STOCK PURCHASE AGREEMENT

EXHIBIT 10.19

 

 

 

STOCK PURCHASE AGREEMENT

 

 

 

by and between

 

 

 

TELIFONDA (CAYMAN) LTD.

and

AURELIO RESOURCE CORPORATION

 

 

 

September 30, 2008

 

 

TABLE OF CONTENTS

 

1.          Definitions         *

2.          Purchase and Sale of Target Shares       *

(a)         Basic Transaction          *

(b)         Purchase Price   *

(c)         The Closing       *

(d)         Deliveries at the Closing             *

(e)         Closing Adjustment        *

3.          Representations and Warranties Concerning the Transaction       *

(a)         Representations and Warranties of the Seller      *

(b)         Representations and Warranties of the Buyer      *

4.          Representations and Warranties Concerning the Target   *

(a)         Organization, Qualification, and Corporate Power          *

(b)         Capitalization     *

(c)         Noncontravention          *

(d)         Brokers' Fees    *

(e)         Title to Assets    *

(f)          Subsidiaries       *

(g)         Financial Statements      *

(h)         Events Subsequent to Most Recent Fiscal Month End    *

(i)          Undisclosed Liabilities    *

(j)          Legal Compliance          *

(k)         Tax Matters       *

(l)          Real Property    *

(m)        Permits *

(n)         Intellectual Property       *

(o)         Tangible Assets             *

(p)         Contracts          *

(q)         Notes and Accounts Receivable             *

(r)         Powers of Attorney       *

(s)         Insurance           *

(t)          Litigation           *

(u)         Employees         *

(v)         Employee Benefits         *

(w)        Guaranties         *

(x)         Environment, Health, and Safety Matters            *

(y)         Certain Business Relationships With the Target   *

(z)         Disclosure         *

(aa)       Limitations         *

5.          Pre-Closing Covenants *

(a)         General             *

(b)         Notices and Consents    *

(c)         Operation of Business    *

(d)         Preservation of Business            *

(e)         Full Access        *

(f)          Notice of Developments            *

(g)         Exclusivity         *

(h)         Title Insurance   *

(i)          Employment      *

6.          Post-Closing Covenants             *

(a)         General             *

(b)         Litigation Support          *

(c)         Transition          *

(d)         Confidentiality    *

7.          Conditions to Obligation to Close           *

(a)         Conditions to Obligation of the Buyer     *

(b)         Conditions to Obligation of the Seller     *

8.          Remedies for Breaches of This Agreement         *

(a)         Survival of Representations and Warranties        *

(b)         Indemnification Provisions for Benefit of the Buyer          *

(c)         Indemnification Provisions for Benefit of the Seller          *

(d)         Matters Involving Third Parties   *

(e)         Determination of Adverse Consequences           *

(f)          Exclusive Remedy          *

9.          Tax Matters       *

(a)         Tax Periods Ending on or Before the Closing Date         *

(b)         Tax Periods Beginning Before and Ending After the Closing Date            *

(c)         Refunds and Tax Benefits           *

(d)         Cooperation on Tax Matters      *

(e)         Tax Sharing Agreements            *

(f)          Certain Taxes    *

10.        Termination       *

(a)         Termination of Agreement          *

(b)         Effect of Termination      *

11.        Miscellaneous    *

(a)         Press Releases and Public Announcements         *

(b)         No Third-Party Beneficiaries      *

(c)         Entire Agreement           *

(d)         Succession and Assignment        *

(e)         Counterparts; Electronic Signatures        *

(f)          Headings           *

(g)         Notices             *

(h)         Governing Law *

(i)          Amendments and Waivers         *

(j)          Severability        *

(k)         Expenses           *

(l)          Construction      *

(m)        Incorporation of Exhibits and Schedules             *

Exhibit A           Historical Financial Statements

Exhibit B           Forms of Side Agreements

Exhibit C           Payments to Secure Initial Bolsa Real Property Assets

Disclosure Schedule       Exceptions to Representations and Warranties Concerning the Target

STOCK PURCHASE AGREEMENT

This Agreement (the "Agreement") is entered into on September 30, 2008, by and between TELIFONDA (CAYMAN) LTD., a Cayman Island corporation (the " Buyer "), and AURELIO RESOURCE CORPORATION, a Nevada corporation (collectively the " Seller "). The Buyer and the Seller are referred to collectively herein as the " Parties ".

The Seller owns all of the outstanding capital stock of BOLSA RESOURCES, INC., an Arizona corporation (the " Target ").

This Agreement contemplates a transaction in which the Buyer will purchase from the Seller, and the Seller will sell to the Buyer, all of the outstanding capital stock of the Target in return for a cash consideration and granting a net smelter return royalty from certain real property assets of the Target.

Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

1.          Definitions .

" Accredited Investor " has the meaning set forth in Regulation D promulgated under the Securities Act.

" Adverse Consequences " means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses.

" Affiliate " has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

" Affiliated Group " means any affiliated group within the meaning of Code Section1504(a) or any similar group defined under a similar provision of state, local, or foreign law.

" Applicable Rate " means the corporate base rate of interest publicly announced from time to time by Bank of America.

" Basis " means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.

" Bolsa NSR " has the meaning set forth in Section2(b) below

" Bridge Loan " means the bridge financing made to Aurelio in accordance with the Bridge Loan Agreement attached hereto as Exhibit B-1 .

" Buyer " has the meaning set forth in the preface above.

" Closing " has the meaning set forth in Section2(c) below.

" Closing Date " has the meaning set forth in Section2(c) below.

" COBRA " means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section4980B and of any similar state law.

" Code " means the Internal Revenue Code of 1986, as amended.

" Confidential Information " means any information concerning the businesses and affairs of the Target that is not already generally available to the public.

" Controlled Groups " has the meaning set forth in Code Section1563.

" Disclosure Schedule " has the meaning set forth in Section4 below.

" Dissenting Shares" has the meaning set forth in Section7(b)(ix).

" Employee Benefit Plan " means any "employee benefit plan" (as such term is defined in ERISA Section3(3)) and any other material employee benefit plan, program or arrangement of any kind.

" Employee Pension Benefit Plan " has the meaning set forth in ERISA Section3(2).

" Employee Welfare Benefit Plan " has the meaning set forth in ERISA Section3(1).

" Environmental, Health, and Safety Requirements " shall mean all federal, state, local and foreign statutes, regulations, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended.

" ERISA Affiliate " means each entity which is treated as a single employer with the Target for purposes of Code Section414.

" Financial Statement " has the meaning set forth in Section4(g) below.

" GAAP " means United States generally accepted accounting principles as in effect from time to time.

" Hart-Scott-Rodino Act " means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

" Income Tax " means any federal, state, local, or foreign income tax, including any interest, penalty, or addition thereto, whether disputed or not.

" Income Tax Return " means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

" Indemnified Party " has the meaning set forth in Section8(d) below.

" Indemnifying Party " has the meaning set forth in Section8(d) below.

" Initial Bolsa Real Property Assets " has the meaning set forth in the Net Smelter Return Royalty Agreement attached hereto as Exhibit B-2 .

" Intellectual Property " means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium).

" Knowledge " means actual knowledge of David Stafford Johnson, Steve Doppler and Fred Warnaars after reasonable investigation.

" Most Recent Balance Sheet " means the balance sheet contained within the Most Recent Financial Statements.

" Most Recent Financial Statements " has the meaning set forth in Section4(g) below.

" Most Recent Fiscal Month End " has the meaning set forth in Section4(g) below.

" Most Recent Fiscal Year End " has the meaning set forth in Section4(g) below.

" Multiemployer Plan " has the meaning set forth in ERISA Section3(37).

" Nesbitt Report " means the Title Report dated May 32, 2008 by Nesbitt & Associates LLC.

" Ordinary Course of Business " means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

" Owned Real Property " has the meaning set forth in Section4(l)(i) below.

" Party " has the meaning set forth in the preface above.

" Person " means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

" Rodman Renshaw Debentures " means those certain Securities Purchase Agreements and related Convertible Debenture, Registration Rights Agreements and Warrants dated February 26, 2008 between Seller and Cranshire Capital, L.P., Enable Growth Partners LP, enable Opportunity Partners LP, Harborview Master Fund LP and Pierce Diversified Strategy Master Fund LLC.

" Securities Act " means the Securities Act of 1933, as amended.

" Securities Exchange Act " means the Securities Exchange Act of 1934, as amended.

" Security Interest " means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic's, materialmen's, and similar liens, (b) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

" Seller " has the meaning set forth in the preface above.

" Subsidiary " means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.

" Survey " has the meaning set forth in Section5(i) below.

" Target " has the meaning set forth in the preface above.

" Target Share " means any share of the Common Stock, no par value, of the Target.

" Third Party Claim " has the meaning set forth in Section8(d) below.

2.          Purchase and Sale of Target Shares .

(a)         Basic Transaction . On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell to the Buyer, all of the Target Shares for the consideration specified below in this Section2.

(b)         Purchase Price . As consideration for the sale and transfer of the Target Shares, the Buyer agrees (i) to pay to the Seller at the Closing a cash consideration in the amount of $2,000,000 (in words: US Dollars Two Million) (the " Cash Consideration ") by (x) offsetting the Cash Consideration against the Bridge Loan, (y) subject to Section2(d) below, delivery of cash for the balance of the Cash Consideration payable by wire transfer or delivery of other immediately available funds and (ii) to grant to the Seller at the Closing a three percent (3%) net smelter return royalty from the minerals product derived from the Initial Bolsa Real Property Assets (the " Bolsa NSR ") by entering, and causing Target to enter, into the Net Smelter Return Royalty Agreement substantially in the form attached hereto as Exhibit B-2 .

(c)         The Closing . The closing of the transactions contemplated by this Agreement (the " Closing ") shall take place electronically on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as the Buyer and Seller may mutually determine (the " Closing Date ").

(d)         Deliveries at the Closing . At the Closing, (i) the Seller will deliver to the Buyer the various certificates, instruments, and documents referred to in Section7(a) below, (ii) the Buyer will deliver to the Seller the various certificates, instruments, and documents referred to in Section7(b) below, (iii) the Seller will deliver to the Buyer stock certificates representing all the Target Shares, endorsed in blank or accompanied by duly executed assignment documents, and (iv) the Buyer will deliver to the Seller the Cash Consideration specified in Section2(b) above and the Net Smelter Return Royalty Agreement executed by the Target and Buyer.

(e)         Closing Adjustment . At the Closing, the Buyer shall reimburse the Seller for all payments made to maintain the Target's assets from and after August 15, 2008, which payments are described on Exhibit C ; provided, however , that no reimbursement shall be made for payments indicated on Exhibit C made by Seller during the third and fourth calendar quarter of 2008 in order to secure on behalf of Target the Initial Bolsa Real Property Assets and further provided that Buyer may offset from the Cash Consideration specified in Section2(b) above any amounts necessary to make payments indicated on Exhibit C to be paid by Seller which are due in the third and fourth calendar quarter of 2008 but which are not made by Seller prior to the Closing.

3.          Representations and Warranties Concerning the Transaction .

(a)         Representations and Warranties of the Seller . The Seller represents and warrants to the Buyer that the statements contained in this Section3(a) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section3(a)) with respect to itself.

(i)          Organization of Seller . The Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)         Authorization of Transaction . The Seller has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions. The Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement.

(iii)        Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Seller is subject or any provision of its charter or bylaws or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which he or it is bound or to which any of his or its assets is subject.

(iv)        Brokers' Fees . The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated.

(v)         Investment . The Seller (A) understands that the Bolsa NSR has not been, and will not be, registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) is acquiring the Bolsa NSR solely for its own account for investment purposes, and not with a view to the distribution thereof, (C) is a sophisticated investor with knowledge and experience in business and financial matters, (D) has received certain information concerning the Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Bolsa NSR, (E) is able to bear the economic risk and lack of liquidity inherent in holding the Bolsa NSR, and (F) is an Accredited Investor.

(vi)        Target Shares . The Seller holds of record and owns beneficially the number of Target Shares set forth next to its name in Section4(b) of the Disclosure Schedule, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Seller to sell, transfer, or otherwise dispose of any capital stock of the Target (other than this Agreement). The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Target.

(b)         Representations and Warranties of the Buyer . The Buyer represents and warrants to the Seller that the statements contained in this Section3(b) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section3(b)).

(i)          Organization of the Buyer . The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)         Authorization of Transaction . The Buyer has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. The Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement.

(iii)        Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its charter or bylaws or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject.

(iv)        Brokers' Fees . The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated.

(v)         Investment . The Buyer (A) understands that the Target Shares have not been, and will not be, registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) is acquiring the Target Shares solely for its own account for investment purposes, and not with a view to the distribution thereof, (C) is a sophisticated investor with knowledge and experience in business and financial matters, (D) has received certain information concerning the Target and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Target Shares, (E) is able to bear the economic risk and lack of liquidity inherent in holding the Target Shares, and (F) is an Accredited Investor for the reasons set forth on Annex I attached hereto.

4.          Representations and Warranties Concerning the Target . The Seller represents and warrants to the Buyer that the statements contained in this Section4 are correct and complete as of the date of this Agreement and will be correct and complete in all material respects as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section4), except as set forth in the disclosure schedule delivered by the Seller to the Buyer on the date hereof and initialed by the Parties (the "Disclosure Schedule" ). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section4.

(a)         Organization, Qualification, and Corporate Power . The Target is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. The Target is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Target. The Target has full corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Section4(a) of the Disclosure Schedule lists the directors and officers of the Target.

(b)         Capitalization . The entire authorized capital stock of the Target consists of 100,000 Target Shares, of which 10,000 Target Shares are issued and outstanding and 90,000 Target Shares are held in treasury. All of the issued and outstanding Target Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record by the Seller as set forth in Section4(b) of the Disclosure Schedule. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Target to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Target. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Target.

(c)         Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Target is subject or any provision of the charter or bylaws of the Target or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Target is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets), except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Security Interest would not have a material adverse effect on the business, financial condition, operations or results of operations of the Target or on the ability of the Parties to consummate the transactions contemplated by this Agreement. The Target does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement, except where the failure to give notice, to file, or to obtain any authorization, consent, or approval would not have a material adverse effect on the business, financial condition, operations or results of operations of the Target or on the ability of the Parties to consummate the transactions contemplated by this Agreement.

(d)         Brokers' Fees . The Target has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

(e)         Title to Assets . To the Knowledge of Seller, the Target has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for such Security Interests described in the Nesbitt Report, and except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet. Such assets include all data and other assets related to the mining property Target intends to utilize including but not limited to, all scoping studies, all properties, all equipment and telecom service agreements, all bank accounts of Target, the DataMine Studio (3) lease/purchase agreement, all office and storage facility leases and the contract to purchase updated server equipment, and other assets described in Section4(e) of the Disclosure Schedule.

(f)          Subsidiaries . The Target has no Subsidiaries.

(g)         Financial Statements . Attached hereto as Exhibit A are the following financial statements (collectively the " Financial Statements "): unaudited consolidated balance sheets and statements of income (the " Most Recent Financial Statements ") as of and for the year ended December 31, 2007 and the months ended [June, 30], 2008 (the " Most Recent Fiscal Month End ") for Target. The Financial Statements present fairly the financial condition of Target as of such dates and the results of operations of Target for such periods; provided, however , that the Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items.

(h)         Events Subsequent to Most Recent Fiscal Month End . Since the Most Recent Fiscal Month End, there has not been any material adverse change in the business, financial condition, operations or results of operations of the Target. Without limiting the generality of the foregoing, since that date:

(i)          the Target has not sold, leased, transferred, or assigned any material assets, tangible or intangible, outside the Ordinary Course of Business;

(ii)         the Target has not entered into any material agreement, contract, lease, or license outside the Ordinary Course of Business other than the Master Service Agreement with Wilcox Professional Services of Arizona, LLC dated November 26, 2007;

(iii)        no party (including the Target) has accelerated, terminated, made material modifications to, or canceled any material agreement, contract, lease, or license to which the Target is a party or by which any of them is bound;

(iv)        the Target has not imposed any Security Interest upon any of its assets, tangible or intangible;

(v)         the Target has not made any material capital expenditures outside the Ordinary Course of Business;

(vi)        the Target has not made any material capital investment in, or any material loan to, any other Person outside the Ordinary Course of Business;

(vii)       the Target has not created, incurred, assumed, or guaranteed any indebtedness for borrowed money and capitalized lease obligations;

(viii)       the Target has not granted any license or sublicense of any material rights under or with respect to any Intellectual Property owned or used by the Target;

(ix)        there has been no change made or authorized in the charter or bylaws of the Target;

(x)         the Target has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;

(xi)        the Target has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

(xii)       the Target has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to its property;

(xiii)       the Target has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course of Business;

(xiv)      the Target has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

(xv)       the Target has not granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business;

(xvi)      the Target has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);

(xvii)      the Target has not made any other material change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business; and

(xviii)     the Target has not committed to take any of the actions listed in Section4(h)(i)-(xvii).

(i)          Undisclosed Liabilities . The Target has no material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes), except for (i) liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business.

(j)          Legal Compliance . To the Knowledge of Seller, the Target has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply, except where the failure to comply would not have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Target.

(k)         Tax Matters .

(i)          On or before the Closing Date, the Target will have filed all Income Tax Returns that it was required to file, and all such Income Tax Returns will be correct and complete in all material respects. All Income Taxes owed by the Target (whether or not shown on any Income Tax Return) will have been paid on or before the Closing Date. The Target is currently not the beneficiary of any extension of time within which to file any Income Tax Return.

(ii)         There is no material dispute or claim concerning any Income Tax liability of the Target either (A) claimed or raised by any authority in writing or (B) as to which the Seller has Knowledge based upon personal contact with any agent of such authority. Â!

(iii)        The Seller has delivered to the Buyer correct and complete copies of all federal Income Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by the Target since December 31, 2005. The Target has not waived any statute of limitations in respect of Income Taxes or agreed to any extension of time with respect to an Income Tax assessment or deficiency.

(iv)        The Target has not filed a consent under Code Section341(f) concerning collapsible corporations. The Target has not made any material payments, nor is the Target obligated to make any material payments, nor is the Target a party to any agreement that under certain circumstances could obligate it to make any material payments that will not be deductible under Code Section280G. Buyer has no obligation to withhold parts of the consideration payable for the Target Shares pursuant to Section 1445 of the Code as Seller is not a foreign person or disregarded entity for the purpose of and within the meaning of Section 1445 of the Code and applicable Treasury Regulations. The Target has not a party to any tax allocation or sharing agreement. The Target has (A) not been a member of an Affiliated Group filing a consolidated federal Income Tax Return (other than a group the common parent of which was the Seller) or (B) no liability for the taxes of any Person (other than the Target) under Reg. Section1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(v)         The unpaid Income Taxes of the Target (A) do not, as of the Most Recent Fiscal Month End, exceed by any material amount the reserve for Income Tax liability (rather than any reserve for deferred taxes established to reflect timing differences between book and tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (B) will not exceed by any material amount that reserve as adjusted for operations and transactions through the Closing Date in accordance with the past custom and practice of the Target in filing its Income Tax Returns.

(l)          Real Property .

(i)          Section4(l)(i) of the Disclosure Schedule lists and describes briefly all real property the Target owns (collectively, the " Owned Real Property ," which term excludes any unpatented mining and mill site claims which are addressed in Subsection 4(l)(iii) and (iv)). Section4(l)(i) of the Disclosure Schedule also identifies the title insurance policies which Target has acquired in connection with the purchase of the Owned Real Property. With respect to each such parcel of Owned Real Property, to the Knowledge of Seller:

(A)        the Target has good and marketable title to the parcel of Owned Real Property, free and clear of any Security Interest, easement, covenant, or other restriction, except for those items addressed in the Nesbitt Report, the lien of taxes not yet due or payable, installments of special assessments not yet delinquent, recorded easements, covenants, and other restrictions, all matters shown on any policy or commitment for title insurance issued to the Target, as described in Section4(l)(i) of the Disclosure Schedule, and utility easements, building restrictions, zoning restrictions, and other easements and restrictions existing generally with respect to properties of a similar character which do not affect materially and adversely the current use, occupancy, or value, or the marketability of title, of the property and right subject thereto;

(B)        there are no pending or, to the Knowledge of Seller, threatened condemnation proceedings, lawsuits, or administrative actions relating to the Owned Real Property or other matters affecting materially and adversely the current use, occupancy, or value thereof;

(C)        the Target has not received written notice from any governmental entity or instrumentality indicating that the Owned Real Property violates or fails to comply in any material respect with any governmental or judicial law, order, rule or regulation, which violation or failure to comply has not been cured;

(D)        Target is not a party to any leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the parcel of Owned Real Property, other than those described in subsection (A) above;

(E)        Target has not granted any outstanding options or rights of first refusal to purchase any parcel of Owned Real Property, or any portion thereof or interest therein, other than as described in the Option to Purchase Agreement with Newmont Realty Company dated March 27, 2007;

(F)        there are no parties (other than the Target) in possession of any parcel of Owned Real Property, other than those conflicts and other similar items described in the Nesbitt Report, and tenants under any leases disclosed in Section4(l)(i) of the Disclosure Schedule who are in possession of space to which they are entitled.

(ii)         Section4(l)(ii) of the Disclosure Schedule lists and describes briefly all real property leased or subleased to the Target. The Seller has delivered to the Buyer correct and complete copies of