ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (this
"Agreement") is entered into as of May 19, 2005 (the "Effective
Date") by and among OREGON RESOURCES CORPORATION, an Oregon
corporation ("Purchaser") and MINERAL RECOVERY SYSTEMS, INC., a
Nevada corporation ("Seller").
RECITALS
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A.
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Seller owns certain assets used in connection
with Seller's pilot plant for
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production of heavy-mineral concentrate from
mineral sands located in Camden, Tennessee (the "Camden Mineral
Concentrate Operations").
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B.
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Seller wishes to sell to Purchaser, and
Purchaser wishes to purchase from
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Seller, certain of the assets of Seller that
relate to the Camden Mineral Concentrate Operations and to assume
certain specified liabilities of Seller relating thereto, as more
fully described herein.
AGREEMENT
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In consideration of the terms
hereof, the parties agree as follows:
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ARTICLE I - PURCHASE OF
ASSETS
AND ASSUMPTION OF SPECIFIED
LIABILITIES
Subject to the terms and conditions
of this Agreement, at the Closing, Seller shall sell, assign,
transfer, convey and deliver to Purchaser, free and clear of any
lien, mortgage, pledge, deed of trust, security interest,
conditional sales agreement, charge, encumbrance or similar
interest or restriction of any kind (other than liens for taxes not
yet due and payable) (each an "Encumbrance"), and Purchaser shall
purchase and acquire from Seller, all of Seller's rights, title and
interest in and to all of the following assets, other than any of
the following that are Excluded Assets (collectively the"
Assets"):
The pilot plant used in the Camden
Mineral Concentrate Operations and all ancillary personal property
required for its operation and maintenance, including feed module
(including hopper, feed conveyor, variable speed drive, and all
attachments thereto); transfer conveyor (including motor and all
attachments thereto); feed preparation module (including trommel
screen, feed hopper, feed pump, and all attachments thereto);
desliming module (including cyclones, sumps, pumps, and all
attachments thereto); spiral plant (including sumps, pumps,
spirals, samplers, motor control center, and all attachments
thereto); pond
water supply pump and float, and all attachments
thereto; phase converter; and interconnecting piping between
modules and between modules and the water source for the pilot
plant ( collectively, the "Pilot Plant").
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1.1.2
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Equipment; Inventory
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All tangible personal property,
equipment, spare parts, and inventory held for use in the operation
of the Camden Mineral Concentrate Operations, including tools for
Pilot Plant maintenance located in the office and trailer used in
the operation of the Pilot Plant; laboratory equipment for
heavy-mineral analysis using lithium metatungstate (including
stirred hot plates, vacuum pump, funnels, beakers, digital scales,
drying ovens, tubing, etc); and equipment for size analysis
(including Rotap and screens) (collectively the
"Equipment").
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1.1.3
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Intellectual Property
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All information and intellectual
property rights used or owned by Seller and used primarily in
operation of the Camden Mineral Concentrate Operations or the
Assets, including all software, technology, know-how, trade
secrets, processes and all evidence thereof, and any licenses
related thereto used primarily in operation of the Camden Mineral
Concentrate Operations or the Assets, including that described in
Schedule 1.1.3 (collectively, the "Proprietary Rights").
All of Seller's right, title and
interest in, to and under all contracts and agreements, leases,
licenses and the instruments and agreements primarily related to
the operation of the Camden Mineral Concentrate Operations or the
Assets set forth in Schedule 1.1.4 (collectively, the
"Contracts").
All records, manuals and other
materials necessary for the operation of the Pilot Plant including,
designs, drawings, specifications, shop drawings, research and
development files, operating instructions, maintenance manuals,
MSHA compliance plan and MSHA training materials.
Notwithstanding anything in this
Agreement to the contrary, the Assets do not include the following
(the "Excluded Assets"): (a) the office trailer located near the
Pilot Plant (the "Trailer") and any leases associated therewith;
(b) the porta-potty located near the Pilot Plant and any leases
associated therewith; (c) any lease under which Seller leases or
licenses mineral rights in Camden, Tennessee and surrounding areas;
(d) the concrete pads underneath the Pilot Plant; (e) drums of
Camden Ore Concentrate located near the Trailer; (f) any
remaining raw or stock piles; and (f) the
telephone and the engineering files on the retention dam located in
the Trailer.
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1.3
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Assumption of Liabilities
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Subject to the terms and conditions
of this Agreement, Purchaser shall assume and agree to pay, perform
and fully discharge all liabilities and obligations of Seller
arising after the Closing Date in respect of the Contracts listed
in Schedule 1.1.4, to the extent that such Contracts are
effectively assigned to Purchaser (other than any liability arising
out of or relating to a breach of any such Contract by Seller that
occurred prior to the Closing Date) (the "Assumed
Liabilities").
Purchaser shall not assume any
liabilities other than the Assumed Liabilities (all obligations or
liabilities not assumed by Purchaser herein are called the
"Excluded Liabilities").
The aggregate consideration for the
Assets (the "Purchase Price") is $215,000 to be paid to Seller as
follows:
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(a)
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an amount equal to $21,500 upon the execution of
this Agreement by the parties; and
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(b)
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the balance of the Purchase Price in the amount
of $193,500 at the Closing.
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The purchase and sale of the Assets
and other transactions contemplated hereby shall take place at a
closing (the "Closing") to occur at such date, time or location as
the parties shall agree (such date being referred to herein as the
"Closing Date"); provided, however, if the Closing Date has not
occurred within ten (10) days of the date first set forth above on
this Agreement, any party that is prepared to close and has provide
notice of such to the other party may, at its election, ( a)
terminate this Agreement, or (b) initiate a legal action seeking
specific performance of this Agreement or damages for breach
thereof. The Closing shall not take place in person; rather, each
party shall delivery its Closing deliverables identified in Section
1.6 to the attorney or representative for the other party (Gannett
Fleming, Inc. in the case of Purchaser), instructing such attorney
or representative to hold such deliverables in escrow until the
early to occur of (y) the time the party delivering such
deliverables expressly
authorizes (by phone or email) the release of
such deliverables to the other party as part of Closing or (z) the
party delivering such deliverables demands their return.
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1.6.2
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Seller's Deliverables at Closing
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At the Closing, Seller shall deliver
or cause to be delivered to the Purchaser:
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(a)
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a receipt for the Purchase Price; and
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(b)
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an executed Bill of Sale, Assignment and
Assumption Agreement in
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substantially the form attached hereto as
Exhibit A (the "Bill of Sale") and other such instruments executed
by Seller as may reasonably be requested by the Purchaser to
transfer title to the Assets to the Purchaser.
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1.6.3
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Purchaser's Deliverables at
Closing
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At the Closing, the Purchaser shall
deliver or cause to be delivered to Seller:
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(a)
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the cash amount due as set forth in Section
1.5(b), by cashiers check; and
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(b)
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an executed counterpart to the Bill of
Sale.
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ARTICLE II - REPRESENTATIONS AND
WARRANTIES OF SELLER
To induce Purchaser to enter into
and perform this Agreement and the Bill of Sale, Seller represents
and warrants to Purchaser as of the Effective Date and as of the
Closing Date as follows in this Article II.
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2.1
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Organization; Authorization; Binding
Effect
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Seller is an entity duly organized
and validly existing under the laws of the State of Nevada, has the
corporate power and authority to carry on its business as currently
conducted and has the power and authority to enter into and carry
out its obligations under this Agreement. The execution and
delivery by Seller of this Agreement, the performance of its
obligations hereunder and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of Seller. This Agreement
has been duly executed and delivered by Seller, and constitutes a
legal, valid and binding obligation of Seller enforceable against
Seller in accordance with its terms, except as to the effect, if
any, of (a) applicable bankruptcy and other similar laws affecting
the rights of creditors generally and (b) rules of law governing
specific performance, injunctive relief and other equitable
remedies.
The execution, delivery and
performance by Seller of this Agreement and the Bill of Sale, and
the consummation of the transactions contemplated hereby and
thereby do not and will not (a) violate, conflict with, or result
in any breach of, any provision of Seller's organizational
documents; (b) violate, conflict with, result in any breach of, or
constitute a default (or an event that, with notice or lapse of
time or both, would constitute a default) under any contract,
permit, agreement or judgment, decree, writ, order or injunction to
which Seller is a party or by which it is bound; (c) result in the
creation of any Encumbrance on any of the Assets; or (d) violate
any applicable law, statute, rule, ordinance or regulation of any
Governmental Body (defined below) applicable to Seller or the
Assets; or (e) violate or give any other party rights of
acceleration, amendment, termination or cancellation under any
contract, agreement, judgment, decree, writ, order or injunction or
other restriction to which Seller is a party or by which it is
bound or which relates to the Assets. "Governmental Body" means any
federal, state, local or other court or governmental body, any
subdivision, agency, commission or authority thereof, or any
quasi-governmental or private body exercising any regulatory or
taxing authority thereunder, domestic or foreign.
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2.3
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Consents and Approvals
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The execution, delivery and
performance by Seller of this Agreement does not, and will not,
require any consent, approval, exemption, authorization or other
action by, or filing with or notification to, any Governmental Body
or any other third party.
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2.4
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Claims and Legal Proceedings
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There is not any action, suit,
proceeding, audit, investigation or claim (each a "Claim") pending
or, to Seller's knowledge, threatened against Seller with respect
to the Assets before or by any Governmental Body or nongovernmental
department, commission, board, bureau, agency or instrumentality or
any other person nor any valid basis for a Claim with respect to
the Assets. There are no outstanding or unsatisfied judgments,
orders, decrees or stipulations to which Seller, with respect to
the Assets, is a party, that involve the transactions contemplated
herein; or that would or reasonably could be expected to have a
material adverse effect upon the Assets. No claim, action,
proceeding or investigation is pending or, to Seller's knowledge,
threatened, which questions the validity of this Agreement or any
action taken or to be taken by Seller hereunder.
Seller has no liability for any tax
obligations with respect to the Assets, and no interest or
penalties have accrued or are accruing with respect thereto,
whether state, county, local or otherwise with respect to any
periods prior to the Closing Date except, in each case, any tax
obligations that, if not timely paid by Seller, could not result in
(a) an Encumbrance on any of the Assets or (b) the commencement of
a claim against Purchaser. There is no
claim pending or threatened in respect of any
taxes relating to the Assets, nor has any deficiency or claim for
any such taxes been asserted or threatened.
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2.6
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Pilot Plant; Equipment
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The Pilot Plant and Equipment
described in Sections 1.1.1 and 1.1.2 constitute all of the
machinery, equipment, spare parts, inventory, computer hardware,
and other tangible personal property owned by Seller and used
primarily in the operation of the Camden Mineral Concentrate
Operations other than the Excluded Assets.
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(a)
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Schedule 1.1.3 is a true, correct and complete
list of all Proprietary Rights
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owned or used by Seller primarily in connection
with the Camden Mineral Concentrate Operations or the Assets.
Seller is the sole and exclusive owner of or has a valid license to
use the Proprietary Rights. With respect to Proprietary Rights
owned by Seller, Seller is not bound by any contract or other
agreement regarding the Proprietary Rights or that limits, impairs
or restricts Seller's ability to use, sell, transfer, assign or
convey the Proprietary Rights.
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(b)
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No activity, service or procedure currently
conducted by Seller in connection
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with the Camden Mineral Concentrate
Operations, including without limitation any activity,
service or procedure involving any use of the
Proprietary Rights, conflicts or interferes with, infringes upon or
violates in any manner any valid proprietary rights owned by any
third party and, to the knowledge of Seller, no third party is
infringing upon any of the Proprietary Rights owned by Seller,
There are no claims, disputes, actions, proceedings, suits or
appeals pending against Seller with respect to any Proprietary
Rights, and Seller has not received from any third party since
inception any notice, charge, claim or other assertion that Seller
is infringing any proprietary right
