EXHIBIT 10.5
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION PROVIDED BY
REGULATION S UNDER THE ACT. UNTIL ONE YEAR AFTER THE DATE OF PURCHASE, NO AMOUNT
OF THE SHARES MAY BE OFFERED, SOLD OR TRANSFERRED TO ANY U.S. PERSON. OFFERS,
SALES OR TRANSFERS IN THE U.S. OR TO A U.S. PERSON (AS DEFINED IN REGULATION S
PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF A U.S. PERSON ARE
NOT PERMITTED, EXCEPT AS PROVIDED IN SAID REGULATION S, UNLESS THE SECURITIES
ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE
ACT IS APPLICABLE."
REGULATION "S" STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement is made as of June 21, 2007, by and
between ARCOBEL INVESTMENT, INC., S.A., a Sociedad Anonima Corporation
constituted according to the laws of the Republic of Panama, inscribed at File
N(degree) 37836, Roll N(degree) 2045, Image N(degree) 163, of the Mercantile
Microfilms Section of the Public Registry of the Republic of Panama, since April
the 6th, 1979, domiciled at the Republic of Panama, Panama City ("BUYER"), and
Dhanoa Minerals Ltd.,15 Oceanview Road, Lions Bay, B.C. V0N 2E0 Canada
("SELLER").
WHEREAS, the SELLER desires to sell Two Million Ninety Thousand One
Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the
SELLER, at the Purchase Price (as hereinafter defined), to the BUYER;
WHEREAS, the BUYER will also receive, at no extra cost, one warrant for
the purchase of Two Million Ninety Thousand One Hundred Sixty Four (2,090,164)
Shares of Regulation "S" Common Stock of the SELLER at the exercise price of
$.61(U.S.) per share exercisable for a period of two (2) years from the date
hereof, (the "Warrant"). The Warrant may be exercised in whole or in part on a
pro rata basis, based upon the price referenced above.
WHEREAS, the BUYER desires to purchase the Regulation "S" Shares from
the SELLER in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements of the parties contained herein, the parties, intending to be legally
bound hereby, agree as follows:
1. SALE OF SHARES. The SELLER shall sell and deliver to the BUYER, at
the Purchase Price, the Shares of the SELLER and the BUYER shall purchase and
receive the Shares from the SELLER, at such Purchase Price.
2. CLOSING DATE. This transaction shall be closed pursuant to the terms
and conditions of this Agreement on June 21, 2007, 1:00 PM (local time) at the
offices of the SELLER, or its designee. The date of closing of this transaction
is herein called the "Closing Date". The actions outlined in Sections 3 and 10,
which are to take place on the Closing Date, are herein called the "Closing".
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3. CLOSING. At Closing, the parties shall take the following actions:
3.1 TRANSFER OF SHARES. The SELLER shall sell, transfer,
assign, and deliver to the BUYER, the Shares, all of which shall be issued and
outstanding as of the Closing Date, upon the terms and subject to the conditions
set forth in this Agreement. The SELLER shall deliver to the BUYER, free and
clear of all claims and encumbrances, certificate(s) for the Shares which the
SELLER is selling in accordance with Section 3.3 hereof, registered in the name
of the BUYER or, if not so registered, then in fully negotiable form.
3.2 PURCHASE PRICE. BUYER does agree to purchase and SELLER
does hereby agree to sell Two Million Ninety Thousand One Hundred Sixty Four
(2,090,164) Shares of Regulation "S" Common Stock of the SELLER at the price of
$1,275,000 (U.S.) at $.61 per share, payment as follows:
a.) The purchase price shall be evidenced by a wire transfer, in favor
of SELLER in the amount of $1,275,000 (U.S.);
For the Account of:
Dhanoa Minerals Ltd.
15 Oceanview Road
Lions Bay, B.C. V0N 2E0
Canada
The parties hereto agree that the purchase price has been adjusted to
reflect a discount of 15% of the closing bid price of the Common Stock of the
SELLER on the day of the sale.
4. SECURITIES ACT OF 1933 AND HOLDING PERIOD. The BUYER covenants and
agrees as follows:
4.1 The BUYER understands that the Shares acquired pursuant to
this Agreement have not been registered under the United States ("US")
Securities Act of 1933 ("1933 Act") with the Securities and Exchange Commission
in reliance upon the exemption from such registration requirements afforded by
Regulation "S" under the 1933 Act, governing the offer and sale of securities
that occur outside the U.S., nor with any state securities commission. The BUYER
agrees and acknowledges that the SELLER shall have cause to issue Stop Transfer
instructions to its registrar or transfer agent prohibiting the transfer of the
Shares delivered under this Agreement for a period of 12 months after the date
of Closing and as set forth herein below.
4.2 The BUYER hereby represents and warrants that: it is a
Sociedad Anonima Corporation constituted according to the laws of the Republic
of Panama, with principal executive and administrative offices located outside
the US within the meaning of Rule 902(o) of Regulation "S".
4.3 The BUYER agrees that the Shares acquired by the BUYER
pursuant to this Agreement shall not be voluntarily sold, transferred or
otherwise disposed of for a minimum period of 12 months from the date of
Closing.
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4.4 The BUYER understands that any disposition of the Shares
in violation of this Agreement, as well as Sections 4.1, 4.3, or this Section
4.4, shall be null and void. No transfer of the Shares shall be made by the
SELLER'S registrar or transfer agent upon the SELLER'S stock transfer books or
records unless there has been compliance with the terms of this Agreement,
including Sections 4.1, 4.3, and this Section 4.4. The SELLER shall have cause
to issue Stop Transfer instructions to its registrar, or transfer agent, to the
effect that the certificate(s) evidencing the Shares may not be transferred for
a period of 12 months after the date of Closing and thereafter may be
transferred immediately thereafter except as provided in Sections 2 and 3.1
hereof. The BUYER agrees to indemnify and hold the SELLER harmless from and
against all Material Damages, as defined in Section 10, that result from or
arise out of any disposition of the Shares in violation of this Agreement.
5. CONDITIONS OF BUYER'S AND SELLER'S OBLIGATION TO CLOSE. The
following shall be conditions of the BUYER'S and the SELLER'S obligation to
close hereunder, which either the BUYER or the SELLER, in each's sole
discretion, may waive in whole or in part:
5.1 REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
SELLERS. Representations and Warranties made by the BUYER, and the SELLER, in
this Agreement shall be true and correct as of the Closing Date as fully made at
this time.
5.2 NO DEFAULT - COVENANTS AND AGREEMENTS. Neither the BUYER
nor the SELLER shall be in material default with respect to any obligation under
this Agreement and it shall have performed or compiled with all covenants,
agreements and conditions to be performed or compiled with by it prior to or at
the Closing.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The SELLER represent
and warrant to the BUYER that the statement contained in Sections 6.1 through
6.9 are true and correct on the date hereof and will be true and correct on and
as of the Closing Date as follows:
6.1 CORPORATE STANDING. The SELLER is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada, and it has full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The SELLER has full power and
authority to carry on its business as it is now being conducted and to own its
assets. The SELLER is duly qualified to transact business in each jurisdiction
where the nature of its business requires it to be so qualified and where the
failure so to qualify would have a material adverse effect on the business of
the SELLER. The execution and delivery of this Agreement by the SELLER does not,
and the consummation of the transactions contemplated hereby will not, violate
or result in a breach of any provisions of SELLER'S Charter or Bylaws.
6.2 CAPITAL STOCK. The authorized capital stock of the SELLER
consists of One Hundred Fifteen Million (115,000,000) shares of authorized
common stock, $.001 par value per share, of which approximately Forty Million
(40,000,000) shares of Common Stock (excluding treasury Shares), have been
validly issued and are outstanding, fully paid and non-assessable as of June 21,
2007.
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6.3 AUTHORITY. The SELLER has full power and authority to
enter into this Agreement and have taken all action or will use their best
efforts to take all action necessary to authorize the execution, delivery and
performance of this Agreement, the completion of the transactions contemplated
hereby and the execution and delivery on behalf of the SELLER of any and all
instruments necessary or appropriate in order to effectuate fully the terms and
conditions of this Agreement. Upon delivery of the Shares and payment of the
purchase price, good and clear title to the Shares will pass, free and clear of
all restrictions on transfer, liens, encumbrances, security interest and claims
whatsoever, to the BUYER, subject, however, to the provisions of Section 2, 3,
and 4 inclusive.
No consent or approval of any court, governmental agency or other
public authority, or of any other person, corporation or entity with any actual
or alleged interest in the SELLER is required as a condition to (a) the validity
or enforceability of this Agreement or any other instruments to be executed by
the SELLER to effectuate this Agreement, or (b) the completion or validity of
any of the transactions contemplated by this Agreement. This Agreement has been
properly executed and delivered by the SELLER, and constitutes the valid and
legally binding agreement of the SELLER and is enforceable against the SELLER in
accordance with its terms.
6.4 FINANCIAL STATEMENTS. The SELLER shall furnish, or make
available to the BUYER, financial statements contained in the SELLER'S annual
report on Form 10-KSB for the year ended April 30, 2007, and its most recent
quarterly report on Form 10-QSB ("Financial Statements"). There has been no
material adverse change in, material loss or destruction of, or material amount
of damage to the financial condition or business of the SELLER since the filing
of the most recent Form 10-QSB, whether or not arising from transactions in the
ordinary course of business. The regular books of account of the SELLER fairly
and accurately reflect all transactions since the filing of the most recent Form
10-QSB, are true, correct and complete, and are maintained and kept in
accordance with generally accepted accounting principles consistently applied.
The SELLER has no liabilities or obligations, whether accrued, absolute,
contingent or otherwise, which would materially and adversely affect the
condition (financial and otherwise) of the SELLER, except and to the extent
reflected or reserved against in the balance sheets included in the Financial
Statements. No dividends are due or unpaid by the SELLER.
6.5 LAWSUITS AND PROCEEDINGS. There are no actions at law or
in equity, proceeding, governmental proceedings or investigations pending or
threatened against the SELLER, or against or with respect to the business or
assets of the SELLER, and the SELLER is not in material default with respect to
any decree, injunction or other order of any court or government authority. The
SELLER is in substantial compliance with all (and has not received any notice of
any claimed violation of any) applicable, federal, state, county or municipal
laws, ordinances, and regulations. There is no action at law or in equity,
arbitration proceeding, governmental proceeding or investigation, or motion or
request to any court, pending or threatened, against, or with respect to the
SELLER, with respect to this Agreement or any of the transactions contemplated
hereby.
6.6 TAXES. The SELLER knows of no outstanding claims against
it for taxes which constitute a lien on the Shares being sold hereunder.
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6.7 EXTRAORDINARY TRANSACTIONS. Since the filing of the
SELLER'S most recent Form 10-QSB, the SELLER has not (i) mortgaged, pledged or
subjected to lien, charge or any other encumbrance any of its assets; (ii)
canceled any claim of or debts owed to it, or, except in each case in the
ordinary course of business, sold or transferred any of its assets; (iii) made
any management decisions involving any material change in its policies with
regard to the provision of services, sales, purchasing or other business,
financial, accounting (including reserves and the amounts thereof) or tax
policies or practices; or (iv) declared or paid any dividends on, or made any
distributions in respect of any outstanding Shares of capital stock of the
SELLER.
6.8 ADVERSE CIRCUMSTANCES. To the best knowledge of the
SELLER, there are no facts, developments or circumstances, existing or
threatened, of a special or unusual nature that may be materially adverse to the
assets, business, financial condition or future prospects of the SELLER.
6.9 LIABILITIES. The SELLER has no material liabilities of any
nature, whether accrued, absolute, contingent or otherwise, existing, or which
may hereafter arise out of any transaction entered into prior to the Closing
Date or out of any act or failure to act on the part of the SELLER, or any of
its employees, or agents, prior to the Closing Date, except (i) as and to the
extent and in the amounts reflected or reserved against in the Financial
Statements, and (ii) current liabilties incurred in the ordinary course of
business since its filing of the SELLER'S most recent Form 10-QSB.
7. COVENANTS AND AGREEMENTS OF THE BUYER. The BUYER hereby covenants
and agrees as follows:
7.1 CORPORATION ACTION. The BUYER shall duly take all action,
corporate or otherwise, necessary or appropriate to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
7.2 IMPAIRMENT - REPRESENTATIONS AND WARRANTIES. The BUYER
shall not take any action or fail to take any action without the prior written
approval of the SELLER, which would or might cause any representation or
warranty of the SELLER made herein not to be true on the Closing Date, or impair
the SELLER'S ability to carry out their obligations under this Agreement.
7.3 DUE DILIGENCE. The BUYER or its agents, have had a full
opportunity to conduct its due diligence of the SELLER in connection with this
Agreement to its complete satisfaction. The BUYER is familiar with the SELLER,
its financial condition, business and prospects, has been provided with such
information concerning the SELLER'S financial and other affairs as the BUYER
deems necessary to enter into and perform this Agreement, has had sufficient
opportunity to ask questions and receive answers to verify the accuracy of such
information, and is not in any way relying upon any information, representation
or warranty (without implying that the supplying of any such information or the
making of any such representation or warranty has occurred) that the SELLER, or
its officers, directors, employees, agents and attorneys have provided, or have
failed to provide, to the BUYER in entering into or performing this Agreement.
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8. CONDITIONS OF THE SELLER'S OBLIGATION TO CLOSE. The obligations of
the SELLER to close this transaction and transfer and deliver to the BUYER the
Shares, as set forth in Section 4.1 hereof, and to perform his obligations
pursuant to the terms and conditions of this Agreement, are subject to the
fulfillment as of the Closing Date of each of the following conditions
precedent, any or all of which may be waived in writing by the SELLER;
8.1 PAYMENT OF PURCHASE PRICE. The BUYER has paid the Purchase
Price;
9. DELIVERY OF DOCUMENTS BY THE SELLER. At the Closing, and in
addition to all other documents and instruments, which the SELLER is required to
deliver, pursuant to this Agreement, the SELLER shall deliver to the BUYER the
following documents duly executed by the SELLER, or the directors, officers, or
employees of or counsel to the SELLER, or appropriate governmental officials, in
form and substance satisfactory to the BUYER and its counsel.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION. The SELLER and the BUYER agree to
jointly and severally indemnify each other and hold each other harmless from and
against all material damages, losses, costs, liabilities, expenses and
deficiencies, including, without limitation, additional taxes, and interest
expenses, attorneys fees and expenses and accountant and expert witness fees and
expenses (collectively "Material Damages") that result from or arise out of any
misrepresentation, breach of warranty, or non-fulfillment of any agreement,
covenant or obligation on the part of the other under this Agreement. Upon
written demand, the indemnifying person(s) shall reimburse the indemnified
person(s) immediately for all Material Damages for and against which indemnified
person(s) is(are) to be indemnified and held harmless pursuant to this Section.
The obligation of the SELLER and the BUYER to indemnify each other, under this
Section, shall terminate on the Third (3rd) anniversary of the Closing Date
except as to matters to which the indemnified person(s) had(have) made a claim
for indemnification or given written notice of a possible claim for
indemnification on or prior to such date.
11. BROKERAGE FEES. The BUYER and the SELLER each represent and warrant
that no broker, finder or intermediary is entitled to receive any brokerage or
similar type of commission or payment payable by any other and each will hold
the others harmless against and in respect of any claim for brokerage or similar
type of commission or payment.
12. TERMINATION OF AGREEMENT. This Agreement and the transaction
contemplated hereby may be terminated by the BUYER or the SELLER without
liability of any kind to the BUYER or the SELLER by written instrument, signed
by the BUYER or the SELLERS and delivered at any time on or prior to the Closing
Date, giving notice of termination, if:
(a) There has been a material misrepresentation or material
breach of warranty on the part of the BUYER, or the SELLERS, in the
representations and warranties set forth herein or in any Exhibit hereto or in
any certificate delivered pursuant hereto, or the BUYER, the SELLERS shall have
failed to perform or comply with in any material respect any covenant, agreement
or condition to be performed or complied with by either of them prior to, or at
Closing, due to the non-fulfillment of any condition set forth herein;
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(b) In the reasonable judgment of the BUYER or the SELLER the
transactions contemplated by this Agreement have become inadvisable or
impracticable by reasons of (i) the enactment of new federal, state or local
legislation since the date of this Agreement, or (ii) the announcement or the
institution by federal, state or local authorities of an investigation of or
litigation or proceedings against the SELLER, which may have a material and
adverse effect on the SELLER, or the transactions contemplated hereby, or (iii)
the institution since the date of this Agreement by any other person,
corporation or entity of litigation or proceedings against or in regard to the
SELLER, which may have a material and adverse effect upon the authority, or
ability, of the SELLER to consummate the transactions contemplated hereby; or,
(c) The business, assets, result of operations, financial
condition or future prospects of the SELLER have been significantly and
adversely affected by reason of changes or developments in operations, other
than in the ordinary course of business, since the filing of the SELLER'S most
recent Form 10-QSB.
13. AFFECT OF TERMINATION. In the event that this Agreement shall be
terminated in accordance with the provisions of the Agreement, then all further
obligations of the BUYER, and the SELLER under this Agreement shall terminate
without further liability of any one party to the others.
14. EXPENSES. All legal, accounting and other costs and fees incurred
by the BUYER, or the SELLER, in connection with the transactions contemplated by
this Agreement shall be borne and paid for by that party.
15. MISCELLANEOUS PROVISIONS.
15.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The respective representations, warranties, covenants and agreements made in
this Agreement by the BUYER, the SELLER shall survive the Closing. The
respective representations and warranties of each contained herein or in any
certificates delivered pursuant hereto shall not be deemed to be waived or
otherwise affected by an investigation or audit made by any other or by any
action taken by any other at the request of any other hereto.
15.2 ASSIGNMENT. Neither this Agreement nor any rights or
obligations hereunder may be assigned by the BUYER, or the SELLER, in whole or
in part, without the prior written consent of the others.
15.3 NOTICES. Any notice, request, instruction or other
document or communication required or permitted to be given upon delivery in
person or upon being deposited in the mail, postage prepaid, for mailing by
certified or registered mail, as follows:
If to the SELLER, delivered and mailed to:
Dhanoa Minerals Ltd.
15 Oceanview Road,
Lions Bay, B.C. V0N 2E0
Canada
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If to the BUYER, delivered or mailed to:
ARCOBEL INVESTMENT, INC., S.A.,
%Lcdo. Jaime E. Vega G.
CAMARENA, MORALES Y VEGA
Calle Ricardo Arias, Campo Alegre,
Edificio Proconsa II, Segundo Piso
Oficina No 2-A
Apartado 0823-01308
Panama City, Panama
15.4 SECTION HEADINGS. Section headings are for convenience
only and shall not limit or otherwise affect any of the provisions of this
Agreement.
15.5 ENTIRE AGREEMENT. This Agreement and any Exhibits hereto
constitute the entire agreement and understanding of the parties hereto with
respect to the matters herein set forth, and all prior negotiations, writings
and understandings relating to the subject matter of this Agreement are merged
herein and are superseded and canceled by this Agreement.
15.6 WAIVERS - AMENDMENTS. Any of the terms or conditions of
this Agreement may be waived, but only in writing by the party which is entitled
to the benefit thereof, and this Agreement may be amended, or modified in whole,
or in part only by an agreement in writing, executed by all the parties to this
Agreement.
15.7 BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. As used
herein, any reference to the masculine, feminine or neuter gender shall include
all genders, the plural shall include the singular, and the singular shall
include the plural.
15.8 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Nevada without regard to
conflicts of law.
15.9 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.
AGREED TO AND ACCEPTED JUNE 21, 2007
BUYER: SELLER:
ARCOBEL INVESTMENT, INC., S.A. DHANOA MINERALS LTD.
By: /s/ Licimaco Herrera Soto By: /s/ Lee A. Balak
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Licimaco Herrera Soto Lee A. Balak
President Chief Executive Officer and President
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