EXHIBIT 10.4
EQUIPMENT PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 22nd day of August, 1997, by and
between XXXXXXX INTERNATIONAL, INC., an Idaho corporation, ("FII") and ATLAS
MINING COMPANY, an Idaho corporation ("Buyer");
WHEREAS, FII owns equipment used in providing underground mining and
related civil construction contract services in the state of Idaho and
throughout the western United States; and
WHEREAS, Seller desires to sell and Buyer desires to purchase from Seller
all of the mining equipment, drills, loaders, trucks, tools, vehicles and
supplies upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for the other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties do hereby mutually
agree as follows:
Agreement to Sell and to Buy. Seller, for itself and its respective
successors, legal representatives and assigns, hereby agrees to sell to
Buyer and Buyer, for itself and its successors, legal representatives and
assigns, hereby agrees to purchase from Seller, for the consideration set
forth in Section 2 hereof, all of Seller's rights, title and interests in
and to the property listed in Exhibit B, attached hereto. Seller warrants
that the specified assets are free from all liabilities and encumbrances,
except for the secured interests of Washington Trust Bank and Orix Credit
Alliance as described in Exhibit A, attached hereto. Buyer is not assuming
any underlying debts in a timely and orderly manner.
Purchase Price and Method of Payment. Subject to the adjustments
Hereinafter specified, the total purchase price is One Million Four Hundred
Sixteen Thousand Ninety-Four Dollars ($1,416,094.00) and is payable by the
Buyer as follows:
Twenty-five Thousand Dollars ($25,000) upon signing of this agreement,
the receipt of which is hereby acknowleged as xxxxxxx money in partial
payment of the purchase price for said assets; and
The additional sum of Twenty-five Thousand Dollars ($25,000), plus
Three Hundred Fifty Thousand Dollars ($350,000) of Atlas Mining Company
Stock issued at the bid price as of the date of this agreement to FII, on
or before the closing date of this agreement; and
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The balance of the purchase price shall be evidenced by a promissory
Note payable to Seller which provides for payment principal in the amount
of One Million Sixteen Thousand Ninety-Four Dollars ($1,016,094) payable
according to the following schedule.
During the first 12 months of the term of the note, payments will be
$15,000, payable monthly beginning thirty days after Closing Date. Interest
will accrue at the rate of eight and three quarters percent (8.75%) per
annum.
Should Buyer sell or refinance equipment on Exhibit A (now financed by
Washington Trust or Orix Credit), then Buyer will pay the additional
principal payment of the sale or refinance proceeds directly to the
Creditor herein and Seller will reduce balance of the promissory note in
the amount equal to that paid by the Buyer directly to the creditor.
At the end of One Year after Closing Date the Buyer shall: Pay the
outstanding principal and accrued interest in one lump payment; or Refinance the
outstanding balance of principal and accrued interest with another lender; or If
after pursuing both SBA and commercial financing for the purpose of refinancing
the outstanding balance of principal and accrued interest the Buyer is unable to
obtain financing the Buyer shall have the option of refinancing with the Seller
the outstanding balance for additional periods of 30 month or 42 month periods,
and for periods of one year thereafter. The terms of the notes shall be of a
maximum 7 year amortization and annual percentage rate no more than the
Washington Trust Bank prime rate + .75%.
The Buyer has the right to prepay the note without penalty.
The Buyer agrees that all of the equipment listed on Exhibit B shall
be subject to uniform commercial code security interests and/or motor
vehicle title liens in favor of the Seller to secure payment of the amount
due under the promissory note. All security interests shall be released by
the Seller when the note is satisfied.
Buyer agrees the duty of Seller to consummate this sale is expressly
contingent upon the approval of the terms hereof by Washington Trust Bank
and Orix Credit Alliance on or prior to the Closing Date.
Liabilities Not Assumed. This agreement is intended by the parties to be
for the sale of equipment only. It is expressly understood and agreed that Buyer
shall not assume any liability or obligations of any nature, financial or
otherwise, pertaining to the conduct of the business by Seller prior to the date
of closing or the ownership by Seller of the assets sold to Buyer hereunder.
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Closing. It is hereby agreed that this matter shall be closed at the office
of HULL, XXXXXXXXXXX & SIMPSON, Wallace, Idaho. All funds and instruments
necessary to complete the sale and create the contemplated security interests
will be deposited with them. The Closing Date shall be ______________, 1997,
unless an earlier date is mutually agreed upon.
Documents to be Delivered by Seller at Closing. At Closing, Seller Shall
deliver to Buyer, in form and substance satisfactory to Buyer in each case:
Certified copies of resolutions duly adopted by the Board of Directors
and ratification of shareholders of FII approving the transactions referred
to herein and authorizing and directing the execution of this Agreement and
the performance of all obligations hereunder;
Fully executed Bills of Sale and Assignment with full warranties of
title (except as otherwise shown on Exhibit A hereto) transferring to Buyer
all of Seller's interests of every kind and nature in and to all equipment
and supplies as listed in Exhibit B;
All other documents or instruments which Buyer may reasonably require
to assure full and effective transfer to Buyer of all of Seller's property
transferred to Buyer pursuant to the terms of this agreement.
Seller agrees to give the Board of Directors of Atlas Mining Company
voting rights to the stock issued by Atlas as partial payment herein, said
proxy to be nonrevocable for the term of this agreement or extensions
thereof.
Documents to be Delivered by Buyer at Closing. At Closing, Buyer shall
deliver to Seller, in form and substance satisfactory to Seller in each case;
Payment in full of that portion of the consideration payable on the
Date of Closing as specified in Section 2;
Duly executed promissory note purchase money security agreement and
uniform commercial code filing instrument covering assets purchased in the
amount and payable in the manner specified in Section 2;
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Certified copies of resolutions duly adopted by Buyer's Board of
Directors approving the transactions referred to herein and authorizing and
directing the execution of this Agreement and the performance of all
obligations hereunder;
Such other documents as may be reasonably requested by Seller in order
to complete the transaction contemplated hereby.
Possession. Seller shall deliver to Buyer, and Buyer shall take delivery
of, property to Seller being purchased and sold hereunder on the Date of
Closing.
Seller's Covenant, Representations, and Warranties. As an inducement to
Buyer to enter into this Agreement, Seller for itself and its respective
representatives, successors and assigns, jointly and severally covenant,
represent and warrant to Buyer as follows:
The Seller is now, and on the Date of Closing will be, a corporation
duly organized and in good standing under the laws of the State of Idaho,
with the power to own, sell and transfer its assets, inventory and
properties pursuant to this Agreement;
The execution, delivery and performance by the Seller of this
Agreement, and each other instrument or agreement contemplated by this
agreement, are within the corporate powers of the Seller, have been duly
authorized by all necessary corporate action on the part of the Seller
(including shareholder approval of transactions or documents contemplated
by this Agreement with respect to which shareholder approval is required by
law or each of the Seller's governing instruments), and will not violate or
constitute a default under any provision of law or of the Articles of
Incorporation, By-Laws, or other contractual obligation of the Seller. This
Agreement, together with all other instruments or agreements contemplated
hereunder, when duly executed and delivered, will be the legal, valid and
binding obligation of the Seller and its heirs or assigns, and is
enforceable against the Seller in accordance with their respective terms;
Except as specified in Exhibit A, Seller has good and marketable title
to their respective assets sold hereunder. On the Date of Closing all
tangible personal property purchased hereunder shall be in as good order
and condition as on the date of this Agreement, ordinary wear and tear
excepted;
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The Seller is not a party to or by any agreement or instrument or
subject to any charter or corporate resolution or any order, injunction or
decree of any court or governmental agency affecting the properties being
purchased by Buyer hereunder;
Except to the extent otherwise specifically agreed upon under the
terms of this Agreement, the risk of loss of the properties purchased by
the Buyer Hereunder shall remain with Seller until the Closing, at which
time such risk shall become that of the Buyer.
Buyer's Covenants, Representations and Warranties. As an inducement to
Seller to enter into this Agreement, Buyer covenants, represents and warrants to
Seller that:
Buyer is now, and on the Date of Closing will be, a corporation duly
organized, Validly existing and in good standing under the laws of the
State of Idaho, with power to own, purchase and acquire Seller's assets
pursuant to this Agreement; The execution, delivery and performance by
Buyer of this Agreement, and each other instrument or agreement
contemplated by the Agreement, are within the corporate powers of Buyer,
have been duly authorized by all necessary corporate action on the part of
Buyer and will not violate or constitute default under any provision of the
Articles of Incorporation, Bylaws or any other contractual obligation of
Buyer. This Agreement, together with all other instruments or agreements
contemplated hereunder, when duly executed and delivered, will be the
legal, valid and binding obligation of Buyer, and will be enforceable
against Buyer in accordance with their respective terms.
From and after the time of closing Buyer agrees to continually insure
the equipment subject to this agreement in the amount equal to the amount
owed FII from time to time. Buyer further agrees to name FII as an
additional Insured on such theft and casualty policy and with
indemnification paying all proceeds of claims directly to FII or its
assigns.
10. Conditions to Obligation of Buyer. The obligations of Buyer under this
Agreement are expressly conditioned upon satisfaction of the following
conditions as of the Date of Closing:
All the terms, covenants and conditions of this Agreement to be compiled with
and performed by the Seller on or before the Date of Closing shall have been
fully complied with and performed in all material respects;
Seller shall have afforded to the officers and authorized representatives of
Buyer free and full access to the equipment and supplies of Seller prior to the
Date of Closing in order that Buyer shall have full opportunity to make such
inspections of the assets being purchased hereunder and such other
investigations as it shall desire, including the right of Buyer to have an
independent outside appraisal of the assets in Exhibit B, and Seller shall have
furnished Buyer with such additional financial and operating data and other
information as to the maintenance operation of Seller's assets which Buyer shall
from time to time have reasonably requested prior to the Date of Closing.
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11. Brokerage. Seller and Buyer warrant and represent to each other that
there is no brokerage or finder's fee payable to any party in
connection with the sale o the assets, inventory, and properties
provided for in this Agreement.
12. Assignment. Prior to the Date of Closing, Buyer may at its option
assign its interests under this Agreement to a third party without the
prior consent of Seller. Seller may at its option assign its interests
under this agreement to a third party without the prior written
consent of Buyer.
13. Miscellaneous.
All covenants, agreements, representations and warranties contained
herein Shall survive the execution of this Agreement and the Date of
Closing hereunder;
The parties shall execute and deliver such other and further documents
as may be necessary to implement and consummate this Agreement;
This Agreement shall be binding upon and inure to the benefit and be
enforceable against the parties hereto and their respective successors and
assigns, and shall in all respects be governed, enforced and interpreted in
accordance with the laws of the State of Idaho;
Attorney for the Seller is Xxx Xxxxxxx, Xxxx Xxxxxxxxxxx & Xxxxxxx,
000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000. Each party acknowledges the right
of the other to have any and all documents reviewed by their respective
representative.
All notices, demands and requests required or permitted to be given
hereunder shall be deemed duly given if and when mailed by certified or
registered mail, postage prepaid, and, pending the designation in writing
of another address, addressed to Seller as follows:
Xxxxxxx International, Inc.
0000 X. Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
and addressed as follows:
Atlas Mining Company
X.X. Xxx 000
Xxxxxx, XX 00000
(f) This Agreement and the Exhibits attached hereto contain the
entire agreement between the parties, superseding in all respects
any and all prior oral or written agreements or understandings,
between the parties hereto pertaining to the sale of Seller's
equipment purchased and sold hereunder, and shall be amended or
modified only by written instrument signed by both parties
hereto. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all
of which, taken together, shall constitute one agreement.
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IN WITNESS WHEREOF, each of the parties hereto executed this Agreement on
the day and year first above written.
SELLER: Xxxxxxx International, Inc.
By: _________________________
Its: ________________________
Date: _______________________
BUYER: Atlas Mining Company
By: _________________________
Its: ________________________
Date: _______________________
EXHIBIT "A"
EQUIPMENT: All equipment of Debtor now owned or hereafter acquired including,
but not limited to mining equipment and machinery, together with all parts,
fittings, and accessions at anytime acquired, wherever located.
INVENTORY: All inventory of debtor now owned or hereafter acquired, including,
but not limited to, raw materials, work in process, finished goods and materials
and supplies used or consumed in debtor's business including, but not limited to
drill bits, drill shafts and other consumable mining inventory whether in the
possession of the debtor, warehouseman, bailee, or any other person or wherever
located, and all proceeds and products of debtor's inventory in any form.
CASH AND DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll and tax reserve accounts.
DATED this 11th day of October, 1989.
Xxxxxxx International, Inc.
By:________________________________
President
By:________________________________
Treasurer
Washington Trust Bank
By:_________________________________
Vice President
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XXXXXXX INTERNATIONAL, INC.
XXXXXXX MINE SERVICES, INC.
Exhibit A
ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.
CASH AND DEPOSIT ACCOUNTS: All cash deposit accounts in any form excluding
payroll and tax reserve accounts.
GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.
XXXXXXX INTERNATIONAL, INC.
By:_______________________________
By:_______________________________
XXXXXXX MINE SERVICES, INC.
By:_______________________________
By:_______________________________
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EXHIBIT "A"
EQUIPMENT: All equipment of Debtor now owned or hereafter acquired including,
but not limited to mining equipment and machinery, together with all parts,
fittings, and accessions at anytime acquired, wherever located.
INVENTORY: All inventory of debtor now owned or hereafter acquired, including,
but not limited to, raw materials, work in process, finished goods and materials
and supplies used or consumed in debtor's business including, but not limited to
drill bits, drill shafts and other consumable mining inventory whether in the
possession of the debtor, warehouseman, bailee, or any other person or wherever
located, and all proceeds and products of debtor's inventory in any form.
CASH AND DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll and tax reserve accounts.
DATED this 11th day of October, 1989.
Xxxxxxx International, Inc.
By:________________________________
President
By:________________________________
Treasurer
Washington Trust Bank
By:_________________________________
Vice President
XXXXXXX INTERNATIONAL, INC.
XXXXXXX MINE SERVICES, INC.
Exhibit A
ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.
CASH AND DEPOSIT ACCOUNTS: All cash deposit accounts in any form excluding
payroll and tax reserve accounts.
GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.
XXXXXXX INTERNATIONAL, INC.
By:_______________________________
By:_______________________________
XXXXXXX MINE SERVICES, INC.
By:_______________________________
By:_______________________________
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ADDENDUM TO PURCHASE AGREEMENT
DATED AUGUST 22, 1997
This is to modify the maturity date of the Equipment Purchase Agreement of
August 22, 1998, between Xxxxxxx International, Inc. and Atlas Mining Company.
It is mutually agreed that the date of maturity of this agreement be extended to
August 22, 2002. It is mutually agreed that the maturity of the Promissory Note
dated September 30, 1997, negotiated in conjunction with the Equipment Purchase
Agreement also be extended to August 22, 2002.
Signed this ___ day of December, 1998.
---------------------------------
For Xxxxxxx International, Inc.
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