Exhibit 10.5 Stock Purchase Agreement
***PRIVATE***
STOCK PURCHASE AGREEMENT
FOR THE SALE OF COMMON STOCK
BY THE ISSUER TO A LIMITED NUMBER OF INVESTORS
KEYSTONE SILVER MINES, INC.
000 XXXXX XXXXXXX XXXXXX
XXXXX XXXXX
XXXXXXXX, XXXXX 00000
COMMON STOCK
***RESTRICTED***
THIS COMMON STOCK PURCHASE AGREEMENT is made by and between KEYSTONE SILVER
MINES, INC., an Idaho corporation (the "Company"),and the persons listed on
EXHIBIT 1 who are signatories to this Agreement (the "Investors").
The Parties Hereby Agree as Follows:
1. PURCHASE AND SALE
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, each of the Investors agrees to
purchase and the Company agrees to sell and issue to each of
the investors severally and not jointly, against cash payment,
the number of shares of Common Stock (the "Shares") of the
Company set forth opposite each Investor's name in EXHIBIT 1
to this Agreement at a purchase price of $1.00 PER SHARE.
Subject to the applicable rules and regulations, the shares
issued will be subject to Rule 144 restrictions. The Rule 144
restrictions shall be in force until such time that the
Company will become a fully reporting Company as defined under
the securities act of 1933. The Company has already filed all
appropriate forms with the SEC to be a fully-reporting Company
and is currently awaiting an OTC BB approval. Upon being
approved for an OTC BB listing, the Company will file a
registration statement to register all shares under this
agreement so that they will be free trading. The Company is
currently trading as a non-reporting Company on the "pink
sheets" under the symbol KYMI.
1.2 CLOSING. The initial purchase and sale of the Shares being
purchased by the Investors shall take place a at such time and
place as the Company and the Investors mutually agree upon
(which time and place are designated the "Closing").
Within a reasonable amount of time, but not more than 30 days
after the Closing, the Company shall deliver to each of the
Investors a CERTIFICATE representing the number of Shares
which each such Investor is purchasing against delivery to the
Company by each such Investor of cash or a certified bank
cashier's or other check reasonably acceptable to the Company,
or by cancellation of indebtedness in the amounts set forth in
EXHIBIT 1.
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1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from
the sale of the Shares for the purpose of acquiring both
producing and non-producing oil & gas properties, equipment,
labor and general working capital.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby
represents and warrants to the Investors that:
2.1 INCORPORATION. The Company is a corporation duly organized and
validly existing, is in good standing under the laws of the
state of Idaho, has all requisite corporate power and
authority to carry on its business as now conducted and as
proposed to be conducted, and the Company is qualified as a
foreign corporation in each jurisdiction where the failure so
to qualify would have a material adverse effect on its
business or operations.
2.2 CAPITALIZATION. The authorized capital of the Company consists
of ten million (10,000,000) shares of Common Stock, of which
at Closing not more than two million nine hundred seventy four
thousand and seventy shares (2,974,070) will be issued and
outstanding.
2.3 SUBSIDIARIES. The Company does not presently control, directly
or indirectly, any other corporation, association or business
entity.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers and directors necessary for the
authorization, execution, delivery and performance of all
obligations of the Company under this Agreement and for the
authorization, issuance and delivery of the Shares being sold
hereunder has been or shall be taken prior to the Closing, and
this Agreement, when executed and delivered, shall constitute
a valid and legally binding obligation of the Company.
Issuance of the Shares is not subject to preemptive rights or
other preferential rights of any present or future
stockholders in the Company.
2.5 VALIDITY OF SECURITIES. The Shares to be purchased and sold
pursuant to this Agreement, when issued, sold and delivered in
accordance with its terms for the consideration expressed
herein, shall be duly and validly issued.
2.6 GOVERNMENTAL CONSENTS. All consents, approvals, orders,
authorizations or registration, qualification, designation and
declaration or filing with and federal or state governmental
authority on the part of the Company required in connection
with the consummation of the transactions contemplated herein
shall have been obtained prior to, and be effective as of, the
Closing or will be timely filed thereafter.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of any provisions of its respective Certificate of
Incorporation, its Bylaws, any material mortgage, indenture,
lease, agreement or other instrument to which it is a party,
or of any provision of any federal or state judgment, writ,
decree, order, statute, rule or governmental regulation
applicable to the Company . The execution, delivery and
performance of this Agreement will not result in any such
violation or be in conflict with or constitute a default under
any such provision.
2.8 LITIGATION. There are no actions, proceedings or
investigations ending, or to the knowledge of the Company
threatened, which question the validity of this Agreement or
which might result, either individually or in the aggregate,
in any material adverse change in the assets, conditions,
affairs or prospects of the Company, nor, to the knowledge of
the Company , has there occurred any event or does there exist
any condition which might properly be the basis therefor.
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2.9 PATENTS. The Company owns or has a valid right to use the
patents, patent rights, licenses, trade secrets, trademarks,
trademark rights, trade names or trade name rights or
franchises, copyrights, inventions, and intellectual property
rights being used to conduct their businesses as now operated
and as now proposed to be operated; and the conduct of
business as now operated and as now proposed to be operated
does not and will not conflict with valid patents, patent
rights, licenses, trade secrets, trademarks, trademark rights,
trade names or trade name rights or franchises, copyrights,
inventions, and intellectual property rights of others. The
Company has no obligation to compensate any person or entity
for the use of any such patents or rights and have granted to
no person or entity any license or other rights to use in any
manner any of the patents or rights of the Company, whether
requiring the payment of royalties or not.
2.10 FINANCIAL STATEMENTS. The Company has true and complete copies
of the following financial statements for the Company on a
consolidated basis.
(i.) Certified Statements of financial condition as
of April 30, 2000 and the related statements of
operations and statements of changes in financial
position for the year then ended, all prepared by
Xxxxxx, Xxxxxxxxx & Co., independent accountants,
(a.) All such financial statements have been prepared in
conformity with generally-accepted accounting principles
applied on a basis consistent with prior periods (except for
the omission of notes to the certified financial statements),
fairly present the consolidated financial condition of the
Company as of dates thereof, and the consolidated results of
operations of the Company for the periods indicated, and, in
the case of certified statements, subject to normal and
recurring year-end adjustments.
(b.) Specifically, without limitation, such financial
statements reflect, as of their respective dates, all material
accrued liabilities and adequate reserves for all material
unaccrued liabilities and for all reasonably anticipated
material losses of the Company. The books of account of the
Company fully and fairly reflect all of the transactions of
such companies and are complete and accurate.
(c.) The Company is not subject to any undisclosed material
liability not (i) reflected in its certified financial
statements referred to above or in the notes to the financial
statements or (ii) incurred in the ordinary course of business
since April 30, 2000. For purposes of this Agreement, all
financial statements of the Company shall be deemed to include
any notes to such financial statements.
2.11 ABSENCE OF CERTAIN CHANGES. Since April 30, 2000, whether or
not in the ordinary course of business, there has not occurred
or arisen (a) any material adverse change in the financial
condition, operations, business or prospects of the Company
considered as a whole, or (b) any event, condition or state of
facts of any character which materially or adversely affects,
or may materially or adversely affect, the financial
condition, operations, business or prospects of the Company
considered as a whole.
2.12 TAX RETURNS AND REPORTS. All federal income tax and state
franchise tax returns and tax reports required to be filed by
the Company will be filed with the appropriate governmental
agencies in all jurisdictions in which such returns or reports
are required to be filed. All such returns and reports will
constitute complete and accurate representations, in all
material respects, of the tax liabilities of the Company. All
federal income tax and state franchise and other taxes
(including interest and penalties) due from the Company will
be fully paid or adequately provided for on the books and
financial statements of the Company. None of the proposed
federal income tax returns of the Company have been audited by
the Internal Revenue Service. The Company knows of no
additional assessments or adjustments pending or threatened
for any period, nor of any basis for any such assessment or
adjustment. The Company and its affiliates have not entered
into any agreements with federal and state taxing authorities
extending the statute of limitations with respect to the
assessment of federal and state taxes for any period.
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2.13 PROPERTIES. The Company has good and marketable title to its
respective real and personal properties and assets and valid
leasehold interests in its respective leased properties as and
to the extent carried on its books, including those reflected
on the certified statements of financial condition as of April
30, 2000 referred to in paragraph 2.10 above, except
properties and assets disposed of in the ordinary course of
business since April 30, 2000 and none of such properties or
assets is subject to any mortgage, pledge, charge, lien,
security interest, encumbrance of joint ownership interest,
except liens for taxes, assessments, or governmental charges
or levies if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested
in good faith and by appropriate proceedings.
The use of any property of the Company for the purpose for
which it was acquired is not now, and, based upon the laws,
regulations and ordinances in effect on the date of Closing,
in the future will not be, curtailed to a material degree by
any violations prior to the Closing by the Company or any of
the subsidiaries of any law, regulation or ordinance
(including, without limitation, laws, regulations or
ordinances relating to zoning, environmental protection, city
planning, or similar matters). The Company enjoy peaceful and
undisturbed possession under all leases under which they are
operating, and all said lease are valid and subsisting and in
full force and effect.
2.14 AGREEMENTS. The Company has not breached, nor has any such
entity received oral or written notice of any claim or
threatened claim that the Company has breached, any of the
terms or conditions of any agreement, contract, lease,
commitment or understanding, whether oral or written, the
breach or breaches of which singly or in the aggregate could
materially or adversely affect the financial condition,
operations, business or prospects of the Company considered as
a whole.
2.15 PENSION BENEFIT PLAN. The Company does not have or make
contributions to any pension, defined benefit or defined
contribution plans which are subject to the Federal Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
2.16 REGISTRATION RIGHTS. EXCEPT AS SET FORTH IN THIS AGREEMENT, no
person or entity has demand or other rights to cause the
Company to file any registration statement under the
Securities Act of 1933, as amended (the "Act") relating to any
securities of the Company or any right to participate in any
such registration statement.
2.17 DISCLOSURE. To the best of the Company's knowledge and belief,
neither this Agreement, nor any other agreement, document,
certificate or written statement furnished to the Purchasers
or their special counsel by or on behalf of the Company in
connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained herein or therein not misleading.
Most of the Company's executive officers have only been
employed by the Company for a short period of time. To the
best knowledge of the Company's executive officers, but
without having made any independent investigation, there is no
fact within the special knowledge of any of the executive
officers of the Company which has not been disclosed herein or
in writing by them to the Investors and which materially
adversely affects, or in the future in their opinion may,
insofar as they can now foresee, materially adversely affect
the business, properties, assets or condition, financial or
other, of the Company .
Without limiting the foregoing, the Company has no knowledge
or belief that there exists, or there is pending or planned,
any patent, invention, device, application or principle or any
statute, rule, law, regulation, standard or code which would
materially adversely affect the condition, financial or other,
or the operations of the Company .
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3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each of the Investors represents and warrants to the Company as
follows:
3.1 AUTHORIZATION. When executed and delivered by such Investor,
this Agreement will constitute the valid and legally binding
obligation of such Investor.
3.2 ACCREDITED INVESTOR. Such Investor (other than those
identified in writing to counsel for the Company prior to the
Closing) is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Act.
4. SECURITIES ACT OF 1933.
4.1 INVESTMENT REPRESENTATION.
This Agreement is made with each of the Investors in reliance
upon their respective representations to the Company, which by
its acceptance hereof each of the Investors hereby confirms,
that the Shares to be received will be acquired for investment
for an indefinite period for its own account and not with a
view to the sale or distribution of any part thereof, and that
it has no present intention of selling or otherwise
distributing the same, but subject, nevertheless, to any
requirement of law that the disposition of its property shall
at all times be within its control. By executing this
Agreement, each of the Investors further represents that it
does not have any contract, undertaking, agreement or
arrangement with any person to sell or transfer to such person
any of the Shares or any Common Stock acquired on conversion
of the Shares (all of such securities are hereinafter
collectively referred to as the "Securities").
(a) Each of the Investors understands that the Securities
are not and may never be registered under the Act on
the ground that the sale provided for in this
Agreement and the issuance of securities is exempt
pursuant to Section 4(2) of the Act and Rule 506 of
Regulation D thereunder, and that the Company's
reliance on such exemption is predicated on its
representations set forth herein.
(b) Each of the Investors agrees that in no event will it
make a disposition of any of the Securities, unless
the Securities shall have been registered under the
Act, unless and until (i) it shall have notified the
Company with a statement of the circumstances
surrounding the proposed disposition and (ii) it
shall have furnished the Company with an opinion of
counsel reasonably satisfactory to the Company to the
effect that (A) such disposition will not require
registration of such securities under the Act, and
(B) that appropriate action necessary for compliance
with the Act has been taken. Notwithstanding the
foregoing, each Investor may distribute any of the
Securities to the owners of its equity.
(c) Each of the Investors represents that it is able to
fend for itself in the transactions contemplated by
this Agreement, has such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of its investment and
has the ability to bear the economic risks of its
investment and has been furnished with.
(d) Each of the investors understands that if a
registration statement covering the Securities under
the Act is not in effect when it desires to sell any
of the Securities, it may be required to hold such
Securities for an indeterminate period. Each of the
Investors also acknowledges that it understands that
any sale of the Securities which might be made by it
in reliance upon Rule 144 under the Act may be made
only in limited amounts in accordance with the terms
and conditions of that Rule.
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4.2 LEGENDS. All certificates for the Securities shall bear
substantially the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
HAVE BEEN ACQUIRED BY THE ISSUEE FOR INVESTMENT PURPOSES. SAID
SHARES MAY NOT BE SOLD OR TRANSFERRED UNLESS (A) THEY HAVE
BEEN REGISTERED UNDER SAID ACT, OR (B) THE TRANSFER AGENT (OR
THE COMPANY IF THEN ACTING AS ITS TRANSFER AGENT) IS PRESENTED
WITH EITHER A WRITTEN OPINION SATISFACTORY TO COUNSEL FOR THE
COMPANY OR A `NO-ACTION' OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH
SALE OR TRANSFER."
4.3 RULE 144. The Company covenants and agrees that: (i) at all
times while it is subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934 it
will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Act; and
(ii) it will furnish the Investors upon request with all
information about the Company required for the preparation and
filing of Form 144.
5. CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING.
The obligations of the Investors under paragraphs 1.1 and 1.2 of this
Agreement are subject to the fulfillment at or before the Closing of
each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Paragraph 2 hereof, shall be true on
and as of the Closing.
5.2 PERFORMANCE. The Company shall have performed and complied
with all agreements and conditions contained herein required
to be performed or complied with by it on or before the
Closing.
5.3 STATE SECURITIES LAWS. The Company will have complied with all
requirements under all the state of Florida securities laws
with respect to the offer and sale of the Shares and the Common
Stock to be issued upon the conversion thereto.
5.4 COMPLIANCE CERTIFICATE. There shall have been delivered to each
of the Investors a certificate, dated the Closing Date, signed
by the Company's president, certifying that the conditions
specified in paragraphs 5.1, 5.2, 5.3, and 5.4, have been
fulfilled.
5.5 OPINION OF COUNSEL. There shall have been delivered to each of
the Investors an opinion of counsel for the Investors, to the
effect that
(i) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Idaho;
(ii) this Agreement has been duly authorized, executed,
and delivered by the Company and constitutes A VALID
AND ENFORCEABLE OBLIGATION OF THE COMPANY IN
ACCORDANCE WITH ITS TERMS and, after investigation
deemed reasonable by such counsel under the
circumstances, such counsel has no knowledge of any
breach by the Company of its representations,
warranties and covenants under this Agreement.
(iii) the Shares have been duly authorized, issued and
delivered and are validly outstanding;
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(iv) upon issuance and sale of the Shares, the Company
shall have outstanding an aggregate of two million
nine hundred seventy four thousand and seventy
(2,974,070) shares of Common Stock;
(iv) such issue and sale is exempt, and no approval or
authorization of any other public body is necessary
for the issuance and sale by the Company of the
Shares, and based in part upon the representations of
the Investors, the offer, sale, and delivery of the
Shares under the circumstances contemplated by this
Agreement constitutes an exempt transaction under the
Act.
5.6 MINIMUM PURCHASE OF COMMON SHARES. Counterparts of this
Agreement shall have been signed by persons agreeing to
purchase Shares having an aggregate purchase price of not less
than two hundred and fifty thousand dollars (US$250,000)
unless approved by the Company directors.
5.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the
Closing hereby and all documents and instruments incident to
such transactions will be reasonably satisfactory in substance
and form to the Investors and their counsel, and the Investors
and their counsel will have received all such counterpart
originals or certified or other copies of such documents as
they may reasonably request.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company under paragraphs 1.1 and 1.2 of this
Agreement are subject to the fulfillment at or before the Closing of
each of the following conditions:
6.1 WARRANTIES TRUE ON THE CLOSING DATE. The representations and
warranties of each of the Investors contained in paragraphs 3
and 4 hereof shall be true on and as of the Closing with the
same effect as though said representations and warranties had
been made on and as of the Closing.
7. COVENANTS
7.1 FINANCIAL STATEMENTS. The Company promptly shall deliver to
each holder of Shares annual financial statements.
8. MISCELLANEOUS
8.1 AGREEMENT IS ENTIRE CONTRACT. Except as specifically
referenced herein, this Agreement constitutes the entire
contract between the parties hereto concerning the subject
matter hereof and no party shall be liable or bound to the
other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any
previous agreement among the parties related to the
transactions described herein is superseded hereby. The terms
and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of
the parties hereto. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns,
any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided herein.
8.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of IDAHO, country of the
UNITED STATES OF AMERICA.
8.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
8.4 TITLE AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience and are
not to be considered in construing this Agreement.
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8.5 NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon
personal delivery or upon deposit in the United States Post
Office, by registered or certified mail, addressed to a party
at its address or at such other address as such party may
designate by ten (10) days advance written notice to the other
party.
8.6 FINDER'S FEE. Each party hereto represents that it is not, and
will not be, obligated for any finder's fee or commission
payable in cash in connection with this transaction. Each of
the Investors hereby agrees to indemnity and to hold harmless
the Company from any liability for any commission or
compensation in the nature of a finder's fee (and the costs
and expenses of defending against such liability or asserted
liability) for which any such Investor or any of its employees
or representatives is responsible. The Company agrees to
indemnify and hold harmless the Investors from any liability
for any commission and compensation in the nature of a
finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is
responsible.
8.7 LEGAL FEES AND EXPENSES. The Company agrees upon the Closing
to pay its legal fees and expenses of counsel, incurred in
connection with the negotiation and execution of this
Agreement and related documents and with obtaining any
governmental consents and taking such compliance actions,
including, without limitation, securities law filing as are
required in connection therewith.
8.8 SURVIVAL OF WARRANTIES. The warranties and representations of
the Company contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and
the Closing hereunder.
8.9 AMENDMENT OF AGREEMENT. Except as expressly provided herein,
any provision of this Agreement may be amended or waived on
behalf of all Investors by a written instrument signed by the
Company and by Investors holding at least a majority of the
aggregate of the shares of Common Stock issuable and issued
upon conversion of the Shares.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed as of
the day and year first above written.
KEYSTONE SILVER MINES, INC.
/s/ S. Xxxx Xxxxxxx
---------------------
President
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EXHIBIT 1
LIST OF PURCHASERS
/s/ XXXXX XXXXXX
----------------------
Xxxxx Xxxxxx
00000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000 500,000 shares with $500,000.00 cash paid
/s/ Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
000 Xxxxx Xxx Xxxxx
Xxxx Xxxx, XX 00000 15,000 shares with $15,000.00 cash paid
/s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx
00000 Xxxxxxxx
Xxx Xxxx, XX 00000 10,000 shares with $10,000.00 cash paid
/s/ Xxxx Xxxxxxx
----------------
Xxxx Xxxxxxx
00000 Xxxxxxxx, Xxx. 00
Xxxxxxxxxx, XX 00000 10,000 shares with $10,000.00 cash paid
/S/ Xxxxxx Xxxx
----------------
Xxxxxx Xxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000 5,000 shares with $5,000.00 cash paid
/S/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx
00000 X. Xxxxxxx Xx.
Xxxxxxx Xxxxx, XX 00000 10,000 shares with $10,000.00 cash paid
/S/ Xxxxxx Metzei
----------------
Xxxxxx Netzei
0000 Xxxxxxxx Xxx
Xxxxxxxxxx Xxxxx, XX 00000 10,000 shares with $10,000.00 cash paid
