8-K - AREC - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest event Reported): January 10, 2022

AMERICAN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Florida	000-55456	46-3914127
---	---	---
(State or other jurisdiction<br><br>of incorporation)	(Commission<br><br>File Number)	(I.R.S. Employer<br><br>Identification No.)

12115 Visionary Way, Suite 174, Fishers Indiana, 46038

(Address of principal executive offices)

(606) 637-3740

(Registrant’s telephone number, including area code)

________________________________________________

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See: General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On January 10, 2022, American Resources Corporation’s (“American Resources” or the “Company”) wholly owned subsidiary, American Rare Earth LLC (“American Rare Earth” or “ARE”) entered into a Collaboration Agreement, a Membership Interest Purchase Agreement (collectively the “Agreements”) and issued a warrant to purchase an additional membership interest in American Rare Earth LLC (the “Warrant”) with HG Ventures LLC, the corporate venture arm of The Heritage Group (collectively “Heritage”).

Pursuant to the Agreements, American Rare Earth and Heritage will work in good faith to collaborate in identifying opportunities that, in total, enhance American Rare Earth’s likelihood of success through the following, without limitation:

1.	access to Heritage’s (i) vast network of partners, customers, companies, governmental and industry leaders, and other valuable relationships, (ii) expertise, and (iii) certain equipment;
2.	work together to proactively brand, promote and publicly support the efforts of ARE through outreach, media, press releases, industry partners and government relations;
3.	enhance the sourcing of feedstocks, such as of end-of-life magnets and batteries or battery materials, for ARE’s processing and purification of rare earth elements;
4.	further the buildout of ARE’s downstream sales partners for the sale of rare earth elements to government and industry partners for the production of new products and applications;
5.	assist in attracting high value members for ARE’s advisory board;
6.	leverage certain of Heritage’s and its Affiliates’ personnel, expertise, and equipment (such as laboratory equipment) to possibly assist ARE in the development, refinement and execution of its business;
7.	to strategize for the potential to possibly collocate future ARE purification facilities at Heritage’s Affiliate facilities;
8.	afford ARE the ability to compete in being the final stage of isolation and purification of critical elements from black mass for Heritage Affiliates’ battery recycling business based on performance and cost;
9.	to make connections that may provide ARE the right of first refusal to acquire battery black mass from HGV Affiliates’ battery recycling business as a customer for ARE to further purify to isolate its critical material for resale; and
10.	provide Heritage and its Affiliates the ability to market the technologies, patents, capabilities, and access of ARE’s technologies and patents to HGV’s and its Affiliates’ customers, relationships, and affiliates.

In return, the Company has issued to Heritage seven and one-half percent (7.50%) of American Rare Earth LLC’s equity membership interest. Additionally, the Company has issued Heritage a Warrant to purchase up to fifty million dollars ($50,000,000) of American Rare Earth’s equity ownership interest at a fully-diluted, pre-money valuation of three hundred million dollars ($300,000,000). The Warrant carries a five year term and will expire January 10, 2027.

The foregoing description of the Agreements and Warrant do not purport to be complete and is qualified in its entirety by reference to the complete text of the Agreements and Warrant, which is filed as Exhibits hereto.

2

Item 8.01 Other Events.

On January 11, 2022 American Resources issued a press release announcing the investment and partnership with Heritage.

The information presented in Item 8.01 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are attached hereto and filed herewith.

Exhibit No.	Description
1.1	Collaboration Agreement between American Rare Earth LLC and HG Ventures LLC
1.2	Membership Interest Purchase Agreement
1.3	Warrant to Purchase Membership Interest of American Rare Earth LLC
99.1	Press Release Dated January 11, 2022
3
---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	American Resources Corporation
Date: January 14, 2022	By:	/s/ Mark C. Jensen
		Mark C. Jensen
		Chief Executive Officer
4
---

arec_ex11.htm EXHIBIT 1.1

COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT (this “Agreement”), effective as of January 10, 2022 (the “Effective Date”), is made by and between (i) AMERICAN RARE EARTH LLC, an Indiana limited liability company, with a principal place of business at 12115 Visionary Way, Suite 174, Fishers, IN, 46038 (“ARE”), and (ii) HG VENTURES LLC, a Delaware limited liability company **** with its principal place of business at 6320 Intech Way, Indianapolis, Indiana 46278 (“HGV”). Each of ARE and HGV are referred to as a “Party” and collectively as the “Parties.”

BACKGROUND

A.	HGV, the corporate venture arm of The Heritage Group, partners with innovative, high-growth companies that support a sustainable future in materials, infrastructure, environmental solutions and industrial systems, and leverages the expertise, assets and relationships of The Heritage Group to help such innovative companies execute their visions;
B.	ARE is an innovative, high-growth company focusing on extracting, concentrating, processing and purifying rare earth and critical elements and battery metals; and
C.	In connection with a capital contribution by HGV to ARE in return for the issuance of membership interests of ARE to HGV (which is the subject of a separate agreement) and as a material inducement for such capital contribution and issuance of membership interests, HGV and ARE desire to enter into this Agreement to collaborate on opportunities to accelerate the growth and commercialization of ARE’s non-natural, end-of-life feedstock supply and to provide THG with additional products and services to market, pursuant to the terms and conditions set forth below.

HGV, the corporate venture arm of The Heritage Group, partners with innovative, high-growth companies that support a sustainable future in materials, infrastructure, environmental solutions and industrial systems, and leverages the expertise, assets and relationships of The Heritage Group to help such innovative companies execute their visions;

ARE is an innovative, high-growth company focusing on extracting, concentrating, processing and purifying rare earth and critical elements and battery metals; and

In connection with a capital contribution by HGV to ARE in return for the issuance of membership interests of ARE to HGV (which is the subject of a separate agreement) and as a material inducement for such capital contribution and issuance of membership interests, HGV and ARE desire to enter into this Agreement to collaborate on opportunities to accelerate the growth and commercialization of ARE’s non-natural, end-of-life feedstock supply and to provide THG with additional products and services to market, pursuant to the terms and conditions set forth below.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE 1DEFINITIONS

1.1 “AAA “has the meaning specified in Section 9.15.

1.2 “Affiliate” means any individual or entity directly or indirectly controlling, controlled by or under common control with, a Party or a Third Party, as applicable. For purposes of this Agreement, the direct or indirect ownership of fifty percent (50%) or more of the outstanding voting securities of an entity will be deemed to constitute control. Direct or indirect ownership of more than fifty percent (50%) of the voting stock ordinarily entitled to vote in the election of directors of a business entity or, if no such stock is issued, of more than fifty percent (50%) of the ownership interest in the business entity, will constitute ownership thereof.

1.3 “Applicable Law” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, government or regulatory authority, domestic or foreign to the extent they are applicable with respect to any right or obligation of a Party under this Agreement, including any anti-bribery laws such as the US Foreign Corrupt Practices Act and the OECD Convention Against Bribery of Foreign Public Officials in International Business Transactions.

E-1

1.4 “ARE Indemnitee” has the meaning specified in Section 6.2.

1.5 “ARE Technology” means the patents and technology rights licensed by ARE, or its affiliates, to specifically include those Intellectual Property Rights specified in Section 1.13.

1.6 “Business Day” means any day of the year other than: (a) any Saturday or Sunday; or (b) any other day on which banks located in New York, New York are closed for business.

1.7 “Change of Control” means: (a) a sale of either Party (whether by merger, consolidation or other transaction or series of related transactions in which, in each case, the beneficial owners of such Party’s voting securities outstanding immediately prior to the consummation of the transaction or the series of related transactions beneficially own securities with less than a majority of the voting power of such Party or a successor immediately after the transaction or such transactions, or by sale, license or other transfer of all or substantially all of such Party’s assets or capital stock to a Third Party which is not an Affiliate of such Party, or otherwise); or (b) any sale or other transfer of the division or business unit of a Party or its Affiliates which holds all or substantially all of the assets of such Party and its Affiliates which are related to this Agreement.

1.8 “Confidential Information” means all Information: (a) that is marked or labeled “Confidential”, “Secret” or the like at the moment of disclosure or, in the case of oral Information, is identified as confidential and confirmed in writing within thirty (30) days after disclosure thereof; or (b) of which the confidential nature is reasonably apparent.

1.9 “HGV Indemnitee” has the meaning specified in Section 6.1.

1.10 “Indemnifying Party” has the meaning specified in Section 6.3.

1.11 “Indemnitee” has the meaning specified in Section 6.3.

1.12 “Information” means any and all drawings specifications, photographs, samples, models, processes, procedures, instructions, software, reports, papers, and any other technical, commercial or customer information, data and documents of any kind, including oral information.

1.13 “Intellectual Property Rights” means rights in and to any and all: (a) U.S. and foreign patents and patent applications claiming any inventions or discoveries made, developed, conceived, or reduced to practice, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations, post-grant reviews and extensions thereof; (b) copyrights; (c) unpatented information (including Information), trade secrets, know-how, data, or materials; (d) trademarks, service marks, trade names, trade dress, domain names and similar rights; (e) mask work rights; and (f) any other proprietary rights of any kind now known or hereafter recognized in any jurisdiction.

1.14 “Losses” has the meaning specified in Section 6.1.

E-2

1.15 “Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust or joint venture, or a governmental agency or political subdivision thereof.

1.16 “Regulatory Authority” means any national, supra-national, regional, state or local regulatory agency, department, bureau, notified bodies, commission, council or other governmental entity.

1.17 “Restricted Party” means any of [insert names of competitors of The Heritage Group] and any of their Affiliates.

1.18 “Third Party” means any Person that is neither a Party nor an Affiliate of a Party.

1.19 “Term” has the meaning specified in Section 8.1.

ARTICLE 2MANAGEMENT AND ORGANIZATION OF THE COLLABORATION

2.1 Executive Sponsors. Each Party will appoint an executive to be its executive sponsor (each, an “Executive Sponsor”) for purposes of this Agreement. The initial Executive Sponsor appointed by HGV (the “HGV Executive Sponsor”) will be Jonathan Schalliol and the initial Executive Sponsor appointed by ARE (the “ARE Executive Sponsor”) will be Mark Jensen. Each Party may change its Executive Sponsor from time to time upon written notice to the other Party. The Executive Sponsors will resolve any disputes or disagreements between the Parties and will generally oversee the activities of the collaboration.

2.2 Collaboration. The Parties will generally work in good faith to collaborate in identifying opportunities that, in total, to enhance ARE’s likelihood of success. Examples of possible opportunities resulting from this collaboration may include, without limitation, the Parties acting reasonably and in good faith but without obligation to the other Party if the possible opportunities fail to materialize:

(a) to work together to proactively brand, promote and publicly support the efforts of ARE through outreach, media, press releases, industry partners and government relations;

(b) to enhance the sourcing of feedstocks, such as of end-of-life magnets and batteries or battery materials, for ARE’s processing and purification of rare earth elements;

(c) to further the buildout of ARE’s downstream sales partners for the sale of rare earth elements to government and industry partners for the production of new products and applications;

(d) to assist in attracting high value members for ARE’s advisory board;

(e) to leverage certain of HGV’s and its Affiliates’ personnel, expertise, and equipment (such as laboratory equipment) to possibly assist ARE in the development, refinement and execution of its business;

E-3

(f) to strategize for the potential to possibly collocate future ARE purification facilities at HGV’s Affiliate facilities;

(g) to afford ARE the ability to compete in being the final stage of isolation and purification of critical elements from black mass for HGV Affiliates’ battery recycling business based on performance and cost;

(h) to make connections that may provide ARE the right of first refusal to acquire battery black mass from HGV Affiliates’ battery recycling business as a customer for ARE to further purify to isolate its critical material for resale;

(i) to provide HGV and its Affiliates the ability to market the technologies, patents, capabilities, and access of ARE’s technologies and patents to HGV’s and its Affiliates’ customers, relationships, and affiliates; and

(j) to encourage and facilitate the cooperation under this Agreement, and to manage, direct and oversee the efforts corresponding thereto.

ARTICLE 3REGULATORY MATTERS

3.1 Compliance with Laws. Each Party will comply with Applicable Law regarding the performance of its obligations under this Agreement. Without limiting the generality of the foregoing, each Party will: (a) report to every applicable Regulatory Authority within any relevant time periods all events relating to this Agreement that are required to be reported; and (b) deliver, within the permitted time periods, all annual or other periodic reports required to be delivered to every applicable Regulatory Authority in connection with this Agreement. Each Party will comply with Applicable Law pertaining to the sale and marketing of the Parties’ offerings in connection with this Agreement in the countries where it sells and markets such offerings.

ARTICLE 4CONFIDENTIALITY

4.1 Receipt of Information. The Parties acknowledge that in connection with the performance of the obligations contemplated by this Agreement they may receive Information that contains valuable information, know-how or trade secrets of the disclosing Party or its Affiliates that the disclosing Party considers to be proprietary or confidential.

E-4

4.2 Obligations. Except as expressly provided in this Agreement, the receiving Party: (a) will not disclose the disclosing Party’s Confidential Information to any Third Party, (b) will not use the disclosing Party’s Confidential Information for any purpose other than in connection with the performance of the obligations contemplated by, or the exercise of its rights under, this Agreement, (c) will limit disclosure of the disclosing Party’s Confidential Information to such persons as have a need to know in connection with performance of the obligations contemplated by, or the exercise of the receiving Party’s rights under, this Agreement, and (d) will keep the disclosing Party’s Confidential Information confidential by employing adequate procedures for safeguarding the disclosing Party’s Confidential Information at least as rigorous as the receiving Party employs for its own confidential information, but reflecting not less than a reasonable degree of care. For the avoidance of doubt, the Parties agree that Affiliates, agents, consultants, potential and actual lenders and investors and advisors are not Third Parties for purposes of this ARTICLE 4, and the Parties agree that each Party may disclose only on a need-to-know basis any received Confidential Information to its respective Affiliates, agents, consultants, potential and actual lenders and investors and advisors that have agreed to be bound by similar obligations of confidentiality and non-use. Each Party shall procure compliance with such confidentiality obligations and non-use obligations by their respective Affiliates, agents, consultants, potential and actual lenders and investors and advisors and shall be liable for any non-compliance.

4.3 Limitations on Obligations. The confidentiality and non-use obligations under this Agreement will not apply to such Confidential Information as the receiving Party can document:

(a) was already generally available to the public at the time it was disclosed or subsequently becomes generally available to the public through no fault of the receiving Party;

(b) was known to the receiving Party or was in its possession prior to receipt of such Confidential Information;

(c) was developed by the receiving Party independently and without use of or reliance on Confidential Information provided by the disclosing Party under this Agreement and without any breach of this Agreement; or

(d) was lawfully received by the receiving Party on a non-confidential basis from a Third Party who was not bound by a similar obligation of confidentiality or non-use in relation to the Confidential Information.

4.4 Legal Proceedings and Other Permitted Disclosures. In the event that, in connection with any legal proceeding or investigation by a court of competent jurisdiction or governmental or administrative authority, either Party (or any of its Affiliates agents, consultants, potential and actual lenders and investors, advisors or representatives) is required to disclose any Confidential Information received under this Agreement, such Party may disclose that portion (and only that portion) of the Confidential Information, which, in the written opinion of its legal counsel, the Party is legally required to disclose. Such Party will, unless legally prohibited, provide the other Party with prompt notice of such requirement(s) so that the other Party may seek an appropriate protective order or other appropriate remedy.

4.5 Agreement is Confidential. The Parties acknowledge the confidential nature of this Agreement, and, subject to Section 4.4 and Section 4.6, neither Party will disclose the contents of this Agreement without obtaining the prior approval of the other Party in writing, except as required by Applicable Law or by either Party in connection with the enforcement of its rights hereunder. Any breach by either Party, of its confidentiality or non-use obligations under this ARTICLE 4 will not affect any right or remedy to which the non-breaching Party would be entitled at law absent this Agreement.

4.6 Securities Filings. If a Party is required by Applicable Law to make a securities filing materially and specifically relating to the execution or performance of this Agreement with the appropriate governmental authorities (including the U.S. Securities and Exchange Commission, and any securities exchange on which securities of such Party are listed), then the Party under such requirement shall prepare a draft of such securities filing for review and comment by the other Party. If such securities filing includes the disclosure of this Agreement and its terms, the Party under such disclosure obligation shall use commercially reasonable efforts to include a confidential treatment request and a proposed redacted version of this Agreement as part of such draft.

E-5

ARTICLE 5REPRESENTATIONS AND WARRANTIES

5.1 HGV. HGV hereby represents and warrants that:

(a) it is a duly and validly organized and existing limited liability company in good standing, and that it is legally qualified to do business in each jurisdiction in which failure to do so would cause a material adverse effect;

(b) the performance of this Agreement and the consummation of the transactions contemplated herein will not result in any breach, conflict or violation of any terms or provisions of, or constitute a default under, its organizational documents, or any material agreement or instrument to which it is a party, by which it is bound, or to which any of its property is subject;

(c) all requisite company action has been taken for the due authorization, execution, delivery, and performance of this Agreement by it, and this Agreement constitutes a legally binding obligation, enforceable against such Party, in accordance with its terms, except insofar as enforceability may be limited by bankruptcy, insolvency, reorganization, or similar laws affecting the rights of creditors generally; and

(d) it is not a party to any litigation relating to, or that could reasonably be expected to affect, its ability to perform its obligations under this Agreement.

5.2 ARE. ARE hereby represents and warrants that:

(a) it is a duly and validly organized and existing limited liability company, and that it or its Affiliates that may be performing its obligations under this Agreement are legally qualified to do business in each jurisdiction in which this Agreement may be performed and where its activities hereunder require such qualification;

E-6

(d) it is not a party to any litigation relating to, or that could reasonably be expected to affect, its ability to perform its obligations under this Agreement; and

(e) to the best of ARE’s knowledge as of the Effective Date (without an obligation of further inquiry), the ARE Technology existing as of the Effective Date (and the use thereof) does not infringe the issued patent rights of any Third Party or misappropriate the trade secrets of any Third Parties.

5.3 Disclaimer. ARE and HGV specifically disclaim any representation, warranty or guarantee that the collaboration hereunder will be successful, in whole or in part. It is understood that the mere failure of the Parties to successfully accelerate and commercialize any technology related to this Agreement will not, in and of itself, constitute a breach of any representation or warranty under this Agreement. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ARE AND HGV MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLABORATION OR TECHNOLOGIES DESCRIBED HEREIN OR INFORMATION DISCLOSED HEREUNDER, AND HEREBY EXPRESSLY DISCLAIM ANY WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 6INDEMNIFICATION

6.1 Indemnity by ARE. Subject to the provisions of Section 6.3, ARE will defend, indemnify and hold harmless HGV, its subsidiaries, parent corporations, Affiliates and its and their officers, directors, independent contractors, partners, shareholders, employees, agents, and their respective successors and assigns (collectively, the “HGV Indemnitees”) from and against any Third Party claim, suit, demand, loss, damage, expense (including reasonable attorney’s fees and those that may be asserted by a Third Party) or liability (collectively, “Losses”), in each case solely for Losses imposed upon the HGV Indemnitee(s) by any Third Party, to the extent arising from or related to: (a) any material breach of ARE’s representations and warranties, covenants or obligations under this Agreement; or (b) any negligence, gross negligence, intentional misconduct or violation of Applicable Law by ARE (or its Affiliates, employees, agents or representatives) in performing its obligations, or exercising its rights, under this Agreement, in each case solely to the extent that a court of competent jurisdiction determines that such Losses arose from or related to any HGV Indemnitee’s negligence, gross negligence, intentional misconduct, violation of Applicable Law or breach of this Agreement (including any breach of its representations and warranties, covenants or obligations).

6.2 Indemnity by HGV. Subject to the provisions of Section 6.3, HGV will defend, indemnify and hold harmless ARE, its subsidiaries, parent corporations, Affiliates and its and their officers, directors, partners, shareholders, employees, agents, and their respective successors and assigns (collectively, in such capacity, the “ARE Indemnitees”) from and against any Losses, in each case solely for Losses imposed upon the ARE Indemnitee(s) by any Third Party, to the extent arising from or related to: (a) any material breach of HGV’s representations and warranties, covenants or obligations under this Agreement; or (b) any negligence, gross negligence, intentional misconduct or violation of Applicable Law by HGV (or its Affiliates, employees, agents or representatives) in performing its obligations, or exercising its rights, under this Agreement, in each case solely to the extent that a court of competent jurisdiction determines that such Losses arose from or related to any ARE Indemnitee’s negligence, gross negligence, intentional misconduct, violation of Applicable Law or breach of this Agreement (including any breach of its representations and warranties, covenants or obligations).

E-7

6.3 Procedure. A Party seeking indemnification (an “Indemnitee”) will promptly notify the other Party (the “Indemnifying Party”) in writing of a claim or suit; provided, that a Party’s failure to give such notice or delay in giving such notice will not affect such Party’s right to indemnification under this ARTICLE 6 except to the extent that the other Party has been prejudiced by such failure or delay. Neither Indemnifying Party has any obligation to indemnify an Indemnitee in connection with any settlement made by such Indemnitee without the Indemnifying Party’s written consent. The Indemnitee has the right to participate at its own expense in the claim or suit and in selecting counsel therefor. The Indemnitee will cooperate with the Indemnifying Party as reasonably requested, at the Indemnifying Party’s sole cost and expense. The Indemnifying Party will not settle any claim or suit without the Indemnitee’s prior written consent unless such settlement: (a) is limited to the payment of cash by the Indemnifying Party; (b) does not amend this Agreement; and (c) contains a full release of the Indemnitee.

ARTICLE 7LIMITATION OF LIABILITY

EXCEPT WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN ARTICLE 6, OR A BREACH BY EITHER PARTY OF ITS CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 4, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS OR PUNITIVE DAMAGES IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

ARTICLE 8TERM AND TERMINATION

8.1 Term of Agreement. The term of this Agreement will commence on the Effective Date, and will continue in full force and effect for an initial term of three (3) years (the “Initial Term”), unless terminated earlier as provided in this ARTICLE 8. This Agreement will be automatically renewed thereafter for successive one (1) year terms after the Initial Term (each a “Renewal Term” and, together with the Initial Term, the “Term”), unless either Party notifies the other Party in writing at least sixty (60) days prior to the expiration of the Initial Term or any Renewal Terms of its decision not to renew this Agreement, in which case this Agreement shall expire and terminate as of the end of the Initial Term or Renewal Term, as the case may be.

E-8

8.2 Termination.

(a) Termination for Material Breach. Either Party may terminate this Agreement in the event the other Party materially breached or defaulted in the performance of any of its material obligations hereunder, and such default will have continued for thirty (30) days after written notice thereof was provided to the breaching Party by the non-breaching Party. Any termination will become effective at the end of such thirty (30) day period unless the breaching Party (or any of its Affiliates or any Third Party on such breaching Party’s behalf) has cured any such breach or default prior to the expiration of the thirty (30) day period, except that, if the allegedly breaching Party disputes in good faith the existence of a material breach, the thirty (30) day cure period will be tolled until such time as the dispute is resolved by the Parties pursuant to Section 9.15.

(b) Termination for Insolvency. If voluntary or involuntary proceedings by or against a Party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for such Party, or proceedings are instituted by or against such Party for corporate reorganization, dissolution, liquidation or winding-up of such Party, which proceedings, if involuntary, will not have been dismissed within sixty (60) days after the date of filing, or if such Party makes an assignment for the benefit of creditors, or substantially all of the assets of such Party are seized or attached and not released within sixty (60) days thereafter, the other Party may immediately terminate this Agreement effective upon notice of such termination.

(c) Termination for Restricted Change of Control. HGV may terminate this Agreement upon ten (10) days’ prior written notice to ARE in the event of a Change of Control of ARE involving a Restricted Party; provided, that such notice of termination will be delivered within one hundred eighty (180) days following the consummation of such Change of Control. ARE will give written notice to HGV within five (5) days after the occurrence of any Change of Control with a Restricted Party.

8.3 Effect of Termination or Expiration. Termination or expiration of this Agreement for any reason will not release either Party hereto from any liability or obligation that, at the time of such termination or expiration, has already accrued to the other Party or that is attributable to a period prior to such termination, including all obligations set forth in any other agreement between the Parties in connection with this Agreement, nor will it preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.

8.4 Survival. Sections 4, 6, 7, 8.3, this 8.4 and 9 will survive the expiration or termination of this Agreement for any reason.

ARTICLE 9MISCELLANEOUS

9.1 Governing Law. This Agreement and any dispute arising from the construction, performance or breach hereof will be governed by and construed and enforced in accordance with the laws of the State of Indiana without regard to conflict-of-law principles that would result in the application of the law of any other jurisdiction.

9.2 Assignment. Neither Party will assign this Agreement, in whole or in part, without the prior written consent of the other Party, which consent will not be unreasonably conditioned, delayed or withheld; provided, however, that either Party may assign this Agreement without such consent, to an Affiliate, or, subject to Section 8.2(c), to a successor in a Change of Control and the terms of the Agreement will continue in effect without modification after such assignment. Any purported assignment without such consent will be void and of no effect. Subject to the foregoing sentence, this Agreement will be binding on and inure to the benefit of the Parties and their respective successors and permitted assigns.

E-9

9.3 No Implied Licenses. Only the licenses granted pursuant to the express terms of this Agreement, if any, will be of any legal force or effect. No other license rights will be created by implication, estoppel or otherwise.

9.4 Representation by Legal Counsel. Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will exist or be implied against the Party that drafted such terms and provisions.

9.5 Waiver. It is agreed that no waiver by either Party hereto of any breach or default of any of the covenants or agreements herein set forth will be deemed a waiver as to any subsequent or similar breach or default.

9.6 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect to the fullest extent permitted by Applicable Law without said provision, and the Parties will amend the Agreement to the extent feasible to lawfully include the substance of the excluded term to as fully as possible realize the intent of the Parties and their commercial bargain.

9.7 Independent Contractors; No Third Party Beneficiaries. The relationship of the Parties hereto is that of independent contractors. The Parties hereto are not deemed to be agents, partners or joint ventures of the others for any purpose as a result of this Agreement or the transactions contemplated thereby. Neither Party will have any authority to or will attempt to bind or commit the other Party, or cause the other Party to incur any liability or obligation, for any purpose without the express written consent of the other Party. Nothing in this Agreement will entitle any person or entity (other than a Party hereto and his, her or its respective successors and assigns permitted hereby, or the HGV Indemnitees or the ARE Indemnitees) to any claim, cause of action, remedy or right of any kind.

9.8 Export Control Regulations. The rights and obligations of the Parties under this Agreement, will be subject in all respects to Applicable Law as will from time to time govern the license and delivery of technology abroad, including the United States Foreign Assets Control Regulations, Transaction Control Regulations and Export Control Regulations, as amended, and any successor legislation issued by the Department of Commerce, International Trade Administration, or Office of Export Licensing. Without in any way limiting the provisions of this Agreement, HGV and ARE agree that, unless prior authorization is obtained from the Office of Export Licensing, neither Party will export, re-export, or transship, directly or indirectly, to any country, any of the technical data disclosed to it by the other Party hereto if such export would violate Applicable Law.

E-10

9.9 Notices. All notices, requests and other communications hereunder will be in writing and will be hand delivered, or sent by express delivery service with confirmation of receipt, or sent by registered or certified mail, return receipt requested, postage prepaid, or by facsimile transmission (with written confirmation copy by registered first-class mail), in each case to the respective address or facsimile number indicated below.

If to HGV:

HG Ventures LLC

6320 Intech Way

Indianapolis, IN 46278

Attention:

Phone:

Email:

If to ARE:

American Rare Earth LLC

12115 Visionary Way, Suite 174

Fishers, IN, 46038

Attention: Gregory Jensen

Phone:

Email: GQJ@americanresourcescorp.com

Any such notice will be deemed to have been given when received. Either Party may change its address or email address by giving the other Party written notice, delivered in accordance with this Section.

9.10 Force Majeure. Neither Party will lose any rights hereunder or be liable to the other Party for damages or losses (except for payment obligations) on account of failure of performance by the defaulting Party if the failure is occasioned by war, fire, act of God, earthquake, flood, embargo, act of terrorism, pandemic, governmental acts or orders or restrictions or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the non-performing Party and such Party has exerted all reasonable efforts to avoid or remedy such force majeure.

9.11 Complete Agreement. This Agreement with its Exhibits, if any, constitutes the entire agreement, both written and oral, between the Parties with respect to the subject matter hereof, and all prior agreements respecting the subject matter hereof, either written or oral, express or implied, will be abrogated, canceled, and are null and void and of no effect. No amendment or change hereof or addition hereto will be effective or binding on either of the Parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each Party.

9.12 Headings; Construction. The captions to the several Sections hereof are not part of this Agreement, but are included merely for convenience of reference and will not affect its meaning or interpretation. As used in this Agreement, the word “including” means “including without limitation.”

E-11

9.13 Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same agreement.

9.14 Public Announcements. Except as is necessary for governmental notification purposes or to comply with Applicable Law or to enforce their respective rights under this Agreement, and except as otherwise agreed to by the Parties hereto in writing, the Parties will agree upon the text and the exact timing of any public announcement relating to the transactions contemplated by this Agreement, (including any press release or presentation to analysts or the financial community, but excluding any updates regarding the transactions contemplated by this Agreement provided in quarterly calls with analysts). Within four (4) business days after the Effective Date, the Parties agree to issue a joint press release describing the transactions contemplated by this Agreement.

9.15 Dispute Resolution.

(a) Subject to Section 9.15(b) and Section 9.15(c), if a dispute arises between the Parties relating to the interpretation or performance of this Agreement, and the Parties have not resolved the dispute within sixty (60) calendar days after the matter has been referred to the representatives of HGV and ARE associated with this Agreement, either Party may submit such dispute to final and binding arbitration before a single mutually acceptable arbitrator conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). If the Parties are unable to select a mutually acceptable arbitrator, AAA will appoint an arbitrator or provide a method for selection. Any arbitration proceedings will be conducted in Indianapolis, Indiana. The arbitrator will determine what discovery will be permitted, consistent with the goal of limiting the cost and time that the Parties must expend for discovery. Each Party will bear its own expenses, including attorneys’ fees, and the Parties will share equally the costs and fees of the arbitrator. The Parties will use all reasonable efforts to complete any arbitration subject to this section within six (6) months from the filing of notice of a request for such arbitration. The Parties agree that any award will not include punitive damages and will be consistent with the limitation of liability provisions set forth in this Agreement. The arbitrator will not have the power to add terms not contained in this Agreement or to refuse to enforce any term. For the avoidance of doubt, the arbitrator will not have the power to decide any aspect of any matter outside the scope of this Agreement. Judgment upon any decision rendered by the arbitrators may be entered by any court having jurisdiction. The Parties undertake and agree that all arbitral proceedings and all information, documentation, materials in whatever form disclosed in the course of such arbitral proceeding will be deemed Confidential Information hereunder.

E-12

(b) If the Parties are unable to agree in good faith on terms, then such matter will be deemed a dispute, and a single arbitrator will be selected according to the process described in Section 9.15(a) within fifteen (15) days after the Parties (as applicable) do not reach agreement on the given dispute. Such arbitrator will have the sole responsibility of resolving such dispute from a proposal submitted by each Party under this Section 9.15(b), and no other disputed matters, claims or counterclaims will be permitted by the Parties in such arbitration. Within thirty (30) days after selection of such arbitrator, each Party shall submit to the arbitrator, and exchange with the other Party in accordance with a procedure to be established by the arbitrator, its proposal for resolving such dispute. Within thirty (30) days after receiving each Party’s proposal, the arbitrator shall select, in its entirety and without modification, solely one (1) of the two (2) proposals submitted by the Parties. The Parties, as applicable, shall promptly execute the proposal that is selected by the arbitrator pursuant to this Section 9.15(b).

(c) Notwithstanding anything to the contrary in this Agreement, any dispute arising out of, relating to or in connection with the items described in subsections (i) or (ii) below need not be resolved through the procedure described in Section 9.15(a) or Section 9.15(b), and may be immediately brought in a court of competent jurisdiction: (i) the need to seek preliminary or injunctive measures or other equitable relief (e.g., in the event of a potential or actual breach of the confidentiality or non-use provisions in ARTICLE 4); or (ii) the scope, validity, enforceability or infringement of a Party’s Intellectual Property Rights.

[Signature page follows.]

E-13

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered as of the Effective Date.

HG VENTURES LLC<br> <br><br> <br><br> <br>By: ________________________________	AMERICAN RARE EARTH LLC<br> <br><br> <br><br> <br>By: __________________________________

E-14

arec_ex12.htm EXHIBIT 1.2

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), is made as of the 10th of January, 2022 by and between American Rare Earth LLC, an Indiana limited liability company (the “Company”) and HG Ventures LLC, a Delaware limited liability company (the “Purchaser”).

The parties hereby agree as follows:

Capital Contribution and Issuance of Membership Interests and Warrant.

1.1. Capital Contribution and Issuance of Membership Interests and Warrant. Subject to the terms and conditions of this Agreement, at the Closing the Purchaser shall make a capital contribution of the following property to the Company: intangible assets representing access to the Purchaser’s and its Affiliates’ (i) vast network of partners, customers, companies, governmental and industry leaders, and other valuable relationships, (ii) expertise, and (iii) certain equipment; and, in return, the Company shall issue and deliver to the Purchaser Seven and One-Half Percent (7.50%) of the Company’s equity membership interests (the “Membership Interests”) and a warrant, in substantially similar form as that attached hereto as Exhibit B (the “Warrant”).

1.2. Closing. The capital contribution and issuance of the Membership Interests and the Warrant shall take place remotely via the exchange of documents and signatures on the date of this Agreement or at such other time and place as the Company and the Purchaser mutually agree, orally or in writing (the “Closing”). Upon completion of the Closing, (i) the Purchaser will own 7.50% of the equity interests of the Company, (ii) American Resources Corporation, a Florida corporation (“ARC”), will own 92.50% of the equity interests of the Company, (iii) the Purchaser will be admitted as a “Member” of the Company, and (iv) ARC and the Purchaser will be the Members of the Company.

1.3. Defined Terms Used in this Agreement. In addition to the terms defined above, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below. Any capitalized term not defined herein shall have the meaning ascribed to it in the Operating Agreement.

(a) “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c) “Collaboration Agreement” means the Collaboration Agreement between the Company and the Purchaser, dated of even date herewith.

1

(d) “Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).

(e) “Company Intellectual Property” means all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, tradenames, copyrights, trade secrets, domain names, mask works, information and proprietary rights and processes, similar or other intellectual property rights, subject matter of any of the foregoing, tangible embodiments of any of the foregoing, licenses in, to and under any of the foregoing, and any and all such cases that are owned or used by the Company in the conduct of the Company’s business as now conducted and as presently proposed to be conducted.

(f) “Designee” means any individual appointed by the Purchaser to serve on the Board of Managers of the Company.

(g) “Indemnification Agreement” means the agreement between the Company and the Designee.

(h) “Key Person” means Mark Jensen, Thomas Sauve, and Kirk Taylor.

(i) “Knowledge” including the phrase “to the Company’s knowledge” shall mean the actual knowledge after reasonable investigation of any of the Key Persons.

(j) “Material Adverse Effect” means a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property, prospects, or results of operations of the Company.

(k) “Operating Agreement” means the Company’s Second Amended and Restated Operating Agreement, dated of even date herewith.

(l) “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

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

(n) “Transaction Agreements” means this Agreement, the Warrant, the Collaboration Agreement, and the Operating Agreement.

Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser that, except as set forth on the Disclosure Schedule attached as Exhibit A to this Agreement, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following representations are true and complete as of the date of the Closing, except as otherwise indicated. The Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Section 2, and the disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Section 2 only to the extent it is readily apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

2

For purposes of these representations and warranties (other than those in Subsections 2.2, 2.3, 2.4, 2.5, and 2.6), the term the “Company” shall include any subsidiaries of the Company, unless otherwise noted herein.

2.1. Organization, Existence, Power and Qualification. The Company is a limited liability company duly organized and validly existing under the laws of the State of Indiana and has all requisite limited liability company power and authority to carry on its business as presently conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.

2.2. Capitalization.

(a) As of immediately prior to the Closing, ARC is the sole Member of and owns 100% of the equity interests of the Company.

(b) Subsection 2.2(b) of the Disclosure Schedule sets forth the capitalization of the Company immediately following the Closing. Except for (A) the Warrant, and (B) the rights provided in the Operating Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any equity interests of the Company, or any securities convertible into or exchangeable for equity interests of the Company, or any phantom equity or deferred compensation arrangements.

(c) To the extent required, the Company has obtained valid waivers of any rights by other parties to issue the Membership Interests covered by this Agreement.

2.3. Subsidiaries. Other than set forth on Schedule 2.3 of Exhibit A, the Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement.

2.4. Authorization. All action required to be taken by the Company and its Member in order to authorize the Company to enter into the Transaction Agreements and to issue the Membership Interests and the Warrant at the Closing has been taken or will be taken prior to the Closing. All action on the part of the officers of the Company necessary for the execution and delivery of the Transaction Agreements, the performance of all obligations of the Company under the Transaction Agreements to be performed as of the Closing, and the issuance and delivery of the Membership Interests and the Warrant has been taken or will be taken prior to the Closing. The Transaction Agreements, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained in the Operating Agreement and the Indemnification Agreement may be limited by applicable federal or state securities laws.

3

2.5. Valid Issuance of Membership Interests.

(a) The Membership Interests, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable state and federal securities laws and liens or encumbrances created by or imposed by the Purchaser. Assuming the accuracy of the representations of the Purchaser in Section 3 of this Agreement, the Membership Interests will be issued in compliance with all applicable federal and state securities laws.

2.6. Governmental Consents and Filings. Assuming the accuracy of the representations made by the Purchaser in Section 3 of this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by this Agreement.

2.7. Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or, to the Company’s Knowledge, currently threatened in writing (a) against the Company or any officer, director or Key Person of the Company arising out of their relationship with the Company; (b) to the Company’s knowledge, that questions the validity of the Transaction Agreements or the right of the Company to enter into them, or to consummate the transactions contemplated by the Transaction Agreements; or (c) to the Company's knowledge, that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Neither the Company nor, to the Company’s knowledge, any of its officers or Key Persons is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers or Key Persons, such as would affect the Company). There is no action, suit, proceeding or investigation by the Company pending or which the Company intends to initiate. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to the Company) involving the prior employment of any of the Company’s employees, their services provided in connection with the Company’s business, any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.

2.8. Intellectual Property. The Company owns or possesses enforceable legal rights to all Company Intellectual Property without any known conflict with, or infringement of, the rights of others. To the Company’s Knowledge, no product or service marketed or sold (or proposed to be marketed or sold) by the Company violates or will violate any license or infringes or will infringe any intellectual property rights of any other party. Except as set forth on Subsection 2.8 of the Disclosure Schedule and other than with respect to commercially available software products under standard end-user object code license agreements, (a) there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to the Company Intellectual Property, and (b) the Company is not bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other Person. The Company has not received any communications alleging that the Company has violated, or by conducting its business, would violate any of the patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes of any other Person. The Company has obtained and possesses valid licenses to use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with the Company’s business. Section 2.8 of the Disclosure Schedule lists all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, tradenames, copyrights, and licenses to and under any of the foregoing, in each case owned by the Company. It will not be necessary to use any inventions of any of its employees or consultants (or Persons it currently intends to hire) made prior to their employment by the Company. Each employee and consultant has assigned to the Company all intellectual property rights he or she owns that are related to the Company’s business as now conducted and as presently proposed to be conducted. For purposes of this Subsection 2.8, the Company shall be deemed to have knowledge of a patent right if the Company has actual knowledge of the patent right or would be found to be on notice of such patent right as determined by reference to United States patent laws.

4

2.9. Compliance with Other Instruments. The Company is not in violation or default (a) of any provisions of its Articles of Organization or the Operating Agreement, (b) of any instrument, judgment, order, writ or decree, (c) under any note, indenture or mortgage, or (d) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound that is required to be listed on the Disclosure Schedule, or (e) to its knowledge, of any provision of federal or state statute, rule or regulation applicable to the Company, the violation of which would have a Material Adverse Effect. The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated by the Transaction Agreements will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either (i) a default under any such provision, instrument, judgment, order, writ, decree, contract or agreement; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.

2.10. Agreements; Actions.

(a) Except for the Transaction Agreements, and those licenses and agreements listed Schedule 2.8, there are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound made that involve (i) obligations (contingent or otherwise) of the Company in excess of $100,000, (ii) the license of any patent, copyright, trademark, trade secret or other proprietary right from the Company aside from such licenses made in the ordinary course of the Company’s business, (iii) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other Person that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products aside from such grants made in the ordinary course of the Company’s business, or (iv) indemnification by the Company with respect to infringements of proprietary rights aside from such indemnification made in the ordinary course of the Company’s business.

(b) The Company is not a guarantor or indemnitor of any indebtedness of any other Person.

5

2.11. Certain Transactions.

(a) Except as set forth in Subsection 2.11(a) of the Disclosure Schedule, other than (i) standard employee benefits generally made available to all employees, and (ii) standard director and officer indemnification agreements, (iii) equity awards granted under the Incentive Plan, there are no agreements, understandings or proposed transactions between the Company and any of its officers, consultants or Key Persons, or any Affiliate thereof.

(b) Except as set forth in Subsection 2.11(b) of the Disclosure Schedule, the Company is not indebted, directly or indirectly, to any of its officers or employees or to their respective spouses or children or to any Affiliate of any of the foregoing, other than in connection with expenses or advances of expenses incurred in the ordinary course of business or employee relocation expenses and for other customary employee benefits made generally available to all employees. None of the Company’s officers or employees, or any members of their immediate families, or any Affiliate of the foregoing are, directly or indirectly, indebted to the Company or, to the Company’s knowledge, except as set forth in Subsection 2.11(b) of the Disclosure Schedule, have any (i) material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with any of the Company’s customers, suppliers, service providers, joint venture partners, licensees and competitors, (ii) direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company except that managers, officers, employees or stockholders of the Company may own stock in (but not exceeding two percent (2%) of the outstanding equity securities of) publicly traded companies that may compete with the Company; or (iii) financial interest in any material contract with the Company.

2.12. Rights of Registration and Voting Rights. Except as provided in the Operating Agreement, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities.

2.13. Property. The Company owns or possesses enforceable contractual rights to use all property and assets used or useful to carry on its business as presently conducted and as proposed to be conducted, free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets. None of the property and assets used or useful by the Company to carry on its business as presently conducted and as proposed to be conducted is owned by an Affiliate of the Company. With respect to the property and assets it leases, the Company is in compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances other than those of the lessors of such property or assets. The Company does not own any real property other than the licenses listed in Schedule 2.8 and the property acquired by the Company for use in the Company’s operations.

6

2.14. Financial Statements. The Company has made available to the Purchaser or the Purchaser’s Designee its unaudited financial statements as of December 31, 2020 and its unaudited financial statements as of October 31, 2021 (collectively, the “Financial Statements”). The Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated, except that the Financial Statements do not contain footnotes required by GAAP. The Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein, subject in the case of the interim Financial Statements to normal year-end adjustments. Except as set forth in the Financial Statements, the Company has no material liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to October 31, 2021; (ii) obligations under contracts and commitments incurred in the ordinary course of business; and (iii) liabilities and obligations of a type or nature not required under GAAP to be reflected in the Financial Statements, which, in all such cases, individually and in the aggregate would not have a Material Adverse Effect. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP.

2.15. Changes. Since October 31, 2021, the Company has notified, and will notify, the Purchaser either directly or via disclosure to Purchaser’s Designee to the extent there has been:

(a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not caused, in the aggregate, a Material Adverse Effect;

(b) any damage, destruction or loss, whether or not covered by insurance, that would have a Material Adverse Effect;

(d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and the satisfaction or discharge of which would not have a Material Adverse Effect;

(e) any material change to a material contract or agreement by which the Company or any of its assets is bound or subject;

(f) any material change in any compensation arrangement or agreement with any employee or officer;

(g) any resignation or termination of employment of any officer or Key Person of the Company;

(h) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

7

(i) any loans or guarantees made by the Company to or for the benefit of its employees, officers or managers, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(j) any declaration, setting aside or payment or other distribution in respect of any of the Company’s equity securities, or any direct or indirect redemption, purchase, or other acquisition of any of equity securities by the Company;

(k) any sale, assignment or transfer of any Company Intellectual Property that could reasonably be expected to result in a Material Adverse Effect;

(l) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(m) to the Company’s knowledge, any other event or condition of any character, other than events affecting the economy or the Company's industry generally, that could reasonably be expected to result in a Material Adverse Effect; or

(n) any arrangement or commitment by the Company to do any of the things described in this Subsection 2.15.

2.16. Employee Matters.

(a) To the Company’s knowledge, none of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such employee’s ability to promote the interest of the Company or that would conflict with the Company’s business. Neither the execution or delivery of the Transaction Agreements, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as now conducted and as presently proposed to be conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee is now obligated.

(b) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it prior to the date hereof or amounts required to be reimbursed to such employees, consultants or independent contractors. The Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification and collective bargaining. The Company has withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing.

8

(c) To the Company’s knowledge, no Key Person intends to terminate employment with the Company or is otherwise likely to become unavailable to continue as a Key Person, nor does the Company have a present intention to terminate the employment of any of the foregoing. The employment of each employee of the Company is terminable at the will of the Company. Upon termination of the employment of any such employees, no severance or other payments will become due. The Company has no policy, practice, plan or program of paying severance pay or any form of severance compensation in connection with the termination of employment services.

(d) The Company has not made any representations regarding equity incentives to any officer, employee, or consultant.

(e) The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title I(B) of Employee Retirement Income Security Act of 1974, as amended, and has complied in all material respects with all applicable laws for any such employee benefit plan.

2.17. Tax Returns and Payments. There are no non-de minimis federal, state, county, local or foreign taxes due and payable by the Company which have not been timely paid. There are no accrued and unpaid federal, state, country, local or foreign taxes of the Company which are due, whether or not assessed or disputed. There have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency. The Company has duly and timely filed all federal income and all material state, county, local and foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year.

2.18. Insurance. The Company has in full force and effect fire and casualty insurance policies with extended coverage, sufficient in amount (subject to reasonable deductions) to allow it to replace any of its properties that might be damaged or destroyed.

2.19. Employee Agreements. Each current and former employee, consultant and officer of the Company has executed, or will execute immediately prior to Closing, an agreement with the Company regarding confidentiality and proprietary information substantially in the form or forms delivered to the counsel for the Purchasers (the “Confidential Information Agreements”). No current or former Key Person has excluded works or inventions from his or her assignment of inventions pursuant to such Key Person’s Confidential Information Agreement. Each current and former Key Person has executed a non-competition and non-solicitation agreement substantially in the form or forms delivered to counsel for the Purchaser. To the Company’s knowledge none of its employees or independent contractors is in violation of any agreement covered by this Subsection 2.19.

2.20. Permits. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

2.21. Disclosure. The Company has made available to the Purchaser all the information reasonably available to the Company that the Purchaser has requested for deciding whether to make the capital contribution. No representation or warranty of the Company contained in this Agreement, as qualified by the Disclosure Schedule, and no certificate furnished or to be furnished to the Purchaser at the Closing contains, to the Company’s knowledge, any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. It is understood that this representation is qualified by the fact that the Company has not delivered to the Purchaser, and has not been requested to deliver, a private placement or similar memorandum or any written disclosure of the types of information customarily furnished to purchasers of securities.

9

2.22. Foreign Corrupt Practices Act. Neither the Company nor any of the Company’s officers, employees or agents have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its affiliates in obtaining or retaining business for or with, or directing business to, any person. Neither the Company nor any of its officers, employees or agents have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation. Neither the Company, or, to the Company’s knowledge, any of its officers, directors or employees are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or any other anti-corruption law.

2.23. Data Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers, employees and/or other third parties (collectively “Personal Information”), the Company is and has been in compliance with all applicable laws in all relevant jurisdictions, the Company’s privacy policies and the requirements of any contract or codes of conduct to which the Company is a party. The Company has commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. The Company is and has been in compliance in all material respects with all laws relating to data loss, theft and breach of security notification obligations.

2.24. Environmental and Safety Laws. Except as could not reasonably be expected to have a Material Adverse Effect, (a) the Company is and has been in compliance with all Environmental Laws; (b) there has been no release or threatened release of any pollutant, contaminant or toxic or hazardous material, substance or waste or petroleum or any fraction thereof (each a “Hazardous Substance”), on, upon, into or from any site currently or heretofore owned, leased or otherwise used by the Company; (c) there have been no Hazardous Substances generated by the Company that have been disposed of or come to rest at any site that has been included in any published U.S. federal, state or local “superfund” site list or any other similar list of hazardous or toxic waste sites published by any governmental authority in the United States; and (d) there are no underground storage tanks located on, no polychlorinated biphenyls (“PCBs”) or PCB-containing equipment used or stored on, and no hazardous waste as defined by the Resource Conservation and Recovery Act, as amended, stored on, any site owned or operated by the Company, except for the storage of hazardous waste in compliance with Environmental Laws. The Company has made available to the Purchaser true and complete copies of all material environmental records, reports, notifications, certificates of need, permits, pending permit applications, correspondence, engineering studies and environmental studies or assessments.

10

For purposes of this Section 2.24, “Environmental Laws” means any law, regulation, or other applicable requirement relating to (a) releases or threatened release of Hazardous Substance; (b) pollution or protection of employee health or safety, public health or the environment; or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Substances.

Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company that:

3.1. Authorization. The Purchaser has full power and authority to enter into the Transaction Agreements. The Transaction Agreements to which the Purchaser is a party, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, or (b) to the extent the indemnification provisions contained in the Operating Agreement or Indemnification Agreement may be limited by applicable federal or state securities laws.

3.2. Purchase Entirely for Own Account. This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the Membership Interests to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Membership Interests. The Purchaser has not been formed for the specific purpose of acquiring the Membership Interests.

3.3. Disclosure of Information. The Purchaser has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the issuance of the Membership Interests with the Company’s. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Purchaser to rely thereon.

11

3.4. Restricted Securities. The Purchaser understands that the Membership Interests have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Membership Interests are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Membership Interests indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Membership Interests for resale except as set forth in the Operating Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Membership Interests, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

3.5. No Public Market. The Purchaser understands that no public market now exists for the Membership Interests, and that the Company has made no assurances that a public market will ever exist for the Membership Interests.

3.6. Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.7. No Reliance by Purchaser. The Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers, in making its investment decision.

Conditions to the Purchaser’s Obligations at Closing. The obligations of the Purchaser to make the capital contribution at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

4.1. Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct in all respects, in each case, except to the extent such representations and warranties refer to a specific date, as of such Closing.

4.2. Performance. The Company shall have performed and complied in all respects with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before such Closing.

4.3. Compliance Certificate. The Chief Executive Officer of the Company shall deliver to the Purchaser at such Closing a certificate certifying that the conditions specified in Subsections 4.1 and 4.2 have been fulfilled.

4.4. Proceedings and Documents. All limited liability company and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Purchaser, and the Purchaser (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested.

4.5. Operating Agreement. The Company, ARC and the Purchaser shall have mutually agreed upon the terms of the Operating Agreement.

4.6. Articles of Organization. The Company’s Articles of Organization shall have been amended to make the Company manager-managed.

12

Conditions of the Company’s Obligations at Closing. The obligations of the Company to issue the Membership Interests to the Purchaser at the Closing is subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

5.1. Representations and Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct in all respects as of such Closing.

5.2. Performance. The Purchasers shall have performed and complied with in all respects all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before such Closing.

Miscellaneous.

6.1. Survival of Warranties. The representations and warranties made by the Company shall survive the Closing and, in any event, shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Purchaser or the Company.

6.2. Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.3. Governing Law. This Agreement shall be governed by the internal law of the State of Indiana.

6.4. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

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

6.6. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Subsection 6.6. If notice is given to the Purchaser, a copy shall also be given to Taft, Stettinius & Hollister LLP, One Indiana Square, Suite 500, Indianapolis, IN 46204, Attention: Jeffrey J. Kirk, II.

13

6.7. No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. The Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold harmless the Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

6.8. Attorneys’ Fees. If any action at law or in equity (including, arbitration) is necessary to enforce or interpret the terms of any of the Transaction Agreements, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

6.9. Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the Purchaser. Any amendment or waiver effected in accordance with this Subsection 6.9 shall be binding upon the Purchaser and the Company.

6.10. Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

6.11. Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

6.12. Entire Agreement. This Agreement (including the Exhibits hereto) and the Transaction Agreements constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

14

6.13. Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Indiana and to the jurisdiction of the United States District Court for the Southern District of Indiana for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Indiana or the United States District Court for the Southern District of Indiana, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

[Signatures begin on following page]

15

IN WITNESS WHEREOF, the parties have executed this Membership Interest Purchase Agreement as of the date first written above.

The “COMPANY”
AMERICAN RARE EARTH LLC
By:
Address:	P.O. Box 606

SIGNATURE PAGE TO MEMBERSHIP INTEREST PURCHASE AGREEMENT

arec_ex13.htm EXHIBIT 1.3

THIS WARRANT AND ANY SECURITIES THAT MAY BE ISSUED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR SUCH SECURITIES MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE ISSUER SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE ISSUER (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER).

WARRANT TO PURCHASE MEMBERSHIP INTERESTS OFAMERICAN RARE EARTH LLC

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, HG VENTURES LLC, a Delaware limited liability company**,** or its assignee(as permitted under Article 4 below) (“Holder”), is hereby entitled to purchase from AMERICAN RARE EARTH LLC, an Indiana limited liability company (the “Company”), up to Fifty Million Dollars ($50,000,000) (the “Purchase Amount”) of the Company’s equity ownership interests (the “Membership Interests”) at a fully-diluted, pre-money valuation of Three Hundred Million Dollars ($300,000,000) (the “Valuation Cap”), which, assuming all $50,000,000 is purchased by Holder, would represent 14.29% of the fully-diluted, post-money equity ownership interests of the Company immediately after Holder’s exercise of this Warrant, all as set forth above and below andas adjusted pursuant to Article 2 hereof, subject to the provisions and upon the terms and conditions set forthherein.This Warrant is issued and effective as of January 10, 2022 (the “Warrant Date”).

ARTICLE 1 EXERCISE

1.1 Method of Exercise. With respect to any Membership Interest for which this Warrant is exercisable,Holder may exercise this Warrant (in whole or in part) by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Holder will also deliver to the Company a check for the aggregate dollar amount of Membership Interests being purchased.

1.2 Delivery of New Warrant. Promptly after Holder exercises this Warrant, the Company will deliver to Holder, if this Warrant has not been fully exercised and has not expired, a new warrant representing the remaining amount of Membership Interests not so acquired.

1.3 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

1

1.4 Exercise on Sale, Merger, or Consolidation of the Company.

1.4.1 “Change in Control.” For the purpose of this Warrant, “Change in Control” means the occurrence of any of the following prior to the expiration of this Warrant: (i) the sale, conveyance or disposal of all or substantially all of the Company’s property or business, (ii) the Company’s merger with or into or consolidation with any other business entity (other than a wholly-owned subsidiary of the Company), or (iii) any other transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of, provided that this definition shall not apply to a merger effected exclusively for the purpose of changing the domicile of the Company.

1.4.2 Exercise in Connection with Change in Control. The Company will give Holder notice of the closing of an expected or contemplated Change in Control in accordance with Section 3.2 hereof. This Warrant must be exercised prior to or contemporaneously with the closing of such Change in Control, and if and to the extent not so exercised, then upon consummation of the Change in Control, this Warrant and all rights and obligations hereunder will terminate and be of no further force and effect; provided, however, that Holder may elect to make the exercise of this Warrant contingent on the closing of the Change in Control.

1.5 Forced Call Right. If (i) the Company’s Fair Market Value is at least $600,000,000, (ii) the Company is separately listed on a national securities exchange; and (iii) the Company’s equity ownership interests to be issued to Holder upon exercise of this Warrant are registered and freely traded on such national securities exchange, then the Company may force Holder to exercise this Warrant (the “Forced Call Right”) by providing Holder of notice of mandatory exercise in substantially the form attached as Appendix 2 (the “Mandatory Exercise Notice”). Upon receipt of a Mandatory Exercise Notice, Holder hereby agrees to exercise this Warrant in full.

1.7 Term of Warrant. Subject to Section 1.4.2 hereof, this Warrant shall expire on the date that is the five (5) year anniversary of the Warrant Date (the “Termination Date”).

ARTICLE 2 ADJUSTMENTS TO THE MEMBERSHIP INTERESTS

2.1 Dividends, Splits, Etc. If at any time or from time to time the holders of the Company’s equity ownership interests shall have received other or additional membership interests or stock or other securities or property (other than cash) by way of dividend or distribution, then upon exercise of any portion of this Warrant, for each Membership Interest acquired, Holder will receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Membership Interests of record as of the date the dividend or subdivision occurred.

2

2.2 Reclassification, Exchange, Conversion or Substitution. Upon any reclassification, exchange, substitution, conversion or other event that results in a change of the number and/or class of the securities issuable upon exercise of this Warrant, Holder will be entitled to receive, upon exercise of any portion of this Warrant, the number and kind of securities and property that Holder would have received for the Membership Interests if the portion of this Warrant had been exercised immediately before such reclassification, exchange, substitution, conversion or other event. Upon the occurrence of any of such events, the Company or its successor will promptly issue to Holder a new warrant for such new securities or other property. The new warrant will be appropriately adjusted so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Warrant, including, without limitation, adjustments to the number of securities or property issuable upon exercise of the new warrant. The provisions of this Section 2.2 will similarly apply to successive reclassifications, exchanges, substitutions, conversions, or other events.

2.3 Certificate as to Adjustments. Upon each adjustment, the Company at its expense will promptly compute such adjustment, and furnish Holder with a certificate of its Board of Managers, **** setting forth such adjustment and the facts upon which such adjustment is based.

2.4 Fractional Membership Interests. Fractional Membership Interests may be issued upon exercise of the Warrant, limited to a fraction of one one-hundredth of one percent.

ARTICLE 3 COVENANTS OF THE COMPANY

3.1 Notice of Certain Events. The Company will provide Holder with not less than 20 days prior written notice, including a description of the material facts surrounding, any of the following events: (a) declaration of any dividend or distribution upon its holders of equity ownership interests, whether in cash, property, equity, or other securities and whether or not a regular cash dividend/distribution; (b) effecting any reclassification or recapitalization of any equity ownership interests of the Company; (c) effecting a conversion of the Company from a limited liability company to a corporation; or (d) any Change in Control.

3.2 Information Rights. If requested by Holder, so long as the Holder holds this Warrant, the Company will deliver to the Holder promptly after mailing, copies of all material communications to the members of the Company.

ARTICLE 4 REPRESENTATIONS AND COVENANTS OF THE HOLDER

The Company has entered into this Warrant in reliance upon the following representations and covenants of Holder:

4.1 Investment Purpose. This Warrant and the Membership Interests issuable upon exercise of this Warrant will be acquired by Holder for investment and not with a view to the sale or distribution of any part thereof, and Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption pursuant to the Securities Act. Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect.

3

4.2 Private Issue. Holder understands that: (i) this Warrant and the Membership Interests issuable upon exercise of this Warrant are not registered under the Securities Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof pursuant to Section 4(2) of the Securities Act and any applicable state securities laws; and (ii) the Company’s reliance on such exemption is predicated on the representations set forth in this Article 4.

4.3 Disposition of Holders Rights. In no event will Holder make a transfer or disposition of this Warrant or the Membership Interests issuable upon exercise of the Warrant unless and until: (i) the Holder shall have received written approval from the Company of the proposed disposition; and (ii) if requested by the Company, the Holder shall have furnished the Company with an opinion of independent counsel satisfactory to the Company and its counsel in their absolute discretion to the effect that: (A) appropriate action necessary for compliance with the Securities Act has been taken, or (B) an exemption from the registration requirements of the Securities Act is available. Notwithstanding the foregoing, such restrictions imposed upon the transferability of this Warrant or the Membership Interests issuable upon exercise of the Warrant shall terminate as to any particular Membership Interests when: (1) such security shall have been effectively registered under the Securities Act and sold by the holder thereof in accordance with such registration; or (2) such security shall have been sold without registration in compliance with Rule 144 under the Securities Act; or (3) a letter shall have been issued to Holder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to Holder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the Securities Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. ****

4.4 Financial Risk. Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment, which may include the loss of Holder’s entire investment.

4.5 Risk of No Registration. The Holder understands that it may be required to hold this Warrant and any Membership Interests issuable upon exercise of this Warrant for an indefinite period of time. Holder also understands that any sale of this Warrant or the Membership Interests issuable upon exercise of the Warrant that might be made by it in reliance upon Rule 144 under the Securities Act may be made only in accordance with the terms and conditions of that Rule.

4

ARTICLE 5 MISCELLANEOUS

5.1 Term: Exercise Upon Expiration. Any portion of this Warrant is exercisable in whole or in part, at any time, and from time to time, on or before the Expiration Date set forth above.

5.2 Notices. All notices and other communications from the Company to the Holder, or vice versa, will be deemed given when delivered by: (a) hand delivery; (b) U.S. Mail (certified or registered); (c) Federal Express, UPS, Overnight, Airborne, or other nationally recognized delivery service; or (d) e-mail, or other means of electronic transmission at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. All notices to the Holder will be addressed to address, e-mail address as set forth on the books and records of the Company. A notice delivered by regular or certified U.S. Mail will be deemed to have been delivered or given on the third business day after the post-mark, if affixed by the U.S. Postal Service. Any other notice will be deemed to have been delivered or given on the date and time of the signed receipt or confirmation of delivery or transmission thereof, unless that receipt or confirmation date and time is not a business day or is after 5:00 p.m. local time on a business day, in which case such notice will be deemed to have been delivered or given on the next succeeding business day.****

5.3 Amendments. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.4 Governing Law. This Warrant will be governed by and construed in accordance with the laws of the State of Indiana, without giving effect to its principles regarding conflicts of law.

[Signature Page Follows]

5

IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Membership Interests as of the date set forth above.

	The “COMPANY”
	AMERICAN RARE EARTH LLC
	By: ________________________________
Accepted and agreed to:
HG VENTURES LLC
By: ________________________________

[Signature Page to Warrant to Purchase Membership

arec_ex991.htm EXHIBIT 99.1

American Resources Corporation’s Rare Earth Division Receives Investment and Enters into Long-Term, Strategic Partnership with The Heritage Group

The Heritage Group brings ~100 years of experience and innovation in transportation and infrastructure materials, environmental services and specialty chemicals to American Rare Earth

Partnership with The Heritage Group supports the development of American Rare Earth’s circular economy supply chain partnerships and customer base

Synergies expedite the path to being the first and lowest cost producer of domestically-sourced, purified and sustainable battery and magnet metals

Heritage’s investment will equal 7.5% of American Rare Earth LLC and have a right to invest $50 million at a $300 million pre-money valuation

January 11, 2022| Source: American Resources Corporation

**FISHERS, INDIANA / ACCESSWIRE / January 11, 2022 /**American Resources Corporation (NASDAQ:AREC) (“American Resources” or the “Company”), a next generation and socially responsible supplier of raw materials to the new infrastructure and electrification marketplace, today announced its strategic partnership between its wholly owned subsidiary, American Rare Earth LLC (“American Rare Earth”), and the venture capital investment arm of The Heritage Group, HG Ventures LLC (“Heritage”); a multi-generational business with a diverse range of operating companies focused on innovation in material science, chemistry and environmental services which includes a major stake in the largest and most comprehensive battery recycling platform in North America. American Rare Earth and Heritage will be expediting the path of being the United States’ first and lowest cost producer of domestically-sourced, purified and sustainable battery and magnet metals.

Mark Jensen, CEO of American Resources Corporation commented, “As we continue to execute on our vision of redefining how critical and rare earth elements are sourced, processed and purified by focusing on a sustainable and circular supply chain, we have been very selective with our prospective partners to this point. We are thrilled to be moving forward and partnering with Heritage given their unique position, expertise, network and a shared vision on how we can collaboratively bring impactful solutions to the domestic supply of battery and magnet metals. Furthermore, we both agree that creating a closed-loop and circular supply of these increasingly important materials in a cost effective and environmentally safe way will enable the United States to compete on a global basis. As we are hitting key metrics to bring our technologies into a commercial production in 2022, bringing in a partner that can help expedite the commercial success is a game changer for the scalable growth of our rare earth and battery metals division. This partnership will allow us to further incorporate value-added partners throughout the supply chain more expeditiously and ensures a successful pathway for our shared vision.”

1

Indiana-based The Heritage Group brings almost a century of knowledge, experience, innovation and relationships throughout various industries including transportation infrastructure and materials, environmental services, specialty chemical and fuel products to American Rare Earth. Today, Heritage consists of over thirty operating companies with approximately 170 worldwide locations and over 5,000 employees. With its vast reach, Heritage has a proven track record of delivering new solutions and advancing socio-economic progress through science, world-class R&D, business, venture capital and strategic acquisitions.

“We look forward to partnering with American Rare Earth to expand production of rare earth elements and critical metals by recycling electric motors, batteries and other e-waste, which will help address U.S. supply chain and sustainability challenges,” added Jonathan Schalliol Director at HG Ventures. “As demand for batteries and smart electronics soars, this partnership aims to help drive growth in the U.S. raw materials market to expand our country’s domestic manufacturing capabilities. The U.S. has the opportunity to lead in closed-loop and circular material supply, and it starts with this type of cross-sector collaboration.”

This partnership leverages American Rare Earth’s proprietary and industry-leading technologies in critical and rare earth metal processing and purification with Heritage’s longstanding success in material science, assets and extensive relationships. American Rare Earth’s unique ability to capture, process and purify critical and rare earth elements have come from the partnerships of three leading universities creating a platform of innovation.

With American Rare Earths’ first purification facility expected to be operational in the first half of 2022, this partnership further strengthens American Rare Earth’s foothold into various feedstock relationships for battery and magnet material including from spent electric vehicle, windmill motors and e-waste for which there is currently no comprehensive, sustainable, end-of-life solution. Additionally, the partnership opens up relationships with public and private customers demanding these purified metals to drive the growth and success of the electrification and clean tech markets while advancing national security interests.

Through its due diligence and verification of American Rare Earth’s chromatography process and technology for the final stage of isolation and purification of critical battery and magnet metals, Heritage and American Rare Earth have entered into a collaboration agreement (the “Collaboration Agreement”) to include but not limited to:

1.	collaboration on opportunities to accelerate the growth and commercialization of American Rare Earth’s feedstock supply and to provide Heritage with additional products and services to market;
2.	enhance the sourcing of feedstocks, such as of end-of-life permanent magnets and batteries or battery materials, for American Rare Earth’s processing and purification business;
3.	further the buildout of American Rare Earth’s downstream sales partners for the sale of critical and rare earth metals to government and industry partners for the production of new products and applications;
4.	leverage Heritage and its Affiliates’ personnel, expertise, and equipment (such as R&D and laboratory equipment) to possibly assist American Rare Earth in the further development, refinement and execution of its business; and
5.	provide Heritage and its Affiliates the ability to market the technologies, patents, capabilities and access of American Rare Earth’s technologies and patents to Heritage’s and its Affiliate’s customers, relationships, and affiliates.

2

Pursuant to the Membership Purchase Interest Agreement, Heritage will receive a 7.5% ownership stake of American Rare Earth with American Resources retaining ownership of 92.5% of the equity interest. Additionally, Heritage has been granted an option to purchase up to $50 million of American Rare Earth’s equity interest at a $300 million, pre-money valuation.

American Resources continues to focus on running efficient streamlined operations in being a new-aged supplier of raw materials to the infrastructure and electrification marketplace in the most sustainable of ways, while also helping the world achieve its goals of carbon neutrality. By operating with low or no legacy costs and having one of the largest and most innovative growth pipelines in the industry, American Resources Corporation works to maximize value for its investors by positioning its large asset base to best fit a new-aged economy, while being able to scale its operations to meet the growth of the markets it serves.

About American Resources Corporation

American Resources Corporation is a next-generation, environmentally and socially responsible supplier of high-quality raw materials to the new infrastructure market. The Company is focused on the extraction and processing of metallurgical carbon, an essential ingredient used in steelmaking, critical and rare earth minerals for the electrification market, and reprocessed metal to be recycled. American Resources has a growing portfolio of operations located in the Central Appalachian basin of eastern Kentucky and southern West Virginia where premium quality metallurgical carbon and rare earth mineral deposits are concentrated.

American Resources has established a nimble, low-cost business model centered on growth, which provides a significant opportunity to scale its portfolio of assets to meet the growing global infrastructure and electrification markets while also continuing to acquire operations and significantly reduce their legacy industry risks. Its streamlined and efficient operations are able to maximize margins while reducing costs. For more information visit americanresourcescorp.com or connect with the Company on Facebook, Twitter, and LinkedIn.

About American Rare Earth LLC

American Rare Earth is redefining how critical and rare earth elements are both sourced and processed while focusing on the recycling of end-of-life products such as rare earth permanent magnets and lithium-ion batteries, as well as coal-based waste streams and byproducts to create a low-cost and environmentally-safe, circular supply chain. American Rare Earth has developed its innovative and scalable “Capture-Process-Purify” process chain in conjunction with its licensed intellectual property including 16 patents and technologies and sponsored research partnerships with three leading universities to support the domestic supply chain’s growing demand for magnet and battery metals. For more information visit arareearthcorp.com or connect with the Company on Facebook, Twitter, and LinkedIn.

3

About The Heritage Group

Founded in 1930, The Heritage Group (THG) is a fourth-generation, family-owned business managing a diverse portfolio of companies specializing in heavy construction and materials, environmental services, and specialty chemicals. Companies within the THG portfolio include Heritage Environmental Services, Heritage Construction + Materials, and Monument Chemical. With more than 5,000 employees and 30 operating companies worldwide, THG aims to build a safer, more enriching and sustainable world by harnessing the power of family.

About HG Ventures

HG Ventures is the corporate venture arm of The Heritage Group, headquartered in Indianapolis, Ind. HG Ventures supports innovation and growth across The Heritage Group by investing and partnering with innovative, high-growth companies to support a sustainable future. We leverage the world-class expertise of The Heritage Group operating companies and research center to offer a unique value proposition to our portfolio company partners. www.hgventures.com

Special Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause the Company’s actual results, performance, or achievements or industry results to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond American Resources Corporation’s control. The words “believes”, “may”, “will”, “should”, “would”, “could”, “continue”, “seeks”, “anticipates”, “plans”, “expects”, “intends”, “estimates”, or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Any forward-looking statements included in this press release are made only as of the date of this release. The Company does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. The Company cannot assure you that the projected results or events will be achieved.

PR Contact

Precision Public Relations

Matt Sheldon

917-280-7329

matt@precisionpr.co

Investor Contact:

JTC Team, LLC

Jenene Thomas

833-475-8247

arec@jtcir.com

RedChip Companies Inc.

Todd McKnight

1-800-RED-CHIP (733-2447)

Info@redchip.com

Company Contact:

Mark LaVerghetta

Vice President of Corporate Finance and Communications

317-855-9926 ext. 0

investor@americanresourcescorp.com

4