EXCHANGE AGREEMENT
Between
BATTLE MOUNTAIN GOLD EXPLORATION CORP.
and
BATTLE MOUNTAIN GOLD EXPLORATION, INC.
Dated July 6, 2004
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 6th day of July, 2004, by and between BATTLE MOUNTAIN
GOLD EXPLORATION CORP., a Nevada corporation (hereinafter referred to as the
"Company"), BATTLE MOUNTAIN GOLD EXPLORATION, INC., a Nevada corporation
(hereinafter referred to as "Battle Mountain"), and the persons executing this
Agreement listed on the signature page hereto (referred to collectively as
"Battle Mountain Shareholders") who own one hundred percent (100%) of the
outstanding shares of Battle Mountain, upon the following premises:
Premises.
---------
WHEREAS, the Battle Mountain Shareholders own one hundred percent (100%) of
the issued and outstanding shares of the capital stock of Battle Mountain;
WHEREAS, the Company is a publicly held corporation whose common stock is
quoted on the OTC Bulletin Board under the symbol "BMGX";
WHEREAS, Battle Mountain is a privately held corporation organized under
the laws of Nevada;
WHEREAS, the Company desires to acquire 100% of the issued and outstanding
shares of Common Stock of Battle Mountain in exchange for unissued shares of its
Common Stock (the "Common Stock") (the "Exchange Offer"), so that Battle
Mountain will become a wholly owned subsidiary of the Company; and
WHEREAS, Battle Mountain Shareholders desire to exchange all of their
shares of capital stock of Battle Mountain solely in exchange for the shares of
authorized but unissued Common Stock, $.001 par value, of the Company.
Agreement
---------
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF BATTLE MOUNTAIN
AND THE BATTLE MOUNTAIN SHAREHOLDERS
As an inducement to and to obtain the reliance of the Company, except as
set forth on the Battle Mountain Schedules (as hereinafter defined), Battle
Mountain and the Battle Mountain Shareholders represent and warrant as follows:
Section 1.01 Organization. Battle Mountain is a corporation duly
------------
organized, validly existing, and in good standing under the laws 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, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the Battle Mountain Schedules are complete and correct copies of the Articles
of Incorporation and Bylaws of Battle Mountain 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 Battle
Mountain's Articles of Incorporation or Bylaws. Battle Mountain has taken all
actions required by law, its Articles of Incorporation, or otherwise to
authorize the execution and delivery of this Agreement. Battle Mountain has
full power, authority, and legal right and has taken all action required by law,
its Articles of Incorporation, and otherwise to consummate the transactions
herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of Battle
--------------
Mountain consists of 200,000,000 shares of common stock, $.001 par value per
share, of which 11,640,000 shares are currently issued and outstanding and
10,000,000 shares of preferred stock, $.001 par value per share, of which no
shares are currently issued and outstanding. All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Battle
--------------------------------------------
Mountain does not have any predecessor corporation(s) or subsidiary(ies), and
does not own, beneficially or of record, any shares of any other corporation,
unless otherwise disclosed to the Company in writing.
Section 1.04 Other Information.
------------------
(a) Except as otherwise provided, Battle Mountain 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.
(b) Battle Mountain has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the
period covered thereby, except for amounts which, in the aggregate, are
immaterial.
(c) The books and records of Battle Mountain are in all material respects
complete and correct and have been maintained in accordance with good
business and accounting practices.
(d) Battle Mountain has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise in excess of Twenty-Five Thousand
Dollars ($25,000), except as disclosed in writing to the Company on
Schedule 1.04.
Section 1.05 Information. The information concerning Battle Mountain
-----------
set forth in this Agreement and in the Battle Mountain Schedules is 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.
In addition, Battle Mountain has fully disclosed in writing to the Company
(through this Agreement or the Battle Mountain Schedules) all information
relating to matters involving Battle Mountain or its assets or its present or
past operations or activities which (i) indicated or may indicate, in the
aggregate, the existence of a greater than Twenty-Five Thousand Dollars
($25,000) liability or diminution in value, (ii) have led or may lead to a
competitive disadvantage on the part of Battle Mountain, or (iii) either alone
or in aggregation with other information covered by this Section, otherwise have
led or may lead to a material adverse effect on the transactions contemplated
herein or on Battle Mountain, its assets, or its operations or activities as
presently conducted or as contemplated to be conducted after the Closing Date,
including, but not limited to, information relating to governmental, employee,
environmental, litigation and securities matters and transactions with
affiliates.
Section 1.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of Battle Mountain of any character relating to
the authorized and unissued Battle Mountain common stock, except options,
warrants, calls or commitments, if any, to which Battle Mountain is not a party
and by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in this Agreement or the Battle Mountain Schedules, since inception on January
7, 2004:
(a) there has not been (i) any material adverse change in the proposed
business, operations, properties, assets, or condition of Battle Mountain
or (ii) any damage, destruction, or loss to Battle Mountain (whether or not
covered by insurance) materially and adversely affecting the business or
financial condition of Battle Mountain;
(b) Battle Mountain has not (i) amended its Articles 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 outside of the ordinary course of business or material
considering the business of Battle Mountain; (iv) made any material change
in its method of management, operation or accounting; (v) entered into any
other material transaction other than sales in the ordinary course of its
business; (vi) made any accrual or arrangement for 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 salaried employees whose monthly compensation
exceeds Ten Thousand Dollars ($10,000); 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;
(c) Battle Mountain has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) in excess of $25,000 except as disclosed herein
and except liabilities incurred in the ordinary course of business; (ii)
paid or agreed to pay any material obligations or liability (absolute or
contingent) other than current liabilities, and current liabilities
incurred in the ordinary course of business and professional and other fees
and expenses in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than Twenty-Five
Thousand Dollars ($25,000)), 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 Twenty-Five Thousand Dollars ($25,000)); or (iv) 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 Battle Mountain; and
(d) To the best knowledge of Battle Mountain, Battle Mountain 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 Battle Mountain.
Section 1.08 Title and Related Matters. No third party has any right
--------------------------
to, and Battle Mountain has not received any notice of infringement of or
conflict with asserted rights of others with respect to, any product,
technology, data, trade secrets, know-how, proprietary techniques, trademarks,
service marks, trade names, or copyrights which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a materially adverse effect on the proposed business, operations, financial
condition, income, or business prospects of Battle Mountain or any material
portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as otherwise provided,
--------------------------
there are no actions, suits, or proceedings pending or, to the knowledge of
Battle Mountain after reasonable investigation, threatened by or against Battle
Mountain or affecting Battle Mountain 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. Battle Mountain does not have
any knowledge of any material default on its part with respect to any judgment,
order, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
---------
(a) There are no material contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Battle Mountain
is a party or by which it or any of its assets, products, technology, or
properties are bound other than those incurred in the ordinary course of
business (as used in this Agreement, a "material" contract, agreement,
franchise, license agreement, debt instrument or commitment is one which
(i) will remain in effect for more than six (6) months after the date of
this Agreement and (ii) involves aggregate obligations of at least
Twenty-Five Thousand Dollars ($25,000) unless otherwise disclosed pursuant
to this Agreement;
(b) All contracts, agreements, franchises, license agreements, and other
commitments, if any, to which Battle Mountain is a party and which are
material to the operations of Battle Mountain taken as a whole are valid
and enforceable by Battle Mountain in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(c) Battle Mountain is not a party to or bound by, and the properties of Battle
Mountain are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment,
order, writ, injunction, decree, or award which materially and adversely
affects, the business operations, properties, assets, or condition of
Battle Mountain; and
(d) Except as included or described in the Battle Mountain Schedules, Battle
Mountain is not a party to any oral or written (i) contract for the
employment of any officer or employee which is not terminable on thirty
(30) days, or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or retirement
plan; (iii) agreement, contract, or indenture relating to the borrowing of
money; (iv) guaranty of any obligation, other than one on which Battle
Mountain is a primary obligor, for the borrowing of money or otherwise,
excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one (1) year or
provide for payments in excess of Twenty-Five Thousand Dollars ($25,000) in
the aggregate; (v) collective bargaining agreement; or (vi) agreement with
any present or former officer or director of Battle Mountain.
Section 1.11 Material Contract Defaults. Battle Mountain is not in
----------------------------
default in any material respect under the terms of any outstanding material
contract, agreement, lease, or other commitment which is material to the
business, operations, properties, assets or condition of Battle Mountain and
there is no event of default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which Battle Mountain has
not taken adequate steps to prevent such a default from occurring.
Section 1.12 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, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Battle Mountain is a party or to which any of
its properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
----------------------------
Battle Mountain Schedules, Battle Mountain has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state securities and
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
Battle Mountain of this Agreement and the consummation by Battle Mountain of the
transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
------------------------------------
in the Battle Mountain Schedules, to the best of its knowledge Battle Mountain
has complied with all applicable statutes and regulations of any federal, state,
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 Battle Mountain or except to the
extent that noncompliance would not result in the occurrence of any material
liability for Battle Mountain.
Section 1.15 Approval of Agreement. The Board of Directors of Battle
----------------------
Mountain has authorized the execution and delivery of this Agreement by Battle
Mountain and has approved this Agreement and the transactions contemplated
hereby, and will recommend to the Battle Mountain Shareholders that the Exchange
Offer be accepted by them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
--------------------------------------
Battle Mountain Schedules is a description, if applicable, of every contract,
agreement, or arrangement between Battle Mountain and any predecessor 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 Battle Mountain to
own beneficially, five percent (5%) or more of the issued and outstanding common
stock of Battle Mountain and which is to be performed in whole or in part after
the date hereof or which was entered into not more than three (3) years prior to
the date hereof. Except as disclosed in the Battle Mountain Schedules or
otherwise disclosed herein, no officer, director, or five percent (5%)
shareholder of Battle Mountain has, or has had since inception of Battle
Mountain, any known interest, direct or indirect, in any transaction with Battle
Mountain which was material to the business of Battle Mountain. There are no
commitments by Battle Mountain, whether written or oral, to lend any funds, or
to borrow any money from, or enter into any other transaction with, any such
affiliated person.
Section 1.17 Battle Mountain Schedules. Battle Mountain will deliver
--------------------------
to the Company the following schedules, if such schedules are applicable to the
business of Battle Mountain, which are collectively referred to as the " Battle
Mountain Schedules" and which consist of separate schedules dated as of the date
of execution of this Agreement, all certified by the chief executive officer of
Battle Mountain as complete, true, and correct as of the date of this Agreement
in all material respects:
(a) a schedule containing complete and correct copies of the Articles of
Incorporation in effect as of the date of this Agreement;
(b) a schedule containing complete and correct copies of the Bylaws of Battle
Mountain in effect as of the date of this Agreement;
(c) a schedule containing any Corporate Resolutions of the Shareholders of
Battle Mountain;
(d) a schedule containing Minutes of meetings of the Board of Directors of
Battle Mountain;
(e) a schedule containing a list indicating the name and address of each
shareholder of Battle Mountain together with the number of shares owned by
him, her or it;
(f) a schedule listing any and all federal, state and local tax identification
numbers of Battle Mountain and containing complete and correct copies of
all federal, state and local tax returns filed by Battle Mountain; and
(g) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed by Battle Mountain. Any fact
known to be, or to the best knowledge of Battle Mountain or the Battle
Mountain Shareholders after reasonable investigation, reasonably believed
to be, contrary to the representations, covenants, and warranties made in
Article I are required to be disclosed in the Battle Mountain Schedules
pursuant to this Section 1.17(g).
Battle Mountain shall cause the Battle Mountain Schedules and the
instruments and data delivered to the Company hereunder to be promptly updated
after the date hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by Battle Mountain. Battle
Mountain shall have until August 2, 2004 to provide such schedules. If Battle
Mountain cannot or fails to do so, or if the Company acting reasonably finds any
such schedules or updates provided after the date hereof to be unacceptable
according to the criteria set forth herein, the Company may terminate this
Agreement by giving written notice to Battle Mountain within five (5) days after
the schedules or updates were due to be produced or were provided. For purposes
of the foregoing, the Company may consider a disclosure in the Battle Mountain
Schedules to be "unacceptable" only if that item would have a material adverse
impact on the financial condition of Battle Mountain, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by Battle Mountain in connection herewith constitute
the valid and binding obligation of Battle Mountain, enforceable in accordance
with its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 1.19 Acquisition of the Shares by the Battle Mountain
-------------------------------------------------------
Shareholders. The Battle Mountain Shareholders are acquiring the Shares for
------------
their own account without the participation of any other person and with the
intent of holding the Shares for investment and without the intent of
participating, directly or indirectly, in a distribution of the Shares, or any
portion thereof, and not with a view to, or for resale in connection with, any
distribution of the Shares, or any portion thereof. The Battle Mountain
Shareholders have read, understand and consulted with their legal counsel
regarding the limitations and requirements of Section 5 of the 1933 Act. The
Battle Mountain Shareholders will offer, sell, pledge, convey or otherwise
transfer the Shares, or any portion thereof, only if: (i) pursuant to an
effective registration statement under the 1933 Act and any and all applicable
state securities or Blue Sky laws or in a transaction which is otherwise in
compliance with the 1933 Act and such laws; or (ii) pursuant to a valid
exemption from registration.
Section 1.20 Exemption from Registration. The Exchange and the
------------------------------
transactions contemplated thereby, meet an exemption from registration pursuant
to Rule 506 of Regulation D promulgated under the 1933 Act.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of Battle Mountain and the
Battle Mountain Shareholders, except as set forth in the Company Schedules (as
hereinafter defined), the Company represents and warrants as follows:
Section 2.01 Organization. The Company 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, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, 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 Company
Schedules are complete and correct copies of the Articles of Incorporation and
Bylaws of the Company 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 the Company's Articles of
Incorporation or Bylaws. The Company 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 the Company has full power, authority, and
legal right and has taken all action required by law, its Articles of
Incorporation, Bylaws, or otherwise to consummate the transactions herein
contemplated.
Section 2.02 Capitalization. The Company is authorized to issue
--------------
200,000,000 shares of Common Stock, par value $.001 per share, of which
26,870,000 post 10:1 forward split ("Post Split") shares will be issued and
outstanding on the closing date prior to the issuance of the shares to the
Battle Mountain Shareholders as set forth in Section 3.01(ii), as defined
herein, and 10,000,000 shares of preferred stock, par value $.001 per share
("Preferred Stock"), of which no shares will be issued and outstanding on the
closing date. All issued and outstanding shares are legally issued, fully paid,
and non-assessable and not issued in violation of the preemptive or other rights
of any person. On April 15, 2004, prior to the execution of this Agreement, the
Company amended its articles of incorporation to change its name from Xxxxxx
Ventures Inc. to Battle Mountain Gold Exploration Corp. At that time, the
Company also amended its capitalization to reflect a 10:1 forward stock split,
to increase its authorized shares to 200,000,000 shares of Common Stock, to
reauthorize the par value $.001 per share of Common Stock, and to reauthorize
10,000,000 shares of Preferred Stock, $.001 par value per share of Preferred
Stock.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company
-------------------------------------------
does not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation.
Section 2.04 Financial Statements.
---------------------
(a) Included in the Company Schedules are (i) the audited balance sheets of the
Company and the related statements of operations and cash flows as of and
for the twelve (12) months ended July 31, 2003 and (ii) the unaudited
balance sheets of the Company and the related statements of operations and
cash flows for the nine (9) months ended April 30, 2004.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved. The Company balance sheets present fairly as of their
respective dates the financial condition of the Company. As of the date of
such balance sheets, except as and to the extent reflected or reserved
against therein, the Company had no liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets or the notes
thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein are properly reported and
present fairly the value of the assets of the Company, in accordance with
generally accepted accounting principles. The statements of operations,
stockholders' equity and cash flows reflect fairly the information required
to be set forth therein by generally accepted accounting principles.
(c) The Company 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.
(d) The books and records, financial and otherwise, of the Company are in all
material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of the Company's assets are reflected on its financial statements, and,
except as set forth in the Company Schedules or the financial statements of
the Company or the notes thereto, the Company has no material liabilities,
direct or indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning the Company set
-----------
forth in this Agreement and the Company Schedules is complete and accurate in
all material respects and does not contain any untrue statements 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. In
addition, the Company has fully disclosed in writing to Battle Mountain (through
this Agreement or the Company Schedules) all information relating to matters
involving the Company or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than One Thousand Dollars ($1,000) liability or diminution in
value, (ii) have led or may lead to a competitive disadvantage on the part of
the Company or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on the Company, its assets, or
its operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 2.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of any character relating to the authorized and
unissued stock of the Company.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
------------------------------------
in Schedule 2.07, or permitted in writing by Battle Mountain, since the date of
the most recent Company balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company or (ii) any
damage, destruction or loss to the Company (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of the Company;
(b) The Company has not and will not (i) amend its Articles of Incorporation or
Bylaws except to complete the performance of the Company as set forth
herein; (ii) declare or make, or agree to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchase or redeem, or agree to purchase or redeem, any of
its capital stock; (iii) waive any rights of value which in the aggregate
are outside of the ordinary course of business or material considering the
business of the Company; (iv) make any material change in its method of
management, operation, or accounting; (v) enter into any transaction or
agreement other than in the ordinary course of business; (vi) make 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) increase the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceed One Thousand Dollars
($1,000); or (viii) make 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;
(c) The Company has not (i) granted or agreed to grant any options or warrants;
(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 obligations or liabilities (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent Company balance sheet and current liabilities incurred since
that date in the ordinary course of business and professional and other
fees and expenses in connection with the preparation of this Agreement and
the consummation of the transaction contemplated hereby; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than One Thousand
Dollars ($1,000)), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value less than One
Thousand Dollars ($1,000)); and (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
the Company; and
(d) The Company 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 the Company.
Section 2.08 Title and Related Matters. The Company has good and
----------------------------
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Company
balance sheet or acquired after that date (except properties, inventory,
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) statutory liens or claims not yet
delinquent; (b) 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 (c) as described in the
Company Schedules. Except as set forth in the Company Schedules, the Company
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has any
right to, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of the Company or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
--------------------------
proceedings or investigations pending or, to the knowledge of the Company after
reasonable investigation, threatened by or against the Company or affecting the
Company 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. The Company has no knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator, or governmental agency or instrumentality,
or any circumstance which after reasonable investigation would result in the
discovery of such default.
Section 2.10 Contracts.
---------
(a) The Company is not a party to, and its assets, products, technology and
properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral.
(b) All contracts, agreements, franchises, license agreements, and other
commitments to which the Company is a party or by which its properties are
bound and which are material to the operations of the Company taken as a
whole are valid and enforceable by the Company in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
(c) The Company is not a party to or bound by, and the properties of the
Company are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment,
order, writ, injunction, decree, or award which materially and adversely
affects, the business operations, properties, assets, or condition of the
Company; and
(d) Except as included or described in the Company Schedules or reflected in
the most recent Company balance sheet, the Company is not a party to any
oral or written (i) contract for the employment of any officer or employee
which is not terminable on thirty (30) days, or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other
than one on which the Company is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for collection and other
guaranties of obligations which, in the aggregate do not exceed more than
one year or provide for payments in excess of Twenty-Five Thousand Dollars
($25,000) in the aggregate; (v) collective bargaining agreement; or (vi)
agreement with any present or former officer or director of the Company.
Section 2.11 Material Contract Defaults. The Company is not in default
--------------------------
in any respect under the terms of any outstanding contract, agreement, lease, or
other commitment which is material to the business, operations, properties,
assets or condition of the Company and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which the Company has not taken adequate steps to prevent such a
default from occurring.
Section 2.12 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, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. The Company has all
----------------------------
licenses, franchises, permits, and other governmental 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 the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
------------------------------------
knowledge, the Company 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 condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports, filings and schedules to date with
federal and state securities authorities.
Section 2.15 Approval of Agreement. The Board of Directors of the
-----------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Material Transactions or Affiliations. Except as
----------------------------------------
disclosed herein and in the Company Schedules, there exists no contract,
agreement or arrangement between the Company and any predecessor 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 the Company to own
beneficially, five percent (5%) or more of the issued and outstanding Common
Stock of the Company 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 five percent (5%) shareholder of the
Company has, or has had since inception of the Company, any known interest,
direct or indirect, in any such transaction with the Company which was material
to the business of the Company. The Company has no commitment, whether written
or oral, to lend any funds to, borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 2.17 The Company Schedules. Within ten (10) days following the
---------------------
Closing, the Company will deliver to Battle Mountain the following schedules,
which are collectively referred to as the "Company Schedules" and which consist
of separate schedules, which are dated the date of this Agreement, all certified
by the principal executive officer of the Company to be complete, true, and
accurate in all material respects as of the date of this Agreement:
(a) a schedule containing complete and accurate copies of the Articles of
Incorporation and Bylaws of the Company as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of the Company identified
herein;
(c) a certified list from the Company's Transfer Agent setting forth the name
and address of each shareholder of the Company together with the number of
shares owned by him, her or it;
(d) a schedule containing a description of all real property owned by the
Company, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any
nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations (or
requests or applications therefor) pursuant to which the Company carries on
or proposes to carry on its business (except those which, in the aggregate,
are immaterial to the present or proposed business of the Company);
(f) a schedule listing the accounts receivable and notes and other obligations
receivable of the Company as of April 30, 2004, or thereafter other than in
the ordinary course of business of the Company, indicating the debtor and
amount, and classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments which
are in the aggregate material and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other obligations
payable of the Company as of April 30, 2004, or that arose thereafter other
than in the ordinary course of the business of the Company, indicating the
creditor and amount, classifying the accounts to show in reasonable detail
the length of time, if any, overdue, and stating the nature and amount of
any refunds, set offs, reimbursements, discounts, or other adjustments,
which in the aggregate are material and due to or claimed by the Company
respecting such obligations;
(h) a schedule setting forth a description of any material adverse change in
the business, operations, property, inventory, assets, or condition of the
Company since July 31, 2003;
(i) a schedule listing any and all federal, state and local tax identification
numbers of the Company and containing complete and correct copies of all
federal, state and local tax returns filed by the Company; and
(j) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed by the Company. Any fact
known to be, or to the best knowledge of the Company after reasonable
investigation, reasonably believed to be, contrary to the representations,
covenants, and warranties made in Article II are required to be disclosed
in the Company Schedules pursuant to this Section 2.17(j).
The Company shall cause the Company Schedules and the instruments and data
delivered to Battle Mountain hereunder to be promptly updated after the date
hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by the Company. The
Company shall have until August 2, 2004 to provide such schedules. If the
Company cannot or fails to provide the schedules required by this Section, or if
Battle Mountain or the Battle Mountain Shareholders find any such schedules or
updates provided after the date hereof to be unacceptable, Battle Mountain or
the Battle Mountain Shareholders may terminate this Agreement by giving written
notice to the Company within five (5) days after the schedules or updates were
due to be produced or were provided. For purposes of the foregoing, the Battle
Mountain may consider a disclosure in the Company Schedules to be "unacceptable"
only if that item would have a material adverse impact on the financial
condition of the Company, taken as a whole.
Section 2.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith constitute the
valid and binding obligation of the Company, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 2.19 Liabilities. The Company acknowledges that it will
-----------
have no liabilities outstanding on the Closing Date (as defined in Section
3.02).
Section 2.20 Reporting Requirements of the Company. The Company is
----------------------------------------
subject to the reporting and filing requirements of the Securities Exchange Act
of 1934 ("the Exchange Act') including (1) the periodic reporting requirements
and (2) the Proxy Rules set forth thereunder. The Company and its officers,
directors, and beneficial owners are subject to the provisions of the Exchange
Act Section 16 relating to short-swing profit recapture, reports of beneficial
ownership and short sale prohibitions and the Company and its officers,
directors, and beneficial owners have timely complied in all respects with the
filing requirements of the Exchange Act.
Section 2.21 Quotation on the OTC Bulletin Board. The Company's Common
-----------------------------------
Stock is quoted on the OTC Bulletin Board under the symbol "BMGX" and the
Company will retain such quotation on the OTC Bulletin Board until the Closing
of the transactions contemplated herein.
Section 2.22 Approval of the Exchange by the Company's Shareholders.
--------------------------------------------------------
The transactions contemplated by this Agreement do not require the approval of
the Company's shareholders and the Company is not required to file a Schedule
14A or 14C with the Securities and Exchange Commission as a result of this
Agreement.
Section 2.23 The Directors of the Company shall have approved the
Exchange Offer and the related transactions described herein.
Section 2.24 Approval of the Exchange Offer and related transactions by
the Company's Shareholders is not required by Nevada law or the Company's
Articles of Incorporation or Bylaws or any amendments thereto.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. (i) On the terms and subject to the
-------------
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3.02), each Battle Mountain Shareholder who shall elect to accept the
Exchange Offer described herein shall assign, transfer and deliver, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known claims
of any kind, nature, or description, the number of shares of common stock of
Battle Mountain set forth herein, in the aggregate constituting at least 80% of
the issued and outstanding shares of common stock of Battle Mountain. After the
acquisition of at least 80% of the outstanding shares of Battle Mountain, Battle
Mountain shall become a majority-owned subsidiary of the Company.
Section 3.01(ii) The Battle Mountain Shareholders will receive One (1)
Post-Split share of the Company's common stock for every One (1) share of Battle
Mountain common stock held or an aggregate amount of 11,640,000 Post-Split
shares of the Company's Common Stock. Simultaneously with the execution of this
Agreement, Xxxxx X. XxXxx, Xxx Xxxxxx and Xxxx X. Xxxxxx are executing Stock
Purchase Agreements to purchase 3,700,000, 1,900,000 and 1,900,000 shares,
respectively, (or an aggregate 7,500,000) Post-Split shares of Company Common
Stock from Mr. Nikoloas Bekropoulos, and Bug River Trading Corp., Xxxx Xxxxxx
and Xxxx Xxxxxx are executing Stock Purchase Agreements to purchase 2,000,000,
1,000,000 and 500,000 shares, respectively, (or an aggregate 3,500,000)
Post-Split shares of Company Common Stock from Xx. Xxxx Xxxxx Upton. Following
the execution of this Agreement and the Stock Purchase Agreements, the Battle
Mountain Shareholders shall own 22,640,000 Post-Split shares out of 38,510,000
shares outstanding in the Company, representing Fifty-Eight and Eight Tenths
Percent (58.8%) of the Company's then outstanding Common Stock.
Section 3.02 Closing. The closing ("Closing") of the transaction
-------
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than July 6, 2004, subject to
the right of the Company or Battle Mountain to extend such Closing Date by up to
an additional ten (10) days. Such Closing shall take place at a mutually
agreeable time and place. At Closing, or immediately thereafter, the following
will occur:
a) The Battle Mountain Shareholders shall surrender the certificates
evidencing at least 80% of the shares of Battle Mountain stock, duly
endorsed with Medallion Guaranteed stock powers so as to make the Company
the sole owner thereof;
b) The Company will issue and deliver up to 11,640,000 newly issued Post-Split
treasury shares of the Company's Common Stock in the name of the Battle
Mountain Shareholders in accordance with this Agreement;
c) Prior to the Closing, Nikoloas Bekropoulos and Xxxxxx Xxxxxxx Taneda
resigned as Directors of the Company and, contemporaneously therewith, the
sole remaining Director appointed Xxxx X. Xxxxxx and Xxxxx X. XxXxx as
Directors of the Company to fill the vacancies created on the Company's
Board of Directors as a result of the resignations; and
d) At the Closing, the Company, Battle Mountain and each of the Battle
Mountain Shareholders shall execute, acknowledge, and deliver (or shall
ensure to be executed, acknowledged, and delivered) any and all
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, 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. Among other things, the Company shall provide an
opinion of counsel acceptable to Battle Mountain as to such matters as
Battle Mountain may reasonably request, which shall include, but not be
limited to, a statement, to the effect that to such counsel's best
knowledge, after reasonable investigation, from inception until the Closing
Date, the Company 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 condition
of the Company or except to the extent that noncompliance would not result
in the occurrence of any material liability (such compliance including, but
not being limited to, the filing of all reports to date with federal and
state securities authorities).
Section 3.03 Name Change. Prior to the Closing, the Company
-------------
changed its name from Xxxxxx Ventures Inc. to Battle Mountain Gold Exploration
Corp., pursuant to a Certificate of Amendment to Articles of Incorporation filed
with the Nevada Secretary of State on April 15, 2004.
Section 3.04 Tradability of Shares. The shares of the Common Stock of
----------------------
the Company to be issued to the Battle Mountain Shareholders have not been
registered under the 1933 Act, nor registered under any state securities law,
and are "restricted securities" as that term is defined in Rule 144 under the
0000 Xxx. The securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
1933 Act, or pursuant to an exemption from registration under the 1933 Act. The
shares to be issued to the Battle Mountain Shareholders will bear the following
restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
Section 3.05 Anti-Dilution. The number of shares of the Company's
-------------
Common Stock issuable upon the Exchange Offer shall be appropriately adjusted to
take into account any other stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the Company's Common Stock which may
occur (i) between the date of the execution of this Agreement and the Closing
Date.
Section 3.06 Termination.
-----------
(a) This Agreement may be terminated by the Board of Directors of either the
Company or Battle Mountain or by the Battle Mountain Shareholders 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 upon the advice of its legal counsel, makes it inadvisable to proceed
with the Exchange;
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) 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; or
(iii) if less than eighty percent (80%) of the Battle Mountain
Shareholders agree to the Exchange Offer. In the event of termination
pursuant to this paragraph, 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.
(b) This Agreement may be terminated by the Board of Directors of the Company
at any time prior to the Closing Date if:
(i) the Board of Directors of the Company determines in good faith
that one or more of the Company's conditions to Closing has not occurred,
through no fault of the Company.
(ii) The Company takes the termination action specified in Section
1.17 as a result of Battle Mountain Schedules or updates thereto which the
Company finds unacceptable; or
(iii) Battle Mountain 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 Battle Mountain contained
herein shall be inaccurate in any material respect, where such
noncompliance or inaccuracy has not been cured within ten (10) days after
written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder, except that Battle Mountain shall bear the costs in connection
with the negotiation, preparation, and execution of this Agreement and
qualifying the offer and sale of securities to be issued in the Exchange under
the registration requirements, or exemption from the registration requirements,
of state and federal securities laws.
(c) This Agreement may be terminated by the Board of Directors of Battle
Mountain or by the Battle Mountain Shareholders at any time prior to the
Closing Date if:
(i) there shall have been any change after the date of the latest
balance sheet of the Company in the assets, properties, business or
financial condition of the Company which could have a material adverse
effect on the financial statements of the Company listed in Section 2.04(a)
and 2.04(b) taken as a whole, except any changes disclosed in the Company
Schedules;
(ii) the Board of Directors of Battle Mountain determines in good
faith that one or more of Battle Mountain's conditions to Closing has not
occurred, through no fault of Battle Mountain;
(iii) Battle Mountain takes the termination action specified in
Section 2.17 as a result of the Company Schedules or updates thereto which
Battle Mountain finds unacceptable;
(iv) on or before July 6, 2004, if Battle Mountain notifies the
Company that Battle Mountain's investigation pursuant to Section 4.01 below
has uncovered information which it finds unacceptable by the same criteria
set forth herein; or
(v) The Company 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 the Company contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder.
No revenue ruling or opinion of counsel will be sought as to the tax-free
nature of the subject Exchange and such tax treatment is not a condition to
Closing herein.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. The Company and Battle
--------------------------------
Mountain will each afford to the officers and authorized representatives of the
other full access to the properties, books and records of the Company or Battle
Mountain, as the case may be, in order that each may have a 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 the
Company or Battle Mountain, as the case may be, as the other shall from time to
time reasonably request. Any such investigation and examination shall be
conducted at reasonable times and under reasonable circumstances, and each party
hereto shall cooperate fully therein. No investigation by a party hereto shall,
however, diminish or waive in any way any of the representations, warranties,
covenants or agreements of the other party under this Agreement. In order that
each party may investigate as it may wish the business affairs of the other,
each party shall furnish the other during such period with all such information
and copies of such documents concerning the affairs of it as the other party may
reasonably request, and cause its officer, employees, consultants, agents,
accountants, and attorneys to cooperate fully in connection with such review and
examination, and to make full disclosure to the other parties all material facts
affecting its financial condition, business operations, and the conduct of
operations. Without limiting the foregoing, as soon as practicable after the
end of each fiscal quarter (and in any event through the last fiscal quarter
prior to the Closing Date), the Company shall provide Battle Mountain with
quarterly internally prepared and unaudited financial statements for all periods
up to the date of Closing.
Section 4.02 Delivery of Books and Recordsand the Company's Accounts.
--------------------------------------------------------
At the Closing, Battle Mountain shall deliver to the Company copies of the
corporate minute books, books of account, contracts, records, and all other
books or documents of Battle Mountain now in the possession of Battle Mountain
or its representatives. At the Closing, the Company shall execute such
documents as are necessary to make Xxxx Xxxxxx, or such other person or persons
designated by Xxxx Xxxxxx, the authorized xxxxxx on all of the Company's bank
accounts or other accounts maintained by the Company at financial institutions.
Section 4.03 Third Party Consents and Certificates. The Company and
---------------------------------------
Battle Mountain agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.
Section 4.04 Consent of Battle Mountain Shareholders. Battle Mountain
---------------------------------------
shall use its best efforts to obtain the consent of all Battle Mountain
Shareholders to participate in the Exchange.
Section 4.05 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
--------------------------
Daylight Time on July 6, 2004.
(a) In recognition of the substantial time and effort which the Company has
spent and will continue to spend in investigating Battle Mountain and its
business and in addressing the matters related to the transactions
contemplated herein, each of which may preempt or delay other management
activities, neither Battle Mountain, nor any of its officers, employees,
representatives or agents will directly or indirectly solicit or initiate
any discussions or negotiations with, or, except where required by
fiduciary obligations under applicable law as advised by counsel,
participate in any negotiations with or provide any information to or
otherwise cooperate in any other way with, or facilitate or encourage any
effort or attempt by, any corporation, partnership, person or other entity
or group (other than the Company and its directors, officers, employees,
representatives and agents) concerning any merger, sale of substantial
assets, sale of shares of capital stock, (including without limitation, any
public or private offering of the common stock of Battle Mountain) or
similar transactions involving Battle Mountain (all such transactions being
referred to as " Battle Mountain Acquisition Transactions"). If Battle
Mountain receives any proposal with respect to a Battle Mountain
Acquisition Transaction, it will immediately communicate to the Company the
fact that it has received such proposal and the principal terms thereof.
(b) In recognition of the substantial time and effort which Battle Mountain has
spent and will continue to spend in investigating the Company and its
business and in addressing the matters related to the transactions
contemplated herein, each of which may preempt or delay other management
activities, neither the Company, nor any of its officers, employees,
representatives, shareholders or agents will directly or indirectly solicit
or initiate any discussions or negotiations with, or, except where required
by fiduciary obligations under applicable law as advised by counsel,
participate in any negotiations with or provide any information to or
otherwise cooperate in any other way with, or facilitate or encourage any
effort or attempt by, any corporation, partnership, person or other entity
or group (other than Battle Mountain and its directors, officers,
employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the Common Stock of the
Company or similar transactions involving the Company (all such
transactions being referred to as "Company Acquisition Transactions"). If
the Company receives any proposal with respect to a Company Acquisition
Transaction, it will immediately communicate to Battle Mountain the fact
that it has received such proposal and the principal terms thereof.
Section 4.06 Actions Prior to Closing.
---------------------------
(a) From and after the date of this Agreement until the Closing Date and except
as set forth in the Company Schedules or Battle Mountain Schedules or as
permitted or contemplated by this Agreement, the Company and Battle
Mountain respectively (subject to paragraph (b) below), 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 obligations 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
the Company nor Battle Mountain will:
(i) make any changes in their Articles of Incorporation or Bylaws,
except as otherwise provided in this Agreement;
(ii) take any action described in Section 1.07 in the case of Battle
Mountain, or in Section 2.07, in the case of the Company (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) sell any assets or discontinue any operations, sell any shares of
capital stock or conduct any similar transactions other than in the
ordinary course of business.
Section 4.07 Indemnification.
---------------
(a) The Company hereby agrees to indemnify Battle Mountain and each of the
officers, agents, and directors of Battle Mountain and each of the Battle
Mountain Shareholders 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 by the
Company under this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
Section 4.08 Limitation of Subsequent Corporate Actions.
----------------------------------------------
It is expressly understood and agreed that the Company, the shareholders of
Battle Mountain, and their affiliates will take all steps necessary to ensure
that:
(1) The Company will not enact a reverse split of its Common Stock for a period
of twelve (12) months after execution of this Agreement;
(2) The assets of Battle Mountain, if any, shall remain in the Company as part
of its business operations; and
(3) The Company will not switch transfer agents for a period of twelve (12)
months following the date of execution of this Agreement.
Notwithstanding items (1), (2), and (3) , the Company may waive such conditions
stated above with the prior written approval of such person (or group), if any,
that provides financing to the Company in connection with the Exchange. Other
than (1), (2), and (3), of this Section, there are no restrictions upon the
Company to inhibit, prevent, limit or restrict the Company from issuing
additional securities of any class, preference or type after the date of the
Closing.
Section 4.09 Indemnification of Subsequent Corporate Actions.
---------------------------------------------------
(1) No officer, director, controlling shareholder, agent or representative of
the Company, or any other person currently affiliated with the Company, has
offered or agreed to assist in the promotion, market making, development,
enhancement, or support of the Company's business, capital raising, or
securities market.
(2) Battle Mountain hereby represents and warrants that it will indemnify and
hold harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the
Company, from any decisions, activities, or conduct of the Company
contemporaneous with, or subsequent to this Agreement.
Section 4.10 Audited Financial Statements. The Company shall file
------------------------------
audited financial statements of Battle Mountain as required by the Securities
and Exchange Commission within seventy-five (75) days from the date of Closing.
Section 4.11 Blue Sky Manual Exemption. The Company shall file with
----------------------------
Standard & Poors or Xxxxx'x within one hundred twenty (120) days from the date
of Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by Battle Mountain 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). Battle
Mountain shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Battle Mountain
prior to or at the Closing. The Company shall be furnished with a certificate,
signed by a duly authorized executive officer of Battle Mountain and dated the
Closing Date, to the foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
----------------------
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of Battle Mountain to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
Battle Mountain 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 Battle Mountain Schedules, by or against Battle
Mountain, which might result in any material adverse change in any of the
assets, properties, business, or operations of Battle Mountain.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any material change in the financial condition,
business, or operations of Battle Mountain nor shall any event have occurred
which, with the lapse of time or the giving of notice, is determined to be
unacceptable using the criteria set forth in Section 1.17.
Section 5.04 Approval by Battle Mountain Shareholders. The Exchange
----------------------------- ------------
shall have been approved, and shares delivered in accordance with Section 3.01,
by the holders of not less than eighty percent (80%) of the outstanding common
stock of Battle Mountain.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Battle Mountain after the Closing Date on the basis
as presently operated shall have been obtained.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BATTLE MOUNTAIN
AND THE BATTLE MOUNTAIN SHAREHOLDERS
The obligations of Battle Mountain and the Battle Mountain Shareholders
under this Agreement are subject to the satisfaction, at or before the Closing
Date, of the following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by the Company 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.
Additionally, the Company shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
the Company and shall have satisfied all conditions set forth herein prior to or
at the Closing. Battle Mountain shall have been furnished with certificates,
signed by duly authorized executive officers of the Company and dated the
Closing Date, to the foregoing effect.
Section 6.02 Officer's Certificate. Battle Mountain shall have been
----------------------
furnished with certificates dated the Closing Date and signed by the duly
authorized executive officer of the Company, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of the
Company 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 Company Schedules, by or against the Company, which
might result in any material adverse change in any of the assets, properties or
operations of the Company.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any change in the financial condition, business or
operations of the Company nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 2.17.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Battle Mountain after the Closing Date on the basis
as presently operated shall have been obtained.
Section 6.06 Other Items. Battle Mountain shall have received further
-----------
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Battle Mountain may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions. None of the
-------------------------------------------
Parties to the Agreement, nor their officers, directors or affiliates,
promoters, beneficial shareholders or control persons, nor any predecessor
thereof have been subject to the following:
(a) Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer within the past five (5)
years;
(b) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(c) Being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission (the "SEC") or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or
vacated.
Section 7.02 Broker/Finder's Fee. No broker's or finder's fee will be
-------------------
paid in connection with the transaction contemplated by this Agreement other
than fees payable to persons registered as broker-dealers pursuant to Section 15
of the Securities Exchange Act of 1934. The Company and Battle Mountain agree
that, except as set forth herein and on Schedule 7.02 attached hereto, there
were no brokers or finders involved in bringing the parties together or who were
instrumental in the negotiation, execution or consummation of this Agreement.
The Company and Battle Mountain each agree to indemnify the other against any
claim by any third person other than those described above for any commission,
brokerage, or finder's fee arising from the transactions contemplated hereby
based on any alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the actions of the
indemnifying party.
Section 7.03 Governing Law and Arbitration. 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 the matters of state law, with
the laws of the State of Texas without giving effect to principles of conflicts
of law thereunder. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All arbitrators shall possess
such experience in, and knowledge of, the subject area of the controversy or
claim so as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder shall be in
Texas. The prevailing party shall be entitled to receive its reasonable
attorney's fees and all costs relating to the arbitration. Any award rendered
by arbitration shall be final and binding on the parties, and judgment thereon
may be entered in any court of competent jurisdiction.
Section 7.04 Notices. Any notice or other communications required or
-------
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to the Company, to: Battle Mountain Gold Exploration Corp.
000 Xxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxxxx, XX, Xxxxxx X0X 0X0
If to Battle Mountain, to: Battle Mountain Gold Exploration, Inc.
Xxx Xxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxx, Xxxxxx 00000
With copies to: Xxxxx X. Xxxx, Attorney at Law
0000 Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
----------------
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the prevailing party shall be reimbursed
by the losing party for all costs, including reasonable attorney's fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
---------------
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
-----------------------------------
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.08 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.
Section 7.09 Third Party Beneficiaries. This contract is strictly
---------------------------
between the Company and Battle Mountain and the Battle Mountain Shareholders,
and, except as specifically provided, no director, officer, stockholder (other
than the Battle Mountain Shareholders), employee, agent, independent contractor
or any other person or entity shall be deemed to be a third party beneficiary of
this Agreement.
Section 7.10 Expenses. The Company and Battle Mountain each hereto
---------
agree to pay its own costs and expenses incurred in negotiating this Agreement
including legal, accounting and professional fees, incurred in connection with
the Exchange or any of the other transactions contemplated hereby, and those
costs and expenses incurred in consummating the transactions described herein.
Section 7.11 Entire Agreement. This Agreement represents the entire
-----------------
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
----------------------
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two (2)
years.
Section 7.13 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.
Section 7.14 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 by 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 may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
------------
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a
-------------
faxed signature will constitute an original signature.
Section 7.17 Severability. The invalidity or unenforceability of
------------
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
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.
BATTLE MOUNTAIN GOLD EXPLORATION CORP.
BY: /s/ Xxxxx X. XxXxx
--------------------------------------------
Xxxxx X. XxXxx, Chief Executive Officer
BATTLE MOUNTAIN GOLD EXPLORATION, INC.
BY: /s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx, Chief Executive Officer
