PURCHASE AND SALE OF LLC MEMBERSHIP INTEREST AGREEMENT

PURCHASE AND SALE OF LLC MEMBERSHIP INTEREST AGREEMENT

THIS PURCHASE AND SALE OF LLC MEMBERSHIP INTEREST AGREEMENT (the “Agreement”), dated as of May 11, 2009, is entered into by and between Golden Phoenix Minerals, Inc., a Nevada corporation (the “Seller”), and Win-Eldrich Gold, Inc., a Nevada corporation (“the Purchaser”).  The Seller and the Purchaser are hereinafter collectively referred to as the “Parties.”

RECITALS

WHEREAS , pursuant to that certain Operating Agreement by and between the Parties, dated September 28, 2006 (the “Operating Agreement”) the Seller is the holder of a membership interest and the Purchaser is the holder of a membership interest, the respective ownership interest amounts being in dispute, in Ashdown Project LLC, a Nevada limited liability company (the “LLC”).  Originally, Seller owned a 60% Ownership Interest (defined in the LLC’s Operating Agreement) and Purchaser owned a 40% Ownership Interest.  The Seller and Purchaser collectively own 100% of the Ownership Interests in the LLC.  Terms not defined herein shall have the meaning assigned them in the LLC’s Operating Agreement.

WHEREAS , the Seller desires to sell, or cause to be sold, Seller’s entire Ownership Interest in the LLC, and to assign and transfer certain contractual obligations, equipment, permits and other material documents contributed and/or leased to the LLC.  Purchaser desires to purchase the Seller’s entire Ownership Interest (collectively, the “Membership Interest”), and to accept, or cause the LLC to accept, as applicable, such assignment upon the terms and subject to the conditions hereinafter set forth.

WHEREAS , the Parties previously entered into a Binding Memorandum of Understanding and two related Binding Side Letter Agreements, each dated February 25, 2009 (collectively, the “MOU”), pursuant to which the Parties agreed upon the material terms of the purchase of the Membership Interest.  The parties dispute whether the MOU has expired.

WHEREAS , the Parties hereto desire to enter into an agreement which includes matters set forth in the MOU, whose documentation includes, but is not limited to, this Agreement and the related Note, Security Agreement and Deed of Trust, and certain releases related to claims among them each as defined herein (collectively, the “Transaction Documents”), which Transaction Documents shall supersede the MOU as well as any other arrangements, understandings or agreements, whether written or oral, between the Parties prior to the date hereof.

WHEREAS , in connection with the duties and obligations herein, including the sale of the Seller’s Membership Interest, the Purchaser shall pay Seller the aggregate purchase price of Five Million Three Hundred Thousand Dollars ($5,300,000) and cause the LLC to grant the Seller a security interest in the assets of the LLC, and all of Purchaser’s Ownership Interest in the LLC, as set forth herein.

WHEREAS , certain assets of the LLC are already encumbered by certain security agreements and/or leases, which are identified on Schedule 1.1(b)(i) attached hereto (“Preexisting Liens”).  Seller’s security interest will be subordinate to such Preexisting Liens.

WHEREAS , the parties intend to transfer all of Seller’s Ownership Interest under Section 3.2.3 of the Operating Agreement.

NOW, THEREFORE , in consideration of the mutual promises, covenants and terms contained in this Agreement, the parties hereby agree as follows:

(a)            Purchase Price . Upon the Closing (as hereinafter defined), in consideration for the sale and transfer of One Hundred Percent (100%) of Seller’s Membership Interest in the LLC to Purchaser, and Seller’s release of claims against the LLC and Purchaser pursuant to the Release (defined below), the Purchaser shall issue to Seller a Secured Promissory Note, dated the date of Closing, in substantially the form attached hereto as Exhibit A (the “Note”), whereby the Purchaser promises to pay Seller Five Million Three Hundred Thousand Dollars ($5,300,000) (the “Purchase Price”), pursuant to the terms and conditions herein and as set forth in the Note.

(b)            Grant of Security Interest .  The Purchaser shall (or shall cause the LLC to, as applicable) grant Seller a security interest in certain Collateral (as that term is defined in the Security Agreement) being (except to the extent excluded) all assets of the LLC, and Purchaser’s Ownership Interest in the LLC, which Collateral shall be Seller’s sole recourse in an Event of Default (as defined in the Note), or upon any default or breach of the Security Agreement or Deed of Trust.  The form of the Security Agreement is attached hereto as Exhibit B (the “Security Agreement”).  The form of Deed of Trust is attached hereto as Exhibit C (the “Deed of Trust”).

i.            Priority of Security Interest; Subordination .  The parties acknowledge that the LLC and/or Purchaser will obtain financing to complete the Purchaser’s purchase of Seller’s Membership Interest, to provide working capital and to refinance (when and if Purchaser deems advisable) the LLC’s leases and loans.  This may occur before, at or after Closing.  In the event that a third party desires to provide Purchaser financing via an investment in, joint venture with, or loan to, the LLC secured by the assets of the LLC and/or Purchaser’s Ownership Interest, so long as the Note is still outstanding, Seller agrees to enter into an Intercreditor Agreement with such third party (in form and substance reasonably acceptable to all parties), such that Seller and the third party will each share a first priority security interest (subject to the Preexisting Liens) in pari passu as to One Million Five Hundred Thousand Dollars ($1,500,000) of their respective investment, venture or loan amounts.  Seller agrees that an additional One Million Five Hundred Thousand Dollars ($1,500,000) may be assigned to such similar priority position in pari passu , so long as: (A) title to the Ashdown Mill has vested in the LLC, and (B) Purchaser has made an additional capital contribution to the LLC of at least Five Hundred Thousand Dollars ($500,000) in cash (collectively, this amount with the initial $1,500,000, for a total of $3,000,000, is referred to as the “Priority Amount”) Seller will subordinate its loan and its security interests in the Collateral as to the balance of any principal and interest outstanding under the Note (initially this amount is $5.3M - $1.5M, or $3.8M subordinated to the Priority Amount of $3M with Seller holding $1.5M pari passu ).  Seller’s security interest in the Collateral is subordinate to Preexisting Liens.  Seller agrees to release Collateral for sales and replacements and transactions in the ordinary course, including, but not limited to, off take agreements and forward sales contracts.  Seller also agrees to release its security interest in the Collateral so the LLC may “factor” or finance its accounts receivable and establish a “lock box” security interest for its cash and bank accounts.  Purchaser and the LLC may pay down and reborrow at any time the amount of the Priority Amount, from one or multiple lender/investors, and may replace the Preexisting Liens with alternate financing so long as Seller is not obligated as a guarantor on such alternate financing.  The Purchaser agrees to use (or cause the LLC to use) the proceeds received from any Priority Amount loan in the business of the LLC (which for these purposes includes refinancing of Preexisting Liens or discharge of amounts owed Seller), including payment of those certain required payments of the LLC set forth in Section 4.3.  Collateral shall not include current assests and the LLC may distribute to its members so long as no uncured Event of Default is continuing, available cash.

ii)             Financing Mill.   Notwithstanding anything herein or in the Security Agreement or the Limited Recourse Secured Promissory Note, the Parties agree that Muller and or LLC can encumber, collateralize and seek financing for the granting of a sole first priority interest in the Ashdown Mill up to $500,000 and the lendor or investor will not be subject to the limiting provisions 1.1(b)(i).

iii)            In consideration of the foregoing, Muller and or the LLC agree to grant Seller a first right of refusal to purchase the Ashdown Mill.

(c)            Termination of Existing Litigation or Disputes .  Effective upon Closing, the Parties and the LLC shall enter into a Settlement and Release Agreement, in substantially the form attached hereto as Exhibit D (the “Release”), pursuant to which the Parties and the LLC shall agree that any and all litigation and ongoing disputes existing between the Parties shall be immediately terminated.  Not released are claims for fraud, intentional misconduct or breach of the obligations and duties under this Agreement.  The Seller shall release the LLC from any and all claims, including but not limited to, those arising under the Operating Agreement.  Although at Closing Seller will cease to be a member of the LLC, the obligations of Confidentiality under Article XII of the Operating Agreement survive and are incorporated herein, as are the dispute resolution provisions of Article XIII.

(d)            Wages & Expense Reimbursements .  Excluding Kent Aveson and David Tretbar (for whom any remaining contractual obligations including employee/employer and severance compensation (and taxes related thereto); medical insurance and expenses; other employee benefits, and expense reimbursements, the Seller shall hold the LLC harmless and remain responsible and shall discharge), the Purchaser shall hold Seller harmless from all payroll obligations of the LLC made, or required to be made, on or after December 31, 2008, including, but not limited to, all outstanding employee wages and expense reimbursements and all outstanding payroll and employment-related taxes due.  Any expenses related to employees hired and/or rehired on or after November 14, 2008 will not be the responsibility of Seller.

(e)             Release of Existing Loan Balance .  At Closing, the entire balance of any principal and interest owed on the loan from the LLC to the Seller, estimated to have a balance as of the date hereof of one hundred sixty thousand two hundred thirty dollars ($160,230.00), shall be forgiven in its entirety.

(f)             Payment to Retrievers LLC .  On or before the Closing, Perry Muller (“Muller”), or his assignee, will pay up to One Hundred Thousand Dollars ($100,000.00) of all payments made in settlement of the amounts owed by the LLC to Retrievers LLC, and prior to Closing, Seller (at its cost for any additional amounts required for settlement) shall secure a release (in a form acceptable to Purchaser) from Retrievers LLC of any claim or title in or to the Ashdown Mill with Muller becoming the sole owner of the Ashdown Mill (“Retriever’s Settlement”).  Upon completion of the Retriever’s Settlement, Muller shall lease the Ashdown Mill to the LLC, and Muller agrees to convey the Ashdown Mill to the LLC upon repayment to him by the LLC of the One Hundred Thousand Dollar ($100,000) payment made in the Retriever’s Settlement, plus a loan fee in the amount of Ten Thousand Dollars ($10,000), pursuant to that certain Side Letter Agreement dated May 13, 2009 (“Ashdown Mill Side Letter Agreement”), attached hereto as Exhibit E .

1.2            Interest Rate; Payments .  The interest rate on the Note will be calculated on a quarterly basis, commencing on April 1, 2009, and will constitute the Wall Street Journal Prime Rate plus two percent (2.00%).  Notwithstanding the foregoing, in no event will the interest rate exceed ten percent (10.00%).  Payments of principal and interest will commence one year from the date of this Agreement, and will be payable on a monthly basis, pursuant to the terms of the Note.

 

1.3            Closing .  Subject to the terms and conditions of this Agreement, the closing of this Agreement shall take place on the date the Transaction Documents are entered into (the “Closing”).  At Closing : (i) all Purchaser and Seller Closing Deliverables set forth in Section 1.4 will have been delivered; and (ii) all Pre-Closing Covenants set forth in Section 4 will have been satisfied in accordance with their terms .

(a)            Purchaser Deliverables . Upon Closing, the Purchaser will, or will have the LLC as applicable, deliver to the Seller: (i) the Note in the principal amount of Five Million Three Hundred Thousand Dollars ($5,300,000); (ii) an executed copy of the Security Agreement; (iii) an executed copy of the Deed of Trust; (iv) an executed copy of the Release; (v) Purchaser’s Opinion Letter; (vi) documentation evidencing Muller’s payment to Retriever’s LLC of One Hundred Thousand Dollars ($100,000) pursuant to the Retriever’s Settlement; (vii) an executed copy of the Ashdown Mill Side Letter Agreement; (viii) evidence of the cancellation of the loan referenced in Section 1.1(e); and (ix) such other documents reasonably necessary to complete the transactions contemplated herein.

(b)            Seller Deliverables .  Upon Closing, the Seller will deliver to the Purchaser: (i) an executed copy of the Security Agreement; (ii) an executed copy of the Deed of Trust; (iii) an executed copy of the Release; (iv) a bill of sale or other documentation evidencing the conveyance of the Seller’s entire Membership Interest in the LLC; (v) Seller’s Opinion Letter; (vi) such documentation as required to remove Seller and its agents as signatories from the LLC’s bank accounts; (vii) resignations by Seller’s representatives from the Management Committee; (viii) documentation evidencing completion of the Retriever’s Settlement; (ix) any documents relating to the loan in Section 1.1(e) marked “Cancelled”; (x) documents evidencing Seller’s Member Resignation pursuant to the Operating Agreement;  (xi) documents completing the transfer of assets to the LLC as provided in Section 4.1, and including but not limited to 3(h) and (k); and (xii) such other documentation reasonably necessary to complete the transactions contemplated herein.

1.5            Taxes .  Purchaser shall be solely responsible for the payment of sales, transfer, and use taxes arising out of the sale, transfer, and assignment of the Membership Interest, and to the extent of available funds cause the LLC to discharge sales and use taxes on the use of the Assigned Assets (as defined below) on or after the Closing.  Purchaser shall have no liability or responsibility for any income, franchise, or other taxes (other than income taxes based upon or measured by Purchaser’s net income) or charges or imposts of any kind relating to or arising out of Seller’s Membership Interest on or prior to Closing, or the transactions contemplated by this Agreement, except as specifically set forth herein, or the use of the Assigned Assets prior to the Closing.  Seller shall remain liable for 50% of any liabilities arising out of the LLC’s failure to pay taxes or mineral royalties, or file tax returns due prior to December 31, 2008.

(a)             Organization and Qualification .  The Purchaser is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted.  Purchaser is duly qualified to do business in Nevada to the extent it is required to be so qualified.

 

(b)            Power; Authority; Enforcement; Validity .  The Purchaser has the requisite power and authority to enter into and perform its obligations under each of the Transaction Documents in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby and thereby, have been duly authorized by the Purchaser's Board of Directors and no further filing, consent, or authorization is required by the Purchaser, its Board of Directors or its shareholders.  This Agreement and as of Closing the other Transaction Documents have been duly executed and delivered by the Purchaser, and constitute the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

(c)             Collateral .  Assuming the proper transfers of Assigned Assets by Seller to the LLC, the Purchaser represents and warrants to the Seller to its knowledge it and the LLC are the true and lawful owners of the Collateral, as that term is defined in the Security Agreement, having good and marketable title thereto, free and clear of all liens other than: a) the security interest granted to the Seller hereunder, (ii) the Preexisting Liens, and (iii) as set forth in Schedule 2(c) (the “Permitted Liens”).  The Purchaser shall not (nor shall it allow the LLC to) create or assume or permit to exist any lien on or against any of the Collateral, except as created or permitted hereby and the Permitted Liens and Pre-Existing Liens, and it shall promptly notify the Seller of any other lien against the Collateral and shall defend the Collateral against, and take all such action as may be necessary to remove or discharge, any other lien against the Collateral.  The Purchaser shall, or shall cause the LLC to, maintain the Collateral in good condition and repair.  The Purchaser will pay, or cause the LLC to pay, all taxes and other assessments due and owing by each of them, respectively, pertaining to the Collateral.  The LLC shall maintain in full force and effect insurance coverage on the Collateral that is prudent and customary for comparably situated companies for the business being conducted and the nature of the Collateral.

(d)            Absence of Litigation . To the knowledge of Purchaser, except as set forth on Schedule 2(d) , there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Purchaser, threatened against or affecting the Purchaser or the LLC that would prevent the consummation of this Agreement or have a material adverse effect on the LLC or its business.

(e)            Access to Information .  Purchaser has had access to all information regarding the LLC that the Purchaser reasonably considers important in making the decision to purchase the Seller’s Membership Interest.  The Purchaser further represents that it had the opportunity to ask questions and receive answers from the Seller concerning the business and financial condition of the LLC.

(f)             Compliance with the Securities Laws .  The Purchaser understands that, in reliance upon the representations and warranties made by the Purchaser herein, the Seller’s Membership Interest is not being registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or being qualified under applicable state securities laws, but instead is being transferred under an exemption or exemptions therefrom.

(g)            Brokerage Commissions .  The Purchaser acknowledges that no brokerage commissions or other fees were paid by the Purchaser in connection with this transaction.

(h)            Valuation of Seller’s Membership Interest .  The Purchaser and the Seller have determined the value of the Seller’s Membership Interest based upon arm’s length negotiations.  The Purchaser understands that except as set forth herein the Seller can give no assurances that the Purchase Price is in fact the fair market value of the Membership Interest.

 

(i)             Contribution Agreement .  Purchaser has, or by Closing will have, completed the assignment to the LLC of the “Assets” (as that term is defined in the Contribution Agreement made between Purchaser and the LLC on September 28, 2006), such that the LLC is required to take no additional action as to title and/or ownership of the Assets and that they have been properly assigned.  Further that there are no Assets for which consent to transfer was not obtained and to which Purchaser still holds title for the benefit of the LLC.  To the best of Purchaser’s knowledge, the LLC holds good and defensible title in and to the personal property and certain unpatented mining claims comprising the Assets, except as otherwise set forth on Schedule 2(i).

(j)             Investigations .  To the best of Purchaser’s knowledge, no judgment, order, injunction, decree, investigation, proceeding, or ruling of any court or governmental authority exists by which the assets of the LLC or its businesses are bound, or to which any of them are subject, which would have a material adverse effect on the LLC or its businesses, or Purchaser’s ability to operate the LLC businesses at the level in a manner comparable to the level and manner of Seller’s operations of the LLC’s business prior to December 31, 2008, except as shown on Schedule 2(j).

(k)            Accuracy of Representations .  No representation or warranty by Purchaser given in connection with the transactions contemplated hereby, contains or will contain any untrue statement of material fact, and Purchaser represents and warrants that it has, at all times, acted in good faith in a negotiation of and in the representations made in reaching this agreement.   To Purchaser’s knowledge and belief, all Schedules prepared by Purchaser attached hereto are true, complete and accurate in all material respects.

3.              THE SELLER’S REPRESENTATIONS AND WARRANTIES.   The Seller hereby represents, warrants and confirms the following:

(a)            Power and Authority .  The Seller hereby represents and warrants that it has full power and authority to execute and deliver this Agreement and to perform its obligation under this Agreement. Seller and the consummation by the Seller of the transactions contemplated hereby and thereby, have been duly authorized by the Seller's Board of Directors and no further filing, consent, or authorization is required by the Seller, its Board of Directors or its shareholders.  This Agreement, and as of Closing the other Transaction Documents, have been duly executed and delivered by the Seller, and constitute the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

(b)            Organization and Qualification .  The Seller is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted.  The Seller is duly qualified to do business in Nevada to the extent it is required to be so qualified.

(c)            Ownership of Seller’s Ownership Interest .  Seller has not at any time since its acquisition transferred, assigned or agreed to convey (including a security interest) any part or portion of its Ownership Interest.  The Seller beneficially owns all of its Ownership Interest, free and clear of any restrictions on transfer, taxes, security interests, purchase rights, contracts, commitments, equities, claims and demands.  The Seller is not a party to any purchase right, pledge agreement or other contract or commitment that could require the Seller to sell, transfer or otherwise dispose of the Seller’s Ownership Interest.  Upon the Purchaser’s purchase of the Seller’s Ownership Interest under this Agreement, the Purchaser shall obtain and be fully vested in ownership of the Seller’s Ownership Interest, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), taxes, security interests, purchase rights, contracts, commitments, equities, claims and demands, and except for any transfers by Purchaser of its Ownership Interests, Purchaser shall be the sole member of the LLC.

 

(d)            Reliance .  The Seller acknowledges and agrees that the decision to sell all the Seller’s Membership Interest pursuant to this Agreement is an independent business decision and that Seller is not relying upon the Purchaser’s representations (except those made in Section 2 above), valuations, or other information provided by the Purchaser.  Seller further represents that it has had the opportunity to ask Purchaser questions of Purchaser concerning the business and financial condition of the LLC, including events occurring after December 31, 2008.

(e)            Absence of Litigation .  To the knowledge of Seller, except as set forth on Schedule 2(c) or (d), there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Seller, threatened against or affecting the Seller that would prevent the consummation of this Agreement.

(f)            No Brokers .  Seller has not, directly or indirectly, in connection with the transactions contemplated hereby, (i) employed any broker, finder or agent, or (ii) agreed to pay or incur any obligation to pay any broker’s or finder’s fee or similar fee or compensation, and shall hold Purchaser harmless for any claims of compensation due, or arising from Seller’s actions.

(g)            No General Solicitation .  At no time has Seller made any form of general advertising or solicitation in connection with the offer, sale and purchase of the Seller’s Membership Interest.

(h)            Contribution Agreement .  Seller has, or before Closing will have, completed the assignments to the LLC of the “Underlying Agreements” as that term is defined in the Contribution Agreement made between Seller and the LLC on September 28, 2006 such that the LLC is required to take no additional action as to title and/or ownership in those Agreements and that they have been properly assigned. Further, that there are no Underlying Agreements for which consent was not obtained and to which Seller still holds title for the benefit of the LLC.  To the best of Seller’s knowledge each of the Underlying Agreements is in good standing and in full force and effect, and upon the completion of Seller’s transfers of the Underlying Agreements, the LLC holds good and defensible title in and to the same, except as otherwise set forth in Schedule 3(h).

(i)             Litigation .  Except as set forth in Schedule 2(d) (completed jointly by Seller and Purchaser), to the best of Seller’s knowledge, there are no actions, investigations, claims, suits or proceedings pending or, to Seller’s knowledge threatened, against the LLC or its business in any court or for any administrative agency, nor does Seller have any likely reason to believe that any such investigation, suit or proceeding will be brought which would have a material adverse effect on the LLC or its business.

(j)             Investigations .  To the best of Seller’s knowledge, no judgment, order, injunction, decree, investigation, proceeding, or ruling of any court or governmental authority exists by which the assets of the LLC or its businesses are bound, or to which any of them are subject, which would have a material adverse effect on the LLC or its businesses, or Purchaser’s ability to operate the LLC businesses at the level in a manner comparable to the level and manner of Seller’s operations of the LLC’s business prior to December 31, 2008, except as shown on Schedule 3(j).

(k)            Property, Books and Records .  As of Closing, Seller represents that it has transferred to Purchaser or the LLC all property of the LLC within its possession and control, including, but not limited to, true, correct and complete copies of books, records, data, information, documents, maps, reports, bank accounts, permits, water rights, bonds (including those provided to the BLM and NDEP), claims, deposits, studies, certificates of deposit (whether or not in the LLC’s name, but used in its business), or other tangible or intangible personal property or realty, pursuant to Section 4.1 below.  Within two (2) business days of execution of this Agreement Seller will transfer the LLC computer, and all software and data regarding the LLC to Purchaser.  Said computer is currently at Seller’s office.

(l)             Accuracy of Representations .  No representation or warranty by Seller given in connection with the transactions contemplated hereby, contains or will contain any untrue statement of material fact, and Seller represents and warrants that it has, at all times, acted in good faith in a negotiation of and in the representations made in reaching this agreement.   To Seller’s knowledge and belief, all Schedules prepared by Seller attached hereto are true, complete and accurate in all material respects.

5.1            Entire Contract .  This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof.  The parties acknowledge that this Agreement supersedes all previous understandings, written or oral, including, but not limited to, the MOU dated February 25, 2009, with respect to the subject matter hereof.

5.2            Survival of Representations, Warranties and Covenants .  All representations and warranties made by the Seller and the Purchaser herein shall survive the execution of this Agreement and the sale and delivery of the Seller’s Membership Interest.

5.3            Currency .  All amounts referenced and set forth herein and in any of the Transaction Documents shall be in lawful money of the United States.

5.4            Governing Law .  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, as such laws are applied to contracts entered into and performed in such state without regard to that state’s conflict-of-laws rules.

5.5            Successors and Assigns.   The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Seller and the Purchaser and the legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law or otherwise, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms and conditions hereof.  No party to this Agreement may assign, transfer or delegate its duties of or under this Agreement without the prior written consent of the non-assigning party.

5.6            Notices .  Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery or sent by facsimile, addressed (i) if to Purchaser, at the address set forth on the signature page hereto or such other address as it has furnished to the Seller in writing in accordance with this subsection, or (ii) if to Seller, at the address set forth on the signature page hereto or such other address as it has furnished to the Purchaser in writing in accordance with this subsection.  A notice shall be deemed effectively given, (a) upon personal delivery to the party to be notified; (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (c) three (3) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

5.7            Waivers and Amendments .  No provision of this Agreement or any other Transaction Document may be amended, waived or modified other than by a document signed by the Purchaser and the Seller (as of the effective date of such action).

5.8            Titles and Subtitles .  The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement.

5.9            Severability .  In the event that any of the provisions of this Agreement shall be held by a court or other tribunal of competent jurisdiction to be illegal, invalid or unenforceable, such provisions shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect.

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

 

5.13          Material Adverse Effect .  In the event of a material adverse effect prior to Closing on a portion of the assets or business of the LLC, including that such assets are damaged or destroyed, or if condemnation proceedings are threatened or commenced against all or a portion of the real property of the LLC, upon Purchaser’s giving notice of such material adverse effect and Seller’s receipt of notice, either party shall then have the right, exercisable to terminate this Agreement in which case neither party shall any further rights or obligations hereunder.

5.14          Future Cooperation .  Each party acknowledges that the LLC may be a party to audits, investigations, litigation and other proceedings following the Closing which relate to the LLC’s business or assets, and covenants to fully cooperate with the other in the handling or defense of such matters and to maintain and make available to the other upon reasonable request any and all files and business records and any and all individuals employed by the other party hereto who’s testimony or knowledge is necessary or useful with respect to the issues involved in such matters or preparation therefore.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first indicated above.

EXHIBIT A

SECURED PROMISSORY NOTE

 

 

 

 

Confidential

LIMITED RECOURSE SECURED PROMISSORY NOTE