Exhibit 10.9
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of
____8/25_________, 2003, by and between Gold and Minerals Co., Inc., a Nevada
corporation, or its assigns ("Seller"), Xx. Xxxxxxx Xxxxxxx and Xx. Xxxxx
Xxxxxxxx (the "Principals") and El Capitan Precious Metals, Inc., a Nevada
corporation "Buyer"), is made with reference to the following facts:
X. Xxxxxxx owns certain assets, including mining claims granted by the
United States Bureau of Land Management (the "Claims"), buildings and personal
property (including rights under certain contracts, known in the aggregate as
the COD Mine (the "Mine") all as more fully set forth on Exhibit A attached
hereto (collectively the "Purchased Assets"), used in Seller's business of
operating the COD Mine (the "Mining Business").
B. Buyer is desirous of acquiring the Purchased Assets and of assuming
all of Seller's right, title and interest in and to the Mining Business.
NOW, THEREFORE, in consideration of the mutual agreements, warranties
and representations contained in this Agreement, the parties hereby agree as
follows:
1. Purchased Assets. At the Closing (as defined below), Seller will
sell and transfer to Buyer, and Buyer will purchase the Purchased Assets, free
and clear of all liens, claims and encumbrances, by delivery of a "Quit-claim"
Deed, substantially in the form of Exhibit B attached hereto.
2. Assignment of Rights. At the Closing (as defied below), Seller will
assign, and Buyer will accept and assume, all of Seller's right, title and
interest in and to the Mining Business. To the extent that the assignment of any
of the Purchased Assets to Buyer requires the consent of any third party, this
Agreement shall not constitute an agreement to assign such Purchased Asset until
such consent is obtained. Seller end Buyer shall use their reasonable efforts to
obtain any consent necessary to any such assignment.
3.1 Purchase Price. The purchase price for the Purchased Assets and the
Contracts (the "Purchase Price") shall be the issuance to Seller of One Million
Two Hundred Thousand shares of the common stock of El Capitan Common Stock.
3.2 BUYER SHALL NOT ASSUME OR BE RESPONSIBLE FOR ANY LIABILITIES OR
OBLIGATTIONS OF SELLER OTHER THAN THOSE SET FORTH ON EXHIBIT C ATTACHED HERETO,
INCLUDING WITHOUT LIMITATION, ANY LIABILITIES WHICH SELLER WAS OBLIGATED TO
SATISFY PRIOR TO THE CLOSING DATE, OR FOR ANY FEDERAL, STATE, OR LOCAL TAX
LIABILITY OF SELLER.
3.3 Allocation of Purchase Price. The Purchase Price shall be allocated
among the various assets and rights being acquired by Buyer hereunder as they
are accounted for on the books of Seller. The parties shall report the
transaction in accordance with Form 8594 attached hereto on Schedule 3. Such
allocation shall be binding upon the parties including Seller and the Principals
for income tax purposes.
4. Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Gold and Minerals
Co. on 8/25 , 2003 or at such other date and time as Buyer and Seller agree (the
"Closing Date"). At the Closing, Seller shall deliver to Buyer the Quit-Claim
Deed, and such Bills of Sale, Assignments and Instruments of Transfer and
Conveyance as shall be reasonably be required by Buyer for the transfer to Buyer
of all right, title and interest of Seller in, to and under the Purchased Assets
and the Mining Business. Each party shall also deliver to each other such
Officers' Certificates and other instruments as the other party shall reasonably
request. Upon delivery of all of -the foregoing, the Deposit shall be applied
to, and Buyer shall make delivery of the shares as provided in foregoing Section
3.1; and the transaction shall be deemed closed.
5. Other Agreements of Seller.
(a) Employment. In addition to the Purchase Price, in order to
induce him to continue to manage and operate the Mining
Business, the Buyer will issue Two Hundred Thousand Shares of El
Capitan Common Stock to Xx. Xxxxx Xxxxxxxx at the Closing, and
will agree, pursuant to a management agreement containing
customary terms and conditions, a management fee of $20,000 per
month beginning 2/1/2003 during the term thereof, which shall
not exceed __ year(s). The management fee may be paid, in El
Capitans sole discretion, in shares of its common stock, valued
on the basis set forth an Exhibit D attached hereto. (The shares
of El Capitan Common Stock issued pursuant to Section 3.l, and
this Section 5(a), are hereinafter collectively referred to as
the "Shares").
(b) Investigation. Seller shall allow Buyer and its representatives
and persons or entities which may provide financing for Buyer in
connection with the transactions contemplated hereby, at all
reasonable times, full access during normal business hours to
all stores, warehouses, operations, machinery, equipment,
inventories, property, offices, books, contracts, commitments,
records and affairs of the Seller and the Mining Business, and
reasonable access to third parties having business dealings with
the Seller, for the purpose of familiarizing themselves with the
operation and conduct of all aspects of their business and for
the purpose of reasonable inspection, examination, audit,
counting and copying; such access mail not unreasonably
interfere with the operation and conduct of the Mining Business.
6. Representation of Seller. Seller and the Principals hereby jointly
and severally represent and warrant to Buyer as follows:
(a) Organization and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada. This Agreement has been duly authorized
by all requisite corporate action on the part of Seller, and
constitutes the valid, binding and enforceable obligation of
Seller and the Principals.
(b) Title to the Purchased Assets. Seller is the lawful owner and
has good and marketable title to all of the Purchased Assets and
will warrant and defend title to the Purchased Assets unto Buyer
and its successors and assigns against claims of any third
parties. Seller has the authority to sell and transfer the
Purchased Assets, which are (i) free and clear from any liens or
encumbrances, and (ii) are in good operating condition and
repair, ordinary wear and tear accepted and are usable in the
ordinary course of business.
(c) Seller's Liability. Seller does not have any liability or
obligation (direct or indirect, contingent or absolute, known or
unknown, mature or unmatured of any nature whatsoever), whether
arising out of contract, tort, statute or otherwise
("Liabilities"), except (i) as specifically disclosed in
Schedule 6(c) attached hereto; or (ii) Liabilities incurred in
the ordinary course of business which will not individually or
in the aggregate be materially adverse to, or result in a
materiel increase in the current or long-term Liabilities or
obligations of Seller. To the best knowledge of the Principals,
upon due inquiry, there is no basis for assertion against Seller
of any Liabilities accept for Liabilities described in this
Section 6(c).
(d) Compliance with Laws. Seller has complied with and is not in
default under any applicable law, ordinance, regulation or
order, the violation of which would materially and adversely
affect the Purchased Assets or the Contracts. There is no
litigation, proceeding or investigation pending or known to be
threatened which might materially and adversely effect the
Purchased Assets, the Claims or the Mining Business. Seller
holds all of the franchises, permits and licenses reasonably
necessary to enable it to operate the Mining Business as
presently conducted.
(e) The Claims. The Claims are legal, valid, bidding and enforceable
claims granted by the United States Bureau of Land Management to
Seller and, to the knowledge of Seller are in full force and
effect and Seller has not, nor to its knowledge has any other
party thereto, violated any provision thereof, and complete
copies of all of the Claims disclosed on Exhibit A of this
Agreement have been delivered to Buyer. Except as set forth on
Schedule 6(e), none of the Claims is subject to modification,
lapse or termination, not is the consent of any party required,
as a result of the execution and delivery of this Agreement or
the consummation of the transaction it contemplates.
(f) Taxes. Seller has duly filed all federal, state, local and
foreign tax returns necessary to be filed by it and has duly
paid all taxes (including any interest or penalties) which are
or will be due or payable with respect to such returns or any
other assessment with respect to taxes. There are no known or
proposed penalty, interest or deficiency assessments with
respect to taxes that require payment by, relate to or could
adversely affect the Purchased Assets.
(g) Real Estate and Leases. There is disclosed in Schedule 6(g) a
description of all real estate (including buildings and
improvements) owned or leased by Seller according to the
character of the property and the location thereof. Seller is
not and, to the best knowledge of the Principals, no other party
thereto, is in default in any material respect under any real
property lease nor has any event occurred which with the passage
of time or giving of notice or both would constitute such a
default. No encumbrances have been placed, or have been
permitted to be placed, by the Principals, the Seller or any of
their affiliates, on the real property. Except as disclosed on
Schedule 6(g), the real property and the buildings thereon owned
or utilized by the Corporations in the conduct of the
Corporations do not violate any building, zoning or other laws
or ordinances, or any agreements, applicable thereto, and no
notice of any such violation or claimed violation or of any
condemnation proceedings has been received by the Seller or the
Principals.
(h) Environmental Matters. Except as disclosed in Schedule 6(h), to
the beat knowledge of Seller and the Principals after due
inquiry and investigation, (i) the Purchased Assets materially
comply with any law or regulation governing the protection of
the environment, (including air, water, soil and natural
resources) or the use, storage, handling, release or disposal of
any hazardous or toxic substance ("Environmental Laws"); (ii)
Seller has not received any written notice from any federal,
state, county, municipal, local or foreign government and any
governmental agency, bureau, commission, authority or body
alleging that the Purchased Assets are in violation of any
applicable Environmental Law; (iii) the Purchased Assets are not
the subject of any court order, administrative order or decree
arising under any Environmental Law; and (iv) to the Seller's
knowledge the Acquired Assets have not been used for the
generation, storage, discharge or disposal of any Hazardous
Substances, as defined in, and except as permitted under,
applicable Environmental Laws.
(i) Operation in the Ordinary Course. During the period from
December 31, 2002 to and including the Closing Date, (i) the
Mining Business has been operated in the -usual, regular and
ordinary course; (ii) there has been no damage, destruction or
loss or any event materially adversely affecting the assets or
the business or Seller; (iii) there has been no sale or other
disposition of assets of the Mining Business of the kind and
character of the Purchased Assets over than in the ordinary
course of business; and (iv) there has been no material change
in the level of net working capital, no incurrence of any funded
debt from third party lenders, and no dividends or other
distributions to the shareholders of Seller (other than salaries
in the ordinary, course of business).
(j) Employment Matters. Seller is not a party to any contract with
any labor organization, nor has the Seller agreed to recognize
any union or other collective bargaining unit, nor has any union
or other collective bargaining unit been certified as
representing any of the employees of the Seller with respect to
the operation of the Business, and as of the date of this
Agreement, Seller is not experiencing any strikes, work
stoppages, significant grievance proceedings or, to the
knowledge of Seller, claims of unfair labor practices filed with
respect to the operation of the Business. Seller does not have
any "employee benefit plans" within the meaning of Section 3(3)
of ERISA covering employees of Seller.
(k) Insurance. Schedule 6(l) contains a list of all insurance
policies specifying (a) the insurer, (b) the amount of the
coverage, (c) the .type of insurance, (d) the policy number and
(e) any currently pending claims thereunder (or any claim
asserted thereunder or under similar policies since January 1,
2000) maintained by or on behalf of the Seller on. its
properties, assets, business or personnel. All such policies are
(and pending Closing will continue to be) in full force and
effect, and Seller is not in default in any material respect
with respect to any provision contained in any insurance
policies, nor has Seller failed to give any notice or present
any claim thereunder in date and timely fashion. All premiums
due and payable on such policies covering all periods through
the date hereof have been, and through the Closing Date will be,
paid in full or accrued on the books and records of the Seller.
The Seller is insured in amounts and pursuant to insurance
policies satisfying all requirements of applicable laws. Also
set forth on Schedule 6(l) is a list of all types of liabilities
against which the Seller is self-insured. The insurance coverage
provided bar the policies therein will not terminate or lapse or
otherwise be affected by the transactions contemplated by this
Agreement.
(l) Investment Intent. Seller and Xx. Xxxxxxxx are each (or their
respective designees are) and will be acquiring the Shares for
investment only and not with a view to any public distribution
or resale. Seller and Xx. Xxxxxxxx acknowledge that the Shares
will not be registered under the Securities Act of 1933, but
rather will be issued pursuant to in applicable exemption
thereto which may restrict the trading thereof Seller and Xx.
Xxxxxxxx each agree to execute a customary form of purchaser's
representation letter with respect to their acquisition of the
Shares.
7. Representations of Buyer. Buyer represents and warrants to Seller
that (i) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and (ii) this Agreement has been
duly authorized by the Board of Directors of Buyer and constitutes the valid,
binding and enforceable obligation of Buyer, subject only to any requisite
shareholder approvals with respect to the issuance of the Shares.
8. Indemnification. Seller and the principals (solely, in the case of
the Principals, with respect to any knowing or negligently wrongful breach of
any of the representations and warranties set forth in foregoing Section 6),
covenant and agree with Buyer that they shall jointly and severally reimburse
and indemnify and hold Buyer harmless from, against and in respect of any and
all liabilities of obligations of Seller which; (a) shall have occurred, arising
or existed prior to the date hereof, (b) shall arise out of any breach of their
representations, warranties or covenants hereunder or (c) shall arise from any
failure to comply with all applicable bulk sales and bulk sales tax laws
affecting the transfers contemplated hereby. Buyer shall have the right to
withhold a pro-rata portion of the Shares in satisfaction of, or as security
for, the payment of any unreimbursed claims of indemnity.
9. Conditions to Obligation of Buyer. The obligations of Buyer
hereunder are subject to the satisfaction of the following conditions, any one
or more which may be waived in whole or in part by Buyer:
(a) The representations and warranties of Seller and the Principals
set forth in this Agreement shall be true end correct in all
material respects as of the Closing Date as if made on and as of
such date, and Seller shall have duly performed or complied with
all of the obligations to be performed or complied with by it
under the terms of this Agreement on or prior to Closing and
Buyer shall have received a certificate dated the Closing Date
to such effect from Seller;
(b) There shall have been no material adverse change in the
Purchased Assets or the Contracts;
(c) Seller shall have obtained such consents of third, as may be
necessary to transfer such of the Purchased fits as require
consents;
(d) Seller shall have paid, prior to or contemporaneously with the
Closing, all accounts payable, trade creditors and other amounts
owed to any third parties, and shall provide Buyer with a
certified list thereof and a certificate dated the Closing Date
to such effect from Seller and the Principals;
(e) Buyer shall be reasonably satisfied with the results of its
investigation of Seller and the Business, as provided in
foregoing Section 3.4(c);
(f) Buyer shall be reasonably satisfied with the continuing
employment status of the Principals and other key employees,
pursuant to employment agreements reasonably satisfactory to
Buyer, or otherwise;
(g) Buyer shall have obtained any requisite approvals of the
transaction contemplated by this Agreement by its stockholders;
and
(h) Buyer shall have received the following closing documents from
Seller:
(i) Good Standing Certificates. Certificates of legal existence
anal good standing dated within five (5) days prior to the
Closing Date for Seller from the State of Nevada;
(ii) CertifiedResolutions. Certified copies of resolutions of
the board of directors and shareholders of Seller authorizing
the execution, delivery and performance of this Agreement and
all acts of Seller required or advisable in connection with
the transactions contemplated hereby;
(iii) Certified Charter. A true and complete copy of the
Certificate of Incorporation of Seller, certified by the
Secretary of State of the State of Nevada; and
(iv) Other. Such other documents as counsel for the Buyer
shall reasonably request.
10. Conditions to Obligation of Seller and the Principals. The
obligations of Seller and the Principals hereunder are subject to the
satisfaction of the following conditions, any one or more of which may be waived
in whole or part by them:
(a) The representations and warranties of Buyer set forth in this
Agreement shall be. true and correct in all material respects as
of the Closing Date as if made on and as of such date, and Buyer
shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the
terms of this Agreement on or prior to Closing and Seller shall
have received a certificate dated the Closing Date to such
effect from Buyer.
(b) Seller shall have received the following closing documents from
Buyer:
(i) Good Standing Certificate. Certificates of legal existence
and good standing dated within five (5) days prior to the
Closing Date for Buyer from the State of Nevada;
(ii) Certified Resolutions. Certified copies of resolutions of
the board of directors of Buyer authorizing the execution,
delivery and performance of this Agreement and all acts of
Buyer required or advisable in connection with the
transactions contemplated hereby;
(iii) Certified Charter. A true and complete copy of the
Certificate of Incorporation of Buyer, certified by the
Secretary of State of the State of Nevada; and
(iv) Other. Such other documents as counsel for the Seller
shall reasonably request.
11. Payment of Expenses. Regardless of whether the Closing shall occur,
the Principals shall pay all expenses incurred by or on their behalf or on
behalf of the Seller (unless the parties shall have agreed, in writing prior to
such expenses having been incurred, that such expenses are for the post-closing
benefit of the Business, in which case the Buyer will pay (or permit Seller to
pay) for such expenses), and Buyer shall pay all expenses incurred by or on
behalf of Buyer in connection with the preparation, execution said delivery of
this Agreement and the other agreements and documents referred to herein and the
consummation of the transactions contemplated hereby and thereby. If an audit of
the Business is required by Buyer, Seller at no additional expense to Buyer will
assist with audit preparation by preparing work papers and lead sheets, and by
providing other relevant services consistent with acceptable audit procedures.
12. Commissions and Finder's Fees. Buyer, on the one hand, and the
Principals on behalf of themselves and the Seller, on the other hand, represent
and warrant that none of them has retained or used the services of any
individual, firm or corporation in such manner as to entitle such individual,
firm or corporation to any compensation for brokers' or finders' fees with
respect to the transactions contemplated hereby far which the other may be
liable.
13. Exclusivity; Termination; Highly Confidential Letter. For a period
of sixty (60) days from the date of execution of this Agreement, nether Seller,
the Principals nor any of their employees or advisors will discuss the proposed
transaction with any other party or otherwise promote, cooperate in or be
involved in or encourage discussions regarding the sale of the stock or assets
of Seller as contemplated herein. The parties agree to proceed expeditiously and
in good faith to consummate the proposed transaction.
14. Governing. Law. This Agreement shall he construed in accordance
with the internal laws of the State of Nevada.
15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors of Seller, the Principals and
Buyer. Neither party hereto may assign its rights or obligations under this
Agreement without the written consent of the other, which consent will not be
unreasonably withheld.
16. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of Seller, the Principals and Buyer with respect to the
subject matter hereof and supersedes all prior and contemporaneous written or
oral agreements, understandings or representations which are not specifically
contained herein. This Agreement may be amended or modified only bar a written
instrument signed by Seller, the Principals and Buyer.
17. Disputes. The parties agree to attempt to resolve any claim or
dispute arising out of or relating to this Agreement by mediation and good faith
reasonable negotiation prior to resorting to any litigation or other judicial
process.
18. Publicity. No notices to third parties (including press release or
to any employees, suppliers or customers of Buyer or Seller (other than key
management and other persons whose knowledge is required), shall be made by any
party here to unless mutually agreed to, planned and coordinated jointly among
the parties hereto.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Seller, the Principals and Buyer have executed this
Agreement as of the date first above written.
Gold and Minerals Co., Inc. El Capitan Precious Metals, Inc.
("Seller") ("Buyer")
By /s/Xxxxx Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Its President Its President
----------------------------- -----------------------------
THE PRINCIPALS
/s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx
When Recorded Mail To:
EL Capitan Precious Metals, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
QUIT-CLAIM DEED
For Ten Dollars, and other valuable consideration, Gold and Minerals
Company, Inc., a Nevada corporation, hereby Quit-Claims to EL Capitan Precious
Metals, Inc., a Nevada corporation, all right, title, or interest in the
following described real property situated in Mohave County, Arizona:
See Exhibit A attached hereto.
Exempt per ARS 11-1134 A.7
Dated: July 21, 2003
GOLD AND MINERAL COMPANY, INC.
a Nevada corporation
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxx, President
STATE OF ARIZONA
County of Maricopa
This instrument was acknowledged and executed before me the 22 day of
July, 2003, by Xxxxx X. Xxxxxxxx, President of Gold and Minerals Company, Inc.,
a Nevada corporation, on behalf of the corporation.
- signature illegible -
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Notary Public
EXHIBIT A
C.O.D. Property
County Recorder
Claim Name Book Pass B.L.M.
---------- ---- ---- A.M.C. Nos.
-----------
JAYNS 841 806-807 175025
XXX 841 808-809 175026
KMIC 841 810-811 175015
MARC 841 812-813 175030
O.J.B. 841 814-815 175031
GOLDEN MOON 841 816-817 175024
RICO 841 834-835 175039
XXXX XX. 0 000 000-000 000000
XXXXX XXXXX 841 850-851 175044
WHITE BAGLE #2 841 852-853 175045
REUDE 841 848-849 175035
UNIT 841 846-847 175043
RENO 841 844-845 175034
