AGREEMENT AND PLAN OF MERGER by and among VALOR GOLD CORP., VALOR GOLD ACQUISITION CORP. RED BATTLE CORP. PERSHING GOLD CORPORATION Dated as of May 24, 2012 AGREEMENT AND PLAN OF MERGER

by and among

Dated as of May 24, 2012

 

 

 

This Agreement and Plan of Merger is entered into as of May 24, 2012, by and among VALOR GOLD CORP., a Delaware corporation (“Parent”); VALOR GOLD ACQUISITION CORP. a Delaware corporation and wholly-owned subsidiary of Parent (“Buyer”); RED BATTLE CORP., a Delaware corporation (the “Company”); and PERSHING GOLD CORPORATION, a Nevada corporation and the holder of all of the capital stock of the Company (the “Stockholder”)  Parent, Buyer, Company and the Stockholder are each a “party” and together are “parties” to this Agreement.

 

 

WHEREAS, the Company is the holder of 100% of the outstanding membership interests of each of Arttor Gold LLC and Noble Effort Gold LLC (collectively, the “Gold Operating Subsidiaries” and each, a “Gold Operating Subsidiary”), which own and operate junior gold exploration businesses;

 

WHEREAS, the Stockholder owns 100% of the issued and outstanding capital stock of the Company; and

 

WHEREAS, the Boards of Directors of Parent, Buyer, the Company and the Stockholder have each approved the acquisition of the Company by merger of the Company with and into the Buyer, with the Company surviving such merger, upon the terms and subject to the conditions set forth in this Agreement, whereby all of the issued and outstanding shares of the capital stock of the Company will be converted into the right to receive the Merger Consideration (as defined herein); and

 

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound the parties agree as follows:

 

 

For all purposes of this Agreement, except as otherwise expressly provided,

 

(a)           the terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular,

 

(b)           all accounting terms not otherwise defined herein have the meanings assigned under GAAP,

 

(c)           all references in this Agreement to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of the body of this Agreement,

 

 

(d)           pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, and

 

(e) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

 

As used in this Agreement and the schedules delivered pursuant to this Agreement, the following definitions shall apply:

 

“AAA Rules” has the meaning set forth in Section 9.15.

 

“Action” means any action, complaint, claim, charge, petition, investigation, suit or other proceeding, whether civil or criminal, in law or in equity, or before any mediator, arbitrator or Governmental Entity.

 

“Affiliate” means with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person.

 

“Agreement” means this Agreement and Plan of Merger, as amended or supplemented, together with all exhibits and schedules attached or incorporated by reference.

 

“Approval” means any approval, authorization, consent, qualification or registration, or any waiver of any of the foregoing, required to be obtained from, or any notice, statement or other communication required to be filed with or delivered to, any Governmental Entity or any other Person.

 

“Arttor Payment Deferral” means that certain Deferral Agreement, in the form attached hereto as Exhibit D by and between Arthur Leger and Arttor Gold LLC pursuant to which Mr. Leger agrees to waive payments of all royalty fees payable under the amended and restated lease agreements by and between Arttor Gold LLC and Mr. Leger related to the Red Rock Mineral Property and the North Battle Mountain Mineral Prospect, each due on the first anniversary of such lease until the second anniversary of such lease.

 

 “Business” means the business of the Company and the Gold Operating Subsidiaries as conducted immediately prior to the Closing Date, and shall be deemed to include any of the following incidents of such business: income, cash flow, operations, condition (financial or other), assets, anticipated revenues, prospects, liabilities and personnel.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York or Denver, Colorado.

 

“Buyer” has the meaning set forth in the preamble to this Agreement.

 

 “Cash Portion of the Merger Consideration” means $2,000,000 payable to the Stockholder as Merger Consideration.

 

 

“Certificate of Merger” has the meaning set forth in Section 2.2.

 

“Certificates” has the meaning set forth in Section 2.6.

 

“Claim” has the meaning set forth in Section 8.3.

 

“Claim Notice” has the meaning set forth in Section 8.3.

 

“Closing” has the meaning set forth in Section 2.11.

 

“Closing Date” means the date of the Closing as set forth in Section 2.11.

 

 “Code” has the meaning set forth in the preamble to this Agreement.

 

“Common Stock” means the common stock, par value $0.0001 per share, of the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

 “Contract” means any agreement, contract, arrangement, bond, loan commitment, franchise, indemnity, indenture, instrument, lease, license or understanding, whether or not in writing.

 

“Current Balance Sheet” means the unaudited Balance Sheet of each Gold Operating Subsidiary dated as of March 31, 2012.

 

“DGCL” has the meaning set forth in Section 2.1.

 

 “Effective Time” has the meaning set forth in Section 2.2.

 

“Employee” or “Employees” means any individual who is (a) an employee of the Company immediately prior to the Closing Date and (b) employees of the Company on any authorized leave of absence, including, without limitation, short- or long-term disability leave, worker’s compensation leave or vacation leave as of the Closing Date.

 

 “Encumbrance” means any claim, charge, easement, encumbrance, lease, covenant, security interest, lien, option, pledge, rights of others, or restriction (whether on voting, sale, transfer, disposition or otherwise), whether imposed by agreement, understanding, law, equity or otherwise, except for any restrictions on transfer generally arising under any applicable federal or state securities law.

 

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Estoppel Certificates”  means estoppel certificates, in the form attached hereto as Exhibit E, executed by Mr. Leger relating to the mining leases and properties of the Gold Operating Subsidiaries.

 

 

“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

 

“Governmental Entity” means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

 

 “Indemnified Directors and Officers” has the meaning set forth in Section 6.6(a).

 

“Indemnified Party” has the meaning set forth in Section 8.3.

 

“Indemnifying Party” has the meaning set forth in Section 8.3.

 

“Income Taxes” has the meaning set forth in Section 7.2.

 

 “Knowledge” or “Known” shall mean the actual knowledge (without investigation) of the Stockholder.

 

“Law” means any constitutional provision, statute or other law, rule, regulation, or interpretation of any Governmental Entity and any Order.

 

“Loss” means any action, cost, damage, disbursement, expense, liability, loss, deficiency, diminution in value, obligation, penalty or settlement of any kind or nature, whether foreseeable or unforeseeable, including but not limited to, interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by the specified Person.

 

“Material Adverse Effect” means, with respect to any Person, (i) a material adverse effect on the condition (financial or otherwise), business, prospects, assets, liabilities, or results of operations of such Person; or (ii) a material adverse effect on the ability of such Person to consummate the transactions contemplated by this Agreement.

 

 “Merger” has the meaning set forth in Section 2.1.

 

“Merger Consideration” has the meaning set forth in Section 2.5.

 

“Note Portion of the Merger Consideration” means the 5% promissory note of the Parent in the principal amount of $500,000 issuable to the Stockholder as part of the Merger Consideration.

 

“Order” means any decree, injunction, judgment, order, ruling, assessment or writ of any Governmental Entity.

 

“Parent” has the meaning set forth in the preamble to this Agreement.

 

“Parent Indemnified Party” has the meaning set forth in Section 8.1.

 

“Parent Indemnifying Party” has the meaning set forth in Section 8.2.

 

 

“Parent Shares” shall mean shares of common stock, par value $0.0001 per share, of Parent (or its permitted successor) delivered to the Stockholder as part of the Merger Consideration.

 

“Pershing Cancellation Shares” means 1,750,000 shares of Pershing Gold Corporation held by Arthur Leger which Mr. Leger has agreed to surrender for cancellation in conjunction with the Merger.

 

“Pershing Shares Cancellation Agreement” means the agreement dated as of the date hereof between Pershing and Arthur Leger pursuant to which Mr. Leger agrees to deliver the Pershing Cancellation Shares to Pershing for cancellation along with duly executed and medallion guaranteed stock powers.

 

“Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Entity.

 

“Pre-Closing Tax Returns” has the meaning set forth in Section 7.2.

 

“Royalty Deed” means a Production Royalty Deed, in the form attached hereto as Exhibit C by and between Arthur Leger and Pershing Royalty Company, a wholly owned subsidiary of Stockholder, pursuant to which Mr. Leger grants a 1% net smelter returns production royalty to Pershing Royalty Company on all minerals produced from certain claims leased to the Gold Operating Subsidiaries by Mr. Leger.

 

 “SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

 “Share” and “Shares” has the meaning set forth in Section 2.5 and includes all options, warrants or other securities convertible into shares.

 

“Stock Representations” has the meaning set forth in Section 8.1(c).

 

“Stockholder” has the meaning set forth in the preamble to this Agreement.

 

“Stockholder Indemnified Party” has the meaning set forth in Section 8.2.

 

“Stockholder Indemnifying Party” and “Stockholder Indemnifying Parties” has the meaning set forth in Section 7.1.

 

“Stock Portion of the Merger Consideration” means that portion of the Merger Consideration that is evidenced by the 25,000,000 Parent Shares issued to the Stockholder.

 

 “Straddle Period” has the meaning set forth in Section 7.3.

 

 

“Subsidiary” means, with respect to any Person, (a) any corporation 50% or more of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person, directly or indirectly through Subsidiaries; and (b) any partnership, limited liability company, association, joint venture, trust or other entity in which such Person, directly or indirectly through Subsidiaries, is either a general partner, has a 50% or greater equity interest at the time or otherwise owns a controlling interest.

 

 “Subsidiary Financial Statements” means the (a) audited balance sheets of each of the Gold Operating Subsidiaries as of December 31, 2011, and the related audited statements of income, changes in stockholders’ equity, and cash flow for each of the fiscal year then ended; and (b) unaudited balance sheet of each of the Gold Operating Subsidiaries as of March 31, 2012 (each, a “Subsidiary Interim Balance Sheet”) and the related unaudited statement of income for the three (3) months then ended and annexed hereto on Schedule 3.6.

 

“Surviving Entity” has the meaning set forth in Section 2.1.

 

“Tax” (and, with correlative meaning, “Taxes”) means:  (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, escheat, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any governmental authority; and (ii) any liability of the Company for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation of the Company under any Tax Sharing Arrangement or Tax Indemnity Agreement.

 

“Tax Claim” has the meaning set forth in Section 7.6.

 

“Tax Indemnity Agreement” means any written or unwritten agreement or arrangement pursuant to which the Company may be required to indemnify or reimburse another party for any liability relating to Taxes.

 

“Tax Period” has the meaning set forth in Section 3.7

 

“Tax Return” means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.

 

 “Tax Sharing Arrangement” means any written or unwritten agreement or arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a consolidated, combined or unitary Tax Return which includes the Company.

 

 “Threshold” has the meaning set forth in Section 8.1(c).

 

 

 

2.1           The Merger.  At the Effective Time and upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (the “DGCL”), the Company shall be merged with and into Buyer (the “Merger”).  Following the Merger, Company shall continue as the surviving entity (the “Surviving Entity”) and the separate corporate existence of the Buyer shall cease.  Parent, as the sole owner of Buyer, hereby approves the Merger and this Agreement.

 

2.2           Effective Time.  Subject to the terms and conditions set forth in this Agreement, on the Closing Date, a Certificate of Merger with the Company, substantially in the form of Exhibit A (the “Certificate of Merger”) shall be duly executed and acknowledged by Buyer and thereafter delivered to the Secretary of State of Delaware for filing.  The Merger shall become effective at such time as a properly executed copy of the Certificate of Merger is duly filed with the Secretary of State of the States of Delaware or such later time as Parent and the Stockholder may agree upon and as set forth in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “Effective Time”).

 

2.3           Effects of the Merger.  The Merger shall have the effects set forth in the DGCL.  Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Buyer shall vest in the Surviving Entity, and all debts, liabilities and obligations of the Company and Buyer shall become the debts, liabilities and obligations of the Surviving Entity.

 

2.4           Certificate of Incorporation, Bylaws and Directors and Officers.  The certificate of incorporation of the Buyer shall, without further action, be terminated, and the certificate of incorporation and bylaws of Company in effect at the Effective Time shall be the certificate of incorporation and bylaws of the Surviving Entity until amended in accordance with applicable law.  From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, the directors and the officers of Buyer at the Effective Time shall become the directors and the officers of the Surviving Entity and the officers and directors of the Company shall cease to act as such effective as of the Effective Time.

 

2.5           Conversion of Shares.  At the Effective Time, by virtue of the Merger (and without any action on the part of Buyer or the Company), the shares of Common Stock (each a “Share” and, collectively, the “Shares”) issued and outstanding immediately prior to the Effective Time shall, collectively, be converted into the right to receive the Merger Consideration.  The “Merger Consideration” is the aggregate consideration comprised of (i) the Cash Portion of the Merger Consideration, (ii) the Stock Portion of the Merger Consideration, and (iii) the Note Portion of the Merger Consideration.  Except as otherwise specifically provided herein, the Pershing Share Cancellation Agreement and the Royalty Deed shall constitute “Additional Merger Consideration”

 

 

2.6           Exchange of Shares for Merger Consideration. At the Effective Time, the Shares issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each certificate previously evidencing any such Shares (the “Certificates”) shall thereafter represent the right to receive the Merger Consideration.

 

2.7           Intentionally Omitted.

 

2.8           Buyer Common Stock.  Each share of Buyer common stock, par value $0.0001 per share, held by Parent immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the Parent, be converted into the right to receive one (1) share of common stock of the Surviving Entity.

 

2.9           Delivery of Certificates, Note and Cash.

 

(a)           Delivery.  At the Closing, the Stockholder shall deliver its Certificate(s) to Parent and Parent shall deliver in exchange therefor payment of the Merger Consideration, to wit: the Cash Portion of the Merger Consideration to be paid by wire transfer of immediately available funds to such account as shall have been designated by the Stockholder, the Stock Portion of the Merger Consideration to be paid by delivery to the Stockholder of a certificate representing 25,00,000 Parent Shares, the Note Portion of the Merger Consideration, to be paid by delivery of such to the Stockholder, in the form attached hereto as Exhibit B, the Royalty Deed, to be delivered to the Stockholder in the form attached hereto as Exhibit C and the Pershing Cancellation Shares, to be delivered to the Stockholder along with duly executed medallion guaranteed stock powers.  Upon delivery of the Merger Consideration, the Certificate(s) so surrendered by the Stockholder shall forthwith be canceled.

 

(b)           No Further Transfers.  The Merger Consideration paid upon the surrender of Shares in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares.  From and after the Effective Time, there shall be no further registration of transfers on the transfer books of the Surviving Entity of the Shares that were outstanding immediately prior to the Effective Time.

 

(c)           Certificates.  If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such person of a bond in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, Parent shall deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto.

 

 

2.11           The Closing.  Upon the terms and subject to the conditions of this Agreement, the transactions contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at the offices of Sichenzia Ross Friedman Ference, LLP, legal counsel to Parent and Buyer, located at 61 Broadway, 32nd Floor, New York, New York 10006, contemporaneously with the execution of this Agreement, or at such other place or at such other time or on such other date as the Stockholder and Parent may mutually agree upon in writing, provided that all conditions to closing have been satisfied and closing deliveries required of the parties in this Article II have been delivered (the day on which the Closing takes place being the “Closing Date”).  The Closing may, with the consent of all parties, take place by delivering an exchange of documents by facsimile transmission or electronic mail with originals to follow by overnight mail service courier.

 

 

2.12           Closing Deliveries by the Stockholder and the Company.  At the Closing, against delivery of, among other things, the Merger Consideration, the Stockholder shall deliver or cause to be delivered to Parent:

 

2.13           Closing Deliveries by Parent and Buyer  At the Closing, against delivery of, among other things, the Certificates, Buyer and Parent shall deliver to the applicable Stockholder:

 

 

The Stockholder, hereby represents and warrants as of the date hereof to Buyer, and Parent as follows:

 

3.1           Organization and Qualification of the Company.

 

3.2           Capitalization.

 

3.3           Stock Ownership by Stockholder.  The Stockholder has good title to, and is the sole record and beneficial owner of, the Shares and the Shares owned by the Stockholder are free and clear of any and all Encumbrances.  The Stockholder is not a party to any voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares owned by the Stockholder other than such which will terminate upon the consummation of the transactions contemplated by this Agreement.

 

3.4           Authorization; Enforceability.  The execution, delivery and performance of this Agreement by the Stockholder and the Company and the consummation by the Stockholder and the Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Stockholder and the Company, respectively.  This Agreement has been duly executed and delivered by the Stockholder and the Company, and assuming due authorization, execution and delivery by Buyer and Parent, this Agreement constitutes a valid and binding obligation of the Stockholder and the Company enforceable against the Stockholder and the Company in accordance with its terms, except to the extent that the enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws, or by equitable principles relating to the rights of creditors generally.

 

3.5           No Conflict; Governmental Consents.  The execution, delivery and performance of this Agreement by the Stockholder and the Company do not and will not (i) violate, conflict with or result in the breach of any provision of the charter or by-laws of the Company, (ii) conflict with or violate in any material respect any Law or Order applicable to the Stockholder or, to the Knowledge of the Stockholder, the Company, or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Shares owned by the Stockholder or on any of the other assets or properties of the Stockholder pursuant to, any note, bond, mortgage, indenture, license, permit, lease, sublease or other Contract to which the Stockholder is a party or by which any of the Shares owned by the Stockholder or any of such other assets or properties is bound or affected, except as would not reasonably be expected to result in a Material Adverse Effect on the Stockholder.. The execution, delivery and performance of this Agreement by the Stockholder and, to the Knowledge of the Stockholder, the Company, do not and will not require any Approval or Order of any Governmental Entity.

 

 

3.6           Intentionally Omitted.

 

3.7           Taxes.  Except as set forth in Schedule 3.7 (with subsection references corresponding to those set forth below) during the period beginning on the date of acquisition of the Gold Operating Subsidiaries by the Stockholder through and including the Closing Date (such period, the “Tax Period”):

 

3.8           Litigation; Compliance with Laws.

 

3.9           No Brokers or Finders.  No agent, broker, finder, or investment or commercial banker, or other Person or firm engaged by or acting on behalf of any of the Stockholder, the Company, or any of their respective Affiliates, in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled to any brokerage or finder’s or similar fee or other commission as a result of this Agreement or such transactions.

 

3.10           Disclosure.  To the Knowledge of the Stockholder all factual information (taken as a whole) heretofore or contemporaneously requested by Parent or Buyer and furnished to Parent or Buyer by or on behalf of Stockholder and the Company or its representatives for purposes of or in connection with this Agreement or the transactions contemplated herein was materially true and accurate on the date as of which such information is dated and the Stockholder does not believe such factual information is materially incomplete in any respect.  For the purposes of this Section 3.10 only, the “Knowledge of the Stockholder” shall be deemed to exclude any fact or circumstance actually known by Arthur Leger or David Rector.

 

 

 

 

Parent and Buyer jointly and severally represent and warrant to the Stockholder and agrees as follows:

 

5.1           Organization and Authority of Parent and Buyer.

 

5.2           Capitalization.

 

5.3           Litigation; Compliance with Laws.

 

5.4           No Conflict; Governmental Consents.

 

5.5           SEC Reporting.  Parent has filed all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the SEC pursuant to the Exchange Act or other applicable United States federal securities Laws.  None of the Parent’s subsidiaries is required to file periodic reports with the SEC.  To the Parent’s knowledge, no investigation by the SEC with respect to the Parent or any of its subsidiaries is pending or threatened.

 

5.6           Officer and Directors.  To the Parent’s knowledge, none of the officers or directors of Parent or any of its subsidiaries: (i)has been convicted of any felony or misdemeanor or named as a subject of a criminal proceeding within the past ten (10) years (excluding traffic violations and other minor offenses but including in connection with the purchase or sale of any security, involving the making of a false filing with the SEC, or arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, or investment adviser); (ii) is subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily enjoining or restraining, or is subject to any order, judgment, or decree of any court of competent jurisdiction, entered within the past five (5) years, permanently enjoining or restraining such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security, involving the making of a false filing with the SEC, or arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, or investment adviser; (iii) is subject to an order of the SEC entered pursuant to Sections 15(b), 15B(a), or 15B(c) of the Exchange Act, or Section 203(e) or (f) of the Investment Advisers Act of 1940; (iv) is suspended or expelled from membership in, or suspended or barred from association with a member of, a national securities exchange registered under Section 6 of the Exchange Act or a national securities association registered under Section 15A of the Exchange Act for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade; or (v) is subject to a United States Postal Service false representation order entered under 39 U.S.C. Section 3005 within the past five (5) years or is subject to a restraining order or preliminary injunction entered under 39 U.S.C. Section 3007 with respect to conduct alleged to have violated 39 U.S.C. Section 3005.

 

 

 

5.8           Disclosure.  To the Knowledge of the Parent and the Buyer all factual information (taken as a whole) heretofore or contemporaneously requested by Stockholder or the Company and furnished to the Stockholder or the Company by or on behalf of the Parent or the Buyer or its representatives for purposes of or in connection with this Agreement or the transactions contemplated herein was materially true and accurate on the date as of which such information is dated and neither the Parent nor the Buyer believes such factual information is materially incomplete in any respect

 

 

6.1           Assumption of Risk by Parent and Buyer; No Reliance.

 

 

 

6.3           Taking of Necessary Action; Further Action.  If, at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Entity with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and the Gold Operating Subsidiaries, the officers and directors of the Surviving Entity are fully authorized in the name of the Surviving Entity or otherwise to take and will take, all such actions at Parent’s expense.

 

6.4           Stockholder’s Obligation to Close.  The Stockholder’s obligation to close the transaction set forth in this Agreement is expressly made subject to the satisfaction of the following conditions:

 

6.5           Employment Matters.  Parent and Buyer acknowledge that all employees of the Company, if any, before the Closing will remain employees of the Surviving Entity after the Closing, and that and any all expense and liability related to the employment and/or termination of such employees after the Closing will be borne solely by Parent and Buyer.

 

6.6           Directors’ and Officers’ Indemnification and Insurance.

 

6.7           Further Assurances.  Parent, Buyer and  the Stockholder shall (and Parent shall cause the Surviving Entity and the Gold Operating Subsidiaries to) provide reasonable cooperation to each other and their professional auditors  with respect to any audit, legal or tax inquiries or procedures following the Closing Date including, without limitation, in order to permit Parent to have prepared, at its sole cost and expense, audited financial statements as required for filing with the SEC.

 

6.8           Legal Representation.  Each party hereto acknowledges that it has been represented by independent legal counsel in the preparation of this Agreement and Plan of Merger.  Each party recognizes and acknowledges that counsel for Parent has represented the Stockholder and the Buyer on other matters and may, in the future, represent the Stockholder and the Buyer in connection with various legal matters.  Stockholder and Buyer each hereby explicitly waive any conflict of interest and other allegations that it has not been represented by its own counsel.

 

.6.9           Financial Matters.  At the Closing Date, all intercompany obligations as set forth on the Financial Statements or recorded on the books and records of the Parties, due and owing from the Company or the Gold Operating Subsidiaries to Stockholder, or from Stockholder to the Company or the Gold Operating Subsidiaries, shall be cancelled.  All bank accounts of the Company and the Gold Operating Subsidiaries shall be maintained and any balances on the date hereof shall be conveyed and transferred to Buyer and the Surviving Company by virtue of the Merger.

 

 

7.1           Conveyance Taxes.  Parent and Buyer shall pay and be solely responsible for any transfer or gains, sales, use, transfer, value added, stock transfer, and stamp taxes, any transfer, recording, registration, and other fees, and any similar Taxes which become payable in connection with the transactions contemplated by this Agreement, and shall file such applications and documents as shall permit any such Tax to be assessed and paid on or prior to the Closing Date in accordance with any available pre-sale filing procedure.  Each party hereto shall execute and deliver all instruments and certificates necessary to enable the other party or parties to comply with the foregoing.

 

 

7.2           Pre-Closing Tax Returns.  The Stockholder shall timely prepare and file all Tax Returns of the Company required to be filed by the Company with respect to a period ending on or before the Closing Date (each such Tax Return, a “Pre-Closing Tax Return”).  Parent and Buyer shall cause the Company to execute and timely file any Pre-Closing Tax Return prepared in accordance with this Section 7.2 that will be filed after the Closing Date, other than any income consolidated Tax Return for a consolidated group of which the Stockholder is the common parent.  The cost of preparing all Pre-Closing Tax Returns shall be paid by the Stockholder.  All such Pre-Closing Tax Returns shall be prepared and filed in a manner consistent with the past practice of the Company and its Subsidiaries, if any, unless otherwise required by applicable Law.  The Stockholder, the Buyer and the Parent will cooperate in good faith in connection with the exchange of information necessary for the preparation of all Pre-Closing Tax Returns.

 

7.3           Straddle Period.  The Parent and Buyer shall timely prepare or cause to be prepared and file or cause to be filed any Tax Returns of the Company or its Subsidiaries required to be filed by the Company or its Subsidiaries, as the case may be, with respect to a period beginning before the Closing Date and ending after the Closing Date (a "Straddle Period") relating to Taxes a portion of which is owed by the Company and the Stockholder with respect to any pre-closing tax period or portion thereof ("Straddle Period Returns").  All Straddle Period Returns shall be prepared and filed in a manner consistent with the past practice of the Company unless otherwise required by applicable Law.  The Stockholder shall have the right to review and comment on each Straddle Period Return prior to the filing of such return.  The Stockholder and the Buyer agree to consult and resolve in good faith any issues and comments arising as a result of the review of each Straddle Period Return, and mutually to consent to filing as promptly as possible to each Straddle Period Return.

 

7.4           Last Day of Taxable Period.  If the Company or its Subsidiaries is permitted under any applicable foreign, state or local income tax Law to treat the Closing Date as the last day of a taxable period of the Company or its Subsidiaries, the Stockholder and the Parent and Buyer shall treat (and cause their respective Affiliates to treat) the Closing Date as the last day of such taxable period (i.e., a deemed closing of the books for Tax purposes).  For all purposes under this Agreement, in the case of Taxes that are payable with respect to any Straddle Period, the portion of any such Tax that is allocable to the portion of the period ending on the close of the Closing Date shall be, in the case of Taxes that are based upon or related to income or receipts, be equal to the amount which would be payable if the taxable year ended on the Closing Date.

 

 

7.5           Tax Cooperation.  The Stockholder and the Buyer shall, upon written request of the other, (i) each provide the other with such assistance as may be reasonably requested by any of them in connection with the preparation of any Tax Return, audit, or other examination by any taxing authority or judicial or administrative proceedings relating to liability for Taxes or such returns, (ii) each retain and provide the other with any records or other information that may be relevant to such Tax Returns, audit or examination, proceeding, or determination, and (iii) each provide the other with any final determination of any such audit or examination, proceeding, or determination that affects any amount required to be shown on any such Tax Returns.  Without limiting the generality of the foregoing, the Buyer shall retain until the applicable statues of limitations (including any extensions) have expired, copies of all Pre-Closing Tax Returns and Straddle Period Returns, supporting work schedules, and other records or information that may be relevant to such returns, and shall not destroy or otherwise dispose of any such records without first providing the Stockholder with a reasonable opportunity to review and copy the same.  Each party shall bear its own expenses in complying with the foregoing provisions.

 

7.6           Required Notification.  The Buyer shall promptly notify the Stockholder in writing upon receipt by the Buyer or any of its Affiliates of notice of any audits, examinations, adjustments or assessments relating to Taxes with respect to any Pre-Closing Tax Returns and any Straddle Period Returns, and with respect to amounts which would be paid by the Stockholder or for which any of the Buyer or its Affiliates may be entitled to receive indemnity under this Agreement (each, a "Tax Claim").  The Stockholder, in its sole discretion, may contest such Tax Claim in any permissible forum and shall otherwise have the sole right at its sole expense to direct, control and settle any administrative or judicial proceedings relating to such Tax Claim, provided that the Stockholder (i) notifies the Buyer in writing within twenty (20) days (or if a response to such Tax Claim is required within thirty (30) days and the Internal Revenue Service (or any other applicable state or local tax authority) refuses to grant an extension of at least ten (10) days, fifteen (15) days; provided that the Buyer shall be required to use reasonable efforts to obtain such an extension) of the Buyer's notification of the Stockholder of such Tax Claim of their intent to exercise their right to direct, control, and settle such Tax Claim, (ii) the Buyer shall be entitled to participate at its sole expense in such administrative or judicial proceedings and (iii) to the extent any settlement of any such proceeding is reasonably expected to increase any Tax to the Buyer or its Affiliates in respect of any Tax not indemnified under this Agreement by the Stockholder at the time of such settlement, the Stockholder may not settle any such proceeding without the prior written consent of the Buyer.

 

 

8.1           Obligations of Stockholder.

 

8.2           Obligations of Parent.  Parent, Buyer and the Surviving Entity (collectively, the “Parent Indemnifying Parties”) agree to indemnify and hold harmless the Stockholder and its respective agents, representatives and Affiliates and their successors and assigns (each, a “Stockholder Indemnified Party”) from and against any and all Losses of the Stockholder Indemnified Party, directly or indirectly, as a result of, or based upon or arising from:

 

 

8.3           Procedure.  A Stockholder Indemnified Party or a Parent Indemnified Party (each, an “Indemnified Party”) shall give the Parent Indemnifying Party or Stockholder Indemnifying Party (each, an “Indemnifying Party”), as applicable, notice (a “Claim Notice”) of any matter which an Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (a “Claim”), within forty-five (45) days of such determination; provided, however, that any failure of the Indemnified Party to provide such Claim Notice shall not release the Indemnifying Party from any of its obligations under this Article VIII except to the extent the Indemnifying Party is materially prejudiced by such failure and shall not relieve the Indemnifying Party from any other obligation or liability that it may have to any Indemnified Party otherwise than under this Article VIII except to the extent the Indemnifying Party is materially prejudiced by such failure.  Upon receipt of the Claim Notice, the Indemnifying Party shall be entitled to assume and control the defense of such Claim at its expense if it gives notice of its intention to do so to the Indemnified Party within ten (10) Business Days of the receipt of such Claim Notice from the Indemnified Party; provided, however, that (i) Indemnified Party must approve of the selection of legal counsel by Indemnifying Party, which approval shall not be unreasonably withheld, delayed or conditioned and (ii) if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the judgment of the Indemnified Party, in its reasonable discretion, for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party shall be entitled to retain its own counsel, in each jurisdiction for which the Indemnified Party determines counsel is required, at the expense of the Indemnifying Party.  In the event the Indemnifying Party exercises the right to undertake any such defense against any such Claim as provided above, the Indemnified Party shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably required by the Indemnifying Party.  Similarly, in the event the Indemnified Party is, directly or indirectly, conducting the defense against any such Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party’s expense, all such witnesses, records, materials and information in the Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is reasonably required by the Indemnified Party.  No such Claim may be settled by the Indemnifying Party without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, delayed or conditioned so long as (a) there is no payment or other consideration required of the Indemnified Party and (b) such settlement does not require or otherwise involve any restrictions on the conduct of Business by the Indemnified Party.

 

 

 

8.5           Notice by Indemnifying Party.  The Indemnifying Party agrees to notify the Indemnified Party of any liabilities, claims or misrepresentations, breaches or other matters covered by this Article VIII upon discovery or receipt of notice thereof (other than such claims from the Indemnified Party).

 

8.6           Exclusive Remedy.  Other than rights to equitable relief, to the extent available under applicable law, each of the parties acknowledges and agrees that the sole and exclusive remedy for any Losses arising from Claims described in Sections 8.1 and 8.2 or any other Claims of every nature arising in any manner in connection with this Agreement, shall be indemnification in accordance with this Article VIII  including the offset of Losses through the reduction of the principal amount of the Note Portion of the Merger Consideration, as described in Section 8.1(c)(iii).

 

8.7           Mitigation.  Prior to the resolution of any Claim for indemnification under this Agreement, the Indemnified Party shall utilize all commercially reasonable efforts, consistent with normal past practices and policies and good commercial practice, to mitigate such Losses.

 

8.8           Consequential and Other Damages.  No party shall be liable for any lost profits or consequential, special, punitive, indirect or incidental Losses or damages in connection with this Agreement.

 

 

9.1             Amendments; Waivers.  This Agreement and any schedule or exhibit attached hereto may be amended only by agreement in writing of all parties.  No waiver of any provision nor consent to any exception to the terms of this Agreement or any agreement contemplated hereby shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided.

 

 

9.2           Schedules; Exhibits; Integration.  Each schedule and exhibit delivered pursuant to the terms of this Agreement shall be in writing and shall constitute a part of this Agreement, although schedules need not be attached to each copy of this Agreement.  This Agreement, together with such schedules and exhibits, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the parties in connection therewith.

 

9.3           Governing Law.  This Agreement, the legal relations between the parties and any Action, whether contractual or non-contractual, instituted by any party with respect to matters arising under or in connection with this Agreement, including but not limited to the negotiation, execution, interpretation, coverage, scope, performance, breach, termination, validity, or enforceability of this Agreement, shall be governed by and construed in accordance with the internal laws of the State of New York without reference to principles of conflicts of laws.

 

9.4           No Assignment.  Neither this Agreement nor any rights or obligations under it are assignable without the express written consent of the Stockholder and Parent.

 

9.5           Headings.  The descriptive headings of the Articles, Sections and subsections of this Agreement are for convenience only and do not constitute a part of this Agreement.

 

9.6           Counterparts.  This Agreement and any amendment hereto or any other agreement (or document) delivered pursuant hereto may be executed in one or more counterparts and by different parties in separate counterparts.  All of such counterparts shall constitute one and the same agreement (or other document) and shall become effective (unless otherwise provided therein) when one or more counterparts have been signed by each party and delivered to the other party.

 

9.7           Publicity and Reports.  The Stockholder and Parent shall coordinate all publicity relating to the transactions contemplated by this Agreement and, except as required by Law, no party shall issue any press release, publicity statement or other public notice relating to this Agreement, or the transactions contemplated by this Agreement, without obtaining the prior consent of each of the Stockholder and Parent.

 

9.8           Parties in Interest.  This Agreement shall be binding upon and inure to the benefit of each party, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.  Nothing in this Agreement is intended to relieve or discharge the obligation of any third person to any party to this Agreement.

 

9.9           Notices.  Any notice or other communication hereunder must be given in writing and (a) delivered in person, (b) transmitted by facsimile or (c) mailed by certified mail, postage prepaid, return receipt requested as follows:

 

 

If to Parent, addressed to:

 

Valor Gold Corp.

200 S Virginia Street, 8th Floor

Reno, NV 89501

Facsimile:

(925) 938-0406

 

With a copy to:

 

Sichenzia Ross Friedman Ference LLP

Attn: Harvey Kesner, Esq.

61 Broadway, 32nd Floor

New York, NY 10006

Facsimile:

(212) 930-9725

 

If to Stockholder, addressed to:

 

Pershing Gold Corporation

1658 Cole Boulevard, Building 6, Ste. 210

Lakewood CO 80401

Facsimile:

(720) 974-7249

 

With a copy to:

 

Davis Graham & Stubbs LLP

Attn: Deborah Friedman

1550 17th Street, Suite 500

Denver, CO 80202

Facsimile:

(303) 893-1379

 

or to such other address or to such other person as either party shall have last designated by such notice to the other party.  Each such notice or other communication shall be effective (i) if given by facsimile, when transmitted to the applicable number so specified in (or pursuant to) this Section 8.9 and an appropriate answerback is received, (ii) if given by mail, three (3) days after such communication is deposited in the mails by certified mail, return receipt requested, with postage prepaid and addressed as aforesaid or (iii) if given by any other means, when actually delivered at such address.

 

9.10           Remedies; Waiver.  To the extent permitted by Law, all rights and remedies existing under this Agreement are cumulative to and not exclusive of, any rights or remedies otherwise available under applicable Law.  No failure on the part of any party to exercise or delay in exercising any right hereunder shall be deemed a waiver thereof, nor shall any single or partial exercise preclude any further or other exercise of such or any other right.

 

9.11           Attorney’s Fees.  In the event of any Action by any party to enforce against another party a right or claim, each party shall pay its own fees, costs and expenses incurred in such Action, and no arbitrator shall have authority to make an award of attorney’s fees in contravention of this provision.  Attorney’s fees incurred in enforcing any final judgment in respect of this Agreement are recoverable as a separate item.

 

 

9.12           Severability.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable by any Governmental Entity, the remaining provisions of this Agreement to the extent permitted by Law shall remain in full force and effect; provided that the essential terms and conditions of this Agreement for all parties remain valid, binding and enforceable.  In event of any such determination, the parties agree to negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intents and purposes hereof.  To the extent permitted by Law, the parties hereby to the same extent waive any provision of Law that renders any provision hereof prohibited or unenforceable in any respect.

 

9.13           Entire Agreement.  This Agreement constitutes and includes that entire agreement of the parties with reference to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof.  No promise or representation of any kind has been made to any of the parties to this Agreement by any other party or parties to this Agreement or anyone acting for any of such parties, except as is expressly stated in this Agreement.

 

9.14           Time is of the Essence.  Time is of the essence in interpreting and enforcing this Agreement.

 

9.15           Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be resolved by binding arbitration administered before one arbitrator by the American Arbitration Association under its Commercial Arbitration Rules in effect on the date of this Agreement (herein the “AAA Rules”), and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The arbitrator shall be selected pursuant to the AAA Rules and shall be a neutral and impartial lawyer with excellent academic and professional credentials (i) who is or has been practicing law for at least fifteen (15) years, specializing in general commercial litigation or general corporate and commercial matters and (ii) who has both training and experience as an arbitrator and is generally available to serve as an arbitrator.  The arbitration shall be governed by the arbitration law of the Federal Arbitration Act and shall be held in New York, New York.

 

9.16           Expenses.  All fees and expenses incurred by any party hereto shall be paid by such party.

 

9.17           Disclosures.  Each exception stated in the Schedules attached hereto shall be deemed to be disclosed under any Section of Article III or Article V specifically identified therein and any other Section or Sections to which such disclosure relates.

 

 

[Remainder of Page Left Intentionally Blank]

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its duly authorized officers as of the day and year first above written.