily for commercial, governmental, industrial and residential customers as well as for educational, financial and healthcare institutions. For the year ended
December 31, 2010, the Security segment had net sales of USD 2.1 billion. 
 With estimated 2011 revenue of approximately USD 1
billion, Niscayah is one of the world’s most attractive commercial security and monitoring companies and one of the largest access control and surveillance solutions providers in Europe. Niscayah’s integrated security solutions include
video surveillance, access control, intrusion alarms and fire alarm systems, and its offerings include design and installation services, maintenance and repair, and monitoring systems. The proposed acquisition would expand and complement Stanley
Black & Decker’s existing security product offerings and further diversify the company’s operations and international presence. Niscayah’s business is well-diversified across Northern, Central and Southern Europe and the
Nordic Region, as well as in the United States. Stanley Black & Decker’s existing Convergent Security Solutions business revenues are approximately USD 800 million annually, of which Europe represents approximately USD
300 million annually. 
 Stanley Black & Decker believes that its expertise in the commercial security sector, the
complementary nature of its businesses and end markets in the United States and Europe, and its proven ability to improve the performance

 
of companies it acquires enables it to offer a significant premium to the shareholders and warrant holders of Niscayah. 
 Stanley Black & Decker expects the transaction to result in annual cost savings of approximately USD 80 million, more than half of which would be realized by the end of year one after completion of
the Offer. The acquisition is also expected to be immediately accretive to Stanley Black & Decker’s earnings per share (EPS), with estimated accretion of USD 0.20 in year one and USD 0.45 in year three, excluding acquisition-related
charges of USD 60–80 million which will largely be incurred during year one. 
 Stanley Black & Decker attaches great
importance to the work being carried out by Niscayah’s management and employees and intends to continue to safeguard and build upon the excellent relationship that Stanley Black & Decker perceives Niscayah to have with its associates.
Following the completion of the Offer, Stanley Black & Decker and Niscayah’s leadership teams will develop the best structure going forward in order to maintain Niscayah’s identity with the employees and customers after
completion. According to Stanley Black & Decker’s current assessment, the Offer will not involve any material change for management and employees (including terms of employment) in the locations where Niscayah conducts business.

  
  

Further reference is made to the information contained in this offer document, which has been prepared by the board of directors of SBD Holding for the purpose
of the Offer. The description of Niscayah on pages 15–28 in this offer document has been reviewed by the board of directors of Niscayah, in accordance with what is stated on page 46 below. In accordance with what is stated on page 51 below, the
auditor of Niscayah has examined and made a statement regarding the summary of historical financial information presented on pages 17–19. The board of directors of SBD Holding confirms that, to the best of its knowledge, the information in this
offer document in relation to Stanley Black & Decker and SBD Holding conforms to actual conditions. 
 Mechelen, Belgium

 on July 22, 2011 

SBD Holding AB 
 The board
of directors 

 

  
 7 

 Terms, conditions and instructions 

 

 THE OFFER 
 SBD
Holding offers SEK 18.00 in cash per class A and class B share in Niscayah. The offer price is subject to adjustment should Niscayah pay any dividend or make any other value transfer prior to settlement of the Offer and will accordingly be reduced
by the amount per share of any such dividend or value transfer. 
 SBD Holding offers SEK 0.05 in cash per warrant
2007/20121) in Niscayah. Should Niscayah pay any dividend or make any other
value transfer prior to settlement of the Offer, the offer price for the warrants will be adjusted based on the new adjusted offer price for the underlying shares. 
 No commission will be charged in connection with the Offer. 
 CONDITIONS TO THE OFFER 

Completion of the Offer is conditional upon: 

	(i)	the Offer being accepted to such extent that SBD Holding becomes the owner of more than 90 per cent of the total number of shares in Niscayah (on a fully diluted basis);

	(ii)	all holders of class A shares in Niscayah accepting the Offer and waiving their rights under the pre-emption clause (Sw. hembudsförbehåll) in Niscayah’s
articles of association; 

	(iii)	with respect to the Offer and the acquisition of Niscayah, receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, including from
competition authorities, in each case on terms which, in SBD Holding’s opinion, are acceptable; 

	(iv)	that neither the Offer nor the acquisition of Niscayah is wholly or partly prevented or materially adversely affected by any legislation or other regulation, court decision,
public authority decision or similar circumstance, which is in effect or could reasonably be expected, which is outside the control of SBD Holding and which SBD Holding could not reasonably have foreseen at the time of the announcement of the Offer;

	(v)	that, save as publicly announced by Niscayah or as otherwise disclosed in writing by Niscayah to SBD Holding prior to the date the Offer was announced, SBD Holding does not
discover that any information

	 	 
publicly disclosed by Niscayah or otherwise made available by Niscayah to SBD Holding is materially inaccurate or misleading or that any material information which should have been publicly
disclosed by Niscayah has not been so disclosed; 

	(vi)	no circumstances, other than any circumstances that SBD Holding had knowledge of at the time the Offer was announced, having occurred that have or could be expected to have a
material adverse effect upon Niscayah’s sales, profit, liquidity, equity or assets; 

	(vii)	that Niscayah does not take any measures that typically are intended to impair the prerequisites for the implementation of the Offer; and 

	(viii)	no other party announcing an offer to acquire shares in Niscayah on terms that are more favorable to the shareholders in Niscayah than the Offer. 

SBD Holding reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions are not fulfilled or cannot be fulfilled.
However, with regard to conditions (iii)–(viii), such withdrawal will only be made provided that the failure to fulfill such condition is of material importance to SBD Holding’s acquisition of the shares in Niscayah. 

SBD Holding reserves the right to waive, in whole or in part, one or more of the conditions above in accordance with applicable laws and
regulations, including, with respect to conditions (i)–(ii) above, to complete the Offer at a lower level of acceptance. 
 ACCEPTANCE

 Shareholders and warrant holders in Niscayah whose holdings are directly registered with Euroclear Sweden AB (“Euroclear”) and who wish to
accept the Offer must, during the period from and including July 25, 2011 up to and including September 1, 2011, at 17.00 CET, sign and submit a duly filled in acceptance form to Handelsbanken Capital Markets at the address stated
on the acceptance form. 
 The acceptance form must be submitted or sent, preferably, in the enclosed self addressed envelope,
sufficiently prior to the last day of the acceptance period so that it is received by Handelsbanken Capital Markets no later than 17.00 CET on September 1, 2011 (the “Due Date”). The acceptance form may also be delivered to
bank offices or other securities institutions in Sweden to be 

 

  

	1)	Under the terms of the warrants, each warrant entitles its holder to subscribe for one new Niscayah class B share at a subscription price of SEK 30.00 per share at any time
up to and including June 30, 2012. The consideration offered for the warrants represents an equivalent premium as for the shares, namely 46.9 per cent compared to their theoretical value. There are 5,000,000 warrants outstanding.

  
 8 

 Terms, conditions and instructions 
  

 

 forwarded to Handelsbanken Capital Markets sufficiently prior to the last day of the acceptance period so that it is
received by Handelsbanken Capital Markets no later than the Due Date. 
 The VP-account and the current number of shares and/or warrants
in Niscayah held on July 21, 2011, are pre-printed on the acceptance form which has been sent out together with this offer document to holders of shares and/or warrants in Niscayah who are directly registered. The person who executes and
submits the acceptance form is responsible for checking that the pre-printed information in the acceptance form is correct. Shareholders who are included on the list of pledgees and trustees connected to the share register, will not receive an
acceptance form, but will be notified separately. 
 By executing and submitting the acceptance form, holders of class A shares waive
their rights under the preemption clause (Sw. hembudsförbehåll) in Niscayah’s articles of association. 

Please note that acceptance forms which are filled in incompletely or incorrectly may be disregarded. 

Additional acceptance forms are supplied by Handels-banken Capital Markets in accordance with the contact details below. 

Nominee registered holdings 
 Holders of shares and/or
warrants in Niscayah whose holdings are registered in the name of a nominee, e.g., a bank or other nominee, will receive neither this offer document nor a pre-printed acceptance form. Such holders are instead requested to contact their
nominee in order to obtain a copy of the offer document. Applications must be made in accordance with instructions received from the nominee. 

Pledged holdings 
 If shares or warrants in Niscayah are
pledged in the Euroclear-system, both the holder and the pledgee must sign the submitted acceptance form and confirm that the pledge will be terminated should the Offer be completed. 
 Confirmation regarding acceptance 
 After Handelsbanken Capital Markets has received and registered an
acceptance form which has been duly filled in, the shares and/or warrants in Niscayah which have been accepted to be transferred will be transferred to a new blocked securities account which has been opened

 
for each holder (Sw. apportkonto). In connection with this, Euroclear will send a notification (Sw. VP-avi) showing the number of shares and/or warrants in Niscayah that have been
entered in the newly opened blocked securities account. 
 Holders of shares and/or warrants not residing in Sweden 

Holders of shares and/or warrants who are not residing in Sweden should send the signed acceptance form to Handelsbanken Capital Markets, Issue Department, SE-106
70 Stockholm, Sweden. Please note that the acceptance form must be received by Handelsbanken Capital Markets no later than 17.00 CET on September 1, 2011. 
 Notwithstanding the foregoing, the Offer is not being made, directly or indirectly, by use of mail or any other means of instrumentality (including, without limitation, facsimile transmission, electronic mail,
telex, telephone and the Internet) in or into Australia, Japan, Canada, South Africa, Hong Kong or New Zealand and the Offer cannot be accepted in or from Australia, Japan, Canada, South Africa, Hong Kong or New Zealand. Accordingly all holders of
shares and/or warrants not residing in Sweden, will by sending the signed acceptance form be deemed to have represented that they are not currently in, and are not accepting the Offer from Australia, Japan, Canada, South Africa, Hong Kong or New
Zealand. 
 Withdrawal of acceptance of other offers 

Please note that holders who have accepted any other offer for shares or warrants in Niscayah and wish to accept the Offer from SBD Holding must withdraw their
previous acceptance in accordance with the terms, conditions and time frame of such other offer. 
 SETTLEMENT 

Settlement will be initiated as soon as SBD Holding announces that the terms and conditions of the Offer have been met, or SBD Holding otherwise decides to complete
the Offer. If such announcement takes place around September 6, 2011, at the latest, settlement is expected to be initiated around September 9, 2011. Settlement will be effected by sending a contract note to those who have accepted the
Offer. If the holding is registered in the name of a nominee, information on settlement will be provided by the nominee. 

 

  
 9 

 Terms, conditions and instructions 

 

 

 The settlement amount will be paid to the yield account which is connected to the
shareholder’s and/or warrant holder’s securities account. Holders of shares and/or warrants in Niscayah who do not have a yield account connected to their securities account, if the account is incorrect or whose yield account is a PlusGiro
account will receive settlement in accordance with the instructions in the contract note. In connection with the settlement, the shares and/or warrants in Niscayah will be removed from the blocked securities account which will then be terminated. No
notice evidencing the removal from the blocked securities account will be sent. 
 Note that, even if the shares and/or warrants in
Niscayah are pledged, payment will be made to the yield account or in accordance with the instructions in the sent out contract note. 
 EXTENSION
OF THE OFFER ETC. 
 SBD Holding reserves the right to extend the acceptance period for the Offer, as well as to postpone the date for the settlement.
A notice regarding such extension or postponement will be announced by SBD Holding through a press release in accordance with applicable laws and regulations. 
 RIGHT TO WITHDRAW ACCEPTANCE 
 Holders of shares and/or warrants in Niscayah are entitled to withdraw their
acceptance of the Offer. To be valid the withdrawal must be made in writing and have been received by Handelsbanken Capital Markets (address Handelsbanken Capital Markets, Issue Department, SE-106 70 Stockholm, Sweden) before the public

 
announcement by SBD Holding that the conditions for the completion of the Offer have been satisfied or, if such announcement has not been made during the acceptance period, by 17.00 CET on the
final day of the acceptance period. Holders of shares and/or warrants in Niscayah whose securities are registered in the name of a nominee and who wish to withdraw their acceptance of the Offer must do so in accordance with instructions from the
nominee. 
 If any conditions to the Offer, which SBD Holding has reserved the right to waive, remain unsatisfied and have not been
waived during any extension of the Offer, the right to withdraw a submitted acceptance will apply in the same manner throughout any such extension of the Offer. 
 COMPULSORY ACQUISITION AND DE-LISTING 
 As soon as possible following SBD Holding’s acquisition of shares
representing more than 90 per cent of the shares in Niscayah, SBD Holding intends to call for compulsory acquisition of the remaining shares in Niscayah. In connection hereto, SBD Holding intends to act to have the Niscayah share delisted from
NASDAQ OMX. 
 QUESTIONS REGARDING THE OFFER 
 For
questions regarding the Offer, please contact the help-line for holders of shares and/or warrants in Niscayah on tel. +46 480 40 41 09. 

Information and acceptance forms are also available on Handelsbanken Capital Markets’ website, www.handelsbanken.se/investmentoffer, and on
SBD Holding’s website for the Offer, www.publicoffer.se. 

 

  
 10 

 Statement by the independent committee of Niscayah’s board of directors 

On June 27, 2011, Niscayah published a press release with the following content. 
 

 

  
 11 

 Statement by the independent committee of Niscayah’s board of directors 

 

  
 12 

 Statement by the independent committee of Niscayah’s board of directors 

 

  
 13 

 Fairness opinion from UBS Limited 
 On June 26, 2011, UBS Limited (“UBS”) issued a fairness opinion to the independent committee of Niscayah’s board of directors in relation to the Offer with the following content. 

 

  
 14 

 Fairness opinion from UBS Limited 

 

  
 15 

 Fairness opinion from UBS Limited 

 

 

 

  
 16 

 Information about Niscayah 
  

 

 BUSINESS DESCRIPTION 
 Niscayah is a leading security company specializing in technical security services. Niscayah offers complete security solutions for customers with high security demands within segments such as bank and post,
retail, utilities, transport and logistics and gas stations. Niscayah has approximately 5,100 employees and has operations in 14 countries in Europe and in the United States. The Company is divided into two geographical segments, Mainland Europe and
US/UK/Ireland. 
 STRATEGY 
 During the year
2010, Niscayah developed a new strategic direction which will serve as a platform for the work on improvements in the coming years. In summary, the direction may be condensed into three cornerstones: 

Specialize the operations towards customer segments 
 The
operations should be specialized towards segments where Niscayah is or can become market leader. Through greater specialization Niscayah will get closer to its customers and can provide more knowledge and value. 

Package customer solutions and make them clear 
 The customer
offerings should be clear and packaged in a way so that they generate a high value and service content for the customer, become easier to sell and more cost efficient to produce. 
 Develop a common operational model in Niscayah 
 With common work practices, for example in sales and
production, efficiency can be improved, quality in delivery to customers can be ensured and the demands of international customers can be met cost-effectively. Regular follow up and clear allocation of responsibilities are also important components.

 SERVICE OFFERING 
 Niscayah provides a complete
offering of security services – all from design and installation of security systems to service, maintenance and repairs as well as day-to-day operation of systems. 
 System operations 
 Niscayah offers services for operation and monitoring of security systems. Niscayah’s
12 security centers in Europe and in the US are the core of the offering. Examples of services offered by the centers include alarm monitoring, video surveillance, management of access control systems, fire alarm monitoring and system maintenance.

 The technological development means that increasing numbers of services may be offered from the
security centers. Alarm systems containing cameras can activate camera images in the event of alarm for the operators and a good understanding of the situation can be gained rapidly in this way. The security centers are an important part of
Niscayah’s offering and often serve as a regular interface in relation to the customer. System management such as fault localization and system updates can also be performed remotely if the customer’s alarm system is connected to a
security center. 
 System management 
 Niscayah
offers a number of different system management services depending on what demands the customer has regarding the accessibility and features of the security system. Niscayah also offers service contracts with an agreed response time or according to a
specific functionality requirement in the system. The services may include preventive measures such as checks and regular maintenance, but even fault localization and repairs of security systems when required. 

Niscayah’s service offering is being constantly developed in order to offer good service solutions adapted to the different security
requirements in the customer segments. Niscayah provides all service and maintenance according to a predetermined time schedule to many of its customers. 

Implementation 
 Implementation includes analysis, design and
installation of security systems. Components in systems include access control, video surveillance, intrusion protection and fire alarm systems. Niscayah always manages the work in projects, but certain standardized parts of the installation, for
example, electrical work and assembly of equipment, can be outsourced to subcontractors. Niscayah can also integrate security systems with the customers’ other systems, creating a good overview for the customer. 

Niscayah is working on segmenting the offering into a more standardized model for smaller and medium-sized customers, while customers with high
demands regarding customization and specialization require a more advanced installation offering. The competition is intense on many markets so efficiency and low costs are important competitive advantages.

 

  
 17 

 Information about Niscayah 

 

  

 

 TECHNOLOGY AREAS 
 Niscayah combines and packages security solutions independently based on the product range of a number of suppliers. The technology areas are video surveillance, intrusion protection, access control and fire alarm
systems. 
 Video surveillance 
 Niscayah offers
advanced video surveillance systems which for example can automatically emit an alarm in the event of an abnormality and can be monitored centrally from Niscayah’s security center. The systems can also be simpler, where monitoring takes place
locally at the customer. Video surveillance is the fastest growing technology area. 
 Intrusion alarms 

Intrusion alarms often form the basis of a security system. Components include motion detectors, magnetic contacts and vibration detectors. Almost all companies and
organizations have some form of intrusion alarm. 
 Access control 
 Access control systems enable an efficient flow of people, while simultaneously maintaining a high level of security. Passes or entry badges can be administered via Niscayah’s security centers where access can
also be controlled remotely. 
 Fire alarm systems 

The design of fire alarm systems is often governed by laws and regulations and the systems include fire detectors, sprinkler systems, control units and warning
systems. Fire alarm systems include services such as training and workshops. 
 CUSTOMER GROUPS 

With unique competence within technical security services as well as a good understanding of the customer’s area of operation and risk profile, the grounds for
offering the right security solution to the customer are created, based on their specific needs. Niscayah is continually developing the offerings towards a greater specialization for the customer groups. 

Bank and post 
 Niscayah’s offering includes complete
integrated security systems adapted to banking offices, ATM surveillance systems, positioning systems for secure transport, assault alarms and training of security personnel and security managers. The systems are often connected to Niscayah’s

 
alarm centers in order to rapidly request the correct action in the event of an incident and ensure continual operational supervision. Bank and post is Niscayah’s largest customer group and
the company is market-leading within this segment in a number of European markets. 
 Retail 

Niscayah’s offering for retail aims to deliver a safe and secure environment for staff while at the same time, the systems shall contribute to preventing
theft, wastage and other crimes. Services such as alarm monitoring and function control are offered from Niscayah’s security centers. Another common service for retail is administration of access control systems. Niscayah also offers more
advanced systems for retail, for example, video surveillance systems which can indicate how customers move in different store environments and measure customer flows at different points in time. 

Utilities 
 Niscayah offers complete security systems for
utilities with components such as intrusion alarms, video surveillance, access control systems and integration of other operating systems. Niscayah’s geographical coverage means that service and maintenance can be performed with relatively
short response times. 
 Transport and logistics 

Niscayah offers complete security solutions for the transport and logistics segment. Basic services include intrusion protection and video surveillance, for
example, of terminals, airports and ports. Niscayah also offers more advanced solutions such as GPS positioning. 
 Gas stations 

Niscayah offers a complete system for gas stations which includes components such as intrusion protection, access control and video surveillance. For gas stations,
like for retail generally, the systems are designed in order to reduce criminality and make the working environment secure for the staff. 
 Other
industry and public sector 
 Niscayah offers a broad spectrum of services to customers with high security needs, such as defense and correctional
facilities, but also provides simpler solutions to customers with lower requirements. Niscayah offers operation, service and maintenance as well as installation of the security solutions.

 

  
 18 

 Summary of financial information 
  

The following section presents summarized financial information for Niscayah for the financial years 2008–2010 taken from Niscayah’s audited consolidated
annual reports for these years, and financial information for the first quarter of 2010 and 2011 taken from Niscayah’s published interim reports for the first quarters of 2010 and 2011. The financial information is prepared in accordance with
IFRS and the Swedish Financial Reporting Board’s standard RFR 1, supplementary accounting standards for Groups (Sw. kompletterande redovisningsregler för koncerner). The interim reports for 2010 and 2011 have not been reviewed or
audited by the auditor of Niscayah. Audited annual reports for Niscayah are available on Niscayah’s website (www.niscayah.com). 
 NISCAYAH’S
CONSOLIDATED INCOME STATEMENT IN BRIEF 
  

																					
	SEK million	  	Q1 2011	 	  	Q1 2010	 	  	2010	 	  	2009	 	  	2008	 
	 	 
	 Revenue
	  	 	1,509.3	  	  	 	1,681.0	  	  	 	6,624.3	  	  	 	7,621.0	  	  	 	8,009.0	  
	 Cost of goods sold
	  	 	–988.1	  	  	 	–1,225.3	  	  	 	–4,474.0	  	  	 	–5,019.1	  	  	 	–5,401.1	  
	 	 
	 Gross profit
	  	 	521.2	  	  	 	455.7	  	  	 	2,150.3	  	  	 	2,601.9	  	  	 	2,607.9	  
						
	 Selling and administrative expenses
	  	 	–435.2	  	  	 	–555.1	  	  	 	–1,945.2	  	  	 	–2,078.6	  	  	 	–2,320.0	  
	 Amortisation and impairment of acquisition related intangible assets
	  	 	–6.5	  	  	 	–8.0	  	  	 	–28.7	  	  	 	–30.6	  	  	 	–516.2	1) 
	 	 
	 Operating profit
	  	 	79.5	  	  	 	–107.4	  	  	 	176.4	  	  	 	492.7	  	  	 	–228.3	  
						
	 Financial income and expenses
	  	 	4.7	  	  	 	–1.4	  	  	 	–4.4	  	  	 	–32.6	  	  	 	–137.8	  
	 	 
	 Profit before tax
	  	 	84.2	  	  	 	–108.8	  	  	 	172.0	  	  	 	460.1	  	  	 	–366.1	  
						
	 Income tax
	  	 	–25.6	  	  	 	33.1	  	  	 	–52.4	  	  	 	–140.4	  	  	 	–73.6	  
	 	 
	 Net profit for the period
	  	 	58.6	  	  	 	–75.7	  	  	 	119.6	  	  	 	319.7	  	  	 	–439.7	  
	  
 1) Including impairment of goodwill of SEK 490
million.
	 
   

	  
 NISCAYAH’S CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME IN BRIEF
  
	 
   

	SEK million	  	Q1 2011	 	  	Q1 2010	 	  	2010	 	  	2009	 	  	2008	 
	 	 
	 Net profit for the period
	  	 	58.6	  	  	 	–75.7	  	  	 	119.6	  	  	 	319.7	  	  	 	–439.7	  
						
	 Other comprehensive income
	  				  				  				  				  			
	 Actuarial gains and losses
	  	 	–	  	  	 	–	  	  	 	–24.0	  	  	 	19.8	  	  	 	–29.2	  
	 Exchange difference
	  	 	–59.1	  	  	 	–131.4	  	  	 	–291.5	  	  	 	–93.5	  	  	 	76.0	  
	 Tax attributable to other comprehensive income
	  	 	10.5	  	  	 	10.0	  	  	 	31.7	  	  	 	–17.5	  	  	 	18.4	  
	 	 
	 Other comprehensive income for the period, net after tax
	  	 	–48.6	  	  	 	–121.4	  	  	 	–283.8	  	  	 	–91.2	  	  	 	65.2	  
						
	 Total comprehensive income for the period
	  	 	10.0	  	  	 	–197.1	  	  	 	–164.2	  	  	 	228.5	  	  	 	–374.5	  

  
 19 

 Summary of financial information 

 

 NISCAYAH’S CONSOLIDATED BALANCE SHEET IN BRIEF 

 

																					
	SEK million	  	Q1 2011	 	  	Q1 2010	 	  	2010	 	  	2009	 	  	2008	 
	 	 
	 ASSETS
	  				  				  				  				  			
	 Intangible assets
	  	 	2,349.3	  	  	 	2,544.9	  	  	 	2,415.9	  	  	 	2,606.9	  	  	 	2,655.9	  
	 Tangible assets
	  	 	150.7	  	  	 	239.6	  	  	 	164.1	  	  	 	300.9	  	  	 	381.7	  
	 Financial assets
	  	 	179.1	  	  	 	156.7	  	  	 	200.9	  	  	 	102.1	  	  	 	131.4	  
	 Inventories
	  	 	202.9	  	  	 	244.7	  	  	 	204.7	  	  	 	263.6	  	  	 	315.4	  
	 Trade receivables and other receivables
	  	 	2,152.8	  	  	 	2,249.6	  	  	 	2,193.5	  	  	 	2,311.2	  	  	 	3,032.3	  
	 Cash and cash equivalents
	  	 	162.3	  	  	 	333.3	  	  	 	320.5	  	  	 	511.2	  	  	 	356.7	  
	 	 
	 Total assets
	  	 	5,197.1	  	  	 	5,768.8	  	  	 	5,499.6	  	  	 	6,095.9	  	  	 	6,873.4	  
						
	 EQUITY AND LIABILITIES
	  				  				  				  				  			
	 Total equity
	  	 	1,779.7	  	  	 	1,858.4	  	  	 	1,769.7	  	  	 	2,055.5	  	  	 	1,936.5	  
	 Total non-current liabilities
	  	 	1,504.0	  	  	 	1,677.6	  	  	 	1,641.2	  	  	 	1,794.4	  	  	 	2,388.4	  
	 Total current liabilities
	  	 	1,913.4	  	  	 	2,232.8	  	  	 	2,088.7	  	  	 	2,246.0	  	  	 	2,548.5	  
	 	 
	 Total equity and liabilities
	  	 	5,197.1	  	  	 	5,768.8	  	  	 	5,499.6	  	  	 	6,095.9	  	  	 	6,873.4	  

 NISCAYAH’S CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY IN BRIEF 

 

																															
	 	  	 	  	 	  	 	  	March 31, 2011	 	  	March 31, 2010	 
	SEK million	  	 Attributable
to equity
holders of

the Parent
Company
	 	  	Non-
controlling
interests	 	  	Total
equity	 	  	 Attributable
to equity
holders of

the Parent
Company
	 	  	Non-
controlling
interests	 	  	Total
equity	 
	 	 
	 Opening balance January 1, 2011/2010
	  	 	1,762.1	  	  	 	7.6	  	  	 	1,769.7	  	  	 	2,047.7	  	  	 	7.8	  	  	 	2,055.5	  
							
	 Total comprehensive income for the period
	  	 	10.1	  	  	 	–0.1	  	  	 	10.0	  	  	 	–196.8	  	  	 	–0.3	  	  	 	–197.1	  
	 	 
	 Closing balance March 31, 2011/2010
	  	 	1,772.2	  	  	 	7.5	  	  	 	1,779.7	  	  	 	1,850.9	  	  	 	7.5	  	  	 	1,858.4	  

  

																																					
	 	  	Dec 31, 2010	 	  	Dec 31, 2009	 	  	Dec 31, 2008	 
	SEK million	  	Attributable
to equity
holders of
the Parent
Company	 	  	Non-
controlling
interests	 	  	Total
equity	 	  	Attributable
to equity
holders of
the Parent
Company	 	  	Non-
controlling
interests	 	  	Total
equity	 	  	Attributable
to equity
holders of
the Parent
Company	 	  	Non-
controlling
interests	 	  	Total
equity	 
	 	 
	 Opening balance January 1,

2010/2009/2008
	  	 	2,047.7	  	  	 	7.8	  	  	 	2,055.5	  	  	 	1,929.1	  	  	 	7.4	  	  	 	1,936.5	  	  	 	2,487.8	  	  	 	5.7	  	  	 	2,493.5	  
										
	 Change in equity
	  	 	–285.6	  	  	 	–0.2	  	  	 	–285.8	  	  	 	118.6	  	  	 	0.4	  	  	 	119.0	  	  	 	–558.7	  	  	 	1.7	  	  	 	–557.0	  
	 	 
	 Closing balance December 31,

2010/2009/2008
	  	 	1,762.1	  	  	 	7.6	  	  	 	1,769.7	  	  	 	2,047.7	  	  	 	7.8	  	  	 	2,055.5	  	  	 	1,929.1	  	  	 	7.4	  	  	 	1,936.5	  

  
 20 

 Summary of financial information 
  

  
 NISCAYAH’S CONSOLIDATED CASH FLOW
STATEMENT IN BRIEF 
  

																					
	SEK million	  	Q1 2011	 	  	Q1 2010	 	  	2010	 	  	2009	 	  	2008	 
	 	 
	 Cash flow before changes in working capital
	  	 	30.5	  	  	 	52.6	  	  	 	239.3	  	  	 	606.0	  	  	 	450.5	  
	 Change in working capital
	  	 	–54.0	  	  	 	–17.7	  	  	 	17.5	  	  	 	337.2	  	  	 	60.3	  
	 	 
	 Cash flow from operating activities
	  	 	–23.5	  	  	 	34.9	  	  	 	256.8	  	  	 	943.2	  	  	 	510.8	  
						
	 Cash flow from investing activities
	  	 	–17.8	  	  	 	–25.4	  	  	 	–86.8	  	  	 	–162.5	  	  	 	–332.2	  
	 Cash flow from financing activities
	  	 	–115.1	  	  	 	–173.3	  	  	 	–326.8	  	  	 	–622.3	  	  	 	–251.6	  
	 	 
	 Cash flow for the period
	  	 	–156.4	  	  	 	–163.8	  	  	 	–156.8	  	  	 	158.4	  	  	 	–73.0	  
	  
 NISCAYAH’S KEY FIGURES AND PER SHARE DATA

 
	  				  				  				  				  			
	 	  	Q1 2011	 	  	Q1 2010	 	  	2010	 	  	2009	 	  	2008	 
	 	 
	 Return on:
	  				  				  				  				  			
	 Equity, %
	  	 	14	  	  	 	8	  	  	 	6	  	  	 	16	  	  	 	15	1) 
	 Capital employed, %
	  	 	14	  	  	 	10	  	  	 	7	  	  	 	17	  	  	 	8	  
	 Number of chares outstanding, thousands
	  	 	365,059	  	  	 	365,059	  	  	 	365,059	  	  	 	365,059	  	  	 	365,059	  
	 Net debt equity ratio/multiple
	  	 	0.58	  	  	 	0.58	  	  	 	0.56	  	  	 	0.53	  	  	 	0.93	  
	 Shareholders’ equity end of period, SEK
	  	 	1,779.7	  	  	 	1,858.4	  	  	 	1,769.7	  	  	 	2,055.5	  	  	 	1,936.5	  
	 Earnings per share, SEK
	  	 	0.16	  	  	 	–0.21	  	  	 	0.33	  	  	 	0.87	  	  	 	–1.21	  
	 Dividend per share, SEK
	  	 	–	  	  	 	–	  	  	 	0.30	  	  	 	0.30	  	  	 	0.30	  
	 Equity ratio, %
	  	 	34	  	  	 	32	  	  	 	32	  	  	 	34	  	  	 	28	  
	 Average number of employees
	  	 	5,133	  	  	 	5,441	  	  	 	5,295	  	  	 	5,578	  	  	 	6,270	  
	 	 

 1) 2008 is excluding costs of the restructuring program and impairments of goodwill. 

  
 21 

 Share capital and shareholder structure etc. 

 

 

 GENERAL INFORMATION 
 The shares in Niscayah have been issued in accordance with Swedish law. The rights of the shareholders, including the rights of minority shareholders, associated with the shares can only be amended according to the
procedure described in the Swedish Companies Act. Niscayah’s shares of series B are traded on NASDAQ OMX Mid Cap with the short name NISC. Niscayah’s shares are registered with, and its shareholder register is maintained by Euroclear.

 At the general meetings, each share of series A constitutes ten votes and each share of series B one vote. Each voting shareholder may
vote for the full number of shares held and represented without any restriction on voting rights. Each share has equal rights to dividend and to any surplus on liquidation of Niscayah. As a general rule for new issues of shares, holders of shares of
series A have right to subscribe for new shares of series A and holders of shares of series B the right to subscribe for new shares

 
of series B with primary preferential rights, except to the extent otherwise provided in the issue decision. 
 The shares of series A in Niscayah are not traded on the stock exchange and in the event such shares are transferred to a person who does not own shares of series A in Niscayah, the share should immediately be
offered for redemption to the owners of shares of series A, in accordance with section 12 in the articles of association. 
 Notice of
general meetings of Niscayah is given by publication in the Swedish Official Gazette (Post- och Inrikes Tidningar) and on Niscayah’s website within the time specified in the Swedish Companies Act. An announcement stating that notice has been
given will be made in the Swedish newspaper Dagens Industri. The right to participate in a general meeting lies with shareholders who are registered in Niscayah’s share register five working days before the meeting, and have given notice of
participation to Niscayah at the latest 16.00 (CET) on the day indicated in the notice of the meeting. 

 

  
 NISCAYAH’S SHARE PRICE DEVELOPMENT

 Share price development for Niscayah from and including June 24, 2010 up until and including June 23, 2011, the last 12 months before the
Offer was announced. 
 

 

  
 22 

 Share capital and shareholder structure etc. 

 

 SHAREHOLDERS AND SHAREHOLDER STRUCTURE 

The table below shows the ten largest shareholders1) in Niscayah as of June 30, 2011 (and thereafter known changes). 

 

																	
	Name	  	Shares of series A	 	  	Shares of series B	 	  	Capital, %	 	  	Votes, %	 
	 	 
	 Investment AB Latour
	  	 	12,642,600	  	  	 	28,437,500	  	  	 	11.3%	  	  	 	29.9%	  
	 Melker Schörling AB
	  	 	4,500,000	  	  	 	20,963,847	  	  	 	7.0%	  	  	 	12.7%	  
	 Triton III (Nimble) S.à.r.l
	  	 	0	  	  	 	36,820,129	  	  	 	10.1%	  	  	 	7.1%	  
	 Swedbank Robur fonder
	  	 	0	  	  	 	35,630,632	  	  	 	9.8%	  	  	 	6.9%	  
	 Noonday Asset Management LLP
	  	 	0	  	  	 	28,712,149	  	  	 	7.9%	  	  	 	5.5%	  
	 Stanley Black & Decker, Inc.
	  	 	0	  	  	 	21,720,171	  	  	 	6.0%	  	  	 	4.2%	  
	 Didner & Gerge fonder
	  	 	0	  	  	 	14,052,807	  	  	 	3.9%	  	  	 	2.7%	  
	 Handelsbanken fonder
	  	 	0	  	  	 	4,717,078	  	  	 	1.3%	  	  	 	0.9%	  
	 Second Swedish National Pension Fund – AP2
	  	 	0	  	  	 	4,556,678	  	  	 	1.3%	  	  	 	0.9%	  
	 SEB Investment Management
	  	 	0	  	  	 	3,573,051	  	  	 	1.0%	  	  	 	0.7%	  
	 	 
	 Total, ten largest shareholders
	  	 	17,142,600	  	  	 	199,184,042	  	  	 	59.6%	  	  	 	71.6%	  
					
	 Other shareholders
	  	 	0	  	  	 	146,932,255	  	  	 	40.4%	  	  	 	28.4%	  
	 	 
	 Total
	  	 	17,142,600	  	  	 	346,116,297	  	  	 	100.0%	  	  	 	100.0%	  

  

	Source:	Euroclear Sweden AB, owners known to Niscayah. 

 SHARE CAPITAL
AND SHARE CAPITAL DEVELOPMENT 
 Niscayah’s share capital is expressed in SEK and distributed on the shares issued by Niscayah, with a quota value
which is also expressed in SEK. The quota value of the shares is 1 SEK per share. According to Niscayah’s articles of association, the share capital shall amount to at least SEK 200,000,000 and not more than SEK 800,000,000, and the number of
shares shall amount to at least 200,000,000 and not more than 800,000,000. The number of shares in Niscayah on the date of the offer document is 365,058,897 shares; 17,142,600 shares of series A and 347,916,297 shares of series B. As of the date of
the offer document, Niscayah holds 1,800,000 shares of series B in treasury. The share capital amounts to SEK 365,058,897. 
  

																											
	 	  	 	  	Increase in number of1)	 	 	Total number of1)	 	 	 	 	  	 	 
		  		  	 	 	 	 	 	 	 	 				  			
	Year	  	Transaction	  	Shares of
series A	 	  	Shares of
series B	 	 	Shares of
series A	 	  	Shares of
series B	 	 	Increase in
share capital	 	  	Total share
capital	 
	 	 
	 2003
	  		  	 	–	  	  	 	–	  	 	 	–	  	  	 	5,000	2) 	 	 	–	  	  	 	500,000	  
	 2005
	  	Split 1:100	  	 	–	  	  	 	495,000 	2) 	 	 	–	  	  	 	500,000	2) 	 	 	–	  	  	 	500,000	  
	 2006
	  	Bonus issue	  	 	17,142,600	  	  	 	347,416,297	  	 	 	17,142,600	  	  	 	347,916,297	  	 	 	364,558,897	  	  	 	365,058,897	  
	 	 

 1) All shares have a quota value of SEK 1, and are fully paid. 
 2) Before 2006 there was only one series of shares. 
 In the table above is indicated the changes in Niscayah’s
share capital since 2003 up to the day of the offer document. 
  

 
 1) Excluding Niscayahs holding of 1,800,000
treasury shares. 

  
 23 

 Share capital and shareholder structure etc. 
  

 

 SHARE-RELATED COMPENSATIONS 
 In 2007, Niscayah launched a share option scheme comprising of warrants to certain employees of the group. Because those employees acquired the warrants at market value, Niscayah has not been charged with any costs
for the program. Warrant Program 2007/2012 consists of 5,000,000 warrants; each warrant entitles the holder to subscribe for one new share of series B in Niscayah at a price of SEK 30 per share. The subscription of shares may take place from
June 30, 2007 to June 30, 2012. 
 The warrants were sold at a price of SEK 3.40 per warrant. This price, established by
an independent rating agency, represents the market value of the warrants using the Black & Scholes model based on the detailed score components during the calculation period from June 13 to June 14, 2007. Assuming full exercise
of the warrants, the share capital may be increased by not more than SEK 5,000,000, which represents approximately 1.37 per cent of Niscayah’s present share capital and approximately 0.96 per cent of the votes. 

At the annual general meeting on May 6, 2010 and the annual general meeting on May 3, 2011, it was decided to introduce long-term
performance share programs, the LTIP 2010 and LTIP 2011, to senior executives and key personnel of Niscayah. The purpose of the performance based incentive programs is to ensure long-term commitment of the existing senior executives and key
personnel and also improve Niscayah’s opportunities for future recruitments. Using the shares of Niscayah as a key instrument in the incentive programs rewards both equity participation and long-term growth in Niscayah, which implies the
creation of common goals for existing shareholders and participants in the LTIP programs. 
 LTIP 2010 and LTIP 2011 are based on the
following principles, which reflect some of Niscayah’s continuous compensation principles: (i) participants make a personal investment by acquiring shares of series B in Niscayah at market price, (ii) the participants must remain
employed by Niscayah during a specified time to receive the award of performance shares, and (iii) the allotment of performance shares under the LTIP 2010 and LTIP 2011 are based on Niscayahs earnings per share for a relevant period.
Performance shares in the LTIP 2010 will not be awarded, as the performance requirements for 2010 was not achieved.

 THE BOARD’S AUTHORITY TO DECIDE ON THE ACQUISITION OF NISCAYAH’S TREASURY SHARES AND THE TRANSFER OF
NISCAYAH’S TREASURY SHARES 
 To create an opportunity for Niscayah to adjust its capital structure and enable the financing of acquisitions,
hedging costs, including social security costs, in connection with the introduction of the performance program, the annual general meeting 2011 authorized the board of directors to, at one or more occasions, but no later than the annual general
meeting 2012, take decisions on acquisition and transfer of treasury shares. However, the total number of shares held in treasury may not exceed 10 per cent of the total number of shares of Niscayah. Transfer may deviate from the shareholders
preferential rights to the extent of the number of shares that Niscayah holds at the time for the board’s decision. Transfer may be made as payment of all or part of the purchase price of the acquisition of a company or business or part of a
company or business, whereby compensation shall correspond to the shares’ estimated market value. Upon such transfer payment may be made in kind or set-off against a claim on Niscayah. Transfer may also be made through sale on NASDAQ OMX, at a
price within the prevailing registered price interval. The board may determine other terms of purchase or transfer, which however must be marketable. 

DIVIDEND POLICY 
 The board intends to apply a dividend
policy implying that the yearly dividend level – according to Niscayah’s results, financial position and other factors which the board deems relevant – should normally correspond to 40 to 50 per cent of Niscayah’s free cash
flow. 
 The business’ cash flow corresponds to the operating income after amortization, add-back of total depreciation and
amortization and acquisition related restructuring costs minus the investments in non-current assets (excluding acquisition of subsidiaries), changes in accounts receivables and changes in other operating capital employed and adjusted for paid
financial income and expenses, and paid income tax. 
 DIVIDEND HISTORY 

 

																	
	SEK/share	  	2010	 	  	2009	 	  	2008	 	  	2007	 
	 	 
	 Dividend
	  	 	0.30	  	  	 	0.30	  	  	 	0.30	  	  	 	0.50	  

 

  
 24 

 Share capital and shareholder structure etc. 

 

 OTHER INFORMATION 
 Niscayah has, before the announcement of the offer by Securitas on May 16, 2011, entered into certain arrangements with the purpose of ensuring that the Company has the required support for the process in which the
Securitas offer and other potential offers are evaluated and handled as well as in which alternatives are being explored. In addition to engaging an independent valuation expert for a so-called fairness opinion and legal counseling, the arrangements
also include a success-based variable compensation for the engaged financial advisor, Lazard, as well as a so-called staying bonus for two key persons in this process, namely the CEO and CFO. These potential additional compensations are considered
to, at maximum outcome, be moderate and well below one per cent of Niscayah’s market capitalization prior to the Securitas offer. In case a transaction resulting in change of control is not completed, no such additional compensations will be
paid. 
 SHAREHOLDER AGREEMENTS AND PRE-EMPTION RIGHTS IN RESPECT OF SHARES OF SERIES A 
 A shareholders’ agreement which includes a first refusal clause at either party’s sale of shares of series A, is concluded between holders of shares of series A. The board of Niscayah is not aware of any
other shareholder agreements or other agreements between the shareholders of Niscayah. Niscayah’s shares of series A are subject to a pre-emption clause (Sw. hembudsförbehåll) in accordance with the articles of association.

 
 

  
 25 

 Board, senior executives and auditors 

 

 BOARD OF DIRECTORS 
 According to Niscayah’s articles of association, the board shall consist of not less than five (5) and not more than ten (10) ordinary directors, excluding deputy directors, appointed by the general
meeting. Niscayah’s board consists of seven ordinary directors. 
 Jan Svensson born in 1956 

Chairman since 2011. 
 Education: Mechanical Engineer and
Degree of Master of Science in Business and Economics. 
 Other assignments: President and CEO of Investment AB Latour. Chairman of Fagerhult AB and
Nederman Holding AB. Director of Loomis AB and Oxeon AB. 
 Previous assignments: CEO of AB Sigfrid Stenberg, which is now part of Investment AB
Latour. 
 Shares in Niscayah: 10,000 shares of series B. 
 Not independent of the large owners. 
 Anders Böös born in 1964 

Director since 2007. 
 Other assignments: Chairman of Cision
AB, Cleanergy AB and Industrial & Financial Systems, IFS AB. Director of Investment AB Latour, Haldex AB, East Capital Baltic Property Fund AB, Tundra Fonder AB and Newsec AB. 
 Previous assignments: CEO of H&Q AB and Drott AB.  
 Shares in Niscayah: 100,000 shares of
series B. 
 Independent of the large owners. 
 Carl
Douglas born in 1965 
 Director since 2006.  
 Education: Bachelor of Arts. 
 Other assignments: Chairman of Wasatornet AB and MMT Group AB. Vice
chairman of Securitas AB. Director of ASSA ABLOY AB, Swegon AB, Örmo Skogar AB, Sparbössan Fastigheter AB, Tjädertornet AB, Havstornet AB, Fort Rydbo AB, SäkI Förvaltning AB, Slottstornet AB, Deep Sea Productions AB,
Wasatornet Holding AB, Boxholms Skogar AB, Orrtornet AB, Investment AB Latour and SäkI AB.  
 Shares in Niscayah: 200,000 private
shares of series B, 3,000,000 shares of series B through Förvaltnings AB Wasatornet, 12,642,600 shares of series A and 28,437,500 shares of series B through Investment AB Latour. 
 Not independent of the large owners.

 Tomas Franzén born in 1962 
 Director since 2006. 
 Education: Civil Engineering degree, Industrial Economics. 

Other assignments: CEO of Com Hem AB. Chairman of OTM Development AB. Director of Ovacon AB. 
 Previous assignments: President and CEO of Eniro AB 2004–2008. CEO of Song Networks Holding AB 2002–2004, AU- System AB 1999–2002 and AU-System Network AB 1995–1999. Has also worked for
Nokia Data AB and ICL Data AB. 
 Shares in Niscayah: – 
 Independent of the large owners. 
 Håkan Kirstein born in 1969 

Director since 2010 (also President and CEO). 
 Education:
Degree of Master of Science in Business and Economics. 
 Other assignments: Director of Kemetyl Group AB. Previous assignments: CEO of
StatoilHydro in Sweden, Statoil Detaljhandel AB and Statoil Detaljist AB. 
 Shares in Niscayah: 70,000 shares of series B. 

Independent of the large owners. 
 Eva Lindqvist born in
1958 
 Director since 2006. 
 Education:
Civil Engineer and Degree of Master of Science in Business and Economics. 
 Other assignments: Director of Schibsted, Assa Abloy AB and Transmode.
Chairman of Admeta and Xelerated. Member of the Royal Swedish Academy of Engineering Sciences. 
 Previous assignments: Several posts within the
Ericsson Corporate Group 1981–1999. Senior Vice President of Mobile Business and Head of Business Operation International Carrier at TeliaSonera AB. 

Shares in Niscayah: 6,000 shares of series B. 
 Independent of
the large owners. 

 

  
 26 

 Board, senior executives and auditors 

 

 

 Ulrik Svensson born in 1961 
 Director since 2007. 
 Education: Degree of Master of Science in Business and Economics. 

Other assignments: President of Melker Schörling AB. Director of Assa Abloy, AAK, Loomis, Hexpol, Hexagon and Flughafen Zurich. 

Previous assignments: Finance Director of Swiss International Airlines Ltd. 2003–2006, Esselte AB 2000–2003 and Financial Accountant/Finance
Director of Stenbecksgrup-pen’s foreign telecom investments 1992–2000. 
 Shares in Niscayah: 44,000 shares of series B. 

Not independent of the large owners. 
 Peter Alvhed born in
1966 
 Director since 2010. Employee’s representative. 

Previous assignments: Has worked as a technician and project leader for several electrical installation companies. 

Shares in Niscayah: – 
 Mikael Olsson born in
1969 
 Director since 2006. Employee’s representative. 

Previous assignments: Has worked for several small electrical installation companies. 
 Shares in Niscayah: – 
 SENIOR EXECUTIVES 
 Håkan Kirstein born in 1969 
 See Board of directors above. 

Magnus Bladh born in 1972 
 Group Director Sales. 

Education: Bachelor of Arts in Business and Economics.  

Previous assignments: Part of the Swedish Executive Body at Cisco and Microsoft Sweden. 
 Shares in Niscayah: –

 Håkan Gustavson born in 1958 
 CFO since 2008. 
 Education: Degree of Master of Science in Business and Economics. 

Previous assignments: CFO of Enea AB, Chief Operating Officer of MediaEdgeCia Europe. 
 Shares in Niscayah: 250,000 shares of series B. 
 David Schelin born in 1965 

Group Director Operations. 
 Education: MSc. in Electrical
Engineering. 
 Previous assignments: Vice President Business Management for Asia at Ericsson Global Services. Vice President Services at
Ericsson’s operations in Southeast Asia. Venture partner within Brainheart Capital. CEO and founder of Steelscreen (European Steel Exchange). Operations Manager at Europolitan. 
 Shares in Niscayah: – 
 Magnus Jonsson born 1966 

Group Director Marketing. 
 Education: IHM degree in
International Marketing.  
 Previous assignments: CEO of Niscayah’s subsidiary Pacom Systems Ltd in Australia. Vice President Business
Development at Assa Abloy. Several marketing postitions at Interlogix (previously GE-Security, now part of UTC). 
 Shares in Niscayah: 11,034
shares of series B and 30,000 warrants. 
 AUDITOR 

Bo Lagerström born in 1966 
 PricewaterhouseCoopers AB.

 Authorised public accountant. Member of FAR. Auditor in charge since 2009. 
 Shares in Niscayah: – 

 

  
 27 

 Niscayah’s articles of association 

 

 

 ARTICLES OF ASSOCIATION 
 for Niscayah Group AB (publ) with 
 Corporate ID No 556436-6267 

§ 1 
 The name of the company is Niscayah Group AB. The
company is a public company (publ). 
 § 2 

The Board of Directors of the company shall have its registered office in the municipality of Stockholm, County of Stockholm. 

§ 3 
 The object of the company is (directly or
indirectly through subsidiaries) to offer services and products within the field of security, to own and administer real and movable estate, as well as to pursue other compatible business. 
 § 4 
 The share capital shall be no less than MSEK two hundred (200,000,000) and no more than MSEK
eight hundred (800,000,000). 
 § 5 
 The
number of shares issued shall be no less than two hundred million (200,000,000) and no more than eight hundred million (800,000,000). 
 The shares may be issued in two classes, designated Class A and Class B. Shares of Class A may be issued up to a maximum number of one hundred and sixty million (160,000,000) and shares of Class B to
a maximum number of six hundred and forty million (640,000,000). 
 Each share of Class A entitles to ten (10) votes and each
share of Class B to one (1) vote. 
 Should the company decide to issue new Class A and Class B shares by way of a cash issue
or a setoff issue, the holders of Class A and Class B shares, respectively, shall have priority right to subscribe to new shares of the same class in proportion to their existing shareholdings (primary right of priority). Shares not subscribed
to by primary right of priority shall be offered to all shareholders (subsidiary right of priority). If the entire number of shares subscribed to by subsidiary right of priority cannot be issued, the shares shall be allocated between the subscribers
in proportion to their existing shareholdings and, insofar as this cannot be done, by drawing of lots.

 Should the company decide to issue shares of only one class by way of a cash issue or a set-off
issue, all shareholders, irrespective of whether their shares are of Class A or Class B, shall have priority right to subscribe to new shares in proportion to their existing shareholdings. 

Should the company decide to issue warrants or convertible bonds by way of a cash issue or a setoff issue, the shareholders shall have the
priority right to subscribe to such warrants as if the shares to which the warrants entitle were issued and the priority right to subscribe to such convertible bonds as if the shares for which the convertible bonds may be exchanged were issued,
respectively. 
 What is stated above shall not entail any restrictions on the possibility to resolve on a cash issue or a set-off issue
with deviation from the shareholders priority rights. 
 An increase of the share capital by way of a bonus issue shall be made by
issuing shares of both Class A and B, in proportion to their part of the share capital when the increase is decided upon. Holders of shares of Class A and Class B, respectively, shall have the right to new shares of the same class, each in
proportion to their existing shareholdings. The above shall not entail any restrictions on the possibilities to issue shares of a new class by a bonus issue, after any necessary amendments of the Articles of Association. 

§ 6 
 The Board of Directors shall, in addition to such
members that, in accordance with law, may be nominated by others than the General Meeting of Shareholders, consist of no less than five (5) and no more than ten (10) Directors with no deputy Directors. 

For the audit of the company’s administration and accounts, a registered public accounting firm shall be appointed by the General Meeting.

 § 7 
 A notice convening a General Meeting
shall be published in Post- och Inrikes Tidningar (the Swedish Official Gazette) and on the company’s web site. It shall be announced in Dagens Industri that notice of a General Meeting has been given. 

§ 8 
 General Meetings shall be held in Stockholm.

 

  
 28 

 Niscayah’s articles of association 

 

 

 § 9 
 A
shareholder, who wants to take part in the negotiations at a General Meeting, must be registered in a transcript or other presentation of the share register relating to the facts which were recorded five (5) weekdays before the General Meeting
and must give notice to the company no later than 4 p.m. the day set forth in the notice convening the meeting. The last mentioned day must not be a Sunday, any other public holiday, a Saturday, Midsummer Eve, Christmas Eve or New Year’s Eve
and must not fall earlier than on the fifth weekday before the General Meeting. 
 At the General Meeting, a shareholder is entitled to
be accompanied by one or two assistants; however, only if the shareholder gives notice hereof to the company according to what is prescribed in the previous paragraph. 
 § 10 
 At the Annual General Meeting the following matters shall be dealt with: 

	  1)	Election of a Chairman of the Meeting 

	  2)	Preparation and approval of a voting list 

	  3)	Approval of the Agenda 

	  4)	Election of one or two persons to check the minutes 

	  5)	Examination of whether the Meeting has been properly convened 

	  6)	Presentation of the Annual Report and the Auditors’ Report on the Parent Company, and the Consolidated Accounts and the Auditors’ Report on the Group

	  7)	Resolutions with respect to 

	 	a)	the adoption of the Income Statement and the Balance Sheet of the Parent Company, and the Consolidated Income Statement and the Consolidated Balance Sheet,

	 	b)	the appropriation of the Company’s profit or loss according to the adopted Balance Sheet, 

	 	c)	the discharge of the Directors of the Board and the Managing Director from their liability 

	  8)	Determination of the number of directors 

	  9)	Determination of fees for the Board of Directors and, where applicable, the Auditors 

	10)	Election of the Board of Directors and, where applicable, appointment of a registered public accounting firm 

	11)	Any other matter duly referred to the General Meeting. 

 §
11 
 The calendar year shall be the financial year of the company.

 § 12 
 If
a share of Class A has been transferred to a person who is not already a holder of shares of Class A, by means of purchase, exchange, gift, separation of joint property, inheritance, will, company distribution, merger, demerger or other
transfer of title, such share shall immediately be offered to the holders of shares of Class A for redemption. 
 As soon as the
Central Securities Depository (VPC) has informed the Board of Directors of the transfer of title, the Board of Directors shall immediately inform the acquirer of its obligation to offer the shares for redemption by written notification to the Board
of Directors. Such notification shall contain information on the consideration paid for the shares and the acquirer’s conditions for redemption. The acquirer shall hereby evidence his or her acquisition of the shares. Immediately upon receiving
a notification of transfer of title, the Board of Directors shall enter this into a special book with details on the date of notification, as set forth in the Companies Act. The Board of Directors shall at the same time notify every individual
entitled to redemption whose postal address is known to the company, in writing, of the transfer of title to the shares and inform that claims for redemption shall be submitted to the Board of Directors within two (2) months from the
acquirer’s notification of the transfer of title. Claims for redemption submitted within the stipulated time period shall be entered into a special book with details on the date of the claim for redemption, as set forth in the Companies Act.

 An offer for redemption may not be exercised for a smaller number of shares than those included in the offer. If claims for redemption
are made by several individuals entitled thereto, the shares shall, to the extent possible, be allocated to those entitled to redemption in proportion to their previous holdings of shares of Class A. The remaining number of shares shall be allocated
by drawing of lots, executed by notary public. 
 The redemption price shall be determined by agreement between the acquirer and the
individual entitled to redemption and shall as a general rule, if the shares have been transferred for a consideration, correspond to such consideration and otherwise to the price which can be expected in a sale under normal circumstances. If an
agreement on the redemption price cannot be reached, the person entitled to redemption may request arbitration as set forth below.

 

  
 29 

 Niscayah’s articles of association 
  

  

 

 A dispute regarding redemption of shares in accordance with this section 12 shall be finally
settled by the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. Arbitration shall be requested within two months from the day when the claim for redemption was submitted to the company in accordance with what is stipulated
above. The arbitration board shall consist of three arbitrators or one single arbitrator and is to be appointed by the institute. All requests for arbitration, which by reason of the same transfer of shares have been submitted to the institute
within the above stated time, shall be dealt with as one single arbitration procedure. 
 The redemption price shall be paid within one
(1) month from the time when the redemption price was determined, by means of agreement between the parties or by an arbitration award. If, within the stipulated time, no person entitled to redemption would submit a claim for redemption, or if
the redemption price would not be paid within the stipulated time, the person who offered the share for redemption shall be entitled to be registered as holder of the share. 
 § 13 
 The shares of the company shall be registered in a CSD register in accordance with the Financial
Instruments Accounts Act (1998:1479). 
  
  

These Articles of Association were adopted by the Annual General Meeting on 21 April 2009.

 
 

  
 30 

 The interim report of Niscayah, 
 January – March 2011 
 

 

  
 31 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 32 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 33 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 34 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 35 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 36 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 37 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 38 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 39 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 40 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 41 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 42 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 43 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 44 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 45 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 46 

 The interim report of Niscayah, January – March 2011 

 

 

 

  
 47 

 Report by Niscayah’s board of directors 
 The information about Niscayah on pages 15–28 of this offer document has been reviewed by Niscayah’s board of directors. The board of director’s view is that this brief description provides an
accurate and fair, although not complete, picture of Niscayah. 
 Stockholm, July 21, 2011 

Niscayah Group AB (publ) 

The board of directors 

  
 48 

 Description of Stanley Black & Decker and SBD Holding and the financing of the Offer 

 

 DESCRIPTION OF SBD HOLDING 
 SBD Holding AB, registration number 556853-6303, is indirectly wholly owned by Stanley Black & Decker, Inc. The company is domiciled in Stockholm, Sweden, and its registered address is c/o
Gernandt & Danielsson Advokatbyrå KB, Box 5747, SE-114 87 Stockholm, Sweden. The company was registered with the Swedish Companies Registration Office (Sw. Bolagsverket) on May 20, 2011. SBD Holding AB has never conducted
and at present does not conduct any business and its principal business purpose is to make the Offer and take all actions to complete the Offer and operate as parent of Niscayah. 
 DESCRIPTION OF STANLEY BLACK & DECKER 
 Stanley Black & Decker, Inc., with its registered
office in Connecticut, United States, is listed on the New York Stock Exchange. The company is an S&P 500 company and diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic
security solutions, engineered fastening systems, infrastructure solutions and more. Stanley Black & Decker was founded in 1843 as The Stanley Works; the company changed its name to Stanley Black & Decker following the 2010 merger
of a subsidiary formed for that purpose with The Black & Decker Corporation, which was incorporated in 1910. “Stanley” and “Black & Decker” are brand names with worldwide recognition for their quality, design,
innovation and value. Stanley Black & Decker’s more than 36,000 employees worldwide serve customers in over 100 countries. Currently, Stanley Black & Decker has a market capitalization of more than USD 11 billion and revenues
of approximately USD 10 billion. 
 The Company’s operations are classified into three reportable business segments:
Construction & Do-It-Yourself (“CDIY”), Security, and Industrial. The CDIY segment manufactures and markets hand tools, corded and cord-less electric power tools and equipment, lawn and garden products, consumer portable power
products, home products, accessories and attachments for power tools, plumbing products, consumer mechanics tools, storage systems, and pneumatic tools and fasteners. The Security segment provides access and security solutions primarily for
consumers, retailers, educational, financial and health-care institutions, as well as commercial, governmental and

 
industrial customers, and the Industrial segment manufactures and markets professional industrial and automotive mechanics tools and storage systems, metal and plastic fasteners and engineered
fastening systems, hydraulic tools and accessories, and specialty tools. 
 THE FINANCING OF THE OFFER 

General 
 The Offer is not subject to any financing condition.
The Offer will be financed by Stanley Black & Decker from existing cash and a credit facility. 
 Stanley Black &
Decker is an A/Baa1 rated company with USD 1.9 billion in cash and equivalents on its balance sheet as of July 2, 2011. On July 22, 2011, Stanley Black & Decker entered into a 364-Day Credit Agreement (the “Credit
Agreement”) to obtain extensions of credit and commitments aggregating US 1.25 billion (the “Credit Facility”). Stanley Black & Decker’s existing cash resources together with funds available under the Credit Facility are
more than sufficient to fund the entire amount to be paid under the Offer. Notwithstanding the above, Stanley Black & Decker reserves the right to raise funds through, for example, the issuance of commercial paper and/or capital markets
offerings and use such funds, in place of some or all of the amount provided for under the facility described above. 
 Stanley
Black & Decker has undertaken to provide SBD Holding with necessary funds to settle the Offer. 
 Summary of the conditions for a drawdown
pursuant to the Credit Facility 
 The Credit Facility consists of a US 1.25 billion revolving credit loan. Borrowings under the Credit Facility bear
interest at a floating rate or rates equal to, at the option of Stanley Black & Decker, the Eurocurrency rate or the prime rate, plus a margin specified in the Credit Agreement. 

Stanley Black & Decker must repay all advances by the earlier of (i) July 20, 2012 or (ii) the date of termination in
whole, at the election of Stanley Black & Decker, of the commitments by the lenders under the Credit Facility, pursuant to the terms of the Credit Agreement. Stanley Black & Decker may be required to prepay any borrowings under the
Credit Facility upon a change of control. 

 

  
 49 

 Description of Stanley Black & Decker and SBD Holding and the financing of the Offer 

 

 The Credit Agreement contains covenants that include, among other things:

  

	•	 	 a limitation on creating liens on certain property of Stanley Black & Decker and its subsidiaries; 

	•	 	 a restriction on mergers, consolidations and sales of substantially all of the assets of Stanley Black & Decker or its subsidiaries;

	•	 	 maintenance of a specified financial ratio; and 

	•	 	 a restriction on entering into certain sale-leaseback transactions. 

The material conditions for a drawdown pursuant to the Credit Facility are the following: 

 

	•	 	 that certain of the representations made by Stanley Black & Decker in the Credit Agreement are correct; and 

	•	 	 that no circumstances have occurred which would constitute a default or event of default under the Credit Agreement. 

The Credit Facility contains customary events of default. If an event of default occurs and is continuing Stanley Black & Decker might be
required to repay all amounts outstanding under the Credit Facility.

 
 

  
 50 

 Tax issues in Sweden 

 

 INTRODUCTION 
 The following is a summary of certain tax consequences of the Offer in Sweden in relation to individuals and limited liability companies (Sw. Aktiebolag) that are, unless otherwise stated, tax resident in
Sweden. The summary is based on current legislation and is intended to provide general information only. The summary does not cover situations where shares and warrants are held as current assets in business operations. Furthermore, the summary does
not consider special rules that may be applicable when shares and warrants in Niscayah are treated as shares held for business purposes.1) The tax treatment of each individual shareholder and warrant holder depends in part on the holder’s particular
circumstances. Each holder of shares and warrants is advised to consult a tax advisor for information on specific tax consequences that could arise from the Offer, including the applicability and effect of foreign tax legislation and provisions
contained in tax treaties for the avoidance of double taxation. 
 TAX CONSEQUENCES IN RELATION TO THE DISPOSAL OF SHARES IN NISCAYAH 

General 
 A disposal of shares in Niscayah will give rise to a
capital gain or a capital loss. The capital gain or loss is computed as the difference between the sales proceeds (reduced by selling expenses) and the tax acquisition value of the shares. The point of disposal for tax purposes normally occurs when
there is a binding agreement regarding a transfer of shares between the parties. 
 When computing the capital gain or loss, the average
tax acquisition value for all shares of the same class and type should be applied in accordance with the so-called average method. As regards listed shares, the so-called standard method may however be used as an alternative to the average method.
This means that the tax acquisition value may be calculated as 20 per cent of the sales proceeds after deduction of selling expenses.

 Taxation of individuals 
 For individuals, capital gains are taxed in the capital income category (together with e.g. interest income and dividends). The tax rate in the capital income category is 30 per cent. 

Capital losses on listed shares, such as the shares in Niscayah, may be fully offset against taxable capital gains on shares (listed as well as
unlisted) and listed securities that are taxed as shares, provided that the capital gain is realized in the same year as the capital loss. A capital loss on listed shares which cannot be offset against a capital gain is deductible as to 70 per
cent of the loss. 
 Should a net loss arise in the capital income category in a given year, a reduction is granted of the tax on income
from employment and business operations, as well as property tax and municipal estate charges. This tax reduction is granted at 30 per cent of the part of the net loss that does not exceed SEK 100,000 and at 21 per cent of any remaining
net loss. 
 Taxation of limited liability companies 

For limited liability companies, all income is taxed as income from business activities at a rate of 26.3 per cent. Capital losses on shares, warrants and
other securities can normally only be offset against capital gains on shares, warrants and securities that are taxed as shares. If a company does not have the possibility to offset a capital loss against a capital gain, the capital loss can be
offset against another company’s capital gains on shares, warrants and securities that are taxed as shares, provided, inter alia, that the companies can give each other tax deductible group contributions. A capital loss which cannot be
offset against capital gains on shares in a given year, can be carried forward without any limitation in time and can be offset against future capital gains on shares, warrants and securities that are taxed as shares. Special rules may apply to
certain categories of companies, such as investment funds and investment companies. 

 

  

	1)	Listed shares are deemed to be held for business reasons if the shares are held as capital assets and the holding (i) represents at least 10 per cent of the voting rights, or
(ii) otherwise is considered necessary for the business conducted by the holding company or any of its affiliates. Furthermore, the shares must have been held for business reasons for a certain period of time in order for dividends and capital gains
to be tax exempt. 

  
 51 

 Tax issues in Sweden 

 

 TAX CONSEQUENCES IN RELATION TO THE DISPOSAL OF WARRANTS IN NISCAYAH 

The disposal of warrants under the Offer gives rise to capital gains taxation. The standard method may not be applied when determining the acquisition cost of
non-listed warrants. 
 For individuals, capital gains are taxed in the capital income category at a rate of 30 per cent.
70 per cent of a capital loss on non-listed warrants is deductible in the income from capital category. 
 For limited liability
companies, capital gains on non-listed warrants are taxed as ordinary business income at a rate of 26.3 per cent. Capital losses on non-listed warrants may be offset only against taxable gains on shares and other securities that are taxed as
shares. Such capital losses may, under certain circumstances, also be deductible against capital gains on such securities within the same group of companies provided the requirements for group contributions are met. Capital losses, which have not
been utilized within a certain year, may be carried forward and be offset against eligible capital gains in future years without limitation in time. 

CERTAIN SWEDISH TAX ISSUES FOR HOLDERS OF SHARES AND WARRANTS THAT ARE NOT TAX RESIDENT IN SWEDEN 
 Holders of shares and warrants in Niscayah that are not tax resident in Sweden will normally not be subject to capital gains taxation in Sweden on the disposal of shares and warrants (see below for certain
exceptions). Such holders may however be subject to taxation in their state of residence. Such holders should therefore consult their own tax advisors in order to determine the tax consequences that could arise as a result of the Offer.

 Individuals not tax resident in Sweden could be subject to capital gains taxation in Sweden upon
the disposal of Swedish shares and warrants issued by Swedish companies if they have been residents in Sweden or have habitually resided in Sweden at any time during the calendar year of disposal or the ten calendar years preceding the year of
disposal. In a number of cases though, the application of this rule is limited by an applicable tax treaty. However, it should be noted that the effect of applicable tax treaties on Swedish taxation of capital gains on shares and warrants is to some
extent uncertain. 
 A limited liability company not tax resident in Sweden could be subject to capital gains taxation in Sweden if,
inter alia, the company has a permanent establishment in Sweden to which the disposed shares and warrants are attributable.

 

  
 52 

 Auditor’s report regarding summary of historical financial information 

TO THE BOARD OF DIRECTORS OF NISCAYAH GROUP AB (PUBL) 
 We
have audited the summarized historical financial statement for Niscayah Group AB (publ) (“Niscayah”) on pages 17–19 which refer to the period 2008–2010, but not, however, information regarding key ratios and data per share, or
the information for first quarters of financial years 2010 and 2011. 
 THE BOARD OF DIRECTORS’ AND THE CEO’S RESPONSIBILITY FOR THE
FINANCIAL STATEMENTS 
 The board of directors and the CEO are responsible for ensuring that the summarized historical financial statements on pages
17–19, as regards Niscayah, are consistent with those financial statements provided in the annual reports for 2008, 2009 and 2010 and the interim financial reports for the first quarters of 2010 and 2011, respectively, and that these financial
statements have been accurately reproduced. The board of directors is also responsible for the fair presentation of the information in accordance with the Financial Instruments Trading Act (1991:980) and the regulations of NASDAQ OMX concerning
public takeover bids on the stock market. 
 THE AUDITOR’S RESPONSIBILITY 
 Our responsibility is to express an opinion on these summarized historical financial statements based on our audit. We conducted our audit in accordance with FAR’ Recommendation RevR 5 Examination of
Prospectuses. 
 OPINION 
 In our opinion, the
information provided in the historical financial statements for the financial years 2008–2010 has been accurately reproduced. 
 We
have audited the annual reports for the years 2008–2010. We have submitted auditor’s reports in accordance with the standard formulation for each of these financial years. 

Stockholm, on July 21, 2011 

PricewaterhouseCoopers AB 
 Bo
Lagerström 
 Authorized Public Accountant 

  
 53 

 Agreement with Niscayah 
 

 

  
 54 

 Agreement with Niscayah 
  

 

 

  
 55 

 Agreement with Niscayah 

 

 

 

  
 56 

 Agreement with Niscayah 
  

 

 

  
 57 

 Addresses 

 

 Stanley Black & Decker, Inc 
 1000 Stanley Drive 
 New Britain, CT 06053 
 United States 
 Tel: +1 (860) 2255111 
 Email: investorrelations@swkbdk.com 
 www.stanleyblackanddecker.com 

SBD Holding AB 
 C/o Gernandt & Danielsson
Advokatbyrå KB 
 Address below 
 ADVISORS TO
STANLEY BLACK & DECKER AND 
 SBD HOLDING 
 Financial advisors 
 Barclays Capital, Inc. 
 745 Seventh Avenue 
 New York, NY 10019 
 USA 
 Handelsbanken Capital Markets 
 Blasieholmstorg 11–12 
 SE-106 70 Stockholm 
 Sweden 
 J.P. Morgan Securities LLP 
 383 Madison Avenue 
 New York, NY 10179 
 USA 
 Legal advisors 
 Cleary Gottlieb Steen & Hamilton LLP 
 City Place House, 55 Basinghall Street 

London EC2V 5EH 
 England 

Gernandt & Danielsson Advokatbyrå KB 
 Box
5747 
 SE-114 87 Stockholm 
 Sweden

 Niscayah Group AB (publ) 
 Box 12231 
 SE-102 26 Stockholm 
 Visiting address: 
 Lindhagensplan 70 
 Sweden 
 AUDITORS TO NISCAYAH 
 PricewaterhouseCoopers AB 
 Torsgatan 21 
 SE-113 97 Stockholm 
 Sweden 
 ADVISORS TO NISCAYAH 
 Financial advisor 
 Lazard AB 
 Sturegatan 24 
 SE-114 36 Stockholm 
 Sweden 
 Legal advisor 
 Hannes Snellman Attorneys Ltd 
 Kungsträdgårdsgatan 20 
 SE-111 47 Stockholm 
 Sweden 

 

  
 58exhihit_10-1.htm

EXHIBIT 10.1

 

 

SECURITIES PURCHASE AGREEMENT

 

THIS AGREEMENT effective the 13th day of July, 2011

 

AMONG:

 

Z & G ENTERPRISES LLC, a limited liability company incorporated under the laws of the State of Nevada (“Z&G”)

 

AND:

 

APEX CONSOLIDATED LLC, a limited liability company incorporated under the laws of the State of Nevada

 

(“Apex” and together with Z&G, the “Vendors”)

 

AND:

 

INTERNATIONAL GOLD CORP., a body corporate incorporated under the laws of the State of Nevada (the “Purchaser”)

 

AND:

 

CORMACK CAPITAL GROUP LLC, a limited liability company incorporated under the laws of the State of Nevada (the “Company”)

 

WHEREAS the Vendors presently hold one hundred percent (100%) of the membership interests in and to the Company represented by the membership certificates of the Company and the Company has certain indirect interests in a mineral property and equipment as listed in Schedule 1.1 annexed hereto;

 

WHEREAS the Purchaser is a public company reporting in the United States and Canada;

 

WHEREAS the Purchaser wishes to purchase from the Vendors all of the issued and outstanding membership interests of the Company on the terms and conditions herein contained;

 

WHEREAS the purchase price for the membership interests of the Company will be paid in shares of common stock of the Purchaser and certain cash consideration, as set out herein; and

 

WHEREAS following such purchase, the Purchaser will own all of the membership interests, and the membership certificates evidencing such interests, of the Company.

 

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

 

ARTICLE 1

 

DEFINITIONS

 

1.1           Definitions

 

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

 

“45-106” means National Instrument 45-106 Prospectus and Registration Exemptions of the Canadian Securities Administrators, and its companion policy and forms thereto.

  

1

  

 

“Affiliate” of the Company or the Purchaser, as the case may be, means any Person directly or indirectly controlling, controlled by or under direct or indirect common control with the Company or the Purchaser, as the case may be.

 

“Applicable Securities Laws” means all applicable securities legislation in all jurisdictions relevant to the issuance of the Payment Shares to the Vendors.

 

“Area of Interest” means all lands within two miles radius from the outside boundaries of the Property as they exist as of the date of this Agreement.  The Area of Interest also will apply to the boundaries of the Property upon the acquisition of new ground.

 

“Business” means the business currently and heretofore carried on by the Company or the Purchaser, as the case may be.

 

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

 

“Cash Consideration” has the meaning set out in Section 2.2(b).

 

“Change of Control” means the acquisition, directly or indirectly, of beneficial ownership of voting shares that results in a holding of more than 20% of the issued and outstanding voting shares of the Company or the Purchaser, as the case may be, by a third party, other than in connection with this Agreement or the Interim Private Placement.

 

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

 

“Claim” has the meaning set out in Section 9.4.

 

“Closing” means the closing of the purchase and sale of the Membership Interests between the Vendors and the Purchaser and related transactions pursuant to the terms of this Agreement.

 

“Closing Date” means August 15, 2011 or such other date as the Company and the Purchaser may agree in writing.

 

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

 

“Company” has the meaning ascribed to it on the face page of this Agreement.

 

“Company Assets” means all of the assets of the Company, including all of the issued and outstanding shares of MSO.

 

“Membership Interests” has the meaning set out in Section 2.1.

 

“Company Financial Statements” has the meaning set out in Section 3.14.

 

“Company Parties” has the meaning set out in Section 9.1.

 

“Control” in respect of a Person (including the terms “controlled by” and “under common control with”), means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or by other arrangement.

 

“Direct Claim” has the meaning set out in Section 9.4.

  

2

  

 

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

 

“Dollars” and “$” means United States dollars.

 

“Encumbrance” means any encumbrance of any kind whatever (registered or unregistered) and includes a royalty, profit interest, security interest, lien, charge, hypothec, pledge, mortgage, hypothecation, security interest under applicable legislation, trust or deemed trust (whether contractual, statutory or otherwise arising), and a voting trust or pooling agreement with respect to securities.

 

“Environmental Laws” has the meaning set out in Section 3.22.

 

“Finder” means Goal Capital Inc.

 

“Finder’s Fee” means the finder’s fee of 5,000,000 Purchaser Common Shares to be issued to the Finder upon Closing of this Agreement, subject to compliance with applicable securities laws.

 

“Generally accepted accounting principles” or “GAAP” means United States generally accepted accounting principles.

 

“Government Authority” means any government in the United States, Canada, Mexico or any other government and any agency, or department, tribunal, board, commission, court or other authority exercising or purporting to exercise executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government, as well as any arbitrator, arbitration tribunal or other tribunal or other quasi-governmental or private body exercising any regulatory, expropriation or taxation authority under or for the account of any of the foregoing, including any authority regulating the Business.

 

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

 

“Indemnified Party” has the meaning set out in Section 9.4.

 

“Indemnifying Party” has the meaning set out in Section 9.4.

 

“Interim Private Placement” means the issuance by the Purchaser of up to ten million (10,000,000) Private Placement Shares by way of a non-brokered private placement, for minimum gross proceeds of  five hundred thousand dollars ($500,000).

 

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

  

3

  

 

 

“Losses” means all losses, damages, liabilities, deficiencies, costs and expenses (including, without limitation, all reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising out of or relating to any Claim but specifically excluding all loss of profits, punitive damages and consequential damages of all types and any amounts which would result in the duplication of indemnification for any Claim.

 

“Material Adverse Effect” in respect of a Person means any change, effect, event, occurrence, condition or development that has or could reasonably be expected to have, individually or in the aggregate, a material and adverse impact on the business, operations, results of operations, assets, capitalization or financial condition of such Person, other than any changes related to the economy or the industry in which the Person carries on business.

 

“MSO” means Minera Sol de Oro S.A. de C.V., a private corporation incorporated under the laws of Mexico and owner of the Property.

 

“Parties” means all the parties to this Agreement.

 

“Payment Shares” has the meaning set out in Section 2.2.

 

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

 

“Private Placement Shares” means a Purchaser Common Shares pursuant to the Interim Private Placement at a price of $0.05 per share.

 

“Property” means the four mineral concessions covering 15,979.6 hectares known as the Huizopa Property, located approximately 60 kilometers southwest of the town of Madera, and 260 kilometers west of the city of Chihuahua in northern Mexico and the equipment, as detailed in Schedule 1.1.

 

“Purchaser Assets” means all of the assets of the Purchaser.

 

“Purchaser Common Shares” means shares of common stock in the capital of the Purchaser, par value $0.0001 per share.

 

“Purchase Price” has the meaning set out in Section 2.2.

 

 “Purchaser’s Public Documents” means all documents filed by the Purchaser with U.S. Securities and Exchange Commission on EDGAR.

 

“Recognized Exchange” means the TSX, TSX Venture Exchange, Canadian National Stock Exchange or any other recognized Canadian exchange.

 

“Subsidiary” means with respect to a Person, any entity (whether or not incorporated) of which such Person, directly or indirectly, owns or exercises control or direction over at least 50% of the equity interests or voting securities or interests sufficient to elect a majority of the board of directors (or similar body for non-corporate entities).

 

“Tax” or “Taxes” means any tax, including all federal, state, provincial, municipal, local, territorial and other taxes, imposts, rates, levies, assessments and government fees, charges or dues levied, assessed, or imposed by any Government Authority or taxing authority of Canada or the United States or any province, state or jurisdiction contained therein, including income taxes, net proceeds taxes, surtaxes, alternative or minimum taxes, excise taxes, withholding taxes, payroll and employee withholding taxes, employment insurance, pension plan premiums, workers’ compensation payments, employer health taxes, sales taxes, goods and services taxes, transfer fees, levies, charges, business or property taxes, land transfer taxes, capital taxes, customs and import duties, and other governmental charges of any kind whatsoever, and includes additions to taxes, interest, fines and penalties with respect thereto.

  

4

  

 

“Third Party” has the meaning set out in Section 9.6.

 

“Third Party Claim” has the meaning set out in Section 9.4.

 

“U.S. Person” has the meaning set out in Regulation S of the U.S. Securities Act.

 

“U.S. Securities Act” means the United States Securities Act of 1933, as amended.

 

“Vendors Certificate” means the Vendors Certificate in the form attached as Schedule 4.5 hereto.

 

1.2           Knowledge

 

The expression “to the knowledge of” or a similar phrase shall mean the knowledge of the Person based on the receipt of written notice addressed to the Person or the actual knowledge of any senior officer of the Person.

 

1.3           Schedules

 

All of the Schedules referred to herein form an integral part of this Agreement.

 

ARTICLE 2

 

AGREEMENT TO PURCHASE AND SELL

 

2.1           Purchase and Sale of the Membership Interests

 

Subject to the terms and conditions hereof and in reliance on the representations and warranties set out or referred to herein, at the Closing Time, the Vendors agree to sell, transfer and assign to the Purchaser one hundred percent (100%) of the issued and outstanding membership interests in the Company (the “Membership Interests”) and the Purchaser agrees to purchase such Membership Interests from the Vendors.

 

2.2           Payment of Purchase Price

 

The Purchase Price (the “Purchase Price”) for the Membership Interests to be acquired by the Purchaser from the Vendors at the Closing Time shall consist of the following:

 

	
  

	
(a)

	
the issuance to the Vendors and/or their nominees, subject to compliance with applicable securities laws, of a total of twenty five million (25,000,000) Purchaser Common Shares on the Closing Date at a deemed price equal to the price per share of the most recent private placement offering completed by the Purchaser prior to the Closing Date (the “Payment Shares”); and

 

	
  

	
(b)

	
an aggregate cash payment equal to $150,000 (the “Cash Consideration”) consisting of:

 

	
  

	
(i)

	
$75,000 which shall be paid and satisfied by setting-off the Vendor's indebtedness to the Purchaser pursuant to the loan advanced to MSO on June 17, 2011 as a demand loan (the “Loan”), and including all accrued and unpaid interest thereunder up to the Closing Date; and

 

	
  

	
(ii)

	
a further a cash payment of $75,000 payable to MSO on or before Closing.

  

5

  

 

	
  

	
Notwithstanding the foregoing, the Purchaser acknowledges and agrees that upon Closing of this Agreement the Loan plus the second cash payment referred to in 2.2(b)(ii) above in the aggregate of $150,000 will be fully satisfied and extinguished and the Purchaser will remise, release and forever discharge the Vendors from any and all obligations relating to such amount provided that if Closing is not completed, such amount shall be payable to the Purchaser together with interest computed on the outstanding daily principal balance of the Loan plus cash payment at the rate of 5% per annum, calculated monthly, not in advance, and on the date that is 60-calendar days from the date hereof and secured by the assets of the Company.

 

2.3           Resale Restrictions

 

	
  

	
(a)

	
The Vendors agree to abide by all applicable resale restrictions, escrow restrictions and hold periods imposed by Applicable Securities Laws and/or a Recognized Exchange, if applicable.

 

	
  

	
(b)

	
The Vendors and the Company acknowledge that the Purchaser has advised the Vendors and the Company that the Purchaser is relying on an exemption from the prospectus requirements of the Applicable Securities Laws, and, as a consequence, the Vendors will not be entitled to certain protections, rights and remedies available under Applicable Securities Laws, including statutory rights of rescission or damages, and the Vendors will not receive information that would otherwise be required to be provided to the Vendors pursuant to Applicable Securities Laws.

 

2.4           Closing and Delivery of Documents

 

	
  

	
(a)

	
The Closing shall take place at the offices of Heenan Blaikie LLP at the Closing Time on the Closing Date, or as the Company and the Purchaser may otherwise agree.

 

	
  

	
(b)

	
Subject to the satisfaction of the conditions set out in Article 7:

 

	
  

	
(i)

	
The Vendors shall deliver to the Purchaser at the Closing Time the Company Membership Certificates to be acquired from the Vendors, duly endorsed in blank for transfer; and

 

	
  

	
(ii)

	
The Purchaser shall deliver the Payment Shares to the Vendors set out in Section 2.2 and advance the Cash Consideration to MSO as set out in Section 2.2.

 

2.5           Escrow

 

In addition to section 2.3, the Vendors acknowledge that Payment Shares acquired by the Vendors pursuant to this Agreement may be subject to escrow pursuant to the policies of a Recognized Exchange discussed in section 2.3.  If required, the Vendors agree to abide by all escrow requirements imposed by a Recognized Exchange and agree to enter into the requisite form of escrow agreement as required by such an exchange.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE VENDORS

 

The Company and the Vendors hereby jointly and severally represent and warrant to and in favour of the Purchaser, and acknowledge that the Purchaser is relying upon such representations and warranties in connection with the purchase of Membership Interests, the following:

 

3.1           Organization and Existence

 

The Company is a limited liability corporation duly incorporated, organized and validly existing under the laws of the State of Nevada.  The Company is in good standing under the corporate laws of each state, province, territory or other jurisdiction in which it carries on business.  No proceedings have been instituted or are pending for the dissolution or liquidation of the Company.

  

6

  

 

 

MSO is an entity duly incorporated, organized and validly existing under the laws of its incorporation or continuation.  MSO is in good standing under the laws of each jurisdiction in which it carries on business.  No proceedings have been instituted or are pending for the dissolution or liquidation of the MSO.

 

3.2           Corporate Power and Authority

 

The Company has all requisite corporate power, authority and capacity to own, lease and operate the Company Assets and to carry on its Business as now conducted by it.  The Company has all corporate power and capacity to execute and deliver this Agreement and to consummate the transactions and otherwise perform its obligations under this Agreement.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company and, if required, by its shareholders and no other corporate proceedings or approvals on the part of the Company or its shareholders are necessary to authorize this Agreement.

 

3.3           Subsidiaries

 

The Company does not have any Affiliates or wholly-owned or majority owned Subsidiaries, except MSO. MSO is a direct wholly-owned subsidiary of the Company. At the Closing Time, the Company will legally and beneficially own and control all of securities of MSO with good and marketable title thereto, free of any charge, mortgage, lien, hypothec, pledge, claim, restriction, security interest or other encumbrance whether created or arising by agreement, statute or otherwise at law, attaching to property, interests or rights.  Furthermore, no person or entity (other than the Purchaser) has any agreement, right, option, understanding or commitment, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement, right, option, or commitment of any nature, for the purchase, assignment or other transfer of such securities and any certificates representing same.

 

3.4           Corporate Books

 

The Company has made available to the Purchaser correct and complete copies of its minute books, including its Charter, all amendments to its Charter, the names and titles of all of its officers and directors, and its membership register.  The Company is not in violation of its Charter.

 

3.5           Authorized Capital

 

As at the date of this Agreement and at the Closing Time, the Company membership certificates representing the Membership Interests will be issued and outstanding. The Company membership certificates representing the Membership Interests are and will be duly authorized, issued and outstanding. As at the date of this Agreement and at the Closing Time no other securities of the Company will be issued and outstanding.

 

3.6           Membership Interests

 

Immediately prior to the Closing Time, the Vendors will own one hundred percent (100%) of the  Membership Interests as all of the holders of record, and the membership certificates representing such interest will constitute the only issued and outstanding securities of the Company at such time.  At the Closing Time, the Vendors will legally and beneficially own and control all of Membership Interests sold by the Vendors pursuant to this Agreement with good and marketable title thereto, free of any charge, mortgage, lien, hypothec, pledge, claim, restriction, security interest or other encumbrance whether created or arising by agreement, statute or otherwise at law, attaching to property, interests or rights.  No person or entity (other than the Purchaser) has any agreement, right, option, understanding or commitment, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement, right, option, or commitment of any nature, for the purchase, assignment or other transfer from the Vendors of any of the Membership Interests or the membership certificates representing same.

  

7

  

 

3.7           Information

 

All current and historical data and information provided by the Company, at the request of the Purchaser and its agents and representatives, to the Purchaser and its agents and representatives was and is complete and true and correct in all material respects.  All forward-looking information is, to the best of the Company’s knowledge, based upon reasonable assumptions.

 

3.8           Authorization

 

Neither the execution and delivery of this Agreement nor the performance by the Company of its obligations hereunder will:  (a) conflict with or result in a breach of or create a state of facts which, after notice or lapse of time or both, will result in a breach by the Company of: (i) any statute, rule or regulation, which breach would be material to the Company; (ii) any Applicable Securities Laws; (iii) the Charter or resolutions of the directors (or any committee thereof) or membership holders of the Company which are in effect at the date hereof; (iv) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which the Company is a party or by which it is bound, which breach would be material to the Company; or (v) any judgment, decree or order binding the Company or the Company Assets, which breach would be material to the Company; (b) require the consent, approval, authorization, registration or qualification of or with any Governmental Authority, stock exchange, securities association or other third party, except: (i) such as have been obtained; or (ii) such as may be required under all Applicable Securities Laws; or (c) give rise to any lien, charge or claim in or with respect to the Company Assets or the acceleration of or the maturity of any debt or claim for payment under any indenture, mortgage, lease, agreement or instrument binding or affecting the Company or any of the Company Assets.

 

3.9           No Other Agreement to Purchase

 

Other than as set out in Schedule 3.9 annexed hereto, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon the Company to issue any membership interests or any securities convertible or exchangeable, directly or indirectly, into any Membership Interests.  There are no membership holder agreements, pooling agreements, voting trusts or other agreements or understandings with respect to the voting of all or any of Membership Interests.

 

3.10           No Material Adverse Change

 

Other than as disclosed to the Purchaser, as at the date of this Agreement there has occurred no changes in the Business, prospects, operations, results of operations, the Company Assets, capitalization or condition (financial or otherwise) of the Company, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on the Company.

 

3.11           Indebtedness

 

Other than disclosed in Schedule 3.15, there are no loans or other liabilities of the Company and/or MSO outstanding in favour of the Vendors, or any former membership holder of the Company and/or MSO, or any party related to them, nor are there any loans outstanding or other amounts due to the Company from any such persons, for an amount over $5,000 on an individual basis or $10,000 in the aggregate.

 

3.12           Indebtedness to Officers, Directors and Others

 

The Company and/or MSO is not indebted to any director, officer, employee or consultant of the Company, except for amounts payable in the ordinary course of business, and if such amount is over $5,000 on an individual basis or $10,000 in the aggregate.

  

8

  

 

3.13           Taxes

 

The Company and/or MSO as of June 30, 2011 does not owe any Taxes to the federal government, a state government, a municipal government or any other Government Authority, other than in the ordinary course of business and where the payment of such Taxes would not have a Material Adverse Effect on the Company.

 

3.14           Reports and Company Financial Statements

 

	
  

	
(a)

	
The Company has made available to the Purchaser true and complete copies of the unaudited consolidated balance sheet of the Company as of June 30, 2011 and the related audited consolidated balance sheets, statements of operations and cash flows of the Company for the financial years ended December 31, 2010 and 2009 (collectively, the “Company Financial Statements”).

 

	
  

	
(b)

	
The Company Financial Statements delivered under Section 3.14(a) were prepared in accordance with GAAP, the balance sheet included in such the Company Financial Statements fairly presents the financial condition of the Company as at the close of business on the date thereof, and the statement of operations included in the Company Financial Statements fairly presents the results of operations of the Company for the fiscal period then ended.

 

	
  

	
(c)

	
There was no Indebtedness of the Company as of June 30, 2011 other than that disclosed in the balance sheet of the Company as of June 30, 2011.

 

3.15           Material Contracts

 

	
  

	
(a)

	
Annexed hereto as Schedule 3.15 is a true, complete and accurate list of all outstanding material contracts, agreements and commitments entered into by the Company and/or MSO which are in writing or have been orally agreed to by the Company, including:

 

	
  

	
(i)

	
all written contracts with any officer, director, employee or consultant of the Company,

 

	
  

	
(ii)

	
all plans, contracts or arrangements providing for the grant of stock options or share purchase arrangements, bonuses, pensions, deferred or incentive compensation, retirement, Change of Control or severance payments, profit-sharing, insurance or other benefit plans or programs for any employee, officer, consultant or director of the Company,

 

	
  

	
(iii)

	
all option agreements or property-acquisition agreements,

 

	
  

	
(iv)

	
all joint venture agreements and agreements involving a sharing of profits,

 

	
  

	
(v)

	
all royalty agreements,

 

	
  

	
(vi)

	
all lease agreements,

 

	
  

	
(vii)

	
all agreements relating to any Encumbrances granted against the Company Assets,

 

	
  

	
(viii)

	
all agreements respecting non-competition matters,

 

	
  

	
(ix)

	
all agreements respecting confidentiality matters,

 

	
  

	
(x)

	
all agreements respecting any Indebtedness over $5,000 on an individual basis or $10,000 in the aggregate contracted by the Company, and

 

	
  

	
(xi)

	
all other material contracts entered into by the Company.

  

9

  

 

	
  

	
(b)

	
All contracts, agreements, benefit plans, leases and commitments required to be disclosed to the Purchaser pursuant to this Section 3.15 are legally-binding obligations of the Company and/or MSO as applicable, enforceable against the Company and/or MSO in accordance with the respective terms and provisions thereof, subject however to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought, and the Company and/or MSO is not in breach or violation of, or default under, the terms of any such contract, agreement, plan, lease or commitment, except where such breach, violation or default would not have a Material Adverse Effect on the Company and/or MSO, and no event has occurred which constitutes or, with the lapse of time or the giving of notice, or both, would constitute, such a breach, violation or default by the Company and/or MSO.

 

3.16           Title to Assets

 

	
  

	
(a)

	
The Company does not own any real property.

 

	
  

	
(b)

	
All the Company Assets are owned legally and beneficially by the Company and/or MSO with good and marketable title thereto, free and clear of all Encumbrances whether contingent or absolute, except as set out in Schedule 3.16 annexed hereto.

 

	
  

	
(c)

	
To the knowledge of the Company:

 

	
  

	
(i)

	
the Property is properly and accurately described in Schedule 1.1,

 

	
  

	
(ii)

	
none of the Company, the Vendors and MSO has an interest in any other mineral rights which are located wholly or in part within the Area of Interest,

 

	
  

	
(iii)

	
there is no basis for and there is no action, suit, judgment, claim, demand or proceeding outstanding or pending, or threatened against or affecting the Company Assets that, if adversely resolved or determined, would have a Material Adverse Effect on the Company Assets and there is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Material Adverse Effect,

 

	
  

	
(iv)

	
MSO holds all permits, licences, consents and authorities issued by any government or Governmental Authority which are necessary in connection with ownership of the Property,

 

	
  

	
(v)

	
there are no outstanding orders or directions relating to environmental matters requiring any work, repairs, construction or capital expenditures with respect to the Property and the conduct of the operations related thereto, and the Company has not received any notice of same and is not aware of any basis on which any such orders or direction could be made,

 

	
  

	
(vi)

	
MSO is the registered owner of the Property and the MSO has not entered into any agreements with any party with respect to the Property.

 

	
  

	
(vii)

	
there are no rights of first refusal, back in rights, bump up rights, abandonment rights or other rights, options or elections under the any instrument or agreement which would affect MSO’s or the Company’s right, title and interest in and to the Property,

  

10

  

 

	
  

	
(viii)

	
neither the Company nor MSO has received any notice or has any knowledge of any proposal to terminate or vary the terms of or rights attaching to the Property from any government or other regulatory authority,

 

	
  

	
(ix)

	
MSO’s ownership of the Property is in compliance with, is not in default or violation in any material respect under, and neither the Company or MSO has been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation in connection with the MSO’s ownership of the Property,

 

	
  

	
(x)

	
the Company’s and/or MSO’s ownership of the Company Assets is in compliance with, is not in default or violation in any material respect under, and the Company and/or MSO has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation in connection with the Company’s ownership of the Company Assets,

 

	
  

	
(xi)

	
with respect to the Property, MSO has duly filed all reports and returns required to be filed with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement and all of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the knowledge of the Company, threatened, and none of them will be adversely affected by the entry into this Agreement,

 

	
  

	
(xii)

	
the Company and/or MSO has duly filed all reports and returns required to be filed with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement and all of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the knowledge of the Company, threatened, and none of them will be adversely affected by the entry into this Agreement,

 

	
  

	
(xiii)

	
MSO has held the Property in material compliance with all laws, rules, statutes, ordinances, orders and regulations and neither MSO nor the Company has received any notice of any violation thereof, nor is the Company aware of any valid basis therefore,

 

	
  

	
(xiv)

	
the Company has held the Company Assets in material compliance with all laws, rules, statutes, ordinances, orders and regulations and the Company has not received any notice of any violation thereof, nor is the Company aware of any valid basis therefore,

 

	
  

	
(xv)

	
there is no adverse claim or challenge against or to the ownership of or title to any part of the Company Assets and, to the knowledge of the Company, there is no basis for such adverse claim or challenge which may affect the Company Asset,

 

	
  

	
(xvi)

	
the Company has provided the Purchaser with copies of all of the material information relating to the Company Assets of which it has respective knowledge,

 

	
  

	
(xvii)

	
the Property has been properly staked, located, recorded and/or acquired pursuant to Applicable Laws and the Property is in good standing,

 

	
  

	
(xviii)

	
the Property is not subject to any mining royalties other than as disclosed in Schedule 3.16 otherwise, and

  

11

  

 

	
  

	
(xix)

	
to the best of the Company’s knowledge, there is no fact or circumstance known to the Company which has not been disclosed to the Purchaser which would render any of the foregoing representations and warranties untrue, incomplete or otherwise misleading.

 

3.17           Necessary Licenses and Permits

 

The Company and/or MSO has/have all licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, state, provincial or local, required, in the case of the Company to own and lease the Company Assets, and in the case of MSO to own or lease, and to conduct its business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on the Company.  Other than those required in the ordinary course of business, no registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind is required by virtue of the execution and delivery of this Agreement: (a) to avoid the loss of any material license, permit, consent, concession or other authorization or any material Company Asset, property or right pursuant to the terms thereof, or the violation or breach of any law applicable thereto, or (b) to enable the Company to hold and enjoy the same immediately after the Closing Date in the conduct of its Business as conducted prior to the Closing Date.

 

3.18           Compliance with Law

 

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

 

3.19           Employees

 

Other than as disclosed in the list of the Company’s employees set out in the Schedule 3.19 annexed hereto, the Company does not have any employees or consultants and there are no agreements, written or oral, between the Company and any other party relating to payment, remuneration or compensation for work performed or services provided or payment relating to a Change of Control or other event in respect of the Company, other than disclosed in Schedule 3.19.

 

3.20           Intangible Property

 

	
  

	
(a)

	
The Company does not own any intellectual property assets.

 

	
  

	
(b)

	
To the Company’s knowledge, the operation of the Business of the Company does not infringe upon, misappropriate or conflict in any way with any intellectual property assets owned or held by any other person.

 

3.21           Litigation

 

There is no suit, claim, action, proceeding or, to the knowledge of the Company, investigation pending or threatened against or affecting the Company, any of the Company Assets or any officer or director of the Company in his capacity as an officer or director thereof, which could reasonably be expected to result in any liability to the Company.

  

12

  

 

3.22           Environmental Laws

 

Except as would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect on the Company: (a) the Company is not in violation of any applicable law relating to pollution or occupational health and safety, the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including laws relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “Environmental Laws”); (b) to the knowledge of the Company, upon due inquiry, MSO has all permits, authorizations and approvals required under any applicable Environmental Laws and is in compliance with their requirements; and (c) to the knowledge of the Company, there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigation or proceedings relating to any Environmental Laws against MSO.

 

3.23           Insurance

 

The Company has no insurance.

 

3.24           Employee Benefit Plans

 

The Company does not have any employee benefit plans (or any plan which may be in any way regarded as an employee benefit plan) of any nature whatsoever nor has it ever had any such plan.

 

3.25           Location of Office

 

The location of the Company’s registered office is set out in Schedule 3.25 and all of its corporate books and records are located at such addresses.  The location of all other offices both operational and administrative are set out in Schedule 3.25.

 

3.26           No Limitations

 

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

 

3.27           Regulatory Compliance

 

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

 

3.28           Non-Arm’s Length Transactions

 

	
  

	
(a)

	
the Company has not made any payment or loan to, nor has it borrowed any monies from nor is it otherwise indebted to, any officer, director, employee, membership holder or any other Person with whom the Company is not dealing at arm’s length nor any Affiliate of any of the foregoing, except for usual compensation paid in the ordinary course of business consistent with past practice; and

 

	
  

	
(b)

	
the Company is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom the Company is not dealing at arm’s length nor any Affiliate of any of the foregoing.

  

13

  

 

3.29         Enforceability

 

The execution and delivery by the Company and the Vendors of this Agreement and any other agreement contemplated by this Agreement will result in legally-binding obligations of such Parties enforceable against them in accordance with the respective terms and provisions hereof, except as limited by bankruptcy, insolvency, reorganization, moratorium, and to other laws affecting or relating to the rights of creditors.

 

ARTICLE 4

 

REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF THE VENDORS

 

Each of the Vendors severally represents and warrants to the Purchaser that:

 

4.1           Capacity

 

Each Vendor has the corporate power and authority to own and hold its respective Membership Interests, to enter into this Agreement and to perform its obligations under this Agreement.

 

4.2           Execution and Delivery

 

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

 

4.3           Ownership

 

Each Vendor is the registered and beneficial owner its respective portion of all the Membership Interests in accordance with Schedule 1, free and clear of any Encumbrances.  Upon the completion of the Closing, except for the rights of the Purchaser pursuant to this Agreement with respect to the Membership Interests, there will be no outstanding options, calls or rights of any kind binding on any Vendor relating to or providing for the purchase, delivery or transfer of any of its Membership Interests.

 

4.4           No Violation

 

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

 

	
  

	
(a)

	
any provision of law or any order of any court or other governmental, regulatory or administrative authority or agency applicable to that Vendor;

 

	
  

	
(b)

	
the Charter of that Vendor, if a Vendor is a corporate entity;

 

	
  

	
(c)

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

 

	
  

	
(d)

	
any applicable judgment, writ, decree, order, law, statute, rule or regulation applicable to that Vendor, except where such default or the failure to obtain such waiver or consent would not have a Material Adverse Effect.

 

  

14

  

 

4.5           Vendor U.S. Certificate

 

The Vendors shall complete and deliver to the Purchaser duly executed copies of the Vendors Certificate upon execution of this Agreement.  The Vendors represent and warrant that all the representations, warranties and acknowledgments of the Vendors in the Vendors Certificate are true as of the date of the Agreement and will be true as of the Closing Date.

 

4.6           Transfer of Payment Shares by U.S. Persons

 

The Payment Shares to be issued, have not been, and will not be registered under the U.S. Securities Act.  Accordingly, such securities may be offered, sold or otherwise transferred after the Closing only:

 

	
  

	
(a)

	
to the Purchaser;

 

	
  

	
(b)

	
outside the United States in compliance with Rule 904 of Regulation S, if available;

 

	
  

	
(c)

	
in compliance with the exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in compliance with any applicable state securities laws; or

 

	
  

	
(d)

	
in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities;

 

and in the circumstances set forth in clause (c) or (d) of this Section 4.6 , the holder of such securities has prior to such transfer furnished to the Purchaser an opinion of counsel of recognized standing in form and substance satisfactory to the Purchaser.  If the securities are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S at a time when the Purchaser is a “foreign issuer” as defined in Regulation S at the time of sale, the legend set forth above may be removed by providing an executed declaration or representation letter to the registrar and transfer agent for shares of Payment Shares, and, if requested by the Purchaser or the transfer agent, an opinion of counsel of recognized standing in form and substance satisfactory to the Purchaser and the transfer agent to the effect that such sale is being made in compliance with Rule 904 of Regulation S; and provided, further, that, if any such securities are being sold otherwise than in accordance with Regulation S and other than to the Purchaser, the legend may be removed by delivery to the Purchaser and the transfer agent of an opinion of counsel, of recognized standing reasonably satisfactory the Purchaser, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws; and provided further, that the failure of certificates representing such securities to contain such legends shall not affect the enforceability of restrictions set forth in this Section 4.6, except as otherwise provided by applicable law.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

The Purchaser hereby represents and warrants to and in favour of the Company and the Vendors, and acknowledges that the Company and the Vendors are relying upon such representations and warranties in connection with the sale and purchase of the Membership Interests, the following:

 

5.1           Organization and Existence

 

The Purchaser is a corporation duly incorporated, organized and validly existing under the laws of the State of Nevada.  The Purchaser is in good standing under the corporate laws of each state or other jurisdiction in which it carries on business.  No proceedings have been instituted or are pending for the dissolution or liquidation of the Purchaser.

  

15

  

 

5.2           Corporate Power and Authority

 

The Purchaser has all requisite corporate power, authority and capacity to own, lease and operate the Purchaser Assets and to carry on its Business as now conducted by it.  The Purchaser has all corporate power and capacity to execute and deliver this Agreement and to consummate the transactions and otherwise perform its obligations under this Agreement.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Purchaser and, if required, by its shareholders and no other corporate proceedings or approvals on the part of the Purchaser or its shareholders are necessary to authorize this Agreement.

 

5.3           Subsidiaries

 

The Purchaser does not have any Subsidiaries or Affiliates.

 

5.4           Corporate Books

 

The Purchaser has made available to the Company correct and complete copies of its minute books, including its Charter, all amendments to its Charter, the names and titles of all of its officers and directors, and its securities register.  The Purchaser is not in violation of its constating documents.

 

5.5           Authorized Capital

 

At the Closing Time and assuming the issuance of ten million (10,000,000) Private Placement Shares in the Interim Private Placement and the Finder’s Fee, the authorized capital of the Purchaser will consist of one hundred million (100,000,000) Purchaser Common Shares, of which forty six million two hundred and fifty thousand (46,250,000) Purchaser Common Shares will be issued and outstanding.  The Payment Shares issuable on Closing to the Vendors, Purchaser Common Shares to be issued as a Finder’s Fee and the Interim Private Placement Shares issuable to the investors in the Interim Private Placement, if completed, will be duly authorized, issued and outstanding as fully paid and non-assessable shares.

 

5.6           Information

 

All current and historical data and information provided by the Purchaser, at the request of the Company and its agents and representatives, to the Company and its agents and representatives was and is complete and true and correct in all material respects.  All forward-looking information is, to the best of the Purchaser’s knowledge, based upon reasonable assumptions.

 

5.7           Authorization

 

Neither the execution and delivery of this Agreement nor the performance by the Purchaser of its obligations hereunder will:  (a) conflict with or result in a breach of or create a state of facts which, after notice or lapse of time or both, will result in a breach by the Purchaser of: (i) any statute, rule or regulation, which breach would be material to the Purchaser; (ii) any Applicable Securities Laws; (iii) the Charter or resolutions of the directors (or any committee thereof) or shareholders of the Purchaser which are in effect at the date hereof; (iv) any mortgage, note, indenture, contract, agreement, instrument, lease or other document to which the Purchaser is a party or by which it is bound, which breach would be material to the Purchaser; or (v) any judgment, decree or order binding the Purchaser or the property or the Purchaser Assets, which breach would be material to the Purchaser; (b) require the consent, approval, authorization, registration or qualification of or with any Governmental Authority, stock exchange, securities association or other third party, except: (i) such as have been obtained; or (ii) such as may be required under all Applicable Securities Laws; or (c) give rise to any lien, charge or claim in or with respect to the properties of the Purchaser or the Purchaser Assets or the acceleration of or the maturity of any debt or claim for payment under any indenture, mortgage, lease, agreement or instrument binding or affecting the Purchaser or any of the Purchaser Assets.

  

16

  

 

5.8           No Other Agreement to Purchase

 

Other than as disclosed in the Purchaser’s Public Documents, there are no agreements, options, warrants, rights of conversion or other rights binding upon or which at any time in the future may become binding upon the Purchaser to issue any Purchaser Common Shares or any securities convertible or exchangeable, directly or indirectly, into any Purchaser Common Shares.  To the Purchaser’s knowledge, there are no shareholders’ agreements, pooling agreements, voting trusts nor other agreements or understandings with respect to the voting of all or any Purchaser Common Shares.

 

5.9           No Material Adverse Change

 

Other than as disclosed in the Purchaser’s Public Documents, since June 14, 2011, there has occurred no change in the Business, prospects, operations, results of operations, the Purchaser Assets, capitalization or condition (financial or otherwise) of the Purchaser, whether or not in the ordinary course of business, whether separately or in the aggregate with other occurrences or developments, and whether insured against or not, which could reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

5.10           Indebtedness

 

Other than as disclosed in the Purchaser’s Public Documents, there are no loans or other liabilities of the Purchaser outstanding or in favour of any shareholder or former shareholder of the Purchaser, or any party related to them, nor are there any loans outstanding or other amounts due to the Purchaser from any such persons.

 

5.11           Absence of Certain Changes

 

Since June 30, 2011, and other than as disclosed in the Purchaser’s Public Documents and as set out in this Agreement, the Purchaser has not (except as specifically contemplated herein or disclosed in writing to the Company):

 

	
  

	
(a)

	
issued, sold, pledged, hypothecated, leased, disposed of, encumbered or agreed to issue, sell, pledge, hypothecate, lease, dispose of or encumber any shares or other securities or any right, option or warrant with respect thereto;

 

	
  

	
(b)

	
amended or proposed to amend its Charter;

 

	
  

	
(c)

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

 

	
  

	
(d)

	
entered into or amended any employment or services contract with any director, officer or senior management employee, created or amended any employee benefit plan, or made any changes or increases in the base compensation, bonuses, management fees, paid vacation time allowed or fringe benefits for its directors, officers, employees or consultants, other than in the ordinary course of business;

 

	
  

	
(e)

	
suffered any damage, destruction or loss (whether or not covered by insurance) affecting the Purchaser’s Business or any of the Purchaser Assets;

 

	
  

	
(f)

	
made any capital expenditures, additions or improvements or commitments for the same other than those required in the ordinary course of business;

 

	
  

	
(g)

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

  

17

  

 

	
  

	
(h)

	
acquired or agreed to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or the Purchaser Assets or otherwise) any Person, or other business organization or division or acquired or agreed to acquire any material assets;

 

	
  

	
(i)

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

 

	
  

	
(j)

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

 

	
  

	
(k)

	
made any material change in accounting procedures or practices;

 

	
  

	
(l)

	
mortgaged, hypothecated or pledged any of the Purchaser Assets, or subjected any of the Purchaser Assets to any Encumbrance;

 

	
  

	
(m)

	
other than in the ordinary course of business, entered into any agreement or arrangement granting any rights to purchase or lease any of the Purchaser Assets or rights or requiring the consent of any Person to the transfer, assignment or lease of any of the Purchaser Assets or rights;

 

	
  

	
(n)

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

 

	
  

	
(o)

	
sold, leased, subleased, assigned or transferred (by tender offer, exchange offer, merger, amalgamation, sale of shares or the Purchaser Assets or otherwise) any of the Purchaser Assets;

 

	
  

	
(p)

	
entered into any agreement resulting in a Change of Control of the Purchaser;

 

	
  

	
(q)

	
other than in the ordinary course of business, cancelled, waived or compromised any Indebtedness or claims, including any accounts payable and receivable;

 

	
  

	
(r)

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

 

	
  

	
(s)

	
entered into any undisclosed related-party transaction; or

 

	
  

	
(t)

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

 

5.12           Taxes

 

The Purchaser does not owe any Taxes to the federal government, a state government, a municipal government or any other Government Authority, other than in the ordinary course of business and where the payment of such Taxes would not have a Material Adverse Effect on the Purchaser.

 

5.13           Material Contracts

 

All of the contracts material to the Purchaser have been disclosed in the Purchaser’s Public Documents in accordance with the continuous disclosure requirements of Applicable Securities Laws.

 

5.14           Title to Assets

 

	
  

	
(a)

	
The Purchaser does not own any real property.

  

18

  

 

	
  

	
(b)

	
All the Purchaser Assets are owned legally and beneficially by the Purchaser with good and marketable title thereto, free and clear of all Encumbrances whether contingent or absolute, except as disclosed in the Purchaser Financial Statements or as provided for herein.

 

5.15           Intangible Property

 

	
  

	
(a)

	
The Purchaser does not own any intellectual property assets.

 

	
  

	
(b)

	
To the Purchaser’s knowledge, the operation of the Business of the Purchaser does not infringe upon, misappropriate or conflict in any way with any intellectual property assets owned or held by any other Person.

 

5.16           Necessary Licenses and Permits

 

The Purchaser has all licenses, permits, consents, concessions and other authorizations of governmental, regulatory or administrative agencies or authorities, whether foreign, federal, provincial, or local, required to own and lease its properties and the Purchaser Assets and to conduct its business as now conducted, except where the failure to hold the foregoing would not have a Material Adverse Effect on the Purchaser.  Other than those required in the ordinary course of business, no registrations, filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or other action of any kind is required by virtue of the execution and delivery of this Agreement: (a) to avoid the loss of any material license, permit, consent, concession or other authorization or any material Purchaser Asset, property or right pursuant to the terms thereof, or the violation or breach of any law applicable thereto, or (b) to enable the Purchaser to hold and enjoy the same immediately after the Closing Date in the conduct of its business as conducted prior to the Closing Date.

 

5.17           Compliance with Law

 

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

 

5.18           Employees

 

Other than as disclosed in the list of the Purchaser’s Public Documents, the Purchaser does not have any employees and there are no agreements, written or oral, between the Purchaser and any other party relating to payment, remuneration or compensation for work performed or services provided or payment relating to a Change of Control or other event in respect of the Purchaser.

 

5.19           Litigation

 

There is no suit, claim, action, proceedings or, to the knowledge of the Purchaser, investigation pending or threatened against or affecting the Purchaser, or any of the Purchaser Assets or properties, or any officer or director thereof in his or her capacity as an officer or director thereof, which could reasonably be expected to result in liability to the Purchaser.

 

5.20           Environmental Laws

 

Except as would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect on the Purchaser: (a) the Purchaser is not in violation of any Environmental Laws; (b) the Purchaser has all permits, authorizations and approvals required under any applicable Environmental Laws and is in compliance with their requirements; and (c) to the knowledge of the Purchaser, there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigation or proceedings relating to any Environmental Laws against the Purchaser.

  

19

  

 

 

5.21           Insurance

 

The Purchaser has no insurance.

 

5.22           Location of Office

 

The Purchaser’s head office is located at Suite 1720, 1111 West Georgia St. Vancouver, B.C. V6E 4M3, except for documents maintained at the office of the Purchaser’s legal counsel, all of its corporate books and records are located at such address.

 

5.23           No Limitations

 

Except as disclosed in the Purchaser’s Public Documents, there is no non-competition, exclusivity or other similar agreement, commitment or understanding in place, whether written or oral, to which the Purchaser is a party or is otherwise bound that would now or hereafter, in any way limit the Business, use of the Purchaser Assets or operations of the Purchaser.

 

5.24           Regulatory Compliance

 

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

 

5.25           Non-Arm’s Length Transactions

 

Except as otherwise disclosed to the Company:

 

	
  

	
(a)

	
the Purchaser has not made any payment or loan to, nor has it borrowed any monies from nor is it otherwise indebted to, any officer, director, employee, shareholder or any other Person with whom the Purchaser is not dealing at arm’s length nor any Affiliate of any of the foregoing, except for usual compensation paid in the ordinary course of business consistent with past practice; and

 

	
  

	
(b)

	
the Purchaser is not a party to any contract or agreement with any officer, director, employee, shareholder or any other Person with whom the Purchaser is not dealing at arm’s length nor any Affiliate of any of the foregoing.

 

5.26           Enforceability

 

The execution and delivery by the Purchaser of this Agreement and any other agreement contemplated by this Agreement will result in legally-binding obligations of the Purchaser enforceable against the Purchaser in accordance with the respective terms and provisions hereof and thereof, except as limited by bankruptcy, insolvency, reorganization, moratorium, and to other laws affecting or relating to the rights of creditors.

  

20

  

 

ARTICLE 6

 

COVENANTS

 

6.1           Filings

 

The Purchaser, the Company and the Vendors shall prepare and file any filings required under any applicable laws or rules and policies of regulatory bodies relating to the transaction contemplated hereunder.  The Purchaser covenants and agrees to take, in a timely manner, all commercially-reasonable actions and steps necessary in order that the distribution of Payment Shares to the Vendors is exempt from the prospectus requirements of Applicable Securities Laws.

 

6.2           Additional Agreements

 

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

 

	
  

	
(a)

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

 

	
  

	
(b)

	
obtain all necessary consents, approvals, and authorizations as are required to be obtained under any Laws;

 

	
  

	
(c)

	
defend all lawsuits or other legal proceedings challenging this Agreement or the consummation of the transaction contemplated hereunder;

 

	
  

	
(d)

	
lift or rescind any injunction or restraining order or other remedy adversely affecting the ability of the Parties to consummate the transaction contemplated hereunder;

 

	
  

	
(e)

	
effect all necessary registrations and other filings and submissions of information requested by any Governmental Authorities; and

 

	
  

	
(f)

	
comply with all provisions of this Agreement.

 

For purposes of the foregoing, the obligations of the Parties to use “commercially-reasonable best efforts” to obtain waivers, consents and approvals to leases, loan agreements and other contracts shall not include any obligation to agree to a materially-adverse modification of the terms of such documents or to prepay or incur additional material obligations to such other Parties (and the Company and the Purchaser are expressly prohibited from doing so).

 

6.3           Access to Information

 

	
  

	
(a)

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

 

	
  

	
(b)

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

  

21

  

 

 

6.4           Conduct of Business of the Company

 

The Company covenants and agrees that, during the period from the date of this Agreement until the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with its terms, unless the Purchaser shall otherwise agree in writing (such agreement not to be unreasonably withheld or delayed), except as required by law or as otherwise expressly permitted or specifically contemplated by this Agreement:

 

	
  

	
(a)

	
the Business of the Company shall be conducted only in the ordinary course of business and consistent with past practice, and the Company shall use all commercially-reasonable efforts to maintain and preserve its Business, the Company Assets and business relationships; and

 

	
  

	
(b)

	
the Company shall not (unless otherwise contemplated herein or with the written consent of the Purchaser):

 

	
  

	
(i)

	
issue, sell, pledge, hypothecate, lease, dispose of or encumber any shares of any class or other securities or any right, option or warrant with respect thereto,

 

	
  

	
(ii)

	
amend or propose to amend its Charter,

 

	
  

	
(iii)

	
split, combine or reclassify any of its securities or declare or make any Distribution,

 

	
  

	
(iv)

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

 

	
  

	
(v)

	
make any capital expenditures, additions or improvements or commitments for the same which individually or in the aggregate exceed ten dollars ($10,000), unless the Purchaser provides a written consent otherwise,

 

	
  

	
(vi)

	
other than in the ordinary course of business: (A) enter into any contract, commitment or agreement under which it has outstanding Indebtedness; or (B) make any loan or advance to any Person,

 

	
  

	
(vii)

	
acquire or agree to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or the Company Assets or otherwise) any Person or other business organization or division or acquire or agree to acquire any material assets,

 

	
  

	
(viii)

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

 

	
  

	
(ix)

	
create any stock option, bonus or other compensation plan, pay any bonuses or make any awards of cash, stock or other, deferred or otherwise, grant any stock options, or defer any compensation to any of its directors or officers,

 

	
  

	
(x)

	
make any material change in accounting procedures or practices,

 

	
  

	
(xi)

	
mortgage, pledge or hypothecate any of the Company Assets or subject any of the Company Assets to any Encumbrance,

  

22

  

 

	
  

	
(xii)

	
other than in the ordinary course of business, enter into any agreement or arrangement granting any rights to purchase any of the Company Assets or rights or requiring the consent of any Person to the transfer or assignment any the Company Assets or rights,

 

	
  

	
(xiii)

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

 

	
  

	
(xiv)

	
sell assign or transfer (by tender offer, exchange offer, merger, amalgamation, sale of shares or the Company Assets or otherwise) any of the Company Assets,

 

	
  

	
(xv)

	
enter into any agreement resulting in a Change of Control of the Company,

 

	
  

	
(xvi)

	
other than in the ordinary course of business, cancel, waive or compromise any Indebtedness or claims, including any accounts payable and receivable,

 

	
  

	
(xvii)

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

 

	
  

	
(xviii)

	
transfer any of the Company Assets to the Vendors or assume any Indebtedness from the Vendors or enter into any other related-party transactions, or

 

	
  

	
(xix)

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

 

6.5           Conduct of Business of the Purchaser

 

The Purchaser covenants and agrees that, during the period from the date of this Agreement until the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with its terms, unless the Company shall otherwise agree in writing (such agreement not to be unreasonably withheld or delayed), except as required by law or as otherwise expressly permitted or specifically contemplated by this Agreement:

 

	
  

	
(a)

	
the Business of the Purchaser shall be conducted only in the ordinary course of business and consistent with past practice, and the Purchaser shall use its commercially-reasonable efforts to maintain and preserve its Business, the Purchaser Assets and business relationships; and

 

	
  

	
(b)

	
the Purchaser shall not (unless otherwise contemplated herein):

 

	
  

	
(i)

	
except for the issuance of the Purchaser Common Shares upon the due exercise of outstanding Purchaser Options and Purchaser Warrants, or any portion of the Finder’s Fee payable in Purchaser Common Shares, issue, sell, pledge, hypothecate, lease, dispose of or encumber any shares of any class or other securities or any right, option or warrant with respect thereto,

 

	
  

	
(ii)

	
amend or propose to amend its Charter,

 

	
  

	
(iii)

	
split, combine or reclassify any of its securities or declare or make any Distribution,

 

	
  

	
(iv)

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

 

	
  

	
(v)

	
make any capital expenditures, additions or improvements or commitments for the same except in the ordinary course of business,

  

23

  

 

	
  

	
(vi)

	
other than in the ordinary course of business: (A) enter into any contract, commitment or agreement under which it has outstanding Indebtedness; or (B) make any loan or advance to any Person,

 

	
  

	
(vii)

	
acquire or agree to acquire (by tender offer, exchange offer, merger, amalgamation, acquisition of shares or the Purchaser Assets or otherwise) any Person or other business organization or division or acquire or agree to acquire any material assets,

 

	
  

	
(viii)

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

 

	
  

	
(ix)

	
create any stock option, bonus or other compensation plan, pay any bonuses or make any awards of cash, stock or other, deferred or otherwise, grant any stock options, or defer any compensation to any of its directors or officers,

 

	
  

	
(x)

	
make any material change in accounting procedures or practices, except for any arrangements made in connection with the changeover to International Financial Reporting Standards as required by Applicable Securities Laws,

 

	
  

	
(xi)

	
mortgage, pledge or hypothecate any of the Purchaser Assets or subject any of the Purchaser Assets to any Encumbrance,

 

	
  

	
(xii)

	
other than in the ordinary course of business, enter into any agreement or arrangement granting any rights to purchase or lease any of the Purchaser Assets or rights or requiring the consent of any Person to the transfer, assignment or lease of any such the Purchaser Assets or rights,

 

	
  

	
(xiii)

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

 

	
  

	
(xiv)

	
sell, lease, sublease, assign or transfer (by tender offer, exchange offer, merger, amalgamation, sale of shares or the Purchaser Assets or otherwise) any of the Purchaser Assets,

 

	
  

	
(xv)

	
enter into any agreement resulting in a Change of Control of the Purchaser,

 

	
  

	
(xvi)

	
other than in the ordinary course of business, cancel, waive or compromise any Indebtedness or claims, including any accounts payable and receivable,

 

	
  

	
(xvii)

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

 

	
  

	
(xviii)

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

 

6.6           Covenants of the Company

 

As soon as practicable after the date of this Agreement, and in any event prior to ten (10) days prior to the Closing Date, the Company shall exercise its best efforts to prepare and deliver to the Purchaser, all of the Company’s financial statements, audited or otherwise, required to be submitted or filed by the Purchaser to any Government Authority or the Exchange in connection with the transactions contemplated hereunder;

 

6.7           Notification

 

Between the date of this Agreement and the Closing Date, each of the Parties to this Agreement will promptly notify the other Parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, or if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition.  Should any such fact or condition require any change in the Schedules relating to such party, such party will promptly deliver to the other Parties a supplement to the Schedules specifying such change.  During the same period, each party will promptly notify the other parties of the occurrence of any material breach of any of its covenants in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.

  

24

  

 

 

6.8           Collection of Personal Information

 

The Vendors acknowledge and consent to the fact that the Company may be required to collect the personal information of the shareholders of the Vendors for the purposes set out in Schedule 6.9 annexed hereto which may be disclosed by the Company to:

 

	
  

	
(a)

	
securities regulatory authorities;

 

	
  

	
(b)

	
the Company’s registrar and transfer agent;

 

	
  

	
(c)

	
tax authorities; and

 

	
  

	
(d)

	
authorities pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).

 

By executing this Agreement, and, if required, each Vendor that is a corporate entity will collect a signed consent from its shareholders, which consent will consent to the collection, use and disclosure of each shareholders’ personal information and to the retention of such personal information for as long as permitted or required by law or business practice.  An officer of the Purchaser is available to answer questions about the collection of personal information by the Purchaser.

 

ARTICLE 7

 

CONDITIONS PRECEDENT

 

7.1           Purchaser’s Closing Conditions

 

The Purchaser’s obligation to complete the transactions contemplated herein, including the obligation to pay the Purchase Price to, and to acquire the Membership Interests from, the Vendors, on the Closing Date pursuant to Article 2 are subject to compliance by the Company and the Vendors with their agreements herein contained and to the satisfaction, on or prior to the Closing Date, of the following conditions:

 

	
  

	
(a)

	
Encumbrances.  Any outstanding Encumbrances in respect of the Membership Interests shall have been discharged.

 

	
  

	
(b)

	
Charter Documents and Certificate of Corporate Existence.  The Purchaser shall have received from the Company a copy, certified by a duly-authorized officer of the Company to be true and complete as of the Closing Date, of the Charter of the Company.

 

	
  

	
(c)

	
Proof of Corporate Action.  The Purchaser shall have received from the Company copies, certified by a duly-authorized officer thereto to be true and complete as of the Closing Date, of the records of all corporate action taken to authorize the execution, delivery and performance of this Agreement and the transactions contemplated thereunder.

  

25

  

 

	
  

	
(d)

	
Due Diligence.  The Purchaser, and its agents and representatives, shall have conducted and completed to the Purchaser’s satisfaction, acting reasonably, a legal and financial due diligence investigation of the Company and the Property.

 

	
  

	
(e)

	
Financial Statements and Business Plan. The Purchaser shall have received all required financial statements of the Company required to be included in the Company’s Current Report on Form 8-K (the “Form 8-K”) to be filed within four business days of Closing and any other business information respecting the Company required pursuant to the Form 8-K requirements.

 

	
  

	
(f)

	
Legal Opinion.  The Purchaser shall have received from Mexican counsel to MSO, a favourable opinion with respect to the corporate existence of MSO and a title opinion on the Company Assets owned by MSO dated within two business days of the Closing Date.

 

	
  

	
(g)

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

 

	
  

	
(h)

	
Covenants.  All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Vendors and the Company at or before the Closing Date shall have been complied with or performed and the Purchaser shall have received on the Closing Date a certificate to this effect signed by an authorized officer of the Company and an authorized officer of the Vendors.

 

	
  

	
(i)

	
Interim Private Placement.  The Interim Private Placement shall have closed, pursuant to which the Purchaser shall have raised gross proceeds of up to five hundred thousand dollars ($500,000).

 

	
  

	
(j)

	
No Material Adverse Change.  No change shall have occurred in the business, affairs, financial condition or operations of the Company between the execution of this Agreement and the Closing Date which would have a Material Adverse Effect.

 

	
  

	
(k)

	
No Action or Proceeding.  No bona fide legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the consummation of the transactions contemplated hereunder, or any part of it, or the right of the Company or the Purchaser from and after the Closing Time to conduct, expand and develop the Business of the Company.

 

	
  

	
(l)

	
Consents. The Purchaser receiving all requisite consents from Brigus Gold Corp., a Yukon Territory corporation, with respect to an acquisition agreement dated December 23, 2010 between the Company and Brigus Gold Corp., or any other required third party or regulatory consents required to consummate the transaction.

 

	
  

	
(m)

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

 

The agreements, certificates, documents, other evidence of compliance and opinions described in this Section Article 7 shall be in form and substance satisfactory to the Purchaser, acting reasonably, and shall, except as otherwise provided, be delivered to the Purchaser at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by the Purchaser.

  

26

  

 

7.2           The Company and the Vendors’ Closing Conditions

 

The respective obligation of the Company and the Vendors to complete the transactions contemplated herein, including the obligation of the Vendors to transfer and assign to the Purchaser, the Membership Interests in exchange for the Purchase Price pursuant to Article 2 is subject to compliance by the Purchaser with its agreements herein contained and to the satisfaction, on or before the Closing Date of the following conditions:

 

	
  

	
(a)

	
Charter Documents and Certificate of Corporate Existence.  The Vendors and the Company shall have received from the Purchaser: (i) a copy, certified by a duly-authorized officer of the Purchaser, to be true and complete as of the Closing Date, of the Charter of the Purchaser; and (ii) a copy, certified by a duly-authorized officer of the Purchaser, to be true and complete as of the Closing Date, of the Articles and Notice of Articles thereof.

 

	
  

	
(b)

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

 

	
  

	
(c)

	
Due Diligence.  The Company, and its agents and representatives, shall have conducted and completed to the Company’s satisfaction, acting reasonably, a legal and financial due diligence investigation of the Purchaser.

 

	
  

	
(d)

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

 

	
  

	
(e)

	
Covenants.  All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser at or before the Closing Date shall have been complied with or performed and the Company shall have received on the Closing Date a certificate to this effect signed by an authorized officer of the Purchaser.

 

	
  

	
(f)

	
Interim Private Placement.  The Interim Private Placement shall have closed pursuant to which the Purchaser shall have raised gross proceeds of up to five hundred thousand dollars ($500,000).

 

	
  

	
(g)

	
No Material Adverse Change.  No change shall have occurred in the business, affairs, financial condition or operations of the Purchaser between the execution of this Agreement and the Closing Date which would have a Material Adverse Effect.

 

	
  

	
(h)

	
Consents.  All required approvals, consents, authorizations and waivers relating to the transactions herein shall have been obtained.

 

	
  

	
(i)

	
No Action or Proceeding.  No bona fide legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the right of the Company or the Purchaser from and after the Closing Time to conduct, expand and develop the Business of the Company.

 

	
  

	
(j)

	
Director Appointments. The appointment of Joseph Green and James Zecher as directors of the Purchaser.

 

	
  

	
(k)

	
Consulting Agreements. The Purchaser entering into consulting agreements with Joseph Green and Jesus Quintana on reasonable terms with respect to certain consulting services to be provided by Mr. Green and Mr. Quintana in connection with the Property.

  

27

  

 

	
  

	
(l)

	
General.  All instruments and corporate proceedings in connection with the transactions contemplated hereunder shall be satisfactory in form and substance to the Vendors, the Company and their counsel, acting reasonably, and the Vendors and the Company shall have received copies of all documents, including, without limitation, records of corporate or other proceedings, opinions of counsel and consents which the Vendors and the Company may have reasonably requested in connection therewith.

 

The agreements, certificates, documents, other evidence of compliance and opinions described in this Section 7.2 shall be in form and substance satisfactory to the Vendors and the Company, acting reasonably, and shall, except as otherwise provided, be delivered to the Vendors and the Company at the Closing; provided, however, any one or more of the foregoing conditions may be waived in writing by the Company and the Vendors.

 

7.3           Closing Deliveries

 

Subject to Section 7.2(j) , as at the Closing Time, the Purchaser shall deliver:

 

	
  

	
(a)

	
to the Company, share certificates representing the Payments Shares, registered in the names of the Vendors or their nominees in accordance with Section 2.2 hereof;

 

	
  

	
(b)

	
to the Vendors, a certificate executed by a director or officer of the Purchaser certifying the truth and accuracy of the Purchaser’s representations and warranties as if such are made as of the Closing Date;

 

	
  

	
(c)

	
duly approved and executed consulting agreements between the Purchaser and each of Joseph Green and Jesus Quintana on reasonable terms with respect to certain consulting services to be provided by Mr. Green and Mr. Quintana in connection with the Property.

 

	
  

	
(d)

	
share certificates representing the Finder’s Fee registered in the name of the Finder and/or its nominee; and

 

	
  

	
(e)

	
certified resolutions approving the transactions contemplated herein and the appointment of Joseph Green and James Zecher as directors of the Purchaser.

 

Subject to section 7.1(l), as at the Closing Time, each Vendor shall deliver to the Purchaser:

 

	
  

	
(a)

	
membership certificate(s) representing its respective Membership Interests, duly endorsed for transfer to the Purchaser, or with a duly signed and completed transfer power of attorney;

 

	
  

	
(b)

	
a duly executed Schedule 4.5 signed by each Vendor;

 

	
  

	
(c)

	
a certificate executed by each Vendor certifying the truth and accuracy of the Vendor’s representations and warranties as if such are made as of the Closing Date.

 

Subject to section 7.1(l), as at the Closing Time, the Company shall deliver to the Purchaser:

 

	
  

	
(d)

	
consents to act as directors of the Purchaser from Joseph Green and James Zecher;

 

	
  

	
(e)

	
certified resolutions of the Company approving the transactions contemplated herein; and

 

	
  

	
(f)

	
a certificate executed by the Company certifying the truth and accuracy of the Company’s representations and warranties as if such are made as of the Closing Date.

  

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  ARTICLE 8

 

  TERMINATION

 

8.1           Termination

 

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

 

	
  

	
(a)

	
by mutual written consent of each of the Vendors, the Company and the Purchaser;

 

	
  

	
(b)

	
by either: (i) the Vendors or the Company, on the one hand; or (ii) the Purchaser, on the other hand, if there has been a material misrepresentation, breach or non-performance by the other party of any material representation, warranty, covenant or obligation contained in this Agreement, which could reasonably be expected to have a Material Adverse Effect on the other party, provided the breaching party has been given notice of and thirty (30) days in which to cure any such misrepresentation, breach or non-performance;

 

	
  

	
(c)

	
by either the Vendors or the Company, on the one hand, or the Purchaser, on the other hand, if a condition for the terminating party’s benefit, as set out in Article 7 hereto, has not been satisfied or waived on or before August 15, 2011; or

 

	
  

	
(d)

	
by either the Vendors or the Company, on the one hand, or the Purchaser, on the other hand, if the Closing has not occurred or been waived on or before August 15, 2011 (provided that the right to terminate this Agreement under this Section 8.1(d) shall not be available to any party where failure to fulfill any of its obligations under this Agreement has been the cause of or resulted in the failure to consummate the transactions contemplated hereby by such date).

 

8.2           Effect of Termination

 

In the event of the termination of this Agreement as provided in this Article 8, this Agreement shall forthwith have no further force or effect and there shall be no obligation on the part of the Parties hereunder except with respect to Sections 2.2, 8.2, 10.1 and 14.6 and Article 9 and Article 13, which will survive such termination.  Other than as expressly provided herein, in the event of such termination, no party shall have any liability resulting from the termination of this Agreement, except for any liability arising from the fraud or wilful misconduct of such party in connection with the termination of this Agreement.

 

ARTICLE 9

 

INDEMNIFICATION

 

9.1           Indemnification by the Company

 

	
  

	
(a)

	
The Company, on behalf of its respective successors and assigns, as applicable, (who for the purposes of this Article 9 shall be included in all references to the “Company Parties”) agree to indemnify and save harmless the Purchaser, and its Affiliates and its officers, directors, employees and representatives (collectively, the “Purchaser Indemnified Parties”) from all Losses suffered or incurred by the Purchaser Indemnified Parties as a result of or arising out of or in connection with: (i) any breach by any of the Company Parties of or any inaccuracy of any representation or warranty of the Company Parties contained in Article 3 of this Agreement or in any agreement, instrument, certificate or other document delivered by any of the Company Parties pursuant thereto; and (ii) any breach or non-performance by any of the Company Parties of any obligation to be performed by any of them which is contained in this Agreement or in any agreement, certificate or other document delivered by any of the Company Parties pursuant hereto.

  

29

  

 

	
  

	
(b)

	
Each of the Company Parties shall be jointly and severally liable for all Losses payable to the Purchaser pursuant to Section 9.1(a), provided that the maximum amount of Losses that the Purchaser Indemnified Parties will be entitled to recover pursuant to Section 9.1(a) from each of the Company Parties or its respective successor or assign, as applicable, shall be equal to the amount of $25,000.

 

9.2           Indemnification by the Vendors

 

	
  

	
(a)

	
The Vendors, severally, and on behalf of their respective successors and assigns, as applicable, (who for the purposes of this Article 9 shall be included in all references to the “Vendor Parties”) agree to indemnify and save harmless the Purchaser Indemnified Parties from all Losses suffered or incurred by the Purchaser Indemnified Parties as a result of or arising out of or in connection with: (i) any breach by any of the Vendors of or any inaccuracy of any representation or warranty of the Vendors contained in Article 4 of this Agreement or in any agreement, instrument, certificate or other document delivered by any of the Vendors pursuant thereto; and (ii) any breach or non-performance by any of the Vendors of any obligation to be performed by any of them which is contained in this Agreement or in any agreement, certificate or other document delivered by any of the Vendors pursuant hereto.

 

	
  

	
(b)

	
Each of the Vendors shall be severally liable for all Losses payable to the Purchaser pursuant to Section 9.2(a) provided that the maximum amount of Losses that the Purchaser Indemnified Parties will be entitled to recover pursuant to Section 9.2(a) from each of the Company Parties or its respective successor or assign, as applicable, shall be equal to the amount of the Purchase Price received or receivable by it.

 

9.3           Indemnification by the Purchaser

 

	
  

	
(a)

	
The Purchaser agrees to indemnify and save harmless the Company Parties and their respective officers, directors, employees and representatives (collectively, the “Company Indemnified Parties”) from all Losses suffered or incurred by any of the Company Indemnified Parties as a result of or arising directly or indirectly out of or in connection with: (i) any breach by the Purchaser of or any inaccuracy of any representation or warranty of the Purchaser contained in Article 5 of this Agreement or in any agreement, instrument, certificate or other document delivered pursuant hereto; and (ii) any breach or non-performance by the Purchaser of any obligation to be performed by it which is contained in this Agreement or in any agreement, certificate or other document delivered pursuant hereto.

 

	
  

	
(b)

	
The Purchaser shall be liable for all Losses payable to the Company Indemnified Parties pursuant to Section 9.3(a), provided that the maximum amount of Losses that the Company Indemnified Parties will be entitled to recover from the Purchaser, in the aggregate, pursuant to Section 9.3(a), shall be equal to the amount of the Purchase Price paid by the Purchaser.

 

9.4           Notice of Claim

 

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

  

30

  

 

9.5           Direct Claims

 

With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have thirty (30) days in which to make such investigation of the Claim as is considered necessary or desirable.  For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request.  If both parties agree at or prior to the expiration of such thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim, failing which the matter shall be referred to binding arbitration in accordance with the applicable provisions of the Arbitration Act (British Columbia).

 

9.6           Third Party Claims

 

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

 

	
  

	
(a)

	
the Indemnified Party is required by applicable law or the order of any court, tribunal or regulatory body having jurisdiction; or

 

	
  

	
(b)

	
it is necessary in the reasonable view of the Indemnified Party acting in good faith and in a manner consistent with reasonable commercial practices in respect of a Third Party Claim relating to any contract which is necessary to the ongoing operations of the Company or any material part thereof by a reasonable and prudent operator in substantially the same manner in which it has heretofore been operated by the Company in order to preserve the rights of the Indemnified Party under any material contract, to make a payment to any person (a “Third Party”) with respect to the Third Party Claim before the completion of settlement negotiations or related legal proceedings, as the case may be, the Indemnified Party may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnified Party, reimburse the Indemnified Party for such payment.  If the amount of any liability of the Indemnified Party under the Third Party Claim in respect of which such payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall, forthwith after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifying Party.  If such a payment, by resulting in settlement of the Third Party Claim, precludes a final determination of the merits of the Third Party Claim and the Indemnified Party and the Indemnifying Party are unable to agree whether such payment was reasonable in the circumstances having regard to the amount and merits of the Third Party Claim, such dispute shall be submitted to arbitration in accordance with the applicable provisions of the Arbitration Act (British Columbia).

  

31

  

 

9.7            Settlement of Third Party Claims

 

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

 

9.8           Co-operation

 

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

 

9.9           Exclusivity

 

The provision of this Article 9 shall apply to any Claim for breach of any covenant, representation, warranty or other provision of this Agreement or any agreement, certificate or other document delivered pursuant hereto (other than a claim for specific performance or injunctive relief) with the intent that all such Claims shall be subject to the limitations and other provisions contained in this Article 9; provided, however, that nothing contained herein shall prevent an Indemnified Party from bringing a claim based on fraud.

 

9.10           Treatment of Payments

 

Any amount required to be paid by the Vendors to the Purchaser pursuant to this Article 9 shall be considered as a reduction and reimbursement of a portion of the consideration paid by the Purchaser to the Vendors in respect of the Membership Interests purchased pursuant to this Agreement.

 

9.11           Insurance

 

The Indemnified Party shall use reasonable efforts, consistent with past practices, to recover Losses from its insurance carriers, if applicable, provided that such efforts may take place before and/or after recovery of indemnification hereunder and the obligation to use reasonable efforts consistent with past practices shall not delay or affect entitlement to indemnification hereunder.  It is acknowledged by the Purchaser that it has been advised that the Company and the Vendors do not intend to maintain insurance following the Closing Date to cover any such Losses.

 

9.12           Failure to Give Timely Notice

 

A failure to give timely notice as provided in this Article 9 shall not affect the rights or obligations of any party under this Article 9 except and only to the extent that, as a result of such failure, any party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise directly and materially damaged as a result of such failure.

 

9.13           Reductions and Subrogation

 

If the amount of any Losses at any time subsequent to the making of an indemnity payment pursuant to this Article 9 is reduced by any recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other person, the amount of such reduction (less any costs, expenses (including taxes) or premiums incurred in connection therewith) shall promptly be repaid by the Indemnified Party to the Indemnifying Party.  Upon making a full indemnity payment pursuant to this Article 9, the Indemnifying Party shall, to the extent of such indemnity payment, be subrogated to all rights of the Indemnified Party against any third party in respect of the Losses to which such indemnity payment relates but only if the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Losses.  Until the Indemnified Party recovers full payment of its Losses, any and all claims of the Indemnifying Party against any such third party on account of such indemnity payment shall be postponed and subordinated in right of payment to the Indemnified Party’s rights against such third party.  Without limiting the generality or effect of any other provision hereof, the Indemnified Party and Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect such postponement and subordination.

  

32

  

 

 

9.14           Effect of the Indemnification

 

	
  

	
(a)

	
The payment to the Purchaser Indemnified Parties of any amount pursuant to a Claim shall be treated as an adjustment to the Purchase Price paid for the Membership Interests purchased pursuant to this Agreement.

 

	
  

	
(b)

	
The amount of any Losses shall be adjusted to take account of (i) Tax payable by the Indemnified Party arising from the receipt of payments in respect of such Losses under this Agreement (taking into account any Taxes which would be payable on the amount of such payments) and (ii) any Tax benefit realized by the Indemnified Party or any subsidiary by reason of the Losses for which payment is so made or the circumstances giving rise to such Losses, and, for this purpose, any Tax benefit shall be taken into account at such time as it is received by the Indemnified Party or any subsidiary.

 

ARTICLE 10

 

TRANSACTION COSTS

 

10.1           Transaction Costs

 

All costs incurred by the Company, the Vendors and the Purchaser, as the case may be, in connection with this Agreement, including legal fees, financial advisor fees and all disbursements by such Parties and their advisors shall be paid by the Company, the Vendors and the Purchaser, respectively.

 

ARTICLE 11

 

POST-CLOSING MATTERS

 

11.1           Regulatory Filings

 

The Company and the Vendors covenant to assist the Purchaser with any requisite filings with any Government Authority or the Exchange upon the completion of the transactions contemplated herein.

 

ARTICLE 12

 

NOTICES

 

12.1           Notices

 

Any notice or other communication in connection with this Agreement shall be deemed to be delivered if in writing (or in the form of a fax or electronic transmission capable of reproducing a printed copy) addressed as provided below: (a) when actually delivered or faxed to said address, (b) in the case of electronic transmission when transmitted; or (c) in the case of a letter, three (3) business days shall have elapsed after the same shall have been deposited in the Canadian mail, postage prepaid and registered or certified:

 

If to the Purchaser, then to the following address:

 

International Gold Corp.

Suite 1720, 1111 West Georgia St. Vancouver, B.C. V6E 4M3

Attention:  Robert M. Baker

 

or at such other address as the Purchaser shall have specified by notice actually received by the addressor.

  

33

  

 

 

In the case of notice or other communication delivered to the Company or the Vendors, then to the following address:

 

Cormack Capital Group LLC

P.O. Box 60190

Reno, Nevada

 

Attention:  Joseph Green, James Zecher and Alexander Green

 

or at such other address as the Company or the Vendors shall have specified by notice actually received by the addressor.

 

ARTICLE 13

 

SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES, TRANSFER

 

13.1           Survival of Covenants, Agreements, Etc.

 

All covenants, agreements, indemnities, representations and warranties made herein to the Purchaser or the Vendors and the Company or in any other document referred to herein or delivered to the Purchaser or the Vendors and the Company pursuant hereto shall be deemed to have been relied on by the Purchaser and the Vendors and the Company, as the case may be, notwithstanding any investigation made by the Purchaser or the Vendors and the Company, and shall survive the execution and delivery of this Agreement, the delivery to the Purchaser by the Vendors of the Membership Interests and the delivery by the Purchaser to the Vendors of the Purchase Price; provided that any claim for a breach of the representations and warranties made by the Vendors, the Company or the Purchaser pursuant to this Agreement, is made before the expiration of two (2) years from the Closing Date or the date on which the Agreement is terminated in accordance with Article 8.

 

ARTICLE 14

 

MISCELLANEOUS

 

14.1           Amendments and Waivers

 

Except as otherwise expressly provided herein, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each of the Vendors, the Company and the Purchaser, or in the case of a waiver, by the party against whom the waiver is to be effective.  Any amendment or waiver effected in accordance with this Section 14.1 shall be binding upon the Vendors, the Company and the Purchaser pursuant to this Agreement.

 

14.2           Governing Law

 

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

 

14.3           Further Assurances

 

The Vendors, the Company and the Purchaser, upon the request of any other party hereto, whether before or after the Closing, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary or desirable to effect complete the transactions contemplated herein.

  

34

  

 

 

14.4           Time

 

Time shall be of the essence of this Agreement.

 

14.5           Assignment

 

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

 

14.6           Public Announcement; Disclosure

 

None of the Company or the Vendors shall make any public announcement concerning this Agreement or the matters contemplated herein, their discussions or any other memoranda, letters or agreements between the Parties relating to the matters contemplated herein without the prior consent of the Purchaser, which consent shall not be unreasonably withheld, and the Purchaser shall not make any public announcement concerning this Agreement or the matters contemplated herein, its discussions or any other memoranda, letters or agreements between the Parties relating to the matters contemplated herein without the prior consent of the Company, which consent shall not be unreasonably withheld, provided that no party shall be prevented from making any disclosure which is required to be made by law or any rules of a stock exchange or similar organization to which it is bound.

 

14.7           Entire Agreement, Counterparts, Section Headings

 

Other than as specifically provided for herein, this Agreement sets forth the entire understanding of the Parties hereto and supersedes any prior written or oral understandings with respect thereto, including, without limitation, the letter agreement between the Company and the Purchaser dated February 8, 2011.  This Agreement may be executed by facsimile or other electronic means capable of reproducing a printed copy and in one or more counterparts thereof, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.

 

14.8           Regulatory Approval

 

This Agreement is subject to regulatory approval, including, without limitation, final acceptance of the Exchange.

 

14.9           Currency

 

Unless expressly stated otherwise, all monetary amounts set out in this Agreement are in Canadian funds.

 

14.10           Independent Legal Advice

 

Each Vendor acknowledges that it has had independent legal advice regarding the execution of this Agreement, or has been advised of its respective right to obtain independent legal advice, and if it has not in fact obtained independent legal advice, each Vendors acknowledges herewith that it understands the contents of this Agreement and that it is executing the same voluntarily and without pressure from the other Parties or anyone on its behalf.

 

14.11           Force Majeure

 

The obligations of the Parties hereto and the time frames established in this Agreement shall be suspended to the extent and for the period that performance is prevented by any cause beyond any party’s reasonable control, whether foreseeable or unforeseeable, including, without limitation, labour disputes, acts of God, laws, regulations, orders, proclamations or requests of any governmental authority, inability to obtain on reasonable terms required permits, licenses, or other authorizations, or any other matter similar to the above.

  

35

  

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement July 13, 2011.

 

INTERNATIONAL GOLD CORP.

 

 

 

Per:           

 

Authorized Signatory

 

CORMACK CAPITAL GROUP LLC

 

 

 

Per:           

 

Authorized Signatory

 

Z & G ENTERPRISES LLC

 

 

 

Per:           

 

Authorized Signatory

 

APEX CONSOLIDATED LLC

 

 

 

Per:           

 

Authorized Signatory

 

  

36

  

Schedule 1

 

List of Vendors

 

	
Full Name of Vendor

	
Percentage Interest Held in the Company

	
Company Membership Certificate No.

	
Z & G Enterprises LLC

	
50%

	  
	
Apex Consolidated LLC

	
50%

	  
	
TOTAL

	
100%

	  

 

 

  

1

  

 

Schedule 1.1

THE EQUIPMENT AND PROPERTIES

 

A.           THE PROPERTIES

The Huizopa Property is located in the Sierra Madre Occidental Mountains in the state of Chihuahua, northern Mexico at Latitude 28° 53' 04" North, Longitude 108° 38' 39" West.  It is about 60 km southwest of the town of Madera, and 260 km west of the city of Chihuahua.  The Dolores Gold Mine of Minefinders Corporation Ltd. is about 16 km to the northeast and the Mulatos Gold Mine of Alamos Gold is about 34 km to the southwest.  The Target land position consists of four mining concessions totaling 15,979.6 hectares.  The immediate region of the mining concessions is covered by the Chabacan H12 D58 and Tarachi H12 D57 1:50,000 topographic sheets.  The mining concessions are described below in Table 1.

	Concession	Title number	Municipality	Recording Date  	Expiry Date 	Hectares
	
Donna

	
218163

	
Madera, Chihuahua

	
October 11, 2002

	
October 10, 2052

	
550

	
Rosa

	
215321

	
Madera, Chihuahua

	
February 14, 2002

	
February 15, 2052

	
1,640.7

	
Huizopa

	
224874

	
Madera, Chihuahua

	
June 21, 2005

	
June 20, 2055

	
10,600

	
Heimpel

	
230204

	
Madera, Chihuahua

	
July 31, 2007

	
July 30, 2057

	
3,188.9

	
Total

	  	  	  	  	
15,979.6

 

B.           THE EQUIPMENT

 

10 x 10 mining timbers

AC units 2

Air strip fire extinguisher

Apartment beds 2

Apartment small refrigerator

Back packs

Barbed wire

BBQ grill

Bench grinder 2

Blenders 2

Bread machines 2

Brunton compasses 3

Camp food inventory

Camp bedding

  

1

  

 

Camp stoves

Camp chairs

Camp tables

ACR Personal Locator Beacon

Camp cots

Camp freezers 2

Camp refrigerator 3

Cell phones 3

Cement

Chain saws 4

Computer router

Convection oven

Core logging benches

Core saw

Core boxes

Crane, small

Desk top computers 3

Desk calculators

Diesel fuel

Diesel generators 2

Diesel filters

Digital and file cameras

Dining room tent

Document scanner

Dodge 2007 RAM 2500

Dodge 2006 RAM 4000

Drums, 55 gal

DSL equipment

DVD player

Electric fans

Electric heaters 2

External hard drives

Fax machine 2

Fence posts

Field office tent

Film scanner

First aid kits

Flash drives

Flatbed scanners 2

Gas cans, 5 gal.

Gasoline cans, 50 liter

Gasoline hand pump 2

Gasoline generators 2

Gasoline fuel

Handheld radios

Handheld GPS units

Hip chains

HP plotters 2

Industrial grill

Ink jet printers 2

Internet signal booster

Iridium satellite telephones 3

Jet fuel

Kitchen tent

Large sleeping tents on platforms 10

  

2

  

 

Large propane tanks

Large water tanks 3

Laser printers 2

Library books

Map rack

Microscope

Microwave oven 2

Office freezer

Office tent

Office refrigerator

Oregon spine splint

Plastic shelves

Plastic stacking drawers

Pots and pans

Propane heaters

Ready Berms 3

Rock hammers

Sample bags

Sample tags

Satellite equipment

Satellite TV connection

Security camera system

Silva compasses

SKED stretcher

Sleeping bags

Sleeping pads

Small tents

Small propane tanks

Small storage sheds 2

Small electric grills

Software

Spare tires

Spare wire

Steel shelving

Sunto

Telephone answering machine

Time clock

Toasters 2

Topcon GPS

Topcon total station

Trailer 2004

Truck tools boxes 3

TVs 2

UPS units

Various office/apartment folding tables

Various tarps

Various filing cabinets

Various hand tools

Various power tools

Various foot lockers

Various notebook computers

Wall photos

Wall tent frame

Washing machine

Water system

  

3

  

 

Water heaters

Water purification equipment

Wireless telephones

XM radios 3

 

  

4

  

 

Schedule 3.9

 

Agreements to Purchase

 

Nil.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

1

  

 

Schedule 3.15

 

Company Material Contracts

 

	
  

	
·

	
See attached Acquisition Agreement effective December 23, 2010 between the Company and Brigus Gold Corp.

 

 

  

1

  

 

Schedule 3.16

 

Title to Assets

 

Attached

 

  

1

  

 

Schedule 3.19

 

Company Employees and Consultants

 

Green consulting contract (attached)

Quintana consulting contract

  

1

  

 

Schedule 3.25

 

Company Location of Office

 

Cormack Capital Group LLC

7715 Porto Court

Spark, NV 89436

 

and

 

 

Minera Sol de Oro S.A. de C.V

2804 Ohio Street

Chihuahua, Mexico 31214

  

1

  

 

Schedule 4.5

Vendors Certificate

 

In connection with the issuance of shares of common stock (the “Pubco Shares”) of International Gold Corp. (“Pubco”) to the Vendors and/or the Vendors permitted assign, pursuant to that Securities Purchase Agreement dated July 13, 2011 (the “Agreement”), between Pubco and the undersigned as set out in the Agreement, the undersigned hereby agree, acknowledge, represent and warrant that:

 

Any capitalized term not defined in this Schedule 4.5 shall have the meaning ascribed to it in the Agreement.

 

	
1.

	
none of the Payment Shares have been or will be registered under the United States Securities Act of 1933, as amended, (the “1933 Act”), or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state and provincial securities laws;

 

	
2.

	
Pubco has not undertaken, and will have no obligation, to register any of the Payment Shares under the 1933 Act or any other securities legislation;

 

	
3.

	
the decision to execute this Certificate and acquire the Payment Shares agreed to be purchased has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of Pubco and such decision is based entirely upon a review of any public information which has been filed by Pubco with the U.S. Securities and Exchange Commission any Canadian provincial securities commissions, and in compliance, or intended compliance, with applicable securities legislation (collectively, the “Public Record”);

 

	
4.

	
there are risks associated with an investment in the Payment Shares, as more fully described in certain information forming part of the Public Record;

 

	
5.

	
the undersigned and the undersigned’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from Pubco in connection with the distribution of the Payment Shares hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about Pubco;

 

	
6.

	
the books and records of Pubco were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the undersigned during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Payment Shares hereunder have been made available for inspection by the undersigned, the undersigned’s lawyer and/or advisor(s);

 

	
7.

	
all of the information which the undersigned has provided to Pubco is correct and complete as of the date this Certificate is signed, and if there should be any change in such information prior to this Certificate being executed by Pubco, the undersigned will immediately provide Pubco with such information;

 

	
8.

	
Pubco is entitled to rely on the representations and warranties of the undersigned contained in this Certificate and the undersigned will hold harmless Pubco from any loss or damage it or they may suffer as a result of the undersigned’s failure to correctly complete this Certificate;

 

	
9.

	
the undersigned will indemnify and hold harmless Pubco and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever   reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the undersigned contained in this Certificate, or in any document furnished by the undersigned to Pubco in connection herewith being untrue in any material respect or any breach or failure by the undersigned to comply with any covenant or agreement made by the undersigned to Pubco in connection therewith;

  

1

  

 

 

	
10.

	
the undersigned has been advised to consult the undersigned’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Payment Shares and with respect to applicable resale restrictions, and it is solely responsible (and Pubco is not in any way responsible) for compliance with:

 

	
  

	
(i)

	
any applicable laws of the jurisdiction in which the undersigned is resident in connection with the distribution of the Payment Shares hereunder, and

 

	
  

	
(ii)

	
applicable resale restrictions;

 

	
11.

	
the undersigned consents to the placement of a legend or legends on any certificate or other document evidencing any of the Payment Shares setting forth or referring to the restrictions on transferability and sale thereof contained in this Certificate, with such legend(s) to be substantially as follows:

 

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12 (2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKET ARE MET

 

NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

	
12.

	
Pubco has advised the undersigned that Pubco is relying on an exemption from the requirements to provide the undersigned with a prospectus to issue the Payment Shares and, as a consequence of acquiring the Payment Shares pursuant to such exemption, certain protections, rights and remedies provided by the applicable securities legislation of British Columbia including statutory rights of rescission or damages, will not be available to the undersigned;

 

	
13.

	
no securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Payment Shares;

 

	
14.

	
there is no government or other insurance covering any of the Payment Shares;

 

	
15.

	
Pubco will refuse to register the transfer any of the Payment Shares not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in each case in accordance with applicable securities laws;

  

2

  

 

	
16.

	
this Certificate is not enforceable by the undersigned unless it has been accepted by Pubco, and the undersigned acknowledges and agrees that Pubco reserves the right to reject any Subscription for any reason whatsoever;

 

	
17.

	
the undersigned has the legal capacity and competence to enter into and execute this Certificate and to take all actions required pursuant hereto and, if the undersigned is a corporate entity, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Certificate on behalf of the undersigned;

 

	
18.

	
the entering into of this Certificate and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the undersigned or of any agreement, written or oral, to which the undersigned may be a party or by which the undersigned is or may be bound;

 

	
19.

	
the undersigned has duly executed and delivered this Certificate and it constitutes a valid and binding agreement of the undersigned enforceable against the undersigned;

 

	
20.

	
the undersigned has received and carefully read this Certificate;

 

	
21.

	
the undersigned is aware that an investment in Pubco is speculative and involves certain risks, including the possible loss of the entire investment;

 

	
22.

	
the undersigned has made an independent examination and investigation of an investment in the Payment Shares and Pubco and has depended on the advice of its legal and financial advisors and agrees that Pubco will not be responsible in any way whatsoever for the undersigned’s decision to invest in the Payment Shares and Pubco;

 

	
23.

	
the undersigned (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Payment Shares for an indefinite period of time;

 

	
24.

	
the undersigned (i) is able to fend for him/her/itself in the Subscription; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Payment Shares; and (iii) can afford the complete loss of this investment;

 

	
25.

	
the undersigned understands and agrees that Pubco and others will rely upon the truth and accuracy of the acknowledgements, representations, warranties, covenants and agreements contained in this Certificate, as applicable, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the undersigned shall promptly notify Pubco;

 

	
26.

	
all information contained in the Questionnaire, as applicable, is complete and accurate and may be relied upon by Pubco, and the undersigned will notify Pubco immediately of any material change in any such information occurring prior to the Closing;

 

	
27.

	
the undersigned is not an underwriter of, or dealer in, the Shares, nor is the undersigned participating, pursuant to a contractual agreement or otherwise, in the distribution of the Payment Shares;

 

	
28.

	
the undersigned understands and agrees that there may be material tax consequences to the undersigned of an acquisition or disposition of the Payment Shares. Pubco gives no opinion and makes no representation with respect to the tax consequences to the undersigned under federal, state, provincial, local or foreign tax law of the undersigned’s acquisition or disposition of the Payment Shares. In particular, no determination has been made whether Pubco will be a “passive foreign investment company” within the meaning of Section 1291 of the United States Internal Revenue Code.

  

3

  

 

	
29.

	
the undersigned is not aware of any advertisement of any of the Payment Shares and is not acquiring the Payment Shares as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

	
30.

	
no person has made to the undersigned any written or oral representations:

 

	
  

	
(iii)

	
that any person will resell or repurchase any of the Payment Shares,

 

	
  

	
(iv)

	
that any person will refund the purchase price of any of the Payment Shares, or

 

	
  

	
(v)

	
as to the future price or value of any of the Payment Shares, and

 

	
31.

	
the undersigned acknowledges and agrees that Pubco shall not consider the undersigned’s Subscription for acceptance unless the undersigned provides to Pubco, along with an executed copy of this Certificate:

 

	
  

	
(i)

	
fully completed and executed Questionnaire in the form attached hereto as Appendix I, and

 

	
  

	
(ii)

	
such other supporting documentation that Pubco or its legal counsel may request to establish the undersigned’s qualification as a qualified investor.

 

	
32.

	
In this Certificate, the term “U.S. Person” shall have the meaning ascribed thereto in Regulation S promulgated under the 1933 Act and for the purpose of the Certificate includes any person in the United States.

 

N WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _______ day of __________________, 2011.

 

Z & G ENTERPRISES LLC

 

 

 

Per:           

 

Authorized Signatory

 

APEX CONSOLIDATED LLC

 

 

 

Per:           

 

Authorized Signatory

 

  

4

  

 

	
  

	
Appendix I

 

This Questionnaire is for use by each Vendor who is a US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the “1933 Act”) and has indicated an interest in receiving Payment Shares of International Gold Corp. (the “Company”).  The purpose of this Questionnaire is to assure the Company that each Vendor will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws.  The Company will rely on the information contained in this Questionnaire for the purposes of such determination.  The Payment Shares will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act.  This Questionnaire is not an offer of the Payment Shares or any other securities of the Company in any state other than those specifically authorized by the Company.

 

All information contained in this Questionnaire will be treated as confidential.  However, by signing and returning this Questionnaire, each Vendor agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Payment Shares hereunder.

 

The Vendor covenants, represents and warrants to the Company that it satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the 1933 Act, as indicated below:  (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Vendor satisfies.)

	
_______

	
Category 1

	
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US $5,000,000.

	
_______

	
Category 2

	
A natural person whose individual net worth, or joint net worth with that person’s spouse, on the date of purchase exceeds US $1,000,000 excluding the value of the primary residence of such person(s) and the related amount of indebtedness secured by the primary residence up to its fair market value.

	
_______

	
Category 3

	
A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

	
_______

	
Category 4

	
A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.

	
_______

	
Category 5

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States).

	
_______

	
Category 6

	
A director or executive officer of the Company.

	
_______

	
Category 7

	
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act.

	
_______

	
Category 8

	
An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories.

 

If the Vendor is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

 

_____________________________________________________________________________________

 

The Vendor hereby certifies that the information contained in this Questionnaire is complete and accurate and the Vendor will notify the Company promptly of any change in any such information.  If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Vendor represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _______ day of __________________, 2011.

 

Z & G ENTERPRISES LLC

 

 

 

Per:           

 

Authorized Signatory

 

APEX CONSOLIDATED LLC

 

 

 

Per:           

 

Authorized Signatory

  

A-1

  

 

Schedule 6.9

 

Personal Information of the Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

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