EXHIBIT 10.1
FRONTIER DEVELOPMENT, LLC.
================================================================================
ASSET PURCHASE AGREEMENT
SEPTEMBER 2, 2003
================================================================================
Oretech, Inc.
TABLE OF CONTENTS
-----------------
SECTION
-------
Incorporation of Recitals 1
Sale and Purchase of Assets 2
Purchase Price, Manner of Payment and Allocation 3
Title Insurance and Form of Deed 4
Closing Costs and Prorations 5
Closing 6
Representations and Warranties of Seller 7
Due Incorporation 7.1
Authority 7.2
Capitalization 7.3
Subsidiaries 7.4
Financial Information 7.5
Taxes 7.6
Material Changes 7.7
Title to Assets; Liens 7.8
Litigation 7.9
Compliance with Laws 7.10
Insurance 7.11
Licenses 7.12
Hazardous Materials 7.13
Judgments Against Purchaser 7.14
Identification of Asset 7.15
Amounts Owing to Purchaser's Shareholders 7.16
Inventory 7.17
Disclosure Materials 7.18
Defaults 7.19
Vendor Accounts 7.20
Material Contracts 7.21
Outstanding Liabilities 7.22
Products 7.23
Patents 7.24
Receivables 7.25
Employees 7.26
No Conflicts 7.27
Violations of Law 7.28
Condition and Sufficiency of Assets 7.29
Bank Accounts 7.30
Filings Complete 7.31
Environmental Matters 7.32
Intellectual Property 7.33
Certain Payments 7.34
Consents and Approvals 7.35
Customers and Suppliers 7.36
Changes in the Purchaser or its Documents 7.37
Shareholders Agreements and Other Agreements 7.38
Assets in Good Condition 7.39
Brokers and Finders 7.40
Restricted Securities 7.41
Access to Purchaser's Management 7.42
Representations and Warranties of Purchaser 8
Due Incorporation 8.1
Authority 8.2
Capitalization 8.3
Subsidiaries 8.4
i
Financial Information 8.5
Taxes 8.6
Material Changes 8.7
Title to Assets; Liens 8.8
Litigation 8.9
Compliance with Laws 8.10
Insurance 8.11
Licenses 8.12
Hazardous Materials 8.13
Judgments Against Purchaser 8.14
Identification of Asset 8.15
Amounts Owing to Purchaser's Shareholders 8.16
Inventory 8.17
Disclosure Materials 8.18
Defaults 8.19
Vendor Accounts 8.20
Material Contracts 8.21
Outstanding Liabilities 8.22
Products 8.23
Patents 8.24
Receivables 8.25
Employees 8.26
No Conflicts 8.27
Violations of Law 8.28
Condition and Sufficiency of Assets 8.29
Bank Accounts 8.30
Filings Complete 8.31
Environmental Matters 8.32
Intellectual Property 8.33
Certain Payments 8.34
Consents and Approvals 8.35
Customers and Suppliers 8.36
Changes in the Purchaser or its Documents 8.37
Shareholders Agreements and Other Agreements 8.38
Assets in Good Condition 8.39
Brokers and Finders 8.40
Interim Events 9
Conditions of the Obligations of Purchaser 10
Representations and Warranties 10(a)
506 Offering 10(b)
Roman Agreement 10(c)
Employment Agreement 10(d)
Contract for Services 10(e)
Conditions of the Obligations of Seller 11
Representations and Warranties 11(a)
506 Offering 11(b)
Roman Agreement 11(c)
Employment Agreement 11(d)
Contract for Services 11(e)
No Material Adverse Change 11(f)
Maintenance of Assets 11(g)
Ordinary Course of Business 11(h)
Directorships 11(i)
Acquisition of Chain-O-Mines 12
Seller's Royalty Interest 13
Survival of Representations and Indemnification 14
Survival 14(a)
Indemnification by Seller 14(b)
ii
Indemnification by Purchaser 14(c)
Notification of Certain Matters 15
Further Assistance 16
Authority 17
Notices 18
Entire Agreement; Modification; Waiver 19
Headings 20
Effect of Termination 21
Severability 22
Governing Law; Jurisdiction 23
Attorney's Fees 24
Counterparts, Facsimile Signatures 25
Publicity 26
Successors and Assigns 27
Miscellaneous 28
Guaranty Regarding Purchasing Shareholder's Spouses 29
List of Exhibits
----------------
Legal Description for Pittsburg Mine and Description of Related Assets "A"
Legal Description for Silver Mine and Description of Related Assets "B"
Legal Description for Xxxxxxx Mine and Description of Related Assets "C"
Liabilities to be Assumed by Purchaser "D"
Liabilities of Seller Described in Section 7.22 "E"
Purchaser's Disclosure Schedule "F"
Specifically Listed Assets of Purchaser "G"
Exhibit Intentionally Omitted "H"
Employment Agreement for Xxxxxx XxXxxxxx "I"
Contract for Services "J"
Description of Funding Obligation Regarding Chain-O-Mines "K"
Seller's Disclosure Schedule "L"
Purchase Price Promissory Note "M"
iii
THIS AGREEMENT ("Agreement") is entered into and executed as of the 2nd
day of September, 2003, by and between Frontier Development, LLC., a Nevada
limited liability company, whose principal place of business is X.X. Xxx 0000,
Xxxxxxxxxx, Xxxxxxx 00000 ("SELLER"), Xxxxxx XxXxxxxx, member of Seller
("XXXXXXXX"), Xxxxxx Xxxxxxx, member of Seller ("XXXXXXX"), Xxxx Xxxxxxxx,
member of Seller ("XXXXXXXX"), and Xx Xxxx, member of Seller ("XXXX") (XxXxxxxx,
Xxxxxxx Xxxxxxxx, and Xxxx are collectively referred to below as the "SELLING
MEMBERS"), Oretech, Inc., a Nevada corporation, whose principal place of
business is 000 Xxxxx Xxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxx 00000 ("PURCHASER"), and
Xxxxxxx X. Xxxxxxx, shareholder and CEO of Purchaser, and Xxxxxxx X. Xxxxxxxxx,
shareholder and officer of Purchaser (collectively the "CONTRACT SHAREHOLDERS").
R E C I T A L S:
A. Seller has control over three mining properties in the State of
Colorado, together with the right to convey such mining properties, and Seller
desires to sell, and Purchaser desires to purchase, these mining properties,
which are more particularly identified in Section 2 below.
B. Seller has, over the past several years, cultivated strategic
relationships with principals holding interests in assets commonly known as the
"Chain-O-Mines" (hereinafter the "CHAIN-O-MINES") located in Xxxxxx County,
State of Colorado, and Seller believes that Seller has the ability to negotiate
the acquisition of the Chain-O-Mines. The Chain-O-Mines includes approximately
200 mines within a one square mile area.
C. Purchaser desires to buy the Chain-O-Mines properties.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein, the parties covenant, agree, represent and warrant as follows:
T E R M S:
1. INCORPORATION OF RECITALS. The header paragraph and Recital
Paragraphs appearing above are hereby incorporated into and are part of this
Agreement.
2. SALE AND PURCHASE OF ASSETS. Subject to the terms, provisions and
conditions of this Agreement, and at the Closing (defined below), Seller agrees
to sell to Purchaser and Purchaser agrees to buy from Seller (the
"TRANSACTION"), the following (hereinafter sometimes collectively referred to as
the "ASSETS"):
(a) The mining property known as "The Pittsburg Mine"
(referred to herein as "PITTSBURG MINE"), more particularly on EXHIBIT "A"
attached hereto, together with the related assets and personal property, if any,
identified on said Exhibit;
(b) The mining property known as "The Silver Plume Mine"
(referred to herein as "SILVER MINE"), more particularly on EXHIBIT "B" attached
hereto, together with the related assets and personal property, if any,
identified on said Exhibit; and
(c) The mining property known as "The Xxxxxxx Mine" (referred
to herein as "XXXXXXX MINE"), more particularly on EXHIBIT "C" attached hereto,
together with the related assets and personal property, if any, identified on
said Exhibit.
3. PURCHASE PRICE, MANNER OF PAYMENT, AND ALLOCATION.
(a) The aggregate purchase consideration to be paid by
Purchaser to the Seller for the Assets shall be: (i) Five Hundred Thousand
Dollars ($500,000); (ii) 2,000,000 shares of Purchaser's restricted Common Stock
(defined below); (iii) 500,000 Warrants (defined below); and (iv) assumption by
Purchaser of the debts identified on EXHIBIT "D" attached hereto.
If by the date of Closing Purchaser has successfully completed
its pending SEC Rule 506 Private Offering of Common Stock (the "506 OFFERING"),
then the $500,000.00 portion of the purchase price described in subparagraph
(a)(i) above shall be paid in cash at the Closing.
If by the date of Closing Purchaser has not successfully
completed the 506 Offering, then:
(i) The $500,000.00 portion of the purchase price
described in subparagraph (a)(i) above shall be payable
pursuant to a promissory note (the "NOTE") in the form of
EXHIBIT "M" attached hereto and hereby made a part hereof. The
Note will be secured by a single Deed of Trust and Assignment
of Rents encumbering the three properties described in
Exhibits A, B and C hereto. The Deed of Trust and Assignments
of Rent will be drafted using the Escrow Agent's standard form
(with however a due-on-sale and due-on-encumbrance clause
added if the same is not in the form), if any, and in the
absence of such a form, then using a form acceptable to Seller
in Seller's discretion.
(ii) At the Closing, Purchaser shall pay Seller the
sum of Fifteen Thousand Dollars ($15,000.00) cash as an
additional purchase price. If and only if the Note is paid in
full prior to Seller having taken any collection action on the
Note (including without limitation commencing a collection
suit or a trustee's sale), then the $15,000.00 paid at the
Closing under this subparagraph shall be applied as payment
against the balance due under the Note, as the last $15,000.00
payable under the Note.
(b) The purchase price shall be allocated to the individual
items of Assets in the following manner:
---------------------------- -------------- ------------------ ---------------
Asset Cash Common Stock WARRANTS TO
PURCHASE
---------------------------- -------------- ------------------ ---------------
Pittsburg Mine $125,000 500,000 shares 125,000 shares
---------------------------- -------------- ------------------ ---------------
Silver Mine $187,500 750,000 shares 187,500 shares
---------------------------- -------------- ------------------ ---------------
Xxxxxxx Mine $187,500 750,000 shares 187,500 shares
---------------------------- -------------- ------------------ ---------------
Total $500,000 2,000,000 shares 500,000 shares
---------------------------- -------------- ------------------ ---------------
Each debt described on EXHIBIT "D" shall be allocated to the Asset to which the
debt relates, and if a debt is not clearly identifiable to a particular Asset,
then it shall be allocated equally among Pittsburg Mine, Silver Mine and Xxxxxxx
Mine.
(c) The $500,000 cash component of the purchase consideration
shall be used to pay off at the Closing any and all mortgage, deed of trust, or
tax liens related to Pittsburg Mine, Xxxxxxx Mine, and/or Silver Mine, to the
extent the same are not listed on EXHIBIT "D" attached hereto; provided,
however, that if the Note is issued by Purchaser under subparagraph 3(a) above,
then, notwithstanding any other provision of this Agreement, at the Closing the
Pittsburg Mine may be encumbered by one or more liens, with balances totaling
less than the $125,000.00 described in subparagraph 3(b) above, and the payments
made by Purchaser under the Note shall be applied first to pay off said lien(s).
ASSET PURCHASE AGREEMENT PAGE 2
(d) Purchaser's common stock is referred to herein as the
"COMMON STOCK." At the Closing, Purchaser shall issue to Seller the Two Million
(2,000,000) shares of Purchaser's Common Stock described in subparagraph (a)
above. All such stock shall be eligible to participate, on the same terms and in
the same proportions as granted to any management personnel of Purchaser, in any
"piggyback" or other registration rights which may be made available after the
Closing to any of said management personnel. Should Purchaser no longer be
publicly traded on a US national exchange or the Over-The-Counter Bulletin
Board, then Seller shall have pre-emptive rights and a right of first refusal to
acquire its proportionate share (based on Common Stock ownership) on any shares
of stock thereafter issued by Purchaser.
(e) At the Closing, Purchaser shall issue to Seller the Five
Hundred Thousand (500,000) warrants (the "WARRANTS") to purchase shares of
Purchaser's Common Stock, as described in subparagraph (a) above. The Warrants
shall be irrevocable rights to purchase 500,000 shares of Purchaser's authorized
but unissued Common Stock at an exercise price of $1.00 per share of Common
Stock (based on the number of shares of Common Stock issued as of the date of
this Agreement, to be adjusted for future transactions such as stock splits and
reverse stock splits). The Warrants shall have a term of three years during
which they may be exercised, in whole or in part, by payment to the Purchaser of
$1.00 for each Warrant Share (defined below).
The term "WARRANT SHARES" shall mean those shares of
Purchaser's Common Stock acquired upon exercise of the Warrants. All such stock
shall be eligible to participate, on the same terms and in the same proportions
as granted to any management personnel of Purchaser, in any "piggyback" or other
registration rights which may be made available after the Closing to any of said
management personnel. Regarding the Warrant Shares once issued, should Purchaser
no longer be publicly traded on a US national exchange or the Over-The-Counter
Bulletin Board, then Seller shall have pre-emptive rights and a right of first
refusal to acquire its proportionate share (based on Common Stock ownership) of
any shares of stock thereafter issued by Purchaser.
(f) At the Closing, Purchaser shall assume and agree to timely
perform all obligations under the debts identified on EXHIBIT "D" attached
hereto, pursuant to an assumption agreement in form and content reasonable
satisfactory to Purchaser.
4. TITLE INSURANCE AND FORM OF DEED. Purchaser's obligation to purchase
the Assets is subject to approval by Purchaser within ten (10) days after
receipt from the Escrow Agent handling this matter (the "ESCROW AGENT") of a
preliminary title report, property surveys (to be obtained by Purchaser at
Purchaser's option, but at Purchaser's cost) of the Pittsburg Mine, Silver Mine
and Xxxxxxx Mine, and legible copies of all documents and matters disclosed
thereon. Purchaser shall notify Seller and Escrow Agent in writing of any
objections to any such exceptions or the condition of Seller's title within such
time period. If Purchaser objects to any such exceptions or the condition of
Seller's title as disclosed in the report within such time period, then Seller
may, at Seller's option, have until the Closing to cure any such objection. If
Seller is unable or unwilling to cure, then Seller shall notify Purchaser
thereof on or prior to Closing, and Purchaser, at its election within two (2)
days thereafter or upon Closing, whichever occurs first, may: (i) terminate this
Agreement and escrow, or (ii) elect to waive the uncured objections and proceed
to close the Transaction. If Purchaser fails to object to title matters as
provided for above in the time period set out above, then Purchaser will be
deemed for all purposes relating to this Agreement to have waived objection. The
exceptions and conditions of title not cured and not waived as provided for
above are referred to herein as the "PERMITTED EXCEPTIONS."
At the Closing, Seller shall provide Purchaser with a standard coverage owner's
policy of title insurance, insuring title to the real estate portion of the
Assets (the "REAL PROPERTY") for the full amount of the purchase price in the
name of Purchaser. The cost of said policy shall be paid for one-half by Seller
and one-half by Purchaser. The title insurance shall provide coverage subject
only to the Permitted Exceptions. Purchaser may at Purchaser's option require
Escrow Agent to issue an ALTA extended coverage owner's title policy, provided
Purchaser pays any additional premium for such upgraded coverage.
ASSET PURCHASE AGREEMENT PAGE 3
Seller shall transfer title to the Real Property by Escrow Agent's standard form
of special warranty deed, subject to all matters of record and all matters that
a current and accurate survey of the Real Property would disclose.
Purchaser hereby acknowledges and agrees that: (i) Seller has made no warranties
or representations of any nature, express or implied, oral or written,
concerning the Real Property, this Agreement, or any matter related thereto,
other than as may expressly be provided for herein; (ii) the Assets will be
transferred in their "AS IS" condition; and (iii) Seller will not be charged
with any knowledge of Purchaser's intended use of the Assets or of Purchaser's
assumptions or beliefs concerning the status of the Assets. Purchaser has made
or will have had an opportunity to make an inspection of the Assets prior to the
Closing.
5. CLOSING COSTS AND PRORATIONS. All escrow fees charged by Escrow
Agent shall be shared equally by Purchaser and Seller. All recording fees and
miscellaneous closing costs shall be paid by the parties in accordance with
customary commercial real estate practices in the county in which the property
is located, as such practices may be determined by Escrow Agent. Real estate
taxes and personal property taxes, if any, shall be apportioned at the Closing
as of 12:01 a.m. on the day of Closing, based on the latest available figures.
If a Deed of Trust is required pursuant to the terms of this Agreement, then
Purchaser shall pay any additional title insurance premium necessary to obtain a
standard mortgagee's title insurance for such deed of trust. Any set-up fees or
collection fees charged by Escrow Agent for acting as collection agent on under
any Note and Deed of Trust hereunder shall be shared equally by Purchaser and
Seller.
Each party, Purchaser and Seller, shall pay the fee of the attorney who
represented it in negotiating this Agreement and supervising the purchase and
sale described in it.
Any and all sales taxes arising because of the sale pursuant to this Agreement
of the fixtures and equipment of said business to Purchaser shall be paid
one-half each by Purchaser and Seller.
6. CLOSING. The closing of the Transaction (the "CLOSING") shall occur
on or before September 30, 2003, at the offices of First American Title
Insurance Company, at 000 Xxxxxx Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxx (Phone:
000-000-0000). Any postponement of said Closing date shall require the written
consent of all parties to this Agreement.
7. REPRESENTATIONS AND WARRANTIES BY SELLER. In addition to the other
representations and warranties of Seller and the Selling Members appearing in
this Agreement, the following representations, warranties and indemnities are
being made as of the date of this Agreement by Seller and by the Selling
Members. These representations, warranties and indemnities are subject to any
limitations and qualifications or other disclosures contained in the
corresponding sections of the disclosure schedule attached hereto as EXHIBIT
"L".
7.1 DUE FORMATION. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Nevada, and is duly licensed or qualified to do business and
is in good standing in each State where the property owned or held
under lease is such as to require Seller to be so licensed or
qualified, except those states where the failure to be so licensed or
qualified would not have a material adverse effect on the financial
condition or operations of Seller or Seller's business ("SELLER'S
BUSINESS"). Seller has the corporate power and authority to own and
operate its properties and carry on Seller's Business as now conducted.
7.2 AUTHORITY. Seller has the power and authority to enter
into and perform its obligations under this Agreement, and the members
of Seller have approved, authorized, and ratified the execution and
delivery of this Agreement, and the documents herein required to
consummate the Transaction. This Agreement constitutes the legally
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.
ASSET PURCHASE AGREEMENT PAGE 4
7.3 CAPITALIZATION. This Section was intentionally omitted.
7.4 SUBSIDIARIES. This Section was intentionally omitted.
7.5 FINANCIAL INFORMATION. This Section was intentionally
omitted.
7.6 TAXES. All federal and state income, excise, franchise,
payroll, property, sales, and other tax returns required to be filed by
or with respect to Seller (except returns not yet due), are complete
and accurately reflect in all material respects all matters therein
required to be reflected, and all taxes shown on such returns to be
due, and any assessments received by Seller with respect thereto, have
been paid in full.
7.7 MATERIAL CHANGES.This Section was intentionally omitted.
7.8 TITLE TO ASSETS; LIENS. Seller owns all assets it purports
to own, including all assets reflected in its financial statements and
information. All assets of Seller are free and clear of all
restrictions, claims, liens, encumbrances or rights of others, other
than those imposed under the Articles of Incorporation or Bylaws of
Seller, and other than as disclosed on Seller's financial statements
provided to Seller or disclosed in this Agreement.
7.9 LITIGATION. There is no litigation, proceeding, or
investigation pending or threatened against Seller, or Seller's
Business, and Seller has no reasonable grounds to know any basis for
such litigation, proceeding or investigation.
7.10 COMPLIANCE WITH LAWS. Neither Seller nor Selling Members
are aware of any investigation with respect to any violation of any
provision of any federal, state or local law, regulation, ordinance,
order or administrative ruling, relating to Seller or the Seller's
Business.
7.11 INSURANCE. This Section was intentionally omitted.
7.12 LICENSES. Seller has any and all licenses, permits, and
contracts necessary and/or appropriate to operate the Seller's Business
in the manner in which the Seller's Business is currently operated.
7.13 HAZARDOUS MATERIALS. Neither Seller nor the Seller's
Business has ever dealt in any manner with any hazardous or toxic
materials or waste relating to the Assets.
7.14 JUDGMENTS AGAINST SELLER. Neither Seller nor the Seller's
Business is under any governmental investigation, no such investigation
has been threatened, and there are no judgments against Seller, the
Seller's Business or the assets of Seller.
7.15 IDENTIFICATION OF ASSET. This Section was intentionally
omitted.
7.16 AMOUNTS OWING TO SELLER'S MEMBERS. This Section was
intentionally omitted.
7.17 INVENTORY. This Section was intentionally omitted.
7.18 DISCLOSURE MATERIALS. All of the information disclosed by
Seller to Purchaser, as a whole, does not contain any statement that,
as of the date hereof, is false or misleading, and does not omit to
state any material fact: (i) necessary to make the statements made, in
light of the circumstances under which they were made, not false or
misleading, or (ii) necessary to provide Purchaser with complete and
accurate information as to the assets and financial condition of
Seller.
ASSET PURCHASE AGREEMENT PAGE 5
7.19 DEFAULTS. This Section was intentionally omitted.
7.20 VENDOR ACCOUNTS. This Section was intentionally omitted.
7.21 MATERIAL CONTRACTS. This Section was intentionally
omitted.
7.22 OUTSTANDING LIABILITIES. There are no liabilities of
Seller relating to the Assets other than as are shown on its most
recent balance sheet provided to Purchaser, and other than liabilities
specifically identified in this Agreement. Seller does not know of any
basis for the assertion against Seller of any material liabilities or
obligations, either accrued, absolute, contingent or otherwise, which
would materially and adversely affect the ability of Seller to transfer
the Assets to Purchaser, other than those expressly disclosed in
writing to Purchaser or disclosed on EXHIBIT "E" attached hereto.
Furthermore, none of the Assets are the subject of any liens or
encumbrances of any kind or nature other than those disclosed on
EXHIBIT "E".
7.23 PRODUCTS. This Section was intentionally omitted.
7.24 PATENTS. This Section was intentionally omitted.
7.25 RECEIVABLES. This Section was intentionally omitted.
7.26 EMPLOYEES. This Section was intentionally omitted.
7.27 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other documents and instruments to be executed
and delivered by Seller pursuant hereto, and the consummation by Seller
of the transactions contemplated herein or therein:
(a) Will not violate or conflict with any applicable
federal, state, foreign, local or other law, ordinance, rule,
regulation, or governmental requirement or restriction of any
kind, including any rules, regulations, and orders promulgated
thereunder, and any final orders, decrees, consents, or
judgments of any regulatory agency or court ("Law");
(b) Except as may be required to comply with the
Securities Act and the Exchange Act, will not require any
authorization, consent, approval, exemption or other action by
or notice to any government entity (including, without
limitation, under any "plant closing" or similar law) (Seller
is not required to give any notice or to obtain any consent
from any person, entity, or governmental agency in connection
with the execution and delivery of this Agreement or the
consummation of the Transaction);
(c) Will not constitute a default or an event that,
with notice, lapse of time, or both, would be a default,
breach, or violation of the Articles of Incorporation or
Bylaws of Seller or any lease, license, promissory note,
conditional sales, contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement
to which Seller is a party or by which Seller or its property
is bound; and
(d) Will not give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate, or modify any
governmental authorization held by Seller or that otherwise
relates to Seller's Business.
7.28 VIOLATIONS OF LAW. None of the present or past operations
of the Seller's Business, the products of the Seller's Business, or
Seller's assets violate or conflict, in any material respect, with any
permits, any law (including environmental laws), governmental
specification, authorization, or requirement, or any decree, judgment,
ASSET PURCHASE AGREEMENT PAGE 6
order or similar restriction. Seller is not the subject of an
inspection or inquiry regarding violations or alleged violations of any
law by any state, federal or local agency.
There are no pending administrative or judicial proceedings, threatened
proceedings, orders, notice of violations, inspection reports, and
similar occurrences, if any, relating to the conduct of the Seller's
Business or Seller's assets.
Seller has not been the subject of an Occupational and Safety Health
Administration inspection or found by any agency to be in violation of
any state or federal occupational safety or health law in the conduct
of its business.
7.29 CONDITION AND SUFFICIENCY OF ASSETS. Seller has (or will
deliver to Purchaser at the Closing) good and marketable title to all
of the Assets, free and clear of all liens, leases, encumbrances,
equities, conditional sales contracts, taxes, security interests,
charges and restrictions, other than the Permitted Exceptions.
7.30 BANK ACCOUNTS. This Section is intentionally omitted.
7.31 FILINGS COMPETE. This Section is intentionally omitted.
7.32 ENVIRONMENTAL MATTERS. For purposes of this Section:
(i) "Environmental Law" means all federal, state,
local, foreign, and other applicable jurisdiction laws
relating to the environment or the use, disposal, existence,
or release of any Hazardous Materials, including but not
limited to any and all laws concerning, affecting,
controlling, or in any way relating to, whether in whole or in
part, noise levels, ground vibrations, air pollutants, water
pollutants, process waste water, or Hazardous Materials;
(ii) "Environmental Release" means any release,
spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property;
(iii) "Hazardous Materials" means: (A) any waste,
hazardous waste, pollutant, contaminant, or hazardous or toxic
substance regulated by law; (B) asbestos; (C) formaldehyde;
(D) polychlorinated biphenyls; (E) radioactive materials; (F)
waste oil and other petroleum products; and (G) any other
substance which constitutes a nuisance or hazard to the
environment or the public health, safety, or welfare.
Seller is, and at all times has been, in full compliance with, and has
not been and is not in violation of or liable under, any Environmental
Law. Seller has no basis to expect, nor has Seller or (to the knowledge
of Seller or any Selling Member) any other person for whose conduct
Seller is or may be held to be responsible, received, any actual or
threatened order, notice, or other communication from: (i) any
governmental body or private citizen acting in the public interest; or
(ii) the current or prior owner or operator of any of Seller's
properties or assets, of any actual or potential violation or failure
to comply with any Environmental Law, or of any actual or threatened
obligation to undertake or bear the cost of any environmental, health
and safety liabilities with respect to any of Seller's properties or
assets (whether real, personal, or mixed) in which Seller has had an
interest, or with respect to any of Seller's properties at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used or processed by Seller, or (to the knowledge of Seller)
any other person for whose conduct Seller is or may be held
responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
ASSET PURCHASE AGREEMENT PAGE 7
Seller has delivered to Purchaser complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated
by Seller or any of its members pertaining to Hazardous Materials or
hazardous activities in, on, or under Seller's properties or concerning
compliance by Seller, or any other person for whose conduct Seller is
or may be held responsible, with Environmental Laws.
7.33 INTELLECTUAL PROPERTY. This Section is intentionally
omitted.
7.34 CERTAIN PAYMENTS.This Section is intentionally omitted.
7.35 CONSENTS AND APPROVALS. This Section is intentionally
omitted.
7.36 CUSTOMERS AND SUPPLIER. This Section is intentionally
omitted.
7.37 CHANGES IN THE SELLER OR ITS DOCUMENTS. This Section is
intentionally omitted.
7.38 SHAREHOLDERS AGREEMENTS AND OTHER AGREEMENTS. This
Section is intentionally omitted.
7.39 ASSETS IN GOOD CONDITION. This Section is intentionally
omitted.
7.40 BROKERS AND FINDERS. No finder, broker, agent or other
intermediary has acted for or on behalf of Seller in connection with
the negotiations or consummation of this Agreement or of any of the
transactions contemplated hereby, nor has Seller incurred or caused to
be incurred any liability for any fee or commission in the nature of a
finder's fee, originator's fee or broker's fee in connection with the
subject matter of this Agreement, and Seller hereby indemnifies
Purchaser, and agrees to hold Purchaser harmless, against all
liabilities, expenses, costs, losses and claims, if any, arising from
the employment by Seller (or any allegation of any such employment) of
any finder, broker, agent or other intermediary in such connection.
7.41 RESTRICTED SECURITIES. Seller and Selling Members
understand that the Common Stock and Warrants being issued by Purchaser
at Closing, as well as the underlying Warrant Shares, are "restricted
securities" as that term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended ("Act"). Seller and Selling Members
understand that (i) the Common Stock and Warrants being issued by
Purchaser at Closing, as well as the underlying Warrant Shares, have
not been registered under the Act or any state securities laws and that
they must, therefore, be able to bear the economic risk of holding such
restricted securities for an indefinite period of time; and (ii) they
cannot sell these restricted securities unless the these restricted
securities are registered under the Act or an exemption from such
registration (i.e., Rule 144) is available. Seller and Selling Members
further understand that the certificates for the Common Stock and
Warrants being issued by Purchaser at Closing will bear the following
legend;
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
7.42 ACCESS TO PURCHASER'S MANAGEMENT. Purchaser has made
available to Seller, Selling Members, their counsel and advisors, prior
to Closing, the opportunity to ask questions of, and to receive answers
from, Purchaser's officers and directors concerning the business of
Purchaser. Moreover, Seller, Selling Members, their counsel and
advisors have been given due access by Purchaser to obtain any
information, documents, financial statements, records and books (i)
relative to the Purchaser and its business; and (ii) necessary to
verify the accuracy of any information, documents, financial
statements, records and books furnished or otherwise made available for
review. All materials and information requested by either the Seller or
ASSET PURCHASE AGREEMENT PAGE 8
any Selling Member, their counsel or advisors, including any
information requested to verify any information furnished or otherwise
made available for review, have been made available and examined by
Seller, the Selling Members, their counsel and advisors.
An individual will be deemed to have knowledge of a particular fact or other
matter if such individual is actually aware of such fact or other matter without
inquiring, or such individual is not actually aware of the fact but written
notification of the fact has been received such that the individual should have
known the fact. An entity will be deemed to have knowledge of a particular fact
or other matter if any individual who is serving as a director or officer of the
entity is actually aware of such fact or other matter without inquiring, or such
individual is not actually aware of the fact but written notification of the
fact has been received such that the individual should have known the fact.
Seller hereby agrees to indemnify Purchaser and its shareholders, officers,
directors and controlling persons and attorneys, and defend and hold them free
and harmless from and against any liability, obligation, loss, cost and expense,
including attorney's fees, incurred in connection with any material breach by
Seller of any of its representations, warranties or covenants contained in this
Agreement. The Selling Members will indemnify and defend and hold Purchaser
harmless from and against any liability, including attorneys' fees incurred by
Purchaser in connection with any breach by the Selling Members of any
representation or warranty, or covenant, contained in this Agreement.
The representations and warranties in this Section, and elsewhere in this
Agreement, and all indemnification provisions in this Agreement, will survive
the Closing. The rights of Purchaser based upon the representations and
warranties of Seller will not be affected by any investigation conducted with
respect thereto, or any knowledge acquired, or capable of being acquired, at any
time, whether before or after the execution of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation or
warranty.
Disclosures made anywhere in this Agreement or its Exhibits shall be deemed to
be disclosures for all purposes of this Agreement.
8. REPRESENTATIONS AND WARRANTIES BY PURCHASER. In addition to the
other representations and warranties of Purchaser and the Contract Shareholders
appearing in this Agreement, the following representations, warranties and
indemnities are being made as of the date of this Agreement by Purchaser and by
the Contract Shareholders. These representations, warranties and indemnities are
subject to any limitations and qualifications or other disclosures contained in
the corresponding sections of the disclosure schedule attached hereto as EXHIBIT
"F".
8.1 DUE INCORPORATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada, and is duly licensed or qualified to do business and
is in good standing in each State where the property owned or held
under lease is such as to require Purchaser to be so licensed or
qualified, except those states where the failure to be so licensed or
qualified would not have a material adverse effect on the financial
condition or operations of Purchaser or Purchaser's business (the
"BUSINESS"). Purchaser has the corporate power and authority to own and
operate its properties and carry on the Business as now conducted.
Purchaser is in the process of qualifying to do business in the State
of Alabama where it has recently moved its principal place of business.
Prior to the Closing, Purchaser will qualify to do business in the
State of Colorado or form a Colorado corporation to take title to the
Assets. The Colorado corporation, if formed, will be a wholly-owned
subsidiary of Purchaser.
True, correct and complete copies of the corporate formation
documents for Purchaser, and all operating minutes, resolutions and
consents, have been delivered to Seller. The minute book(s) of
ASSET PURCHASE AGREEMENT PAGE 9
Purchaser correctly records all resolutions of the directors and
shareholders of Purchaser, and Purchaser's stock records correctly
reflect the ownership of stock of Purchaser.
8.2 AUTHORITY. Purchaser has the power and authority to enter
into and perform its obligations under this Agreement, and the board of
directors of Purchaser, and the shareholders of Purchaser to the extent
necessary or appropriate, have approved, authorized, and ratified the
execution and delivery of this Agreement, and the documents herein
required to consummate the Transaction. This Agreement constitutes the
legally valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.
8.3 CAPITALIZATION. The authorized capital stock of Purchaser
is as shown in EXHIBIT "F". No other shares of capital stock of
Purchaser are outstanding. Other than as shown on EXHIBIT "F", there
are no rights, subscriptions, warrants, options, conversion rights or
agreements of any kind outstanding to purchase or otherwise acquire
from Purchaser any shares of capital stock of Purchaser, or securities
or obligations of any kind of Purchaser convertible into or
exchangeable for any shares of capital stock of Purchaser. To the
knowledge of Purchaser and the Contract Shareholders, all issued shares
have been duly authorized, and the issued and outstanding shares of
stock are fully paid, non-assessable, and were not issued in violation
of the terms of any agreement or other understanding, and were issued
in compliance with all applicable federal and state securities or "blue
sky" laws and regulations. The Contract Shareholders own of record and
beneficially, and have good and marketable title to, the stock shown as
being owned by them on EXHIBIT "F". Purchaser has provided a complete
and accurate list of the identity of each shareholder of Purchaser, and
the numbers of shares of each class of stock held by each such
shareholder, and such list is consistent with the capitalization
information appearing in EXHIBIT "F".
Assuming all rights to acquire stock (for example, stock options) of
Purchaser are exercised, the capital stock in Purchaser which Seller
would own after receipt of the Common Stock (including Warrant Shares)
identified in Section 3 above represents and would represent that
percent of the total capital stock of Purchaser so identified on
EXHIBIT "F".
8.4 SUBSIDIARIES. Purchaser has no subsidiaries or equity
interests of stock ownership or otherwise in any form in any
corporation, association or business enterprise. Purchaser does not own
and does not have any agreement, whether written or oral, regarding
rights or contracts to acquire any equity securities or other
securities of any company, or any direct or indirect equity or
ownership interest in any other entity.
8.5 FINANCIAL INFORMATION. All of the books and records of
Purchaser are in the possession of Purchaser, other than the capital
stock books and stock transfer records, which may be in the possession
of Purchaser's transfer agent and registrar.
8.6 TAXES. All federal and state income, excise, franchise,
payroll, property, sales, and other tax returns required to be filed by
or with respect to Purchaser (except returns not yet due), are complete
and accurately reflect in all material respects all matters therein
required to be reflected, and all taxes shown on such returns to be
due, and any assessments received by Purchaser with respect thereto,
have been paid in full.
8.7 MATERIAL CHANGES. Except for Purchaser's acquisition of
Oretech, Inc., a Nevada corporation, and the change of Purchaser's name
from "The Tantivy Group, Inc." to "Oretech, Inc.," from the date of the
most recent financial statements provided to Seller (which are dated
March 31, 2003), and through the date hereof, the business of Purchaser
has been conducted only in the ordinary course, there have not been any
material adverse changes in the financial condition and operations of
said business, and there has been no damage, destruction or other
occurrence (whether or not insured against) to tangible property which
materially adversely affects the financial condition or operations of
said business.
ASSET PURCHASE AGREEMENT PAGE 10
8.8 TITLE TO ASSETS; LIENS. Purchaser owns all assets it
purports to own, including all assets reflected in its financial
statements and information. All assets of Purchaser are free and clear
of all restrictions, claims, liens, encumbrances or rights of others,
other than those imposed under the Articles of Incorporation or Bylaws
of Purchaser, and other than as disclosed on Purchaser's financial
statements provided to Seller.
8.9 LITIGATION. There is no litigation, proceeding, or
investigation pending or threatened against Purchaser, or the Business,
and Purchaser has no reasonable grounds to know any basis for such
litigation, proceeding or investigation.
8.10 COMPLIANCE WITH LAWS. Neither Purchaser nor the Contract
Shareholders are aware of any investigation with respect to any
violation of any provision of any federal, state or local law,
regulation, ordinance, order or administrative ruling, relating to
Purchaser or the Business.
8.11 INSURANCE. Purchaser carries insurance against personal
injury and property damage to third persons and in respect of its
products and services, and other insurance, including any and all
workers compensation insurance required by law. Purchaser has not
received any notice that Purchaser is in default with respect to any
provision contained in any insurance policy, and Purchaser is not aware
of any such default. Purchaser has delivered to Seller copies of all
insurance policies of Purchaser.
8.12 LICENSES. Purchaser has any and all licenses, permits,
and contracts necessary and/or appropriate to operate the Business in
the manner in which the Business is currently operated.
8.13 HAZARDOUS MATERIALS. Neither Purchaser nor the Business
has ever dealt in any manner with any hazardous or toxic materials or
waste.
8.14 JUDGMENTS AGAINST PURCHASER. Neither Purchaser nor the
Business is under any governmental investigation, no such investigation
has been threatened, and there are no judgments against Purchaser, the
Business or the assets of Purchaser.
8.15 IDENTIFICATION OF ASSET. All assets used by Purchaser in
the operation of the Business are either owned by Purchaser or leased
by Purchaser under the leases, if any, described in Purchaser's
financial statements provided to Seller. The assets of Purchaser
include, without limitation, the assets identified on EXHIBIT "G"
attached hereto.
8.16 AMOUNTS OWING TO PURCHASER'S SHAREHOLDERS. No amounts are
owing by Purchaser to any of Purchaser's shareholders, other than the
debts, if any, specifically so identified in Purchaser's financial
statements provided to Seller.
8.17 INVENTORY. The inventory, if any, held by Purchaser is
usable and in good condition, with not more than one percent thereof
being obsolete, and all of the inventory is owned by Purchaser, none of
it being held on consignment.
8.18 DISCLOSURE MATERIALS. All of the information disclosed by
Purchaser to Seller, as a whole, does not contain any statement that,
as of the date hereof, is false or misleading, and does not omit to
state any material fact: (i) necessary to make the statements made, in
light of the circumstances under which they were made, not false or
misleading, or (ii) necessary to provide Seller with complete and
accurate information as to the assets and financial condition of
Purchaser.
ASSET PURCHASE AGREEMENT PAGE 11
8.19 DEFAULTS. There are no defaults or events that, with the
giving of notice or the passage of time, would constitute defaults
under any material document under which Purchaser is obligated.
8.20 VENDOR ACCOUNTS. Purchaser use Purchaser's best efforts
do nothing to cause Purchaser to lose any of Purchaser's supplier and
other vendor accounts, or to cause adverse changes in the account
terms.
8.21 MATERIAL CONTRACTS. Purchaser is not a party to or bound
by any agreement not made in the ordinary course of its business which
is material to its financial condition or operations.
8.22 OUTSTANDING LIABILITIES. There are no liabilities of
Purchaser other than as are shown on its most recent balance sheet
provided to Seller, and other than liabilities arising after the
balance sheet date in the normal course of business out of purchases
and sale of goods. There are no liabilities relating to Purchaser's
business which are more than ninety (90) days past due.
8.23 PRODUCTS. The products, if any, offered currently or in
the past by Purchaser for sale meet all material product and/or process
specifications which they purport or are required to meet, and satisfy
in all material respects all applicable laws where the products are
currently being sold or have been sold within the last five years,
except where Purchaser has chosen not to sell products because the
products would violate a law of that place.
8.24 PATENTS. There is no litigation pending or threatened
with respect to the patents, if any, of Purchaser, there is no
outstanding order, judgment, decree or stipulation affecting the
validity or enforceability of said patents, there exits no outstanding
notices of infringement given by Purchaser regarding the patents, there
are no pending interferences or other contested proceedings pending, or
that are in the process of being instituted, in the United States
Patent Office or in the courts, relating to said patents, and none of
Purchaser's patents are presently being infringed.
8.25 RECEIVABLES. All accounts receivable of Purchaser arose
in the regular course of business, and represent valid obligations
arising from sales actually made or services actually performed in the
ordinary course of business and are collectable and are subject to no
defenses or counterclaims.
8.26 EMPLOYEES. All of Purchaser's employee benefits are
disclosed on EXHIBIT "F" attached hereto. Purchaser is in compliance
with all terms of all employee benefit plans of Purchaser.
Purchaser shall upon request made by Seller provide Seller
with a complete and accurate list of the following information for each
employee of Purchaser, including each employee on leave of absence or
layoff status: name; job title; current compensation; vacation and sick
pay accrued; and services credited for purposes of vesting and
eligibility to participate in any of Purchaser's employee benefit
plans.
8.27 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other documents and instruments to be executed
and delivered by Purchaser pursuant hereto, and the consummation by
Purchaser of the transactions contemplated herein or therein:
(a) Will not violate or conflict with any applicable
federal, state, foreign, local or other law, ordinance, rule,
regulation, or governmental requirement or restriction of any
kind, including any rules, regulations, and orders promulgated
thereunder, and any final orders, decrees, consents, or
judgments of any regulatory agency or court ("Law");
ASSET PURCHASE AGREEMENT PAGE 12
(b) Except as may be required to comply with the
Securities Act and the Exchange Act, will not require any
authorization, consent, approval, exemption or other action by
or notice to any government entity (including, without
limitation, under any "plant closing" or similar law)
(Purchaser is not required to give any notice or to obtain any
consent from any person, entity, or governmental agency in
connection with the execution and delivery of this Agreement
or the consummation of the Transaction);
(c) Will not constitute a default or an event that,
with notice, lapse of time, or both, would be a default,
breach, or violation of the Articles of Incorporation or
Bylaws of Purchaser or any lease, license, promissory note,
conditional sales, contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement
to which Purchaser is a party or by which Purchaser or its
property is bound; and
(d) Will not give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate, or modify any
governmental authorization held by Purchaser or that otherwise
relates to Business.
8.28 VIOLATIONS OF LAW. None of the present or past operations
of the Business, the products of the Business, or Purchaser's assets
violate or conflict, in any material respect, with any permits, any law
(including environmental laws), governmental specification,
authorization, or requirement, or any decree, judgment, order or
similar restriction. Purchaser is not the subject of an inspection or
inquiry regarding violations or alleged violations of any law by any
state, federal or local agency.
There are no pending administrative or judicial proceedings, threatened
proceedings, orders, notice of violations, inspection reports, and
similar occurrences, if any, relating to the conduct of the Business or
Purchaser's assets.
Purchaser has not been the subject of an Occupational and Safety Health
Administration inspection or found by any agency to be in violation of
any state or federal occupational safety or health law in the conduct
of its business.
8.29 CONDITION AND SUFFICIENCY OF ASSETS. All tangible assets
of the Purchaser are in operating condition and repair, and are
adequate for the uses to which they are being put, and none of such
items is in need of maintenance or repairs, except for ordinary,
routine maintenance and repairs that are not material in nature or
cost. The assets are sufficient for the continued conduct of the
Purchaser's businesses after the Transfer Date in substantially the
same manner as conducted prior to the Transfer Date.
8.30 BANK ACCOUNTS. This Section is intentionally omitted.
8.31 FILINGS COMPLETE. All documents filed by Purchaser with
any governmental agency, including with the Securities Exchange
Commission, do not contain a misstatement of a material fact or an
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading as of the time such
document was filed or became effective.
8.32 ENVIRONMENTAL MATTERS. For purposes of this Section:
(i) "Environmental Law" means all federal, state,
local, foreign, and other applicable jurisdiction laws
relating to the environment or the use, disposal, existence,
or release of any Hazardous Materials, including but not
limited to any and all laws concerning, affecting,
controlling, or in any way relating to, whether in whole or in
part, noise levels, ground vibrations, air pollutants, water
pollutants, process waste water, or Hazardous Materials;
ASSET PURCHASE AGREEMENT PAGE 13
(ii) "Environmental Release" means any release,
spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property;
(iii) "Hazardous Materials" means: (A) any waste,
hazardous waste, pollutant, contaminant, or hazardous or toxic
substance regulated by law; (B) asbestos; (C) formaldehyde;
(D) polychlorinated biphenyls; (E) radioactive materials; (F)
waste oil and other petroleum products; and (G) any other
substance which constitutes a nuisance or hazard to the
environment or the public health, safety, or welfare.
Purchaser is, and at all times has been, in full compliance with, and
has not been and is not in violation of or liable under, any
Environmental Law. Purchaser has no basis to expect, nor has Purchaser
or (to the knowledge of Purchaser or any Contract Shareholder) any
other person for whose conduct Purchaser is or may be held to be
responsible, received, any actual or threatened order, notice, or other
communication from: (i) any governmental body or private citizen acting
in the public interest; or (ii) the current or prior owner or operator
of any of Purchaser's properties or assets, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear the cost of any
environmental, health and safety liabilities with respect to any of
Purchaser's properties or assets (whether real, personal, or mixed) in
which Purchaser has had an interest, or with respect to any of
Purchaser's properties at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or
processed by Purchaser, or (to the knowledge of Purchaser) any other
person for whose conduct Purchaser is or may be held responsible, or
from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
Purchaser has delivered to Seller complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated
by Purchaser or any of its shareholders pertaining to Hazardous
Materials or hazardous activities in, on, or under Purchaser's
properties or concerning compliance by Purchaser, or any other person
for whose conduct Purchaser is or may be held responsible, with
Environmental Laws.
8.33 INTELLECTUAL PROPERTY. Purchaser has good and valid title
to and the rights to use the intellectual property identified on
EXHIBIT "G" attached hereto.
8.34 CERTAIN PAYMENTS. Neither Purchaser nor any shareholder,
director, officer, agent or employee of Purchaser, or any other person
associated with or acting for or on behalf of Purchaser, has directly
or indirectly: (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person, private or
public, regardless of form, whether in money, property, or services:
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special
concessions or for special concessions already obtained, for or in
respect of Purchaser, or (iv) in violation of any law; or (b)
established or maintained any fund or asset that has not been recorded
in the books and records of Purchaser.
8.35 CONSENTS AND APPROVALS. No consent, approval or
authorization of, or declaration, filing or registration with, any
governmental person, whether federal, state or local, is required of
Purchaser in connection with the execution or delivery by Purchaser of
this Agreement or the consummation by Purchaser of any of the
transactions contemplated hereby, except as may be required to comply
with the Securities Act or the Exchange Act and compliance filings with
the State of Nevada.
8.36 CUSTOMERS AND SUPPLIER. This Section is intentionally
omitted.
ASSET PURCHASE AGREEMENT PAGE 14
8.37 CHANGES IN THE PURCHASER OR ITS DOCUMENTS. None of the
following has occurred within the last twelve months prior to the date
of this Agreement: (i) any change in the Articles of Incorporation or
Bylaws of Purchaser; (ii) any change in the number of shares of stock
issued and outstanding; (iii) the merger or consolidation of Purchaser
with or into any other corporation or other entity; (iv) declaration or
payment by Purchaser of any dividend or any repurchase by Purchaser of
any shares of stock of Purchaser; or (v) except in the ordinary course
of business and consistent with Purchaser's past practice, any increase
in the compensation payable by Purchaser to any director, officer,
employee or agent, or payment of any bonus, severance payment or other
compensation to any director, officer, employee or agent, or the
entering into of any agreement of any type which is not terminable by
Purchaser on no more than 30 days notice.
8.38 SHAREHOLDERS AGREEMENTS AND OTHER AGREEMENTS. There are
no shareholders agreements of any type, including but not limited to
any voting trust agreements, voting agreements or similar arrangements
restricting voting rights or the transferability of any interest in
Purchaser relating to the capital stock of Purchaser, or otherwise
relating to Purchaser. This representation and warranty does not
include any pledge by a shareholder of capital stock of Purchaser, the
terms of which may restrict transferability of such capital stock.
Furthermore, there are no employment agreements, consulting agreements
or similar type agreements relating to Purchaser which are not
terminable by Purchaser without penalty on not more than 90 days
notice.
8.39 ASSETS IN GOOD CONDITION. Each material asset of
Purchaser which is a tangible asset is in good working order and
condition, reasonable wear and tear excepted.
8.40 BROKERS AND FINDERS. No finder, broker, agent or other
intermediary has acted for or on behalf of Purchaser in connection with
the negotiations or consummation of this Agreement or of any of the
transactions contemplated hereby, nor has Purchaser incurred or caused
to be incurred any liability for any fee or commission in the nature of
a finder's fee, originator's fee or broker's fee in connection with the
subject matter of this Agreement, and Purchaser hereby indemnifies
Seller, and agrees to hold Seller harmless, against all liabilities,
expenses, costs, losses and claims, if any, arising from the employment
by Purchaser (or any allegation of any such employment) of any finder,
broker, agent or other intermediary in such connection.
An individual will be deemed to have knowledge of a particular fact or other
matter if such individual is actually aware of such fact or other matter without
inquiring, or such individual is not actually aware of the fact but written
notification of the fact has been received such that the individual should have
known the fact. An entity will be deemed to have knowledge of a particular fact
or other matter if any individual who is serving as a director or officer of the
entity is actually aware of such fact or other matter without inquiring, or such
individual is not actually aware of the fact but written notification of the
fact has been received such that the individual should have known the fact.
Purchaser hereby agrees to indemnify Seller and its members, officers, directors
and controlling persons and attorneys, and defend and hold them free and
harmless from and against any liability, obligation, loss, cost and expense,
including attorney's fees, incurred in connection with any material breach by
Purchaser of any of its representations, warranties or covenants contained in
this Agreement. The Contract Shareholders will indemnify and defend and hold
Seller harmless from and against any liability, including attorneys' fees
incurred by Seller in connection with any breach by the Contract Shareholders of
any representation or warranty, or covenant, contained in this Agreement.
The representations and warranties in this Section, and elsewhere in this
Agreement, and all indemnification provisions in this Agreement, will survive
the Closing. The rights of Seller based upon the representations and warranties
of Purchaser will not be affected by any investigation conducted with respect
thereto, or any knowledge acquired, or capable of being acquired, at any time,
whether before or after the execution of this Agreement, with respect to the
accuracy or inaccuracy of or compliance with, any such representation or
warranty.
ASSET PURCHASE AGREEMENT PAGE 15
Disclosures made anywhere in this Agreement or its Exhibits shall be deemed to
be disclosures for all purposes of this Agreement.
9. INTERIM EVENTS. Purchaser agrees that it shall take no action prior
to the Closing, other than in the ordinary course of business, which would or
might have a material adverse effect upon the financial condition of Purchaser,
and no benefits will be paid or incurred to shareholders, officers, or directors
of Purchaser between the date hereof and the Closing other than as is consistent
with past activities and practices.
From the date of this Agreement until the Closing, and except as otherwise
consented to or approved by Seller in writing, which consent shall not be
unreasonably withheld, Purchaser shall not: (i) change its Articles of
Incorporation or Bylaws; (ii) [this subparagraph (ii) is intentionally omitted];
(iii) merge or consolidate with or into any other corporation or other entity;
(iv) declare or pay any dividend or repurchase or otherwise acquire any shares
of stock of Purchaser; or (v) except in the ordinary course of business and
consistent with Purchaser's past practice, increase the compensation payable to
or to become payable by Purchaser to any director, officer, employee or agent,
or to pay any bonus, severance payment or other compensation to any director,
officer, employee or agent, or enter into any agreement of any type which is not
terminable by Purchaser on no more than 30 days notice.
10. CONDITIONS OF THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are subject to the following conditions being met prior to
or contemporaneously with the Closing:
(a) REPRESENTATIONS AND WARRANTIES. All of Seller's
representations and warranties contained in this Agreement being true
and correct in all material respects on and as of the Closing, with the
same force and effect as though made on and as of the Closing, and
Seller having performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by Seller on or prior to the Closing.
(b) EMPLOYMENT AGREEMENT. The execution by all parties thereto
of an Employment Agreement in the form of EXHIBIT "I" attached hereto.
(c) CONTRACT FOR SERVICES. The execution by all parties
thereto of a Contract for Services in the form of EXHIBIT "J" attached
hereto.
11. CONDITIONS OF THE OBLIGATIONS OF SELLER. The obligations of Seller
hereunder are subject to the following conditions being met prior to or
contemporaneously with the Closing:
(a) REPRESENTATIONS AND WARRANTIES. All of Purchaser's
representations and warranties contained in this Agreement being true
and correct in all material respects on and as of the Closing, with the
same force and effect as though made on and as of the Closing, and
Purchaser having performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed
or complied with by Purchaser on or prior to the Closing.
(b) EMPLOYMENT AGREEMENT. The execution by all parties thereto
of an Employment Agreement in the form of EXHIBIT "I" attached hereto.
ASSET PURCHASE AGREEMENT PAGE 16
(c) CONTRACT FOR SERVICES. The execution by all parties
thereto of a Contract for Services in the form of EXHIBIT "J" attached
hereto.
(d) NO MATERIAL ADVERSE CHANGE. The operations, assets and
financial condition of Purchaser have not suffered a material adverse
change between the date of this Agreement and the date of Closing, and
the operations, assets and financial condition of Purchaser as of the
Closing not being materially different in an adverse manner than the
condition disclosed in Purchaser's most recent financial statements
provided to Seller.
(e) MAINTENANCE OF ASSETS. Purchaser having maintained its
assets in the same condition as of the date of this Agreement (subject
only to ordinary wear and tear).
(f) ORDINARY COURSE OF BUSINESS. Purchaser having conducted
its businesses diligently and substantially in the same manner as prior
to the execution of this Agreement and not having entered into any
material contract, commitment or transaction not in the usual and
ordinary course or business.
(i) DIRECTORSHIPS. Xxxxxx Xxxxxxx having been installed on
Purchaser's Board of Directors.
12. ACQUISITION OF CHAIN-O-MINES.
(a) Immediately upon execution of this Agreement, Seller and
Purchaser shall use their best efforts to negotiate an option to
acquire the rights of Judge Xxxxxx Xxxxxx and his affiliates in the
Chain-O-Mines properties, and shall immediately thereafter begin
working with Xxxx Xxxxx for the purpose of having her appointed the
guardian or conservator for the person and estate of Xxxxxx Xxxxxxxx.
Upon the appointment of Xxxx Xxxxx as guardian and/or conservator of
the person and estate of Xxxxxx Xxxxxxxx, Seller and Purchaser shall
use their best efforts to: (i) negotiate a settlement of the litigation
between Xxxxxx Xxxxxxxx and Judge Xxxxxx Xxxxxx and their affiliates
regarding and affecting the Chain-O-Mines properties; and (ii) acquire
the Chain-O-Mines properties as described herein (i.e., the Joint
Venture Parcels (defined below) to be acquired in the Joint Venture
LLC, and other Chain-O-Mine assets to be acquired by Purchaser).
Purchaser shall assist Seller in such efforts by advancing certain
predetermined legal fees and living expenses for Xxxx Xxxxx.
Purchaser's obligations under this paragraph shall be limited to the
amounts and circumstances set forth in EXHIBIT "K" attached hereto, but
Purchaser shall be obligated to fund said amounts up to said limits as
and when requested by Seller.
(b) The parking lot which is approximately eight to ten acres,
and has on it tailings (estimated at 2,500,000 to 3,000,000 tons) from
the "Glory Hole," is referred to herein as the "PARKING LOT PROPERTY."
Said term does not include the tailings on the surface of said real
estate (except as is expressly described below), but does include any
and all other interests of any type relating to said real estate. The
Parking Lot Property, together with the approximately 3,200 acres of
real property commonly referred to the "Young Ranch," and the
approximately 260 acres of real estate commonly referred to as the
"Proland Property," are sometimes collectively referred to herein as
the "JOINT VENTURE PARCELS."
If Purchaser (or any affiliate of Purchaser) shall ever have an
opportunity to acquire rights relating to any or all of the Joint
Venture Parcels, then, as to each such opportunity: (i) Purchaser shall
notify Seller of the opportunity; (ii) if Purchaser (or any affiliate
of Purchaser) takes advantage of the opportunity then Purchaser (or the
affiliate) will do so in the Joint Venture LLC (defined below); and
(iii) Seller will be entitled to participate in the Joint Venture LLC,
without cost to Seller.
ASSET PURCHASE AGREEMENT PAGE 17
If within seven years after the date of this Agreement, Seller shall
have an opportunity to acquire rights relating to one or more of the
Joint Venture Parcels, then Seller will notify Purchaser of the
opportunity, and Purchaser will be entitled to participate in the
opportunity, thorough the Joint Venture LLC (defined below), as
described below, on a right of first refusal basis. Seller shall give
written notice to Purchaser that Seller desires for the Joint Venture
LLC to enter into a transaction (the "JOINT VENTURE OPPORTUNITY")
relating to one or more of the Joint Venture Parcels. Seller shall
attach to that notice one or more documents showing the details of the
Joint Venture Opportunity. The terms of the Joint Venture Opportunity
must be commercially common terms subject to duplication, as opposed to
terms which can only be met by the particular prospective purchaser
(for example, the offer cannot be to exchange personal consulting
services). For forty-five (45) days from receipt of the written notice
from Seller, Purchaser shall have the option to cause the Joint Venture
LLC to execute an agreement to engage in the Joint Venture Opportunity.
If Purchaser does not cause the Joint Venture LLC to execute such an
agreement within said time period, or if after such an agreement is
executed the Joint Venture LLC is not able to consummate the
transaction as provided for in the agreement within the time periods
set out in the agreement, then Seller thereafter shall be entitled to
consummate the transaction and/or take advantage of the Joint Venture
Opportunity for Seller's benefit or the benefit of one or more third
parties.
The term "JOINT VENTURE LLC" (as used herein relating to an acquisition
of one or more of the Joint Venture Parcels), means one or more limited
liability companies formed for said purpose. Said limited liability
company(s) will be formed in Colorado under Colorado laws, will be a
"member-run" limited liability company(s), and will be owned and
controlled equally, one-half each, by Seller and Purchaser. Seller and
Purchaser will attempt in good faith to agree on the terms of an
Operating Agreement to govern the limited liability company(s), but
absent such an agreement, the limited liability company(s) will be
governed by Colorado law without an Operating Agreement.
It is acknowledged and agreed that Purchaser will provide or obtain the
financing required to consummate the purchase of the Joint Venture
Parcels, if they are acquired by the Joint Venture LLC., and the
financing required to operate the Joint Venture LLC (including but not
limited to paying the costs of removing the existing surface tailings
from the Parking Lot Property (if said tailings are so removed), as
described below), the parties agreeing that Purchaser is the "money
partner" and Seller shall have no obligation to provide funds to or for
the Joint Venture LLC.
If the Parking Lot Property is acquired with tailings on its surface,
then the tailings shall be acquired by the Joint Venture LLC as part of
the purchase. It is anticipated that the Joint Venture LLC will
thereafter sell the Parking Lot Property, and the tailings will have to
be removed from the Parking Lot Property.
If the Joint Venture LLC is required under its sale agreement to move
the tailings, then Purchaser shall be responsible for moving the
tailings and advancing the funds necessary to cover the costs of moving
the tailings. The cost of the removal shall be an expense of the Joint
Venture LLC, but only the cost of moving the tailings up to ten miles
from the Parking Lot Property, and said cost shall be allocated by the
Joint Venture LLC 90% to Purchaser and 10% to Seller. Purchaser shall
thereafter own all of the tailings, which shall be part of the "Royalty
Assets" subject to Seller's royalty interest granted in Section 13
below.
If the buyer under the Joint Venture LLC's sale agreement is required
under the sale agreement to move the tailings for the benefit of
Purchaser, then: (i) after the tailings are so moved, Purchaser shall
own the tailings, which shall be part of the "Royalty Assets" subject
to Seller's royalty interest granted in Section 13 below; and (ii) when
allocating gain on the sale at the Joint Venture LLC level, and when
making distributions from the Joint Venture LLC, $3,000,000.00 more
shall be allocated and distributed to Seller than to Purchaser. This is
a fixed amount adjustment agreed to by the parties to compensate Seller
for the fact that the buyer will not pay as high of a purchase price
for the Parking Lot Property if the buyer has to incur the cost to move
the tailings.
If the Joint Venture LLC sells the Parking Lot Property, and the
tailing are sold to the buyer as part of the sale, then all of the
sales proceeds from the sale, including proceeds from the tailings,
shall belong to the Joint Venture LLC as if the tailings were included
in the definition in this Agreement of the "Parking Lot Property."
(c) If Seller shall have an opportunity to acquire rights
relating to one or more of the Chain-O-Mines properties other than the
Joint Venture Parcels (the "NON-VENTURE OPPORTUNITY"), then Seller will
notify Purchaser of the Non-Venture Opportunity, and Purchaser shall be
ASSET PURCHASE AGREEMENT PAGE 18
entitled to participate in the Non-Venture Opportunity, on a right of
first refusal basis, without Seller having any interest therein (other
than any interest of Seller in the capital stock of Purchaser). Seller
shall give written notice to Purchaser of the Non-Venture Opportunity,
and shall attach to that notice one or more documents showing the
details of the Non-Venture Opportunity. The terms of the Non-Venture
Opportunity must be commercially common terms subject to duplication,
as opposed to terms which can only be met by the particular prospective
purchaser (for example, the offer cannot be to exchange personal
consulting services). For forty-five (45) days from receipt of the
written notice from Seller, Purchaser shall have the option to execute
an agreement to engage in the Non-Venture Opportunity.
If Purchaser does not execute such an agreement within said
time period, or if after such an agreement is executed Purchaser is not
able to consummate the transaction as provided for in the agreement
within the time periods set out in the agreement, then Seller
thereafter shall be entitled to consummate the transaction and/or take
advantage of the Non-Venture Opportunity for Seller's benefit or the
benefit of one or more third parties.
If Purchaser, or an Affiliate of Purchaser, acquires an
interest in a Non-Venture Opportunity, then the interest so acquired
will be included in the Royalty Assets, as that term is defined in
subparagraph 13(a) below.
(d) If any of the Parking Lot Property is acquired by the
Joint Venture LLC (or for some reason by Purchaser or an affiliate of
Purchaser), AND said acquisition occurs prior to the acquisition by
Purchaser (or an affiliate of Purchaser) of any other of the
Chain-O-Mine properties, then upon the closing of the acquisition of
the Parking Lot Property Purchaser shall issue to Seller an additional
Five Hundred Thousand (500,000) shares of Purchaser's Common Stock and
pay Seller an additional sum of $250,000.00 in cash. If thereafter
Purchaser or an affiliate of Purchaser acquire any part of the
Chain-O-Mine properties which includes the "Glory Hole," then upon the
closing of the property which includes the "Glory Hole," Purchaser
shall issue to Seller an additional Five Hundred Thousand (500,000)
shares of Purchaser's Common Stock and pay Seller an additional sum of
$250,000.00 in cash.
If instead of as is called for in the paragraph appearing immediately
above, Purchaser or an affiliate of Purchaser acquire any part of the
Chain-O-Mine properties which includes the "Glory Hole" and the
acquisition occurs before the Parking Lot Property is acquired by the
Joint Venture LLC (or for some reason by Purchaser or an affiliate of
Purchaser), then upon the closing of the acquisition of the property
which includes the "Glory Hole" Purchaser shall issue to Seller an
additional One Million (1,000,000) shares of Purchaser's Common Stock
and pay Seller an additional sum of $500,000.00 in cash. If thereafter
any other part of the Chain-O-Mine properties or a Joint Venture Parcel
is acquired by the Joint Venture LLC, Purchaser or an affiliate of
Purchaser, then no additional shares of Purchaser's Common Stock or
cash shall be payable to Seller under this subparagraph (d), the
parties intending in this subparagraph (d) (including this paragraph
and the paragraph immediately preceding this paragraph) to call for the
issuance to Seller of a maximum of 1,000,000 shares and $500,000.00
cash (adjusted however if applicable by the paragraph appearing
immediately below).
The number of shares figures appearing in the two paragraphs
immediately preceding this paragraph (i.e., of 500,000 shares and
1,000,000 shares) are based on the number of shares of Common Stock
issued as of the date of this Agreement, and shall be adjusted for
future transactions such as stock splits and reverse stock splits. All
such stock shall be eligible to participate, on the same terms and in
the same proportions as granted to any management personnel of
Purchaser, in any "piggyback" or other registration rights which may be
made available after the Closing to any of said management personnel.
Should Purchaser no longer be publicly traded on a US national exchange
or the Over-The-Counter Bulletin Board, then Seller shall have
pre-emptive rights and a right of first refusal to acquire its
proportionate share (based on Common Stock ownership) on any shares of
stock thereafter issued by Purchaser.
ASSET PURCHASE AGREEMENT PAGE 19
The acquisition of the Young Ranch and/or the Proland Property
will not trigger an obligation of Purchaser to issue shares or pay cash
as described above in this subparagraph (d), regardless of whether
either or both are acquired.
(e) Neither Purchaser nor Seller will have any obligation
under this Agreement to bring to the other party any opportunity which
is not part of the Chain-O-Mines.
13. SELLER'S ROYALTY INTEREST.
(a) Seller and/or Seller's designated agents or assignees
shall receive a royalty interest (the "ROYALTIES") on all of
Purchaser's "Gross Production Proceeds" (defined below) as follows:
------------------------- ---------------------------------------------------------- -------------------
Row # Years Seller's
Percentage of
Gross Production
Proceeds
------------------------- ---------------------------------------------------------- -------------------
1 All years from the Closing date until Purchaser's 10%
production on the Royalty Assets (defined below) reaches
six tons per hour, twenty hours per day, five days per
week, for a period of at least four consecutive weeks.
------------------------- ---------------------------------------------------------- -------------------
2 From the end of the time period in Row 1 above until the 10%
end of five (5) full years thereafter.
------------------------- ---------------------------------------------------------- -------------------
3 From the end of the time period in Row 2 above until the 5%
end of five (5) full years thereafter.
------------------------- ---------------------------------------------------------- -------------------
4 For all time periods after the end of the time period in 2.5%
Row 3 above.
------------------------- ---------------------------------------------------------- -------------------
For purposes hereof, the term "GROSS PRODUCTION PROCEEDS" shall mean
the following:
(i) So long as Purchaser owns each of the Royalty
Assets, the term shall mean as to the Royalty Assets owned the
gross revenue earned by or for Purchaser or any Affiliate of
Purchaser from its/their "Related Mining Operations" (defined
below) of those Royalty Assets; and
(ii) If Purchaser sells any or all of the Royalty
Assets, then the term shall mean as to the Royalty Assets sold
the same as set out in subparagraph immediately (i) above,
except that the calculations will be based on the gross
revenue earned by the owner(s) of the Royalty Assets
transferred or any Affiliate of said owner(s). The buyer of
the Royalty Assets sold must in writing at the closing of the
sale assume and agree to timely perform the obligations of
Purchaser in this Section 13, as to the Royalty Assets sold to
the buyer. Seller's lien described in subparagraph 13(i) below
shall continue after the sale of the Royalty Assets to be an
encumbrance against the Royalty Assets sold.
The term "RELATED MINING OPERATIONS" as used herein shall mean and
include: (i) all income from tailings processing operations and other
processing operations that are based on mining properties located
within a twenty (20) mile radius of Central City and Blackhawk,
Colorado, and/or within a twenty (20) mile radius of any Royalty Asset,
but does not include tailings from mines outside of such radius but
brought to a site within the radius for processing; and (ii) all
income, whether from processing or otherwise, from tailings and other
ASSET PURCHASE AGREEMENT PAGE 20
materials of any type obtained from the Royalty Assets, whether or not
processed in the geographical area described in (i) above.
The term "ROYALTY ASSETS" as used herein shall mean and include the
Assets (defined in Section 2 above), all tailings from the Parking Lot
Property, as described in subparagraph 12(b) above, and Non-Venture
Opportunities, as described in the last paragraph of subparagraph 12(c)
above.
(b) Purchaser shall commence mining "Operations" on the Assets
within two years after the Closing. For this purpose, Purchaser shall
be deemed to have commenced "Operations" if any amount of Royalties has
been generated under subparagraph 13(a) above and paid to Seller under
said provision. If Purchaser shall not have so commenced Operations,
then Seller shall be entitled, for a period of six months after the
expiration of said two year period, to purchase the Assets from
Purchaser for a cash purchase price equal to the purchase price(s) paid
by Seller to acquire the Assets prior to transfer of the Assets to
Purchaser under this Agreement. If Seller so elects to purchase the
Assets, then Purchaser shall so sell the Assets to Seller and shall
deliver to Seller title to the Assets free and clear of any and all
encumbrances, other than those, if any, encumbering the Assets
immediately after the Closing of Purchaser's acquisition of the Assets
pursuant to this Agreement.
(c) The Royalties will be payable quarterly, on a calendar
quarter basis, on or before the first day of the month following the
first month after the end of the calendar quarter to which the
Royalties relate (for example, Royalties for the first quarter of a
year shall be payable by May 1 of that year).
(d) As used in this Agreement, the term "Affiliate" shall
mean:
(i) Any natural person, partnership, joint venture,
corporation, estate, trust, association, or other legal
entities ("Person") directly or indirectly owning,
controlling, or holding with power to vote five percent (5%)
or more of the outstanding voting securities of Purchaser;
(ii) Any Person five percent (5%) or more of whose
voting securities are directly or indirectly owned,
controlled, or held with power to vote by Purchaser;
(iii) Any Person directly or indirectly controlling,
controlled by or under common control with Purchaser;
(iv) Any officer, director, partner or trustee of
Purchaser; and/or
(v) If such other Person is an officer, director,
partner, or trustee, any company or trust for which such
Person acts in such capacity.
(e) All unpaid Royalties and other amounts due to Seller
hereunder shall bear interest from the due date until the date of
payment at the rate of eighteen percent (18%) per annum.
(f) If, during the term of this royalty agreement, Purchaser,
or any Affiliate of Purchaser, offers any product or service in
exchange for less than commercially reasonable consideration, without
the prior written approval of Seller, then Seller shall nonetheless be
entitled to Royalties based upon the value of the product transferred
or services performed.
(g) On or before the due date of the Royalties described
above, Purchaser shall make a written report to Seller in form and with
detail as shall reasonably be requested by Seller, setting forth the
sales and other detail relating to the Gross Production Proceeds for
the period to which the Royalties relate.
ASSET PURCHASE AGREEMENT PAGE 21
Purchaser shall keep at its principal place of business, such books and
records and other documents relating to its Gross Production Proceeds
during the term of this Agreement as may be necessary or proper to
enable the amounts payable to Seller hereunder to be conveniently
ascertained, and shall permit Seller or Seller's duly authorized
representatives, upon reasonable notice, at reasonable times, up to one
year after expiration or termination of this Agreement, to inspect all
such accounts and records and to take extracts therefrom or copies
thereof to the extent necessary to verify the report and payments
required under the terms of this Agreement.
Seller shall have the right, from time to time during the time of this
Agreement, and for a period of one year thereafter, to cause the books
and records of Purchaser to be audited or otherwise reviewed. In the
event said audit or review is done by an independent certified public
accountant, the following shall apply:
(i) If the audit or review discloses that
Seller was underpaid its Royalties by two percent (2%) or more
during the period covered by the audit or review, then
Purchaser shall, within ten (10) days after demand is made
therefor, pay all costs relating to said audit or review and
pay Seller an amount equal to two (2) times the amount of the
underpayment. Seller shall further have all other rights and
remedies against Purchaser available at law, in equity, or
under this Agreement with respect to such underpayment.
(ii) If the audit or review fails to
disclose an underpayment to Seller of two percent (2%) or
more, then Seller shall pay the cost of the audit or review.
(iii) If the audit or review discloses that
Seller was underpaid by less than two percent (2%), or
overpaid, in any period, then Purchaser, or Seller, as the
case may be, shall within ten (10) days after demand made
therefor, pay the amount of the underpayment or overpayment.
Purchaser hereby authorizes Seller and its representatives and agents
to contact Purchaser's accounting firm and legal counsel, and, if
reasonably necessary for proper verification, Purchaser's customers and
suppliers, for verification of the calculation of Royalties, and
Purchaser instructs said firms to provide Seller with any and all
information requested by Seller.
(h) Purchaser agrees to indemnify and defend and save harmless
Seller from every claim, demand, expense, and cost, including
attorney's fees, which may arise by reason of the operations of
Purchaser or any other person or entity, conducted on or in connection
with the Assets, arising after the Closing.
(i) At the Closing, liens shall be placed encumbering the
Assets, securing Purchaser's obligation under this Agreement. As to the
real estate, the liens will be in the form of Deeds of Trust and
Assignments of Rent, using the Escrow Agent's standard form, if any,
and in the absence of such a form, then using a form acceptable to
Seller in Seller's discretion. If any such lien would violate any
applicable "rule against perpetuities," then that lien shall be
extinguished on the earlier to occur of: (i) December 31, 2103; or (ii)
twenty-one years after the death of the last to die of the "lives in
being," as of the date the lien originated, in the group consisting of
the parties whose signatures appear on this document, the President of
the United States, and the Speaker of the House of Representatives of
the Untied States, and any then-living descendent of any of said
persons.
14. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION.
(a) SURVIVAL. All statements contained in any Exhibit,
Schedule, document, certificate or other instrument delivered by or on
behalf of any party hereto, or in connection with the transactions
ASSET PURCHASE AGREEMENT PAGE 22
contemplated hereby, shall be deemed to be representations and
warranties made pursuant to this Agreement by such party along with the
representations and warranties made pursuant to this Agreement, and
shall survive the consummation of the transactions contemplated by this
Agreement and the investigations made by or on behalf of any of the
parties.
(b) INDEMNIFICATION BY SELLER. Seller agrees to indemnify
Purchaser and hold Purchaser harmless against and in respect to any and
all damages, losses, expenses, costs, obligations and liabilities,
including reasonable attorney's fees, incurred in connection with any
asserted claim or loss which Purchaser may incur or may suffer by
reason of: (i) any breach of, or failure of Seller to perform, any of
their representation, warranties, guarantees, commitments or covenants
contained in this Agreement; and/or (ii) any act or omission of Seller
which constitutes a breach or default hereunder. Consummation of the
Transaction hereunder shall not be deemed or construed to be a waiver
of any right or remedy of Purchaser, notwithstanding the facts which
Purchaser knew or should have known at the time of Closing, nor shall
this subparagraph or any other provision of this Agreement be deemed or
construed to be a waiver of any ground or defense by Purchaser.
(c) INDEMNIFICATION BY PURCHASER. Purchaser agrees to
indemnify Seller and hold Seller harmless against and in respect to any
and all damages, losses, expenses, costs, obligations and liabilities,
including reasonable attorney's fees, incurred in connection with any
asserted claim or loss which Seller may incur or may suffer by reason
of: (i) any breach of, or failure of Purchaser to perform, any of their
representation, warranties, guarantees, commitments or covenants
contained in this Agreement; and/or (ii) any act or omission of
Purchaser which constitutes a breach or default hereunder. Consummation
of the Transaction hereunder shall not be deemed or construed to be a
waiver of any right or remedy of Seller, notwithstanding the facts
which Seller knew or should have known at the time of Closing, nor
shall this subparagraph or any other provision of this Agreement be
deemed or construed to be a waiver of any ground or defense by Seller.
15. NOTIFICATION OF CERTAIN MATTERS. Each party to this Agreement will
give prompt notice to other parties to this Agreement of:
(i) The occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect; and
(ii) The failure of the party to comply with or satisfy any
material covenant, condition or agreement to be complied with or
satisfied by the party under this Agreement.
16. FURTHER ASSURANCES. The parties agree to do such further acts and
things and to execute and deliver such additional agreements and instruments as
any party may reasonably require to consummate, evidence, or confirm any
agreement contained herein in the manner contemplated hereby.
17. AUTHORITY. Any individual executing this Agreement on behalf of an
entity represents and warrants that such individual has the right and authority
to execute this Agreement on behalf of such entity and that the entity will be
bound by this Agreement.
18. NOTICES. Any notice or communication given under the terms of this
Agreement ("Notice") shall be in writing and shall be delivered in person or
mailed by certified mail, return receipt requested, in the United States Mail,
postage pre-paid, addressed as follows:
If to Purchaser, to:
Oretech, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Chief Executive Officer
ASSET PURCHASE AGREEMENT PAGE 23
With copy to:
Xxxxx X. Xxxx, Attorney
000 Xxxxxxxxx Xxxx.
Xxxxxxxx, Xxxxxxxxxx 00000
If to Seller, to:
Xx. Xxxxxx XxXxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Xx. Xxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Mr. Xxxx Xxxxxxxx
0000 Xxxxx 00xx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Xx. Xx Xxxx
0000 Xxxxx
Xxxxx, Xxxxxxx 00000
If to Contract Shareholders, to:
Xx. Xxxxxxx X. Xxxxxxx
c/o Oretech, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
Xx. Xxxxxxx X. Xxxxxxxxx
c/o Oretech, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
or at such other address as a person may from time to time designate by Notice
hereunder. Notice shall be effective upon delivery in person, or if mailed, at
midnight on the third business day after the date of mailing.
19. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions whether oral or written. Any modification or waiver
of any term of this Agreement, including a modification or waiver of this term,
must be in writing and signed by the parties to be bound by the modification or
waiver. No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provision (whether or not similar), not shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
20. HEADINGS. Paragraph and Subparagraph headings are not to be
considered part of this Agreement, are included solely for convenience and are
not intended to be full or accurate descriptions of the content hereof.
21. EFFECT OF TERMINATION. Termination of this Agreement pursuant to
any of its provisions shall be without prejudice to any other rights or remedies
of the respective parties at law or in equity.
ASSET PURCHASE AGREEMENT PAGE 24
22. SEVERABILITY. If any portion of this Agreement shall be declared by
any court of competent jurisdiction to be invalid, illegal, or unenforceable,
such portion shall be deemed severed from this Agreement, and the remaining
parts hereof shall remain in full force and effect as fully as though such
invalid, illegal or unenforceable portion had never been a part of this
Agreement.
23. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Arizona,
without giving effect to the conflicts of laws rules thereof. The courts of the
State of Arizona shall have the sole and exclusive jurisdiction and venue in any
case or controversy arising under this Agreement or by reason of this Agreement.
The parties agree that any litigation or arbitration arising from the
interpretation or enforcement of this Agreement shall be only in either Maricopa
County Superior Court or in the United States Federal District Court for the
District of Arizona, and for this purpose each party to this Agreement (and each
person who shall become a party) hereby expressly and irrevocably consents to
the jurisdiction and venue of such courts.
24. ATTORNEY'S FEES. Should any party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement, or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party(s) of such action or
proceeding shall be entitled to receive from the other involved party or parties
all costs and expenses, including reasonable attorneys' fees and expert witness
fees incurred by the prevailing party(s) in connection with such action or
proceeding.
25. COUNTERPARTS, FACSIMILE SIGNATURES. This Agreement may be executed
by the parties in one or more counterparts, and any number of counterparts
signed in the aggregate by the parties shall constitute a single instrument. The
parties authorize and agree to accept facsimile signatures in counterparts to
this Agreement, and that said facsimile signatures shall for all purposes be
binding upon the parties as if the same were original signatures.
26. PUBLICITY. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be released
only with the written consent of Purchaser and Seller.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither this Agreement nor any interest herein shall be assigned by
Purchaser or Seller without the prior written consent of the other; provided,
however, that: (i) Seller shall be entitled to assign its rights under Section
13 above (regarding Royalties); and (ii) Purchaser shall be entitled to assign
its rights under this Agreement to a wholly-owned subsidiary of Purchaser formed
to consummate the Transaction, but any such assignment shall not relieve
Purchaser of any of its obligations under this Agreement.
28. MISCELLANEOUS. The parties agree that each party and its counsel
have reviewed and revised this Agreement, or had an opportunity to review and
revise this Agreement, and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not apply to the
interpretation of this Agreement or any amendments or exhibits hereto. The
parties do not intend to confer any benefit upon any person, firm, or
corporation other than the parties hereto. No representation or warranty herein
may be relied upon by any person not a party to this Agreement. No waiver of any
provision of this Agreement shall be effective unless made in writing. The
Exhibits attached hereto are incorporated into and are part of this Agreement.
The parties agree that time is of the essence of each and every provision of
this Agreement.
ASSET PURCHASE AGREEMENT PAGE 25
DATED the date first set forth above.
SELLER:
Frontier Development, LLC., a Nevada
limited liability Company
By: /s/ Xxxxxx XxXxxxxx
--------------------------------
Xxxxxx XxXxxxxx, Member
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Xxxxxx Xxxxxxx, Member
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Xxxx Xxxxxxxx, Member
By: /s/ Xx Xxxx
--------------------------------
Xx Xxxx, Member
PURCHASER:
Oretech, Inc., a Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
CONTRACT SHAREHOLDERS: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
SELLING MEMBERS:
/s/ Xxxxxx XxXxxxxx
-----------------------------------
Xxxxxx XxXxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
/s/ Xx Xxxx
-----------------------------------
Xx Xxxx
ASSET PURCHASE AGREEMENT PAGE 25