PURCHASE & SALE AGREEMENT
AGREEMENT
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THIS AGREEMENT (the "Agreement"), effective as of August 5, 1999, by
and between XXXXX X. XXXXXXXX (hereinafter referred to as "Seller") and S. XXXX
XXXXXXX (hereinafter referred to as "Buyer").
WITNESSETH:
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WHEREAS, Seller desires to sell and Buyer desires to purchase a
controlling interest in Keystone Silver Mines, Inc., an Idaho Corporation.
WHEREAS, Seller and Buyer both agree the most effective method is for
Buyer to acquire an option to acquire common stock in Keystone Silver Mines,
Inc., an Idaho Corporation (hereinafter "Keystone Silver"), as well as Buyer to
assume control of Keystone Silver;
ARTICLE I
CLOSING DATE
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As used herein, "Closing Date" shall mean 9:00 PM., Spokane time, on August 9,
1999, or such other or later date as may be mutually agreed upon in writing
between Buyer and Seller. At the Closing, Seller will deliver to Buyer, his
resignation, as well as the resignations of its current officers and directors.
ARTICLE 2
PURCHASE
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Subject to the terms and conditions herein set forth:
(a) PURCHASE. Subject to the terms and conditions stated herein, on the
Closing date, Seller will resign and obtain the resignations of all officers and
directors of Keystone Silver and cause the appointment of S. Xxxx Xxxxxxx,
Xxxxxx Xxxxx, and Xxxxxx X. XxXxxxxx as officers and directors of Keystone
Silver.
i. Additional Compensation. Buyer will also cause to be
issued, effective, on or before August 9,1999,
certain options designated as follows:
a. OPTION CERTIFICATE NO. 1, between the Company and
S. Xxxx Xxxxxxx, pursuant to which 5,000,000 shares of the
Company's Common Stock, $0.05 par value, may be purchased and
otherwise transferred for a period of 2 years from the date
herein for $0.05 per share, other consideration, and upon such
other terms as set forth in the Option Certificate No. 1;
b. OPTION CERTIFICATE NO. 2. between the Company and
Xxxxx X. Xxxxxxxx, pursuant to which 11,500 shares of the
Company's Common Stock, $0.05 par value, may be purchased and
otherwise transferred for a period of 2 years from the date
herein for $0.05 per share, other consideration, and upon such
other terms as set forth in the Option Certificate No.2;
c. OPTION CERTIFICATE NO. 3, between the Company and
Xxxxx Xxxxx, pursuant to which 11,500 shares of the Company's
Common Stock, $0.05 par value, may be purchased and otherwise
transferred for a period of 2 years from the date herein for
$0.05 per share, other consideration, and upon such other
terms as set forth in the Option Certificate No. 3;
d. OPTION CERTIFICATE NO. 4, between the Company and
Xxxx Xxxxx, pursuant to which 500 shares of the Company's
Common Stock, $0.05 par value, may be purchased and otherwise
transferred for a period of 2 years from the date herein for
$0.05 per share, other consideration, and upon such other
terms as set forth in the Option Certificate No. 4;
e. OPTION CERTIFICATE NO. .5, between the Company and
Xxxxxx X'Xxxxx, pursuant to which 500 shares of the Company's
Common Stock, $0.05 par value, may be purchased and otherwise
transferred for a period of 2 years from the date herein for
$0.05 per share, other consideration, and upon such other
terms as set forth in the Option Certificate No. 5;
f. OPTION CERTIFICATE NO. 6, between the Company and
X. X. XxxXxxx, pursuant to which 500 shares of the Company's
Common Stock, $0.05 par value, may be purchased and otherwise
transferred for a period of 2 years from the date herein for
$0.05 per share, other consideration, and upon such other
turns as set forth in the Option Certificate No. 6 and,
g. OPTION CERTIFICATE NO. 7, between the Company and
Xxxxxx X. Xxxxxxxx, pursuant to which 500 shares of the
Company's Common Stock, $0.05 par value, may be purchased and
otherwise transferred for a period of 2 years from the date
herein for $0.05 per share, other consideration, and upon such
other terms as set forth in the Option Certificate No. 7.
(b) PURCHASE PRICE. The purchase price for the option for common stock
shall be $100,000 due Seller from Buyer shall be paid to the Trust Account of
Xxxxxxx X. Xxxxxxxxx, attorney for Seller, on or before Closing Date, subject to
the following conditions:
(i) Prior to Closing, Seller caused the capital structure
of Keystone Silver Mines to be reorganized, namely
effective August 3, 1999, each outstanding share of
Capitol Silver common stock (currently 9,034,868)
shall be canceled and shall be converted (at the
ratio of 1 share of Keystone Silver for every 70
shares of Keystone Silver shares) by virtue of such
recapitalization, such that Shareholders of Keystone
Silver Common Stock will hold 129,070 (subject to
rounding of shares) shares of Common Stock of
Keystone Silver.
(ii) the deposit of the sum of $100,000 to the Seller is
conditioned on Buyer retaining the right to purchase
5,000,000 shares of Common Stock (post reverse stock
split) (representing approximately __% of the issued
and outstanding shares of Keystone Silver). At
Closing, all funds deposited with Xxxxxxx X.
Xxxxxxxxx, shall be released to the Seller.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
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(a) The option for common stock and the transactions contemplated
herein have been duly and validly issued, subject to ratification by the
Shareholders of Keystone Silver.
(b) NO CONFLICT OR DEFAULT. Neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions hereof, including
without limitation the consummation of the transactions contemplated hereby,
will violate any statute, regulation or ordinance of any governmental authority,
or conflict with or result in the breach of any term condition of provisions of
the articles of incorporation or bylaws of Keystone Silver, or of any agreement,
deed, contract, mortgage, indenture, writ, order decree, legal obligation or
instrument to which Seller is a party or by which it or any of its respective
assets or properties are or may be bound, or constitute a default (or an event
which, with the lapse of time or the giving of notice, or both, would constitute
a default) thereunder, or result in the creation or imposition or any lien,
charge or encumbrance, or restriction of any nature whatsoever with respect to
the option for common stock in Keystone Silver, or give to others any interest
or rights.
LITIGATION. There are no actions, suits, investigations, or
proceedings pending, or, to the knowledge of Seller, threatened, against or
affecting or which may affect Seller, the performance of the terms and
conditions hereof, or the consummation of the transactions contemplated hereby,
in any court or by or before any governmental body or agency, including without
limitation any claim, proceeding or litigation for the purpose of challenging,
enjoining or preventing the execution, delivery or consummation of this
agreement; and Seller does not know of any state of facts which would give rise
to any such action, suit, investigation or proceeding. Seller is not subject to
any order, judgment, decree, stipulation or consent or any agreement with any
governmental body or agency.
ARTICLE 4
CONDITIONS TO THE BUYER OBLIGATIONS
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The obligations of Buyer hereunder are subject to the fulfillment of
each of the following conditions on the Closing Date; except to the extent that
Buyer may in his absolute discretion waive any one or more hereof; in whole or
in part:
(a) REPRESENTATIONS TRUE; COVENANTS PERFORMED. The representations and
warranties of Seller shall be true and correct, as of the Closing Date, with the
same force and effect as though such representations and warranties have been
made on the Closing Date, and all the terms, covenants and conditions of this
Agreement to be complied with and performed by Seller on or before the Closing
Date shall have been duly complied with and performed.
(b) NO VIOLATION OF AGREEMENTS. The consummation of this Agreement
shall not violate any agreement or instrument to which Seller is a party or is
subject.
NO LITIGATION THREATENED. No inquiry shall have been received nor any
investigation, action, or proceeding shall have been instituted or threatened by
any governmental agency regarding the transaction contemplated thereby.
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ARTICLE 5
INVESTMENT REPRESENTATIONS
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Buyer represents, warrants and agree that:
(a) He acknowledge being informed that the option for common stock in
Keystone Silver and underlying common stock being sold to him is not registered
under the Securities Act of 1933 or any state securities law;
(b) He has not obtained any representative to review or evaluate his
purchase of the option for common stock, underlying common stock in Keystone
Silver and, by reason of his knowledge and experience in financial and business
matters in general, they are capable of evaluating the merits and risks of this
transaction;
He has examined this Agreement and has been given access to all
underlying documents related to this transaction, and is satisfied that he has
received such information as he deems necessary or appropriate as a prudent and
knowledgeable investor to verify the accuracy of such information and to
evaluate the merits and risks of acquiring the option for common stock
underlying common stock in Keystone Silver. He has carefully evaluated his
financial resources, investment condition and the risks attendant upon this
investment, and acknowledge that he is able to bear the economic risks of this
investment;
(d) He realizes that neither the Securities and Exchange Commission nor
the securities regulatory body of any state has received, considered or passed
upon the accuracy or adequacy of the information and representations made in
this Agreement;
(e) He is executing this Agreement and all other documents in
connection with the purchase of the option for common stock of Keystone Silver
as an inducement to Buyer to acquire the option for common stock and Buyer may
rely on such documents and information contained herein to determine the
qualifications of the undersigned to purchase the option for common stock in
Keystone Silver.
(f) At the time of this Agreement, reviewed the economic consequences
of this Agreement with his attorney and/or other financial advisor, was afforded
access to the books and records of the Keystone Silver Mines, Inc., conducted an
independent investigation of the business of the Keystone Silver Mines, Inc.,
and was fully familiar with to financial affairs of the Keystone Silver Mines,
Inc. He has consulted with his counsel with respect to Federal and/or Stare
Securities Acts.
ARTICLE 6
ASSIGNABILITY
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Subject to applicable federal and state securities laws, this
Agreement may be assigned by any party.
ARTICLE 7
ENTIRE AGREEMENT
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This instrument contains the entire agreement among the parties with respect to
the acquisition of controlling interest in Keystone Silver Mines, Inc. and the
other transactions contemplated hereby.
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ARTICLE 8
AMENDMENT
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This Agreement may be amended or modified only by a writing signed by the party
or parties to be charged with such amendment or modification.
ARTICLE 9
INDEMNIFICATION AND WAIVER OF CLAIMS
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Buyer hereby agrees to waive, and release Seller, to indemnify and hold Seller
harmless from and against any and all losses, claims, damages, expenses or
liabilities, known and/or unknown, joint or several, to which Buyer may become
subject under Federal and/or State Securities Acts, Federal and/or State
anti-Racketeering laws (e.g. "RICO"), the Washington State Consumer Protection
Act, or under any other statutes (United States, State, territory or foreign) or
at common law or otherwise arising out of, related to, or connected with
Sellers' status as officers and directors of Keystone Silver Mines, Inc., an
Idaho Corporation. Seller agrees upon his receipt of written notice of the
commencement of any action against Seller as aforesaid, in respect of which
indemnity may be sought from Buyer on account of the indemnity agreement
contained in this subsection, to notify Buyer promptly in writing of the
commencement thereof.
Buyer, his affiliates, subsidiaries, heirs, executors, assigns, and all other
persons claiming by, through, or under Buyer (hereinafter individually and
collectively "Buyer"), hereby release, acquit waive, disclaim, discharge, and
agree to indemnify and hold harmless Keystone Silver Mines, Inc., its
successors, assigns, subsidiaries, agents, officers, directors, and affiliates,
from and against any and all claims, demands, disputes, defaults, liabilities,
damages, actions, causes of action or suits of any kind or nature whatsoever,
known or unknown, direct or indirect, Buyer has or claims to have against
Keystone Silver.
ARTICLE 10
SURVIVAL
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All covenants, agreements, representations, and warranties made herein and in
any certificates delivered at the closing, or pursuant thereto, shall be deemed
to be material and to have been relied upon by the other parties hereto,
notwithstanding any investigation heretofore or hereafter made or omitted by any
such other party or on its behalf; and shall survive the closing hereunder.
ARTICLE 11
NOTICES
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All notices and other communications hereunder shall be in writing and shall be
hand delivered or mailed, first class, postage prepaid, as herein provided:
SELLER: Xxxxx X. Xxxxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxx 00000
BUYER: S. Xxxx Xxxxxxx
8O8 South College, Xxxxx 000
XxXxxxxx, Xxxxx 00000
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ARTICLE 12
BINDING ON SUCCESSORS
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All of the terms, provisions and conditions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors, and legal representatives.
ARTICLE 13
TITLES
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The titles of the sections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.
ARTICLE 14
COUNTERPARTS
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This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which shall be deemed an original and all of
which taken together shall constitute one and the same document.
ARTICLE 15
SEVERABILITY
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The unenforceability or invalidity of any provision of this Agreement shall not
affect the enforceability or validity of the balance of this Agreement.
ARTICLE 16
GOVERNING LAW
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This Agreement shall be governed by and interpreted and constructed in
accordance with the laws of the State of Idaho.
ARTICLE 17
EXPENSES
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Sellers and Buyer shall each bear their own costs, expenses, and attorneys' fees
in conjunction with or related to this Agreement.
ARTICLE 13
ARBITRATION
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Any controversy arising out of, connected to, or relating to any matters herein
of the transactions between Seller and Buyer (including for purposes of
arbitration, employees, controlling persons, affiliates, professional advisors,
accountants, attorneys, or agents of the Buyer or Seller), on behalf of the
undersigned, or this Agreement, or the breach thereof, including, but not
limited to any claims of violations of Federal and/or State Securities Acts,
Banking Statutes, Consumer Protection Statutes, Federal and/or State
anti-Racketeering (e.g. RICO) claims as well as any common law claim, and any
State Law claims of fraud, negligence, negligent misrepresentations, and/or
conversion shall be settled by arbitration; and in accordance with this
paragraph and judgment on the arbitrator's award may be entered in any court
having jurisdiction thereof in accordance with the provisions of Idaho Law. In
the event of such a dispute, each party to the conflict shall select an
arbitrator, both of whom shall select a third arbitrator, which shall constitute
the three person arbitration board. The decision of a majority of the board of
arbitrators, who shall render their decision within thirty (30) days of
appointment of the final arbitrator, shall be binding upon the parties. Venue
for arbitration and any action herein shall lie in Shoshone County, State of
Idaho.
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Dated this ____day of August, 1999
SELLER:
/S/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX
BUYER:
/S/ S. Xxxx Xxxxxxx
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S. XXXX XXXXXXX (facsimile signature shall
be considered the same as an original)
STATE OF IDAHO )
)ss.
County of Shoshone )
On this day personally appeared before me XXXXX X. XXXXXXXX, to me
known to be the individual described in and who executed the within and
foregoing instrument, and acknowledged, that he signed the same as his free and
voluntary act and deed, for the uses and purposes therein mentioned.
GIVEN under my hand and official seal this ____ day of____________,1999.
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NOTARY PUBLIC in and for the State of Idaho, residing in______.
My Commission expires:___
STATE OF )
)ss.
County of )
On this day personally appeared before me S. XXXX XXXXXXX, to me known
to be the individual described in and who executed the within and foregoing
instrument, and acknowledged, that he signed the same as his free and voluntary
act and deed, for the uses and purposes therein mentioned.
GIVEN under my hand and official seal this 5th day of August, 1999,
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NOTARY PUBLIC in and for the State of Texas, residing in illegible.
My Commission expires: 7-18-01
[NOTARY SEAL HERE]
Xxxxxx X. Xxxxxxx
Notary Public
STATE OF TEXAS
My Comm. Exp. 7-18-01
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