Asset Purchase Agreement (2003)Full Document 

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ASSET PURCHASE AGREEMENT

This Agreement dated December 21, 2000 is made

Between

MINERA SAN AUGUSTO, S.A. de C.V.

(“MSA”)

And

O. N. C. de MEXICO S.A. de C.V.

(“ONCM”)

And

NATIONAL GOLD CORPORATION

(“National Gold”)

RECITALS

A.

MSA owns certain mineral concessions and other assets used in connection with exploration and development activities on those concessions in the area of Mulatos in the United Mexican States (“Mulatos Project”);

B.

ONCM is a wholly owned subsidiary of National Gold;

C.

MSA has agreed to sell the Mulatos Project to ONCM on the terms set forth herein;

D.

National Gold has agreed to guarantee the obligations of ONCM set out in this Agreement;

E.

Immediately after Closing MSA may assign all rights and benefits which in the future will accrue to it under this Agreement; and

F.

Capitalized terms in this Agreement have the meaning set out in .

NOW THEREFORE THIS AGREEMENT witnesses that in consideration of the representations, warranties and covenants set out herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

ARTICLE 1
PURCHASE OF ASSETS

1.1

Agreement to Purchase and Sell.  At the Closing Time, subject to the terms and conditions of this Agreement, MSA will sell and ONCM will purchase the Assets with effect from the Effective Date.

1.2

Purchase Price.  The aggregate purchase price for the Assets (the “Purchase Price”) is $10,500,000 payable by ONCM as follows:

(1)

by payment at Closing to MSA or its Assignees of the amount of the Deposit plus accrued interest;

(2)

by payment at Closing to MSA or its Assignees of the amount of $450,000 (the “Closing Payment”);

(3)

by the grant at Closing to MSA or its Assignees of a 2% royalty for technical expertise (“RTE”), which RTE shall run with the land, and shall be in the form set forth in  attached hereto;

(4)

by the delivery at Closing to MSA or its Assignees of a debenture or debentures in the aggregate principal amount of $7,500,000  (the “Debentures”), which debentures will be in a form which is appropriate for a transaction such as this and will include the terms set forth in  attached hereto;

(5)

by ONCM assuming all of the Assumed Liabilities as evidenced in part by the delivery at Closing to MSA, Tenedoramex, S.A. de C.V. (“T-Mex”) and Accessions Mining, Inc. (“Accessions”) jointly, of a certificate evidencing the assumption of liabilities in the form attached hereto as  (the “Certificate Evidencing Assumption of Liabilities”).  For greater certainty, in the event of a conflict the provisions of the Certificate Evidencing Assumption of Liabilities shall be subject to and superseded by the terms of this Agreement as a whole;

(6)

by payment at Closing to MSA or its Assignees of an amount equal to $1,575,000 in respect of value added tax payable in connection with ONCM’s purchase of the Assets (the “IVA Payment”);

(7)

by delivery at Closing of two promissory notes in the forms attached hereto as  and  in the amounts of $750,000 and $1,750,000 respectively and which are due and payable 180 days and 360 days, respectively, after Closing (the “Promissory Notes”).

1.3

Deposit.  Upon execution of this Agreement ONCM will pay to MSA the sum of $50,000 as a deposit (the “Deposit”).  The Deposit will be disbursed in accordance with the following provisions:

(1)

if the Closing occurs at the Closing Time the Deposit shall be credited towards the Purchase Price;

(2)

if Closing does not occur at the Closing Time because a condition precedent to Closing contained in Sections  or  is not fulfilled or waived on or before the Closing Time, then the Deposit shall be returned to ONCM; and

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