OPTION AGREEMENT
----------------
THIS AGREEMENT made as of the 8th day of December, 2000
BETWEEN:
XXXXXXXX X. XXXXXXX, of 0000 Xxxxxxxxx Xxxxx,
Xxxxx Xxxxxxxxx, X.X. X0X 0X0
(the "Optionor")
OF THE FIRST PART
AND:
TUSCANY MINERALS, LTD, a Nevada corporation,
having a registered office located at 0000
Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxx, 00000
(the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Optionor is the owner of certain mineral claims
located in the Province of British Columbia, Canada (the "Mineral
Claims");
B. The Optionor has agreed to grant an exclusive option to
the Optionee to acquire an interest in and to the Mineral Claims,
on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the sum of Ten Dollars ($10.00) now paid by the Optionee to the
Optionor (the receipt of which is hereby acknowledged), the
parties agree as follows:
DEFINITIONS
1. For the purposes of this Agreement the following words and
phrases shall have the following meanings, namely:
(a) "Exploration Expenditures" means the sum of: (i) all
costs of acquisition and maintenance of the Property,
all expenditures on the exploration and
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development of the Property; (ii) and all other costs and expenses
of whatsoever kind of nature including those of a capital
nature, incurred or chargeable by the Optionee with
respect to the exploration of the Property;
(b) "Option" means the option to acquire a 60% undivided
interest in and to the Property as provided in this
Agreement;
(c) "Option Period" means the period from the date of this
Agreement to and including the date of exercise or
termination of the Option;
(d) "Property" means the mineral claims described in
Schedule "A" hereto including any replacement or
successor claims, and all mining leases and other
mining interests derived from any such claims. Any
reference herein to any mineral claim comprising the
Property includes any mining leases or other interests
into which such mineral claim may have been converted;
(e) "Property Rights" means all licenses, permits,
easements, rights-of-way, certificates and other
approvals obtained by either of the parties either
before or after the date of this Agreement and
necessary for the exploration of the Property.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONOR
---------------------------------------------------------
2. The Optionor represents and warrants to and covenants with
the Optionee that:
(a) it is legally entitled to hold the Property and the
Property Rights and will remain so entitled until the
interest of the Optionor in the Property which is
subject to the Option has been duly transferred to the
Optionee as contemplated hereby;
(b) it is, and at the time of each transfer to the Optionee
of an interest in the mineral claims comprising the
Property pursuant to the exercise of the Option it will
be, the recorded holder and beneficial owner of all of
the mineral claims comprising the Property free and
clear of all liens, charges and claims of others,
except as noted on Schedule "A", and no taxes or
rentals are or will be due in respect of any of the
mineral claims;
(c) the mineral claims comprising the Property have been to
the best of the Optionor's knowledge and belief duly
and validly located and recorded pursuant to the laws
of the jurisdiction in which the Property is situate
and, except as specified in Schedule "A" and accepted
by the Optionee, are in good standing with respect to
all filings, fees, taxes, assessments, work commitments
or other conditions on the date hereof and until the
dates set opposite the respective names thereof in
Schedule "A";
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(d) there are not any adverse claims or challenges against
or to the ownership of or title to any of the mineral
claims comprising the Property, nor to the knowledge of
the Optionor is there any basis therefor, and there are
no outstanding agreements or options to acquire or
purchase the Property or any portion thereof, and no
person has any royalty or other interest whatsoever in
production from any of the mineral claims comprising
the Property other than as set out in Schedule "A";
(e) no proceedings are pending for, and the Optionor is
unaware of any basis for the institution of any
proceedings leading to the placing of the Optionor in
bankruptcy or subject to any other laws governing the
affairs of insolvent persons;
(f) the Property is not the whole or substantially the
whole of the undertaking of the Optionor; and
(g) the representations and warranties contained in this
section are provided for the exclusive benefit of the
Optionee, and a breach of any one or more thereof may
be waived by the Optionee in whole or in part at any
time without prejudice to its rights in respect of any
other breach of the same or any other representation or
warranty, and the representations and warranties
contained in this section shall survive the execution
of this Agreement and of any transfers, assignments,
deeds or further documents respecting the Property.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE
---------------------------------------------------------
3. The Optionee represents and warrants to and covenants with
the Optionor that:
(a) it has been duly incorporated, amalgamated or continued
and validly exists as a corporation in good standing
under the laws of its jurisdiction of incorporation,
amalgamation or continuation;
(b) it is lawfully authorized to hold mineral claims and
real property under the laws of the jurisdiction in
which the Property is situate;
(c) it has duly obtained all corporate authorizations for
the execution of this Agreement and for the performance
of this Agreement by it, and the consummation of the
transactions herein contemplated will not conflict with
or result in any breach of any covenants or agreements
contained in, or constitute a default under, or result
in the creation of any encumbrance under the provisions
of the Articles or the constating documents of the
Optionee or any shareholders' or directors' resolution,
indenture, agreement or other instrument whatsoever to
which the Optionee is a party or by which it is bound
or to which it or the Property may be subject;
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(d) no proceedings are pending for, and the Optionee is
unaware of any basis for the institution of any
proceedings leading to, the dissolution or winding up
of the Optionee or the placing of the Optionee in
bankruptcy or subject to any other laws governing the
affairs of insolvent corporations;and
(e) the representations and warranties contained in this
section are provided for the exclusive benefit of the
Optionor and a breach of any one or more thereof may be
waived by the Optionor in whole or in part at any time
without prejudice to its rights in respect of any other
breach of the same or any other representation or
warranty, and the representations and warranties
contained in this section shall survive the execution
hereof.
GRANT AND EXERCISE OF OPTION
----------------------------
4. The Optionor hereby grants to the Optionee the sole and
exclusive right and option to acquire a 60% undivided interest in
and to the Property free and clear of all charges, encumbrances
and claims, except for those set out in Schedule "A".
(a) The Option shall be exercised by the Optionee:
(i) paying the Optionor $1,500.00 US on the execution
of this Agreement, the receipt of which is hereby
acknowledged by the Optionor;
(ii) paying the Optionor $120,000.00 US as follows:
(A) $10,000.00 US on or before the first
anniversary of the date of this Agreement;
(B) an additional $20,000.00 on or before the
second anniversary of the date of this
Agreement;
(C) an additional $40,000.00 on or before the
third anniversary of the date of this
Agreement; and
(D) an additional $50,000.00 on or before the
fourth anniversary of the date of this
Agreement.
(ii) incurring Exploration Expenditures of $558,500 US
on the Property as follows;
(A) $8,500 on or before December 31, 2001;
(B) further $50,000.00 on or before December 31, 2002;
(C) a further $100,000.00 on or before December 31, 2003;
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(D) a further $150,000.00 on or before December
31, 2004; and
(E) a further $250,000.00 on or before December 31, 2005.
(b) In the event that the Optionee spends, in any of the
above periods, less than the specified sum, it may pay
to the Optionor the difference between the amount it
actually spent and the specified sum before the expiry
of that period in full satisfaction of the Exploration
Expenditures to be incurred. In the event that the
Optionee spends, in any period, more than the specified
sum, the excess shall be carried forward and applied to
the Exploration Expenditures to be incurred in
succeeding periods.
(c) If and when the Option has been exercised:
(i) a 60% undivided right, title and interest in and
to the Property shall vest in the Optionee free
and clear of all charges, encumbrances and claims
except for those set out in Schedule "A"; and
(ii) the Optionor and the Optionee shall enter into a
joint venture and be bound by that joint venture
agreement.
RIGHT OF ENTRY
--------------
5. Throughout the Option Period, the Optionor and its servants,
agents and independent contractors, shall have the right in
respect of the Property to:
(a) enter thereon;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development and other
mining work thereon and thereunder as the Optionor in
its sole discretion may determine advisable;
(d) bring upon and erect upon the Property such buildings,
plant, machinery and equipment as the Optionor may deem
advisable;
(e) remove therefrom and dispose of reasonable quantities
of ores, minerals and metals for the purposes of
obtaining assays or making other tests; and
(f) act as operator of the Property.
OBLIGATIONS OF THE OPTIONOR DURING OPTION PERIOD
------------------------------------------------
6. During the Option Period, the Optionor shall:
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(a) based upon payments received from the Optionee maintain
in good standing those mineral claims comprising the
Property by the doing and filing of assessment work or
the making of payments in lieu thereof, by the payment
of taxes and rentals, and the performance of all other
actions which may be necessary in that regard and in
order to keep such mineral claims free and clear of all
liens and other charges arising from the Optionor's
activities thereon except those at the time contested
in good faith by the Optionor;
(b) record all exploration work carried out on the Property
by the Optionor as assessment work;
(c) permit the directors, officers, employees and
designated consultants of the Optionee, at their own
risk and expense, access to the Property at all
reasonable times, and the Optionee agrees to indemnify
the Optionor against and to save it harmless from all
costs, claims, liabilities and expenses that the
Optionor may incur or suffer as a result of any injury
(including injury causing death) to any director,
officer, employee or designated consultant of the
Optionee while on the Property;
(d) do all work on the Property in a good and workmanlike
fashion and in accordance with all applicable laws,
regulations, orders and ordinances of any governmental
authority;
(e) indemnify and save the Optionee harmless in respect of
any and all costs, claims, liabilities and expenses
arising out of the Optionor's activities on the
Property, but the Optionor shall incur no obligation
hereunder in respect of claims arising or damages
suffered after termination of the Option if upon
termination of the Option any workings on or
improvements to the Property made by the Optionor are
left in a safe condition;
(f) permit the Optionee, at its own expense, reasonable
access to the results of the work done on the Property
during the last completed calendar year;and
(g) deliver to the Optionee, forthwith upon receipt
thereof, copies of all reports, maps, assay results and
other technical data compiled by or prepared at the
direction of the Optionor with respect to the Property.
TERMINATION OF OPTION
---------------------
7. The Option shall terminate:
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(a) upon the Optionee failing to incur or make any
expenditure or payment which must be incurred or made
in exercise of the Option; or
(b) at any other time, by the Optionee giving notice of
such termination to the Optionor.
If the Option is terminated the Optionee shall:
(a) leave in good standing for a period of at least 6
months from the termination of the Option Period those
mineral claims comprising the Property;
(b) deliver or make available at no cost to the Optionor
within 90 days of such termination, all drill core,
copies of all reports, maps, assay results and other
relevant technical data compiled by, prepared at the
direction of, or in the possession of the Optionee with
respect to the Property and not theretofore furnished
to the Optionor.
POWER TO CHARGE PROPERTY
------------------------
8. At any time after the Optionee has exercised the Option, the
Optionee may grant mortgages, charges or liens (each of which is
herein called a "mortgage") of and upon the Property or any
portion thereof, any mill or other fixed assets located thereon,
and any or all of the tangible personal property located on or
used in connection with the Property to secure financing of
development of the Property, provided that, unless otherwise
agreed to by the Optionor, it shall be a term of each mortgage
that the mortgagee or any person acquiring title to the Property
upon enforcement of the mortgage shall hold the same subject to
the right of the Optionor to receive the Royalty hereunder as if
the mortgagee or any such person had executed this Agreement.
TRANSFERS
---------
9. The Optionee may at any time either during the Option Period
or thereafter, sell, transfer or otherwise dispose of all or any
portion of its interest in and to the Property and this Agreement
provided that any purchaser, grantee or transferee of any such
interest shall have first delivered to the Optionor its agreement
relating to this Agreement and to the Property, containing:
(a) a covenant to perform all the obligations of the
Optionee to be performed under this Agreement in
respect of the interest to be acquired by it from the
Optionee to the same extent as if this Agreement had
been originally executed by such purchaser, grantee or
transferee; and
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(b) a provision subjecting any further sale, transfer or
other disposition of such interest in the Property and
this Agreement or any portion thereof to the
restrictions contained in this paragraph (a).
No assignment by the Optionee of any interest less than its
entire interest in this Agreement and in the Property shall, as
between the Optionee and the Optionor, discharge it from any of
its obligations hereunder, but upon the transfer by the Optionee
of the entire interest at the time held by it in this Agreement,
whether to one or more transferees and whether in one or in a
number of successive transfers, the Optionee shall be deemed to
be discharged from all obligations hereunder save and except for
the fulfilment of contractual commitments accrued due prior to
the date on which the Optionee shall have no further interest in
this Agreement.
If the Optionor should receive a bona fide offer from an
independent third party (the "Proposed Purchaser") dealing at
arm's length with the Optionor to purchase all or a part of its
interest in the Property, which offer the Optionor desires to
accept, or if the Optionor intends to sell all or a part of its
interest in the Property:
(a) The Optionor shall first offer (the "Offer") such
interest in writing to the Optionee upon terms no less
favourable than those offered by the Proposed Purchaser
or intended to be offered by the Optionor, as the case
may be.
(b) The Offer shall specify the price, terms and conditions
of such sale, the name of the Proposed Purchaser and
shall, in the case of an intended offer by the
Optionor, disclose the person or persons to whom the
Optionor intends to offer its interest and, if the
offer received by the Optionor from the Proposed
Purchaser provides for any consideration payable to the
Optionor otherwise than in cash, the Offer shall
include the Optionor's good faith estimate of the cash
equivalent of the non-cash consideration.
(c) If within a period of 60 days of the receipt of the
Offer the Optionee notifies the Optionor in writing
that it will accept the Offer, the Optionor shall be
bound to sell such interest to the Optionee on the
terms and conditions of the Offer. If the Offer so
accepted by the Optionee contains the Optionor's good
faith estimate of the cash equivalent of the non cash
consideration as aforesaid, and if the Optionee
disagrees with the Optionor's best estimate, the
Optionee shall so notify the Optionor at the time of
acceptance and the Optionee shall, in such notice,
specify what it considers, in good faith, the fair cash
equivalent to be and the resulting total purchase
price. If the Optionee so notifies the Optionor, the
acceptance by the Optionee shall be effective and
binding upon the Optionor and the Optionee, and the
cash equivalent of any such non-cash consideration
shall be determined by binding arbitration and shall be
payable by the Optionee, subject to prepayment as
hereinafter provided,
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within 60 days following its
determination by arbitration. The Optionee shall in
such case pay to the Optionor, against receipt of an
absolute transfer of clear and unencumbered title to
the interest of the Optionor being sold, the total
purchase price which is specified in its notice to the
Optionor and such amount shall be credited to the
amount determined following arbitration of the cash
equivalent of any non-cash consideration.
(d) If the Optionee fails to notify the Optionor before the
expiration of the time limited therefor that it will
purchase the interest offered, the Optionor may sell
and transfer such interest to the Proposed Purchaser at
the price and on the terms and conditions specified in
the Offer for a period of 60 days, but the terms of
this paragraph shall again apply to such interest if
the sale to the Proposed Purchaser is not completed
within such 60 days.
(e) Any sale hereunder shall be conditional upon the
Proposed Purchaser delivering a written undertaking to
the Optionee, in form and substance satisfactory to its
counsel, to be bound by the terms and conditions of
this Agreement.
SURRENDER OF PROPERTY INTERESTS PRIOR TO TERMINATION OF AGREEMENT
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10. The Optionor may at any time during the Option Period
elect to abandon any one or more of the mineral claims comprised
in the Property by giving notice to the Optionee of such
intention. Any claims so abandoned shall be in good standing
under the laws of the jurisdiction in which they are situate for
at least 6 months from the date of abandonment. Upon any such
abandonment, the mineral claims so abandoned shall for all
purposes of this Agreement cease to form part of the Property.
AREA OF COMMON INTEREST
-----------------------
11. If the Optionee and/or associated companies acquires,
through staking, properties located within the following area of
influence; extending one ("1.0") miles in an easterly,
northerly, southerly and westerly direction, these properties
will be included under the terms of this Agreement.
FORCE MAJEURE
-------------
12. If the Optionor is at any time either during the Option
Period or thereafter prevented or delayed in complying with any
provisions of this Agreement by reason of strikes, lock-outs,
labour shortages, power shortages, fuel shortages, fires, wars,
acts of God, governmental regulations restricting normal
operations, shipping delays or any
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other reason or reasons, other than lack of funds, beyond the
control of the Optionee, the time limited for the performance by
the Optionee of its obligations hereunder shall be extended by a
period of time equal in length to the period of each such prevention
or delay, but nothing herein shall discharge the Optionee from its
obligations hereunder to maintain the Property in good standing. The
Optionee shall give prompt notice to the Optionor of each event
of force majeure and upon cessation of such event shall furnish
to the Optionor with notice to that effect together with
particulars of the number of days by which the obligations of the
Optionee hereunder have been extended by virtue of such event of
force majeure and all preceding events of force majeure.
CONFIDENTIAL INFORMATION
------------------------
13. No information furnished by the Optionee to the Optionor
hereunder in respect of the activities carried out on the
Property by the Optionee shall be published or disclosed by the
Optionor without the prior written consent of the Optionee, but
such consent in respect of the reporting of factual data shall
not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant
to applicable securities or corporation laws, regulations or
policies.
ARBITRATION
-----------
14. All questions or matters in dispute under this Agreement
shall be submitted to arbitration pursuant to the terms hereof:
(a) It shall be a condition precedent to the right of any
party to submit any matter to arbitration pursuant to
the provisions hereof, that any party intending to
refer any matter to arbitration shall have given not
less than 10 days' prior notice of its intention to do
so to the other party, together with particulars of the
matter in dispute. On the expiration of such 10 days,
the party who gave such notice may proceed to refer the
dispute to arbitration as provided in paragraph (c).
(b) The party desiring arbitration shall appoint one
arbitrator, and shall notify the other party of such
appointment, and the other party shall, within 15 days
after receiving such notice, either consent to the
appointment of such arbitrator which shall then carry
out the arbitration or appoint an arbitrator, and the
two arbitrators so named, before proceeding to act,
shall, within 30 days of the appointment of the last
appointed arbitrator, unanimously agree on the
appointment of a third arbitrator to act with them and
be chairman of the arbitration herein provided for. If
the other party shall fail to appoint an arbitrator
within 15 days after receiving notice of the
appointment of the first arbitrator, the first
arbitrator shall be the only arbitrator. If the two
arbitrators appointed by the parties shall be unable to
agree on the appointment of the chairman, the chairman
shall be
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appointed under the provisions of the
Commercial Arbitration Act of British Columbia. Except
as specifically otherwise provided in this section, the
arbitration herein provided for shall be conducted in
accordance with such Act. The chairman, or in the case
where only one arbitrator is appointed, the single
arbitrator, shall fix a time and place in Vancouver,
British Columbia, for the purpose of hearing the
evidence and representations of the parties, and he
shall preside over the arbitration and determine all
questions of procedure not provided for under such Act
or this section. After hearing any evidence and
representations that the parties may submit, the single
arbitrator, or the arbitrators, as the case may be,
shall make an award and reduce the same to writing, and
deliver one copy thereof to each of the parties. The
expense of the arbitration shall be paid as specified
in the award.
(c) The parties agree that the award of a majority of the
arbitrators, or in the case of a single arbitrator, of
such arbitrator, shall be final and binding upon each
of them.
DEFAULT
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15. If at any time during the Option Period the Optionee is in
default of any provision in this Agreement, the Optionor may
terminate this Agreement, but only if:
(a) it shall have first given to the Optionee a notice of
default containing particulars of the obligation which
the Optionee has not performed, or the warranty
breached; and
(b) the Optionee has not, within 45 days following delivery
of such notice of default, cured such default or
commenced proceedings to cure such default by
appropriate payment or performance, the Optionee hereby
agreeing that should it so commence to cure any default
it will prosecute the same to completion without undue
delay.
Should the Optionee fail to comply with the provision of sub-
paragraph (b), the Optionor may thereafter terminate this
Agreement by giving notice thereof to the Optionee.
RULE AGAINST PERPETUITIES
-------------------------
16. If any right, power or interest held by or to be acquired by
any party in the Property under this Agreement would violate the
rule against perpetuities, then such right, power or interest
shall terminate at the expiration of 20 years after the date of
this Agreement.
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NOTICES
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17. Each notice, demand or other communication required or
permitted to be given under this Agreement shall be in writing
and shall be delivered, telegraphed or telecopied to such party
at the address for such party specified above. The date of
receipt of such notice, demand or other communication shall be
the date of delivery thereof if delivered or telegraphed or, if
given by telecopier, shall be deemed conclusively to be the next
business day. Either party may at any time and from time to time
notify the other party in writing of a change of address and the
new address to which notice shall be given to it thereafter until
further change.
GENERAL
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18.1 This Agreement shall supersede and replace any other
agreement or arrangement, whether oral or written, heretofore
existing between the parties in respect of the subject matter of
this Agreement.
18.2 No consent or waiver expressed or implied by either party in
respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall be deemed or
construed to be a consent to or a waiver of any other breach or
default.
18.3 The parties shall promptly execute or cause to be executed
all documents, deeds, conveyances and other instruments of
further assurance and do such further and other acts which may be
reasonably necessary or advisable to carry out fully the intent
of this Agreement or to record wherever appropriate the
respective interest from time to time of the parties in the
Property.
18.4 This Agreement shall enure to the benefit of and be binding
upon the parties and their respective successors and permitted
assigns.
18.5 This Agreement shall be governed by and construed in
accordance with the laws of British Columbia and shall be subject
to the approval of all securities regulatory authorities having
jurisdiction.
18.6 Time shall be of the essence in this Agreement.
18.7 Wherever the neuter and singular is used in this Agreement
it shall be deemed to include the plural, masculine and feminine,
as the case may be.
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18.8 Any reference in this Agreement to currency shall be deemed
to be United States currency.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------
XXXXXXXX X. XXXXXXX
TUSCANY MINERALS, LTD.
by its authorized signatory
/s/ J. Xxxxxxx Xxxxxx
---------------------------------
Signature of Authorized Signatory
J. XXXXXXX XXXXXX
---------------------------------
Name of Authorized Signatory
PRESIDENT
---------------------------------
Position of Authorized Signatory
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DESCRIPTION OF PROPERTY
SCHEDULE "A"
CLAIM NAME TENURE NO. EXPIRY DATE UNITS
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Holy 1 374497 February 24, 2001 20
