EXHIBIT 10.7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") dated as of July 14, 2004, by Gold
and Minerals Co. Inc. a Nevada corporation, or it's assigns ("Seller") Xx. Xxxxx
Xxxxxxxx (President) and EL Capitan Precious Metals, Inc., a Nevada corporation
("Buyer") Xx. Xxxxxxx X. Xxxxxxx (CEO), is made with reference to the following
facts.
A. Seller owns certain assets, including mining claims granted by the United
States Bureau of Land Management (the claims) including rights under
certain contracts, known as the Xxxxxx Mine which is more fully set forth
in Exhibit A attached hereto (the Quit Claim deed).
B. Buyer is desirous of acquiring the Purchased Assets and of assuming all of
Sellers right, title and interest in and to the Xxxxxx Creek mining
claims.
NOW, THEREFORE, in consideration of the mutual agreements, warranties and
representations contained in this agreement, the parties hereby agree as
follows.
1. "Purchase Assets." Seller agrees to sell and transfer, and Buyer agrees to
purchase the Purchased Assets free and clear of all liens, claims and
encumbrances by delivery of a "Quit-Claim" deed substantially in the form of
Exhibit A attached.
2. "Assignment of Rights." Seller will assign and Buyer will accept and assume
all of Seller's rights, title and interest in and to the Xxxxxx Creek mining
claims.
3.1 "Purchase Price." The purchase price for the Purchased Assets shall be the
issuance to Seller of One Million (1,000,000) shares of the common stock of EL
Capitan Precious Metals, Inc. common stock effective immediately.
3.2 BUYER SHALL NOT ASSUME OR BE RESPONSIBLE FOR ANY LIABILITIES OR OBLIGATIONS
OF SELLER INCLUDING WITHOUT LIMITATION, ANY LIABILITIES WHICH SELLER HAS
OBLIGATED TO SATISFY PRIOR TO CLOSING DATE, OR FOR ANY FEDERAL, STATE OR LOCAL
TAX LIABILITY OF THE SELLER.
4. Closing. The consummation of the transactions contemplated by the Agreement
(the "Closing") will take place at the offices of Gold & Minerals Inc. July 14,
2004 or at such other date and time as Buyer and Seller agree (the "Closing
Date"). At the closing, Seller shall deliver to Buyer the Quit-claim Deed, and
such Bills of Sale, Assignments and Instruments of Transfer and Conveyance as
shall be reasonably be required by Buyer for the transfer to Buyer of all right,
title and interest of Seller in, to and under the Purchased Assets and the
Mining Business. Each party shall also deliver to each other such Officer
Certificates and other instruments as the other party shall reasonably request.
Upon delivery of all of the foregoing, the Deposit shall be applied to, and
Buyer shall make delivery of the Shares as provided in foregoing Section 3:1 and
the transaction shall be closed.
5. Other Agreements of the Seller.
(a) Investigation. Seller shall allow Buyer and its representatives and
persons or entitles which may provide financing for Buyer in connection
with the transactions contemplated hereby, at all reasonable times, full
access during normal business hours to all stores, warehouses, operations,
machinery equipment, inventories property, offices, books, contracts,
commitments, records and affairs of the Seller and the Mining Business,
and reasonable access to third parties having business dealings with the
Seller, for the purpose of familiarizing themselves with the operation and
conduct of all aspects of their business and for the purpose of reasonable
inspection, examination, audit, counting and copying such access shall not
unreasonably interfere with the operation and conduct of the Mining
Business.
6. Representation of the Seller. Seller and the Principals hereby jointly and
severally represent and warrant to Buyer as follows:
(a) Organization of Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. This
Agreement has been duly authorized by all requisite corporate action on
the part of the Seller, and constitutes the valid, binding enforceable
obligation of Seller and the Principals.
(b) Title to the Purchase Assets. Seller is the lawful owner and has good and
marketable title to all of the Purchased Assets unto Buyer and its
successors and assigns against claims of any third parties. Seller has
authority to sell and transfer the Purchased Assets, which are (i) free
and clear from any liens or encumbrances, and (ii) are in good operating
condition and repair, ordinary wear and tear accepted and are usable in
the ordinary course of business.
(c) Seller's Liabilities. Seller does not have any liability or obligation
(direct or indirect, contingent or absolute, known or unknown, mature or
unmatured of any nature whatsoever, whether arising out of contract, tort,
statute or other ("Liabilities"), except (i) as specifically disclosed in
Schedule _____ attached here to (ii) Liabilities incurred in the ordinary
course of business which will not individually or in the aggregate be
materially adverse to, or result in a material increase in the current or
long term Liabilities or obligations of Seller. To the best knowledge of
the Principals, upon due inquiry, there is no basis for assertion against
Seller of any Liabilities accept for Liabilities.
(d) Compliance with Laws. Seller has complied with and is not in default under
any applicable law, ordinance regulation or order, the violation of which
would materially and adversely affect the Purchased Assets or Contracts.
There is no litigation proceeding or investigation pending or known to be
threatened which might materially and adversely effect the Purchased
Assets, the Claims or the Mining Business. Seller holds all of the
franchises, permits and licenses reasonably necessary to enable it to
operate the Mining Business as presently conducted.
(e) The Claims. The claims are legal, valid, binding and enforceable claims
granted by the United States Bureau of Land management to Seller and to
the knowledge has any other party thereto, violated any provision thereof
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and complete copies of all of the Claims disclosed on Exhibit A of this
Agreement have been delivered to Buyer. Except as set forth on Schedule
_____ none of the Claims is subject to modification, lapse or termination
not as the consent of any party required, as result of the execution and
delivery of this agreement or the consummation of the transaction it
contemplates.
(f) Taxes. Seller has duly filed all federal, state, local and foreign tax
returns necessary to be filed by it and has duly paid all taxes (including
any interest or penalties) which are or will be due or payable with
respect to taxes. There are no known or proposed penalty, interest or
deficiency assessments with respect to taxes that require payment by,
relate to or could adversely affect the purchased assets.
(g) Real Estate and Leases. There is disclosed in Schedule _____ (a
description of all real estate (including buildings and improvements)
owned or leased by Seller according to the character of the property and
the location thereof. Seller is not and, to the best knowledge of the
Principals, no other party thereto, is in default in any material respect
under any real property lease nor has any event occurred which with the
passage of time or giving of notice or both would constitute such a
default. No encumbrances have been placed, or have been permitted to be
placed by the Principals, the Seller or any of their affiliates on the
real property. Except as disclosed on Schedule ___ the real property and
the buildings thereon owned or utilized by the Corporations in the conduct
of the Corporations do not violate any building, zoning or other laws or
ordinances, or any agreements, applicable thereto, and no notice of any
such violation or claimed violation or of any condemnation proceedings has
been received by the Seller or the Principals.
(h) Environmental Matters. Except as disclosed in Schedule _____ to the best
knowledge of Seller and the Principals after due inquiry and investigation
(i) the Purchased Assets materially comply with any law or regulation
governing the protection of the environment (including air, water, soil
and natural resources) or the use storage handling release or disposal of
any hazardous or toxic substance ("Environmental Laws"), (ii) Seller has
not received any written notice from any federal, state, county,
municipal, local or foreign government and any governmental agency,
bureau, commission, authority or body alleging that the Purchased Assets
are in violation of any applicable Environmental Law, (iii) the Purchased
Assets are not the subject of any court order administrative order or any
decree existing under any Environmental Law, and (iv) to the Seller's
knowledge the Acquired Assets have not been used for the generation,
storage discharge or disposal of any Hazardous Substances as defined in
and except as permitted under applicable Environmental Laws.
(i) Completeness of Statements. No representation or warranty in this
Agreement and no statement set forth in any schedule attached hereto
contains any untrue statement of any material fact, or omits to state any
material fact necessary to make the statements contained therein not
misleading.
(j) Operation in the Ordinary Course. During the period from December 31, 2002
to and including the Closing Date (i) the Mining Business has been
operated in the usual regular and ordinary course, (ii) there has been no
damage destruction or loss or any event materially adversely affecting the
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assets or the business or Seller, (iii) there has been no sale or other
disposition of assets of the Mining Business of the kind and character of
the Purchased Assets other than in the ordinary course of business and
(iv) there has been no material change in the level of net working capital
no incurrence on any funded debt from third party lenders and no dividends
or other distributions to the shareholders of Seller (other than salaries
in the ordinary course of business).
(k) Employment Matters. Seller is not a party to any contract with any labor
organization, not has the Seller agreed to recognize any union or other
collection bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the employees of the
Seller with respect to the operation of the Business and as of the date of
this Agreement, Seller is not experiencing any strikes, work stoppages,
significant grievance proceedings or to the knowledge of Seller claims of
unfair labor practices filed with respect to the operation of the
Business. Seller does not have any "employee benefit plans" within the
meaning of Section 3(3) of ERISA covering employees of Seller.
(l) Insurance. Schedule _____ contains a list of all insurance policies
specifying (a) the insurer, (b) the amount of the coverage (c) the type of
insurance (d) the policy number and (e) any currently pending claims
thereunder (or claims asserted there under or under similar policies since
January 1, 2000 maintained by or on behalf of the Seller on its
properties, assets, business or personnel. all such policies are (and
pending Closing will continue to be) in full force and effect, and Seller
is not in default in any material respect with respect to any provision
contained in any insurance policies nor has Seller failed to give any
notice or present any claim there under in due and timely fashion. All
premiums due and payable on such policies satisfying all requirements of
applicable laws. Also set forth on Schedule _____ is a list of all types
of liabilities against which the Seller is self-insured. The insurance
coverage provided by the policies by the policies therein will not
terminate or lapse or otherwise be affected by the transactions
contemplated by this Agreement.
7. Representation of Buyer. Buyer represents and warrants to Seller that (i)
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado and (ii) this Agreement has been duly
authorized by the Board of Directions of Buyer and constitutes the valid binding
and enforceable obligation of Buyer, subject only to any requisite shareholder
approvals with respect to the issuance of the Shares.
8. Indemnification. Seller and the Principals (solely in case of the
Principals with respect to any going or negligently wrongful breach of any of
the representations and warranties set forth in foregoing Section ____) covenant
and agree with Buyer that they shall jointly and severally reimburse and
indemnify and hold Buyer harmless from, against and in respect of any and all
liabilities or obligations of Seller which: (a) shall have occurred, arising or
existed prior to the date hereof (b) shall arise out of any breach of their
representations warranties or covenants hereunder or (c) shall arise from any
failure to comply with all applicable bulk sales and bulk sales tax laws
affecting the transfers contemplated hereby. Buyer shall have the right to
withhold a pro-rata portion of the Shares in satisfaction of, or as security
for, the payment of any UN reimbursed claims of indemnity.
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9. Conditions to Obligation of Buyer. The obligations of Buyer hereunder are
subject to the satisfaction of the following conditions, any one or more which
may be waived in whole or in part by buyer.
(a) The representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date
as if made on and as of such date and Seller shall have duly performed or
complied with all of the obligations to be performed or complied with by
it under the terms of this Agreement on or prior to Closing and Buyer
shall have received a certificate dated the Closing Date to such effect
from Seller.
(b) There shall have been no material adverse change in the Purchased Assets
or the Contracts.
(c) Seller shall have obtained such consents of third as may be necessary to
transfer such of the Purchased Assets as require consents.
(d) Seller shall have paid, prior to or contemporaneously with the Closing,
all accounts payable, trade creditors and other amounts owed to any third
parties, and shall provide Buyer with a certified list thereof and a
certificate dated the Closing Date to such effect from Seller and the
Principals.
(e) Buyer shall be reasonably satisfied with the results of its investigation
of Seller and the Business, as provided in foregoing section ______.
(f) Buyer shall be reasonable satisfied with the continuing employment status
of the Principals and other key employees, pursuant to employment
agreements reasonable satisfactory to Buyer, or otherwise.
(g) Buyer shall have obtained any requisite approvals of the transaction
contemplated by this Agreement by its stockholders and
(h) Buyer shall have received the following closing documents from Seller:
(i) Good Standing Certificates. Certificates of legal existence and good
standing dated within five (5) days prior to the Closing Date for Buyer
from the State of Colorado.
(ii) Certified Resolutions. Certified copies of resolutions of the board
of directors of Buyer authorizing the execution, delivery and performance
of this Agreement and all acts of Buyer required or advisable in
connection with the transactions contemplated hereby.
(iii) Certified Charter. A true and complete copy of the Certificate of
Incorporation of Buyer, certified by the Secretary of State of Nevada and
(iv) Other. Such other documents as counsel for the Seller shall
reasonably request.
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10. Conditions to Obligations of Seller and the Principals. The obligations of
Seller and the Principals hereunder are subject to the satisfaction of the
following conditions, any one or more of which may be waives in whole or
part by them:
(a) The representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date
as if made on and as of such date, and Buyer shall have duly performed or
complied with all of the obligations to be performed or complied with by
it under the terms of this Agreement on or prior to Closing and Seller
shall have received a certificate dated the Closing Date to such effect
from Buyer.
(b) Seller shall have received the following closing documents from Buyer.
(i) Good Standing Certificates. Certificates of legal existence and
good standing dated within (5) days prior to the Closing Date for Seller
from the State of Nevada;
(ii) Certified Resolutions. Certified copies of resolutions of the
board of directors and shareholders of Seller authorizing the execution,
delivery and performance of this Agreement and all acts of Seller required
or advisable in connection with the transactions contemplated hereby;
(iii) Certified Charter. A true and complete copy of the Certificate of
Incorporation of Seller certified by the Secretary of State required
or advisable in connection with the transactions contemplated hereby;
(iv) Other. Such other documents as counsel for the Seller shall
reasonably request.
11. Payment of Expenses. Regardless of whether the Closing shall occur, the
Principals shall pay all expenses incurred by on their behalf or on behalf of
the Seller (unless the parties shall have agreed, in writing prior to such
expenses having been incurred, that such expenses are for the post-closing
benefit of the Business, in which case the Buyer will pay (or permit Seller to
pay) for such expenses), and Buyer shall pay all expenses incurred by or on
behalf of Buyer in connection execution and delivery of this Agreement and the
other agreements and documents referred to herein and the consummation of the
transactions contemplated hereby and thereby. If and audit of the Business is
required by Buyer, Seller at no additional expense to Buyer will assist with
audit preparation by preparing work papers and lead sheets, and by providing
other relevant services consistent with acceptable audit procedures with the
preparation by preparing work papers and lead sheets and by providing other
relevant services consistent with acceptable audit procedures.
12. Commissions and Finder's Fees. Buyer, on the one hand, and the Principal on
behalf of themselves and the Seller, on the other hand, represent and warrant
that none of them has retained or used the services of any individual, firm or
corporation in such manner as to entitle such individual, firm or corporation to
any compensation for broker's or finder's fees with respect to the transactions
contemplated hereby for which the other may be liable.
13. Exclusivity; Termination; Highly Confident. For a period of sixty (60) days
from the date of execution of this Agreement, neither Seller the Principals nor
any of their employees or advisors will discuss the proposed transaction with
any other party or otherwise promote, cooperate in or be involved in or
encourage discussions regarding the sale of the stock or assets of Seller as
contemplated herein. The parties agree to proceed expeditiously and in good
faith to consummate the proposed transaction.
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14. Governing Law. The Agreement shall be construed in accordance with the
internal laws of the State of Colorado.
15. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the respective successors of Seller, the Principals and Buyer.
Neither party hereto may assign its right or obligations under this Agreement
without the written consent of the other, which consent will not be unreasonably
with held.
16. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of Seller, the Principals and Buyer with respect to the subject
matter hereof and supercedes all prior contemporaneous written or oral
agreements, understandings or representations which are not specifically
contained herein. This Agreement may be amended or modified only by a written
instrument signed by Seller, the Principal and Buyer.
17. Disputes. The parties agree to attempt to resolve any claim or dispute
arising out of or relating to this Agreement by mediation and good faith
reasonable negotiation prior to resorting to any litigation or other judicial
process.
18. Publicity. No notices to third parties (including press releases) or to any
employees, suppliers or customers of Buyer or Seller (other than key management
and other persons whose knowledge is required), shall be made by any party
hereto unless mutually agreed to, planned and coordinated jointly among the
parties hereto.
19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, Seller, the Principals, and Buyer have executed this
Agreement as of the date first above written.
El Capitan Precious Metals, Inc. Gold and Minerals Co. Inc.
("Buyers") ("Sellers")
By s/Xxxxxxx X. Xxxxxxx BY s/Xxxxx X. Xxxxxxxx
--------------------------------- ------------------------
Its: CEO, President Its: President
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