SHARE EXCHANGE AGREEMENT Between DUTCH GOLD RESOURCES, INC. And DUTCH MINING, L.L.C. Dated: January 4, 2007
Between
DUTCH
GOLD RESOURCES, INC.
And
DUTCH
MINING, L.L.C.
Dated:
January 4, 2007
THIS
AGREEMENT AND PLAN OF SHARE EXCHANGE
(hereinafter referred to as the “Agreement”), is entered into as of this 4th day
of January, 2007, by and among, DUTCH
GOLD RESOURCES, INC.,
a
publicly-owned Nevada corporation (“DGRI”), DUTCH
MINING, L.L.C., an
Oregon
limited liability company (“Dutch Mining”), and the shareholders of Dutch Mining
on the signature page hereof (the “Dutch Mining Equityholders”). DGRI, Dutch
Mining and the Dutch Mining Equityholders are sometimes hereinafter collectively
referred to as the “Parties” and individually as a “Party.”)
W
I T N E S S E T H
WHEREAS,
DGRI is
a publicly owned Nevada corporation whose common stock, no par value per
share,
is currently quoted on the Pink Sheets under the symbol “DGRI” (the “DGRI Common
Stock”).
WHEREAS,
the
Dutch Mining Equityholders listed on Schedule
I
hereto
own all of the issued and outstanding shares of the membership interests
of
Dutch Mining (the “Dutch Mining Interests”).
WHEREAS,
the
Parties desire that DGRI acquire all of the Dutch Mining Interests from the
Dutch Mining Equityholders solely in exchange for an aggregate of 22,725,000
newly issued shares of common stock (the “Exchange Shares”) pursuant to the
terms and conditions set forth in this Agreement.
WHEREAS,
immediately upon consummation of the Closing (as hereinafter defined), the
Exchange Shares will be issued to the Dutch Mining Equityholders on a pro
rata
basis, in proportion to the ratio that the percentage of Dutch Mining Interests
held by such Dutch Mining Shareholder bears to the number of shares of Dutch
Mining Interests held by all the Dutch Mining Equityholders as of the date
of
the Closing.
WHEREAS, following
the Closing, Dutch Mining will become a wholly-owned subsidiary of DGRI and
the
Exchange Shares will represent approximately eighty percent (80%) of the
total
outstanding shares of Common Stock of DGRI.
WHEREAS,
the
Parties intend that the transaction contemplated herein (the “Transaction”)
qualify as a reorganization and tax-free exchange under Section 368(a) of
the Internal Revenue Code of 1986, as amended.
NOW
THEREFORE,
on the
stated premises and for and in consideration of the foregoing recitals which
are
hereby incorporated by reference, the mutual covenants and agreements
hereinafter set forth and the mutual benefits to the Parties to be derived
here
from and for other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the Parties hereto agree as
follows:
ARTICLE
I
PLAN
OF EXCHANGE
1.1 The
Exchange.
At the
Closing (as hereinafter defined), the Dutch Mining Interests issued and
outstanding immediately prior to the Closing Date shall be exchanged for
shares
of DGRI Common Stock in accordance with Schedule I attached hereto.. The
aggregate number of shares of DGRI Stock exchanged for the Dutch Mining Shares
pursuant to this Agreement shall be 24,000,000. From and after the Closing
Date,
the Dutch Mining Equityholders shall no longer own any shares of Dutch Mining
Common Stock, and the stock certificates formerly representing shares of
Dutch
Mining Common Stock shall represent the pro rata portion of the Exchange
Shares
issuable in exchange therefor pursuant to this Agreement. Any fractional
shares
that would result from such exchange will be rounded up to the next highest
whole number.
1.2 Additional
Issuances.
At the
Closing, DGRI shall issue an additional 1,275,000 shares of Common Stock
(the
“Restricted Stock”) to the Holders and in the amounts set forth on Schedule 1.2
hereof, for services previously to Dutch Mining.
1.3 No
Dilution.
DGRI
shall neither effect, nor fix any record date with respect to, any stock
split,
stock dividend, reverse stock split, recapitalization, or similar change
in the
DGRI Stock between the date of this Agreement and the Effective
Time.
1.4 Closing.
The
closing (“Closing”) of the transactions contemplated by this Agreement shall
occur immediately following the execution of this Agreement providing the
closing conditions set forth in Articles V and VI have been satisfied or
waived
(the “Closing Date”).
1.5 Closing
Events.
At the
Closing, each of the respective parties hereto shall execute, acknowledge,
and
deliver (or shall cause to be executed, acknowledged, and delivered) any
and all
stock certificates, officers’ certificates, opinions, financial statements,
schedules, agreements, resolutions, rulings, or other instruments required
by
this Agreement to be so delivered at or prior to the Closing, and the documents
and certificates provided in Sections 5.2, 5.4, 6.2, 6.4 and 6.5, together
with
such other items as may be reasonably requested by the parties hereto and
their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby. If agreed to by the parties, the Closing may take place
through the exchange of documents (other than the exchange of stock
certificates) by efax, fax, email and/or express courier. At the Closing,
the
Exchange Shares shall be issued in the names and denominations provided by
Dutch
Mining.
1.6 Standstill.
(a)
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Until
the earlier of the Closing or January 31, 2007 (the “No Shop Period”),
neither Dutch Mining nor the Dutch Mining Equityholders will (i)
solicit
or encourage any offer or enter into any agreement or other understanding,
whether written or oral, for the sale, transfer or other disposition
of
any capital stock or assets of Dutch Mining to or with any other
entity or
person, except as contemplated by the Transaction, other than sales
of
goods and services by Dutch Mining in the ordinary course of its
business;
(ii) entertain or pursue any unsolicited communication, offer or
proposal
for any such sale, transfer or other disposition; or (iii) furnish
to any
person or entity (other than DGRI, and its authorized agents and
representatives) any nonpublic information concerning Dutch Mining
or its
business, financial affairs or prospects for the purpose or with
the
intent of permitting such person or entity to evaluate a possible
acquisition of any capital stock or assets of Dutch Mining. If
either
Dutch Mining or any of the Dutch Mining Equityholders shall receive
any
unsolicited communication or offer, Dutch Mining or the Dutch Mining
Equityholders, as applicable, shall immediately notify DGRI of
the receipt
of such communication or offer.
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2
(b)
|
During
the No-Shop Period, DGRI will not (i) solicit or encourage any
offer or
enter into any agreement or other understanding, whether written
or oral,
for the sale, transfer or other disposition of any capital stock
or assets
of DGRI to or with any other entity or person, except as contemplated
herein, or in the ordinary course of its business; (ii) entertain
or
pursue any unsolicited communication, offer or proposal for any
such sale,
transfer or other disposition; or (iii) furnish to any person or
entity
(other than Dutch Mining, and its authorized agents and representatives)
any nonpublic information concerning DGRI or its business, financial
affairs or prospects for the purpose or with the intent of permitting
such
person or entity to evaluate a possible acquisition of any capital
stock
or assets of DGRI. If either DGRI or any of DGRI’s stockholders shall
receive any unsolicited communication or offer, DGRI or such DGRI
stockholder, as applicable, shall immediately notify Dutch Mining
of the
receipt of such communication or
offer.
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ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF DUTCH
MINING
As
an
inducement to, and to obtain the reliance of DGRI, Dutch Mining represents
and
warrants as follows:
2.1 Organization.
Dutch
Mining is a limited-liability company duly organized, validly existing, and
in
good standing under the laws of the State of Oregon. Dutch Mining has the
power
and is duly authorized, qualified, franchised, and licensed under all applicable
laws, regulations, ordinances, and orders of public authorities to own all
of
its properties and assets and to carry on its business in all material respects
as it is now being conducted, including qualification to do business as a
foreign corporation in jurisdictions in which the character and location
of the
assets owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not, and
the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of Dutch Mining’s
organizational documents. Dutch Mining has taken all action required by laws,
its articles of organization certificate of business registration, or otherwise
to authorize the execution and delivery of this Agreement. Dutch Mining has
full
power, authority, and legal right and has taken or will take all action required
by law, its Articles of Organization, and otherwise to consummate the
transactions herein contemplated.
2.2 Capitalization.
All
issued and outstanding membership interests of Dutch Mining are legally issued,
fully paid, and non-assessable and were not issued in violation of the
pre-emptive or other rights of any person. Dutch Mining has no outstanding
options, warrants, calls, or other convertible securities related to the
Dutch
Mining Interests.
3
2.3 Financial
Statements.
(a)
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Dutch
Mining has filed all local income tax returns required to be filed
by it
from its inception to the date hereof. All such returns are complete
and
accurate in all material respects.
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(b)
|
Except
for a certain Federal payroll tax liability approximately in the
amount of
$100,000 and an Oregon State payroll tax liability approximately
in the
amount of $18,000 as set forth on Schedule 2.3(b), Dutch Mining
has no
liabilities with respect to the payment of federal, county, local,
or
other taxes (including any deficiencies, interest, or penalties),
except
for taxes accrued but not yet due and payable, for which Dutch
Mining may
be liable in its own right or as a transferee of the assets of,
or as a
successor to, any other corporation or
entity.
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(c)
|
Except
as set forth herein, no deficiency for any taxes has been proposed,
asserted or assessed against Dutch Mining. There has been no tax
audit,
nor has there been any notice to Dutch Mining by any taxing authority
regarding any such tax audit, or, to the knowledge of Dutch Mining,
is any
such tax audit threatened with regard to any taxes or Dutch Mining
tax
returns. Dutch Mining does not expect the assessment of any additional
taxes of Dutch Mining for any period prior to the date hereof and
has no
knowledge of any unresolved questions concerning the liability
for taxes
of Dutch Mining.
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(d)
|
The
books and records, financial and otherwise, of Dutch Mining are
in all
material respects complete and correct and have been maintained
in
accordance with good business and accounting
practices.
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2.4 Certain
Liabilities.
Attached hereto as Exhibit 2.4 is a schedule of loans made to Dutch Mining,
LLC.
2.5 Information.
The
information concerning Dutch Mining set forth in this Agreement and the Dutch
Mining Schedules (as that term is defined herein) are and will be complete
and
accurate in all material respects and does not contain any untrue statement
of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading
as of the date hereof and as of the Closing Date.
2.6 Absence
of Certain Changes or Events.
Except
as set forth in this Agreement or the Dutch Mining Schedules (as that term
is
defined herein):
(a)
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Except
in the normal course of business, there has not been (i) any material
adverse change in the business, operations, properties, assets,
or
condition of Dutch Mining; or (ii) any damage, destruction, or
loss to
Dutch Mining (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties, assets,
or
condition of Dutch Mining;
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(b)
|
Dutch
Mining has not (i) borrowed or agreed to borrow any funds or incurred,
or
become subject to, any material obligation or liability (absolute
or
contingent) not otherwise in the ordinary course of business, and
except
for capital raised by issuance of debt or equity in a private placement
or
other capital raising transaction deemed advisable by Dutch Mining;
(ii)
paid any material obligation or liability not otherwise in the
ordinary
course of business (absolute or contingent) other than current
liabilities
reflected in or shown on the most recent Dutch Mining consolidated
balance
sheet, and current liabilities incurred since that date in the
ordinary
course of business; (iii) sold or transferred, or agreed to sell
or
transfer, any of its assets, properties, or rights not otherwise
in the
ordinary course of business; (iv) made or permitted any amendment
or
termination of any contract, agreement, or license to which they
are a
party not otherwise in the ordinary course of business if such
amendment
or termination is material, considering the business of Dutch Mining;
or
(v) issued, delivered, or agreed to issue or deliver any stock,
bonds or
other corporate securities including debentures (whether authorized
and
unissued or held as treasury
stock).
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2.7 Litigation
and Proceedings.
There
are no actions, suits, proceedings, or investigations pending or, to the
knowledge of Dutch Mining, threatened by or against Dutch Mining, or affecting
Dutch Mining, or its properties, at law or in equity, before any court or
other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind.
2.8 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term
or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument
to
which Dutch Mining is a party or to which any of its properties or operations
are subject.
2.9 Contracts.
Dutch
Mining has provided, or will provide DGRI, copies of all material contracts,
agreements, franchises, license agreements, or other commitments to which
Dutch
Mining is a party or by which it or any of its assets, products, technology,
or
properties are bound.
2.10 Compliance
With Laws and Regulations.
Dutch
Mining has complied with all applicable statutes and regulations of any federal,
county, or other governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Dutch Mining.
5
2.11 Approval
of Agreement.
The
board of directors of Dutch Mining (the “Dutch Mining Board”) and the Dutch
Mining Equityholders have authorized the execution and delivery of this
Agreement by Dutch Mining and have approved the transactions contemplated
hereby.
2.12 Dutch
Mining Schedules.
Dutch
Mining will deliver, as soon as practicable, the following schedules, which
are
collectively referred to as the “Dutch Mining Schedules” and which consist of
separate schedules dated as of the date of execution of this Agreement and
instruments and data as of such date, all certified by the chief executive
officer of Dutch Mining as complete, true and correct:
(a)
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a
schedule containing complete and correct copies of the organizational
documents, as amended, of Dutch Mining in effect as of the date
of this
Agreement; and
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(b)
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a
schedule as requested by DGRI, containing true and correct copies
of all
material contracts, agreements, or other instruments to which Dutch
Mining
is a party or by which it or its properties are bound, specifically
including all contracts, agreements, or arrangements referred to
in
Section 2.9.
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(c)
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a
schedule setting forth Dutch Mining’s liabilities, notes, mortgages,
promissory notes and any and all encumbrances of Dutch
Mining.
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2.13 Title
and Related Matters.
Dutch
Mining has good and marketable title to all of its properties, interest in
properties, and assets, real and personal, which are reflected in the Dutch
Mining balance sheet or acquired after that date (except properties, interest
in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges,
or
encumbrances except:
(a)
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statutory
liens or claims not yet delinquent;
and
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(b)
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as
described in the Dutch Mining
Schedules.
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2.14 Governmental
Authorizations.
Dutch
Mining has all licenses, franchises, permits, and other government
authorizations, that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except
for
compliance with federal and state securities or corporation laws, as hereinafter
provided, no authorization, approval, consent, or order of, or registration,
declaration, or filing with, any court or other governmental body is required
in
connection with the execution and delivery by Dutch Mining of this Agreement
and
the consummation by Dutch Mining of the transactions contemplated
hereby.
2.15 Continuity
of Business Enterprises.
Dutch
Mining has no commitment or present intention to liquidate Dutch Mining or
sell
or otherwise dispose of a material portion of its business or assets following
the consummation of the transactions contemplated hereby.
6
2.16 Ownership
of Dutch Mining Shares.
The
Dutch Mining Equityholders are the legal and beneficial owners of 100% of
the
Dutch Mining Interests as set forth on Schedule I, free and clear of any
claims,
charges, equities, liens, security interests, and encumbrances whatsoever,
and
the Dutch Mining Equityholders have full right, power, and authority to
transfer, assign, convey, and deliver their respective Dutch Mining Interests;
and delivery of such common stock at the Closing will convey to DGRI good
and
marketable title to such shares free and clear of any claims, charges, equities,
liens, security interests, and encumbrances except for any such claims, charges,
equities, liens, security interests, and encumbrances arising out of such
shares
being held by DGRI.
2.17 Brokers.
Dutch
Mining has not entered into any contract with any person, firm or other entity
that would obligate Dutch Mining or DGRI to pay any commission, brokerage
or
finders’ fee in connection with the transactions contemplated
herein.
2.18 Nominees.
The
nominees of Dutch Mining to serve as DGRI's directors and officers following
the
Closing (the "Nominees"), whose names and signatures appear on Schedule II
hereto, represent that no
event
listed in Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401
of
Regulation S-B has occurred with respect to any of the Nominees during the
past
five years which is material to an evaluation of the ability or integrity
of
such Nominee.
2.19 Subsidiaries
and Predecessor Corporations.
Dutch
Mining does not have any subsidiaries and does not own, beneficially or of
record, any shares or other equity interests of any other corporation or
entity.
ARTICLE
III
REPRESENTATIONS,
COVENANTS,
AND WARRANTIES OF DGRI
As
an
inducement to, and to obtain the reliance of Dutch Mining and the Dutch Mining
Equityholders, DGRI represents and warrants as follows:
3.1 Organization.
DGRI is
a corporation duly organized, validly existing, and in good standing under
the
laws of the State of Nevada, and has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties
and
assets and to carry on its business in all material respects as it is now
being
conducted, and there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the DGRI Schedules
(as hereinafter defined) are complete and correct copies of the Articles
of
Incorporation and By-laws of DGRI, and all amendments thereto, as in effect
on
the date hereof. The execution and delivery of this Agreement does not, and
the
consummation of the transactions contemplated hereby will not, violate any
provision of DGRI’s Articles of Incorporation or bylaws. DGRI has taken all
action required by law, its Articles of Incorporation, its bylaws, or otherwise
to authorize the execution and delivery of this Agreement, and DGRI has full
power, authority, and legal right and has taken all action required by law,
its
Articles of Incorporation, By-laws, or otherwise to consummate the transactions
herein contemplated.
7
3.2 Capitalization.
DGRI’s
authorized capitalization consists of 500,000,000 shares of Common Stock,
of
which no more than 6,256,144 shares will be issued and outstanding at Closing;
an aggregate of 24,000,000 shares of DGRI Stock shall be issued as of
immediately following the Closing and the issuance of the Exchange Shares;
and
10,000,000 shares of “blank check” preferred stock. All presently issued and
outstanding shares are legally issued, fully paid, and non-assessable and
not
issued in violation of the pre-emptive or other rights of any person. The
Exchange Shares will be legally issued, fully paid and non-assessable and
shall
not be issued in violation of the pre-emptive or other rights of any other
person.
3.3 Financial
Statements.
(a)
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DGRI
has no liabilities with respect to the payment of any federal,
state,
county, local, or other taxes (including any deficiencies, interest,
or
penalties), except for taxes accrued but not yet due and payable,
for
which DGRI may be liable in its own right, or as a transferee of
the
assets of, or as a successor to, any other corporation or
entity.
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(b)
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DGRI
has filed all federal, state, or local income tax returns required
to be
filed by it from inception.
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(c)
|
The
books and records, financial and otherwise, of DGRI are in all
material
respects complete and correct and have been maintained in accordance
with
good business and accounting
practices.
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(d)
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No
deficiency for any taxes has been proposed, asserted or assessed
against
DGRI. There has been no tax audit, nor has there been any notice
to DGRI
by any taxing authority regarding any such tax audit, or, to the
knowledge
of DGRI, is any such tax audit threatened with regard to any taxes
or DGRI
tax returns. DGRI does not expect the assessment of any additional
taxes
of DGRI for any period prior to the date hereof and has no knowledge
of
any unresolved questions concerning the liability for taxes of
DGRI.
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(e)
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DGRI
has good and marketable title to its assets and, has no material
contingent liabilities, direct or indirect, matured or
unmatured.
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3.4 Information.
The
information concerning DGRI set forth in this Agreement and the DGRI Schedules
are and will be complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material
fact
required to make the statements made, in light of the circumstances under
which
they were made, not misleading as of the date hereof and as of the Closing
Date.
3.5 Common
Stock Equivalents.
There
are no existing options, warrants, calls, commitments of any character or
other
common stock equivalents relating to authorized and unissued stock of DGRI,
excepting certain convertible debentures issued by DGRI attached hereto as
Exhibit 3.5 (the “Debentures”) in the aggregate principal amount of $________,
convertible into _____ shares of DGRI common stock, with piggyback registration
rights, in the event that DGRI files a Registration Statement with the
Securities Exchange Commission.
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3.6 Absence
of Certain Changes or Events.
Except
as described herein or in the DGRI Schedules:
(a)
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There
has not been (i) any material adverse change, financial or otherwise,
in
the business, operations, properties, assets, or condition of DGRI
(whether or not covered by insurance) materially and adversely
affecting
the business, operations, properties, assets, or condition of
DGRI;
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(b)
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DGRI
has not (i) amended its Article of Incorporation or bylaws; (ii)
declared
or made, or agreed to declare or make any payment of dividends
or
distributions of any assets of any kind whatsoever to stockholders
or
purchased or redeemed, or agreed to purchase or redeem, any of
its capital
stock; (iii) waived any rights of value which in the aggregate
are
extraordinary or material considering the business of DGRI; (iv)
made any
material change in its method of management, operation, or accounting;
(v)
entered into any other material transactions; (vi) made any accrual
or
arrangement for or payment of bonuses or special compensation of
any kind
or any severance or termination pay to any present or former officer
or
employee; (vii) increased the rate of compensation payable or to
become
payable by it to any of its officers or directors or any of its
employees;
or (viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee
benefit
plan, payment, or arrangement, made to, for, or with its officers,
directors, or employees;
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(c)
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DGRI
has not (i) granted or agreed to grant any options, warrants, or
other
rights for its stocks, bonds, or other corporate securities calling
for
the issuance thereof; (ii) borrowed or agreed to borrow any funds
or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid or agreed to pay any material obligation
or
liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent DGRI balance sheet and
current
liabilities incurred since that date in the ordinary course of
business
and professional and other fees and expenses incurred in connection
with
the preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iv) sold or transferred, or agreed to sell
or
transfer, any of its assets, property, or rights (except assets,
property,
or rights not used or useful in its business which, in the aggregate
have
a value of less than $20,000), or canceled, or agreed to cancel,
any debts
or claims (except debts or claims which in the aggregate are of
a value of
less than $20,000); (v) made or permitted any amendment or termination
of
any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business
of DGRI; or
(vi) issued, delivered, or agreed to issue or deliver any stock,
bonds, or
other corporate securities including debentures (whether authorized
and
unissued or held as treasury stock), except in connection with
this
Agreement;
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(d)
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At
the Closing, DGRI shall have assets limited to cash and notes/accounts
receivable, and prepaid fees, no liabilities or accounts payable
of any
kind or nature, actual or contingent, in excess of $20,000 in the
aggregate as of the Closing Date;
and
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(e)
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To
the best knowledge of DGRI, it has not become subject to any law
or
regulation which materially and adversely affects, or in the future
may
adversely affect, the business, operations, properties, assets,
or
condition of DGRI.
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3.7 Title
and Related Matters.
DGRI
has good and marketable title to all of its properties, interest in properties,
and assets, real and personal, which are reflected in the DGRI balance sheet
or
acquired after that date (except properties, interest in properties, and
assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances
except:
(a)
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statutory
liens or claims not yet delinquent;
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(b)
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such
imperfections of title and easements as do not and will not materially
detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties;
and
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(c)
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as
described in the DGRI Schedules.
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3.8 Litigation
and Proceedings.
There
are no actions, suits, or proceedings pending or, to the knowledge of DGRI,
threatened by or against or affecting DGRI, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign,
or
before any arbitrator of any kind.
3.9 Contracts.
DGRI is
not a party to any material contract, agreement, or other commitment, except
as
specifically disclosed in its schedules to this Agreement.
3.10 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term
or
provision of, or constitute a default under, any indenture, mortgage, deed
of
trust, or other material agreement or instrument to which DGRI is a party
or to
which it or any of its assets or operations are subject.
3.11 Governmental
Authorizations.
DGRI is
not required to have any licenses, franchises, permits, and other government
authorizations, that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except
for
compliance with federal and state securities or corporation laws, as hereinafter
provided, no authorization, approval, consent, or order of, or registration,
declaration, or filing with, any court or other governmental body is required
in
connection with the execution and delivery by DGRI of this Agreement and
the
consummation by DGRI of the transactions contemplated hereby.
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3.12 Compliance
With Laws and Regulations.
To the
best of its knowledge, DGRI has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity
or
agency thereof, except to the extent that noncompliance would not materially
and
adversely affect the business, operations, properties, assets, or conditions
of
DGRI or except to the extent that noncompliance would not result in the
incurrence of any material liability.
3.13 Insurance.
DGRI
carries sufficient casualty or liability insurance to property insure its
operations.
3.14 Approval
of Agreement.
The
board of directors of DGRI (the “DGRI Board”) has authorized the execution and
delivery of this Agreement by DGRI and has approved this Agreement and the
transactions contemplated hereby.
3.15 Material
Transactions of Affiliations.
Except
as disclosed herein and in the DGRI Schedules, there exists no material
contract, agreement, or arrangement between DGRI and any person who was at
the
time of such contract, agreement, or arrangement an officer, director, or
person
owning of record or known by DGRI to own beneficially, 10% or more of the
issued
and outstanding common stock of DGRI and which is to be performed in whole
or in
part after the date hereof or was entered into not more than three years
prior
to the date hereof. Neither any officer, director, nor 10% stockholder of
DGRI
has, or has had during the last preceding full fiscal year, any known interest
in any material transaction with DGRI which was material to the business
of
DGRI. DGRI has no commitment, whether written or oral, to lend any funds
to,
borrow any money from, or enter into any other material transaction with
any
such affiliated person.
3.16 Employment
Matters.
DGRI no
employees other than its executive officers.
3.17 DGRI
Schedules.
Prior
to the Closing, DGRI shall have delivered to Dutch Mining the following
schedules, which are collectively referred to as the “DGRI Schedules,” which are
dated the date of this Agreement, all certified by an officer to be complete,
true, and accurate:
(a)
|
a
schedule containing complete and accurate copies of the Articles
of
Incorporation and By-laws, as amended, of DGRI as in effect as
of the date
of this Agreement;
|
(b)
|
a
schedule containing a copy of the federal income tax returns of
DGRI
identified in Section 3.3(b);
|
(c)
|
a
schedule setting forth any other information, together with any
required
copies of documents, required to be disclosed in the DGRI Schedules;
and
|
(d)
|
a
schedule setting forth the Pro Forma balance sheet of DGRI as set
forth on
Exhibit 3.17(d).
|
11
3.18 Brokers.
DGRI
has not entered into any contract with any person, firm or other entity that
would obligate Dutch Mining or DGRI to pay any commission, brokerage or finders’
fee in connection with the transactions contemplated herein.
3.19 Subsidiaries.
DGRI
does not have any subsidiaries and does not own, beneficially or of record,
any
shares or other equity interests of any other corporation or other
entity.
ARTICLE
IV
SPECIAL
COVENANTS
4.1 Shareholders’
Actions of DGRI.
Prior
to the Closing, DGRI shall cause the following actions to be taken by the
written consent of the holders of a majority of the outstanding shares of
common
stock of DGRI:
(a)
|
the
election of Xxxxx Xxxxxxxx, Xx. Xxxxxxx Xxxxx, and an additional
director
to be selected by Xxxxx Xxxxxxxx, as the directors of DGRI effective
at
the time of the Closing;
|
(b)
|
the
approval of this Agreement and the transactions contemplated hereby
and
thereby;
|
(c)
|
the
execution of an agreement with Xxxxxx X. Xxxxxx to serve as DGRI’s
President and Director in the form attached hereto as “Exhibit 4.1”:
and
|
(d)
|
such
other actions as the directors may determine are necessary or
appropriate.
|
4.2 Actions
of Dutch Mining Equityholders.
Prior
to the Closing, Dutch Mining shall cause the following actions to be taken
by
the written consent of the holders of a majority of the outstanding membership
interests of Dutch Mining:
(a)
|
the
approval of this Agreement and the transactions contemplated hereby
and
thereby; and
|
(b)
|
such
other actions as the directors may determine are necessary or
appropriate.
|
4.3 Access
to Properties and Records.
DGRI
and Dutch Mining will each afford to the officers and authorized representatives
of the other reasonable access to the properties, books, and records of DGRI
or
Dutch Mining in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the
other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of DGRI or Dutch
Mining as the other shall from time to time reasonably request.
4.4 Delivery
of Books and Records.
At the
Closing, DGRI shall deliver to Dutch Mining, the originals of the corporate
minute books, books of account, contracts, records, and all other books or
documents of DGRI now in the possession or control of DGRI or its
representatives and agents.
12
4.5 Actions
Prior to Closing by both Parties.
(a)
|
From
and after the date of this Agreement until the Closing Date and
except as
set forth in the DGRI or Dutch Mining Schedules or as permitted
or
contemplated by this Agreement, DGRI and Dutch Mining will each:
(i) carry
on its business in substantially the same manner as it has heretofore;
(ii) maintain and keep its properties in states of good repair
and
condition as at present, except for depreciation due to ordinary
wear and
tear and damage due to casualty; (iii) maintain in full force and
effect
insurance comparable in amount and in scope of coverage to that
now
maintained by it; (iv) perform in all material respects all of
its
obligation under material contracts, leases, and instruments relating
to
or affecting its assets, properties, and business; (v) use its
best
efforts to maintain and preserve its business organization intact,
to
retain its key employees, and to maintain its relationship with
its
material suppliers and customers; and (vi) fully comply with and
perform
in all material respects all obligations and duties imposed on
it by all
federal and state laws and all rules, regulations, and orders imposed
by
federal or state governmental
authorities.
|
(b)
|
From
and after the date of this Agreement until the Closing Date, neither
DGRI
nor Dutch Mining will: (i) make any change in their organizational
documents, charter documents or bylaws; (ii) take any action described
in
Section 2.6 in the case of Dutch Mining, or in Section 3.6, in
the case of
DGRI (all except as permitted therein or as disclosed in the applicable
party’s schedules); (iii) enter into or amend any contract, agreement,
or
other instrument of any of the types described in such party’s schedules,
except that a party may enter into or amend any contract, agreement,
or
other instrument in the ordinary course of business involving the
sale of
goods or services, or (iv) make or change any material tax election,
settle or compromise any material tax liability or file any amended
tax
return.
|
(c)
|
In
addition to the conditions set forth in Articles V and VI herein,
the
condition set forth in the Letter of Intent between the Parties
dated
October 15, 2006, and attached hereto as Exhibit 4.5(c), shall
have been
substantially completed or waived to the satisfaction of DGRI and
Dutch
Mining.
|
4.6 Indemnification.
(a)
|
Dutch
Mining hereby agrees to indemnify DGRI and each of the officers,
agents
and directors of DGRI as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including,
but not
limited to, any and all expense whatsoever reasonably incurred
in
investigating, preparing, or defending against any litigation,
commenced
or threatened, or any claim whatsoever), to which it or they may
become
subject arising out of or based on any inaccuracy appearing in
or
misrepresentation made in Article II. The indemnification provided
for in
this paragraph shall survive the Closing and the consummation of
the
transactions contemplated hereby, but shall not survive the termination
of
this Agreement pursuant to Section 7.1(b) of this
Agreement.
|
13
(b)
|
DGRI
hereby agrees to indemnify Dutch Mining and each of the officers,
agents
and directors of Dutch Mining as of the date of execution of this
Agreement against any loss, liability, claim, damage, or expense
(including, but not limited to, any and all expense whatsoever
reasonably
incurred in investigating, preparing, or defending against any
litigation,
commenced or threatened, or any claim whatsoever), to which it
or they may
become subject arising out of or based on any inaccuracy appearing
in or
misrepresentation made under Article III. The indemnification provided
for
in this paragraph shall survive the Closing and the consummation
of the
transactions contemplated hereby, but shall not survive the termination
of
this Agreement pursuant to Section 7.1(c) of this
Agreement.
|
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF DGRI
The
obligations of DGRI under this Agreement are subject to the satisfaction,
at or
before the Closing, of the following conditions:
5.1 Accuracy
of Representations; Performance.
The
representations and warranties made by Dutch Mining in this Agreement were
true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and Dutch
Mining
shall have performed or complied with all covenants and conditions required
by
this Agreement to be performed or complied with by Dutch Mining prior to
or at
the Closing. DGRI may request to be furnished with a certificate, signed
by a
duly authorized officer of Dutch Mining and dated the Closing Date, to the
foregoing effect.
5.2 Officer’s
Certificates.
DGRI
shall have been furnished with a certificate dated the Closing Date and signed
by a duly authorized officer of Dutch Mining to the effect that no litigation,
proceeding, investigation, or inquiry is pending or, to the best knowledge
of
Dutch Mining threatened, which might result in an action to enjoin or prevent
the consummation of the transactions contemplated by this Agreement, or,
to the
extent not disclosed in the Dutch Mining Schedules, by or against Dutch Mining
which might result in any material adverse change in any of the assets,
properties, business, or operations of Dutch Mining.
14
5.3 No
Material Adverse Change.
Prior
to the Closing Date, there shall not have occurred any material adverse change
in the financial condition, business, or operations of Dutch Mining, nor
shall
any event have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial condition,
business, or operations.
5.4 Other
Items.
(a)
|
DGRI
shall have received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as DGRI may reasonably
request.
|
(b)
|
Complete
and satisfactory due diligence review of Dutch Mining by
DGRI.
|
(c)
|
Approval
of the Transaction by the Dutch Mining Board and the Dutch Mining
Equityholders.
|
(d)
|
Any
necessary third-party consents shall be obtained prior to Closing,
including but not limited to consents necessary from Dutch Mining’s
lenders, creditors, vendors and
lessors.
|
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF DUTCH
MINING
The
obligations of Dutch Mining under this Agreement are subject to the
satisfaction, at or before the Closing, of the following
conditions:
6.1 Accuracy
of Representations; Performance.
The
representations and warranties made by DGRI in this Agreement were true when
made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date, and
DGRI
shall have performed and complied with all covenants and conditions required
by
this Agreement to be performed or complied with by DGRI prior to or at the
Closing. Dutch Mining shall have been furnished with a certificate, signed
by a
duly authorized executive officer of DGRI and dated the Closing Date, to
the
foregoing effect.
6.2 Officer’s
Certificate.
Dutch
Mining shall have been furnished with a certificate dated the Closing Date
and
signed by a duly authorized executive officer of DGRI to the effect that
no
litigation, proceeding, investigation, or inquiry is pending or, to the best
knowledge of DGRI threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this
Agreement.
6.3 No
Material Adverse Change.
Prior
to the Closing Date, there shall not have occurred any material adverse change
in the financial condition, business, or operations of DGRI nor shall any
event
have occurred which, with the lapse of time or the giving of notice, may
cause
or create any material adverse change in the financial condition, business,
or
operations of DGRI.
15
6.4 Good
Standing.
Dutch
Mining shall have received a certificate of good standing from the Secretary
of
State of the State of Nevada or other appropriate office, dated as of a date
within ten days prior to the Closing Date certifying that DGRI is in good
standing as a corporation in the State of Nevada and has filed all tax returns
required to have been filed by it to date and has paid all taxes reported
as due
thereon.
6.5 Other
Items.
(a)
|
Dutch
Mining shall have received a stockholder list of DGRI containing
the name,
address, and number of shares held by each DGRI stockholder as
of the date
of Closing certified by an executive officer of DGRI as being true,
complete, and accurate.
|
(b)
|
Dutch
Mining shall have received such further documents, certificates,
or
instruments relating to the transactions contemplated hereby as
Dutch
Mining may reasonably request.
|
(c)
|
Complete
and satisfactory due diligence review of DGRI by Dutch
Mining.
|
(d)
|
Approval
of the Transaction by the DGRI Board and the stockholders of
DGRI.
|
(e)
|
There
shall have been no material adverse changes in DGRI, financial
or
otherwise.
|
(f)
|
As
of immediately prior to the Closing, DGRI shall have no assets
(other than
the cash proceeds of the Offering), notes or accounts receivable,
and
prepaid expenses, no liabilities, contingent or otherwise (other
than
certain liabilities which in no event shall exceed in the aggregate
$20,000), and no net worth, as determined in accordance with generally
accepted accounting principles.
|
(g)
|
Except
for the Debentures, there shall be no DGRI Common Stock Equivalents
outstanding as of immediately prior to the Closing. For purposes
of the
foregoing, “DGRI Common Stock Equivalents” shall mean any subscriptions,
warrants, options or other rights or commitments of any character
to
subscribe for or purchase from DGRI, or obligating DGRI to issue,
any
shares of any class of the capital stock of DGRI or any securities
convertible into or exchangeable for such
shares.
|
(h)
|
Although
DGRI shall be the surviving corporation in the Transaction from
a
corporate law perspective, the Transaction shall be accounted for
as a
“reverse acquisition” for accounting and financial statement purposes,
wherein Dutch Mining shall be deemed the surviving entity for such
purposes.
|
16
(i)
|
Any
necessary third-party consents shall be obtained prior to Closing,
including but not limited to consents necessary from DGRI’s lenders,
creditors; vendors, and lessors.
|
ARTICLE
VII
TERMINATION
7.1 Termination.
(a)
|
This
Agreement may be terminated by either the Dutch Mining Board or
the DGRI
Board at any time prior to the Closing Date if: (i) there shall
be any
actual or threatened action or proceeding before any court or any
governmental body which shall seek to restrain, prohibit, or invalidate
the transactions contemplated by this Agreement and which, in the
judgment
of such board of directors, made in good faith and based on the
advice of
its legal counsel, makes it inadvisable to proceed with the exchange
contemplated by this Agreement; (ii) any of the transactions contemplated
hereby are disapproved by any regulatory authority whose approval
is
required to consummate such transactions or in the judgment of
such board
of directors, made in good faith and based on the advice of counsel,
there
is substantial likelihood that any such approval will not be obtained
or
will be obtained only on a condition or conditions which would
be unduly
burdensome, making it inadvisable to proceed with the exchange;
(iii)
there shall have been any change after the date of the latest balance
sheets of Dutch Mining and DGRI, respectively, in the assets, properties,
business, or financial condition of Dutch Mining and DGRI, which
could
have a materially adverse affect on the value of the business of
Dutch
Mining and DGRI respectively, except any changes disclosed in the
Dutch
Mining and DGRI Schedules, as the case may be, dated as of the
date of
execution of this Agreement. In the event of termination pursuant
to this
paragraph (a) of Section 7.1, no obligation, right, or liability
shall
arise hereunder, and each party shall bear all of the expenses
incurred by
it in connection with the negotiation, drafting, and execution
of this
Agreement and the transactions herein contemplated; (iv) the Closing
Date
shall not have occurred by February 15, 2007; or (v) if DGRI shall
not
have provided responses satisfactory in Dutch Mining’s reasonable judgment
to Dutch Mining’s request for due diligence
materials.
|
17
(b)
|
This
Agreement may be terminated at any time prior to the Closing by
action of
the DGRI Board if Dutch Mining shall fail to comply in any material
respect with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of Dutch
Mining
contained herein shall be inaccurate in any material respect, and,
in
either case if such failure is reasonably subject to cure, it remains
uncured for seven days after notice of such failure is provided
to Dutch
Mining. If this Agreement is terminated pursuant to this paragraph
(b) of
Section 7.1, this Agreement shall be of no further force or effect,
and no
obligation, right, or liability shall arise hereunder, except that
Dutch
Mining shall bear its own costs as well as the costs incurred by
DGRI in
connection with the negotiation, preparation, and execution of
this
Agreement and qualifying the offer and sale of securities contemplated
hereby for exemption from the registration requirements of state
and
federal securities laws.
|
(c)
|
This
Agreement may be terminated at any time prior to the Closing by
action of
the Dutch Mining Board if DGRI shall fail to comply in any material
respect with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of DGRI
contained
herein shall be inaccurate in any material respect, and, in either
case if
such failure is reasonably subject to cure, it remains uncured
for seven
days after notice of such failure is provided to DGRI. If this
Agreement
is terminated pursuant to this paragraph (c) of Section 7.1, this
Agreement shall be of no further force or effect, and no obligation,
right, or liability shall arise hereunder, except that DGRI shall
bear its
own costs as well as the costs of Dutch Mining incurred in connection
with
the negotiation, preparation, and execution of this
Agreement.
|
ARTICLE
VIII
MISCELLANEOUS
8.1 Governing
Law.
This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to matters
of
state law, with the laws of Nevada. Any dispute arising under or in any way
related to this Agreement will be submitted to binding arbitration before
a
single arbitrator by the American Arbitration Association in accordance with
the
Association’s commercial rules then in effect. The arbitration will be conducted
in New York, New York. The decision of the arbitrator will set forth in
reasonable detail the basis for the decision and will be binding on the parties.
The arbitration award may be confirmed by any court of competent
jurisdiction.
8.2 Notices.
Any
notices or other communications required or permitted hereunder shall be
sufficiently given if personally delivered to it or sent by registered mail
or
certified mail, postage prepaid, or by prepaid telegram
and any
such notice or communication shall be deemed to have been given as of the
date
so delivered, mailed, or telegraphed.
8.3 Attorney’s
Fees.
In the
event that any party institutes any action or suit to enforce this Agreement
or
to secure relief from any default hereunder or breach hereof, the breaching
party or parties shall reimburse the non-breaching party or parties for all
costs, including reasonable attorneys’ fees, incurred in connection therewith
and in enforcing or collecting any judgment rendered therein.
18
8.4 Confidentiality.
DGRI,
on the one hand, and Dutch Mining and the Dutch Mining Equityholders, on
the
other hand, will keep confidential all information and materials regarding
the
other Party designated by such Party as confidential. The provisions of this
Section 8.4 shall not apply to any information which is or shall become part
of
the public domain through no fault of the Party subject to the obligation
from a
third party with a right to disclose such information free of obligation
of
confidentiality. DGRI and Dutch Mining agree that no public disclosure will
be
made by either Party of the existence of the Transaction or the letter of
intent
or any of its terms without first advising the other Party and obtaining
its
prior written consent to the proposed disclosure, unless such disclosure
is
required by law, regulation or stock exchange rule.
8.5 Expenses.
Except
as otherwise set forth herein, each party shall bear its own costs and expenses
associated with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, all costs and expenses incurred
by
Dutch Mining and DGRI after the Closing shall be borne by the surviving
entity.
After
the Closing, the costs and expenses of the Dutch Mining Equityholders shall
be
borne by the Dutch Mining Equityholders.
8.6 Schedules;
Knowledge.
Each
party is presumed to have full knowledge of all information set forth in
the
other party’s schedules delivered pursuant to this Agreement.
8.7 Third
Party Beneficiaries.
This
contract is solely between DGRI, Dutch Mining and the Dutch Mining
Equityholders, and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor, or any other person
or
entity shall be deemed to be a third party beneficiary of this
Agreement.
8.8 Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to
the
transaction. There are no other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set forth
herein.
8.9 Survival.
The
representations and warranties of the respective parties shall survive the
Closing Date and the consummation of the transactions herein
contemplated.
8.10 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed
an
original and all of which taken together shall be but a single
instrument.
8.11 Amendment
or Waiver.
Every
right and remedy provided herein shall be cumulative with every other right
and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any
other
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may be amended by a writing signed
by
all parties hereto, with respect to any of the terms contained herein, and
any
term or condition of this Agreement may be waived or the time for performance
hereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
19
IN
WITNESS WHEREOF,
the
corporate parties hereto have caused this Agreement to be executed by their
respective officers, hereunto duly authorized, as of the date first
above-written.
DUTCH
MINING
L.L.C.
|
|||
By:
|
/s/
Xxxxx Xxxxxxxx
|
||
Xxxxx
Xxxxxxxx, Manager
|
|||
DUTCH
GOLD RESOURCES, INC.
|
|||
By:
|
/s/
Xxxxxx X. Xxxxxx
|
||
Xxxxxx
X. Xxxxxx, President
|
DUTCH
MINING
EQUITYHOLDERS:
|
SIGNATURES:
|
|||
Embassy,
International, LLC
|
||||
By:
|
Xxxxx
Xxxxxxxx
|
/s/
Xxxxx Xxxxxxxx
|
||
By:
|
Xxxx
Xxxxxx-Xxxxxxxx
|
/s/
Xxxx Xxxxxx-Xxxxxxxx
|
||
|
||||
Xxxxx
Burrrow
|
/s/
Xxxxx Xxxxxx
|
|||
HPUs,
LLC
|
/s/
HPU's LLC
|
20
SCHEDULE
I
Dated: January
4, 2007
The
following persons are the only owners of the equity of Dutch
Mining:
Person/Entity
|
Percentage
Of
Equity
|
DGRI
Share Ownership
|
|||||
Embassy
International, LLC
|
84.4
|
%
|
19,177,628
|
||||
Xxxxx
Xxxxxx
|
12.6
|
%
|
2,865,622
|
||||
HPUs,
LLC
|
.3
|
%
|
681,750
|
||||
|
|
|
|||||
Total:
|
100
|
%
|
22,750,000
|
SCHEDULE
1.2
RESTRICTED
STOCK ISSUANCES
Xxxxxxx
Xxxxxx
|
50,000.00
|
|
|
||
Zemasco
Management Company
|
25,000.00
|
|
Xxxxxxx
Xxxxxxx
|
500,000.00
|
|
Xxxxxxx
Xxxxxxx
|
100,000.00
|
|
|
||
Xxxxx
Xxxxxx
|
100,000.00
|
|
|
||
Xxxxxx
Xxxxx
|
500,000.00
|
SCHEDULE
II
to
STOCK
EXCHANGE AGREEMENT
Name:
|
Position(s)
|
Signature
|
Xxxxx
Xxxxxxxx
|
Chairman
of the Board of Directors
|
/s/
Xxxxx Xxxxxxxx
|
Xx.
Xxxxxxx Xxxxx
|
Director
|
/s/
Xx. Xxxxxxx Xxxxx
|