OPTION TO PURCHASE AND ROYALTY AGREEMENT
OPTION TO PURCHASE AND ROYALTY AGREEMENT
THIS AGREEMENT made as of the 25th day of April, 2005.
BETWEEN:
XXXXX XXXX XXXXXXX, businessman having an address at 0000 Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X 0X0
(hereinafter called "Gervais")
OF THE FIRST PART
AND:
THE CAVALIER GROUP, a company duly incorporated under the laws of the State of Wyoming, having an office at 00000 Xxxxxxx Xxxxxx, Xxxx 00, Xxxxxxxx, X.X. X0X 0X0
(hereinafter called "Cavalier")
OF THE SECOND PART
WHEREAS:
| X. | Xxxxxxx is the sole beneficial owner of 100% of
the right, title and interest in and to the Casa Xxxxxxx Mineral Claims,
which are situated in northeast Ontario, which mining claims are more
particularly described in Schedule "A" attached hereto and forming part
hereof (hereinafter together with any form of successor or substitute
mineral tenure called the "Claims"). |
| B. | The parties now wish to enter into an agreement
granting to Cavalier the exclusive right and option to acquire an undivided
100% of the right, title and interest in and to the Claims on the terms
and conditions as hereinafter set forth. |
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual promises, covenants and agreements herein contained, the parties hereto agree as follows:
| 1. | INTERPRETATION |
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| 1.1 | In this Agreement: |
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| (a) |
"Effective Date" means the date that both
parties have signed this Agreement; |
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| (b) |
"Mineral Products" means the products
derived from operating the Claims as a mine. |
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| (c) |
"Net Smelter Returns" means the proceeds
received by Cavalier from any smelter or other purchaser from the sale
of any ores, concentrates or minerals produced from the Claims after deducting
from such proceeds the following charges only to the extent that they
are not deducted by the smelter or other purchaser in computing the proceeds:
|
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| (i)
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the cost of transportation of the ores, concentrates
or minerals from the Claims to such smelter or other purchaser, including
related transport; |
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| (ii) |
smelting and refining charges including penalties;
|
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| (iii) |
marketing costs. |
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| (e) | "Option" means the option granted by Gervais to Cavalier pursuant to Section 3. | |
| (f) | "Operating the Claims as a mine" or "Operation of the Claims as a mine" means any or all of the mining, milling, smelting, refining or other recovery of ores, minerals, metals or concentrates or values thereof, derived from the Claims. | |
| (g) | "Royalty" means the royalty to be paid by Cavalier to Gervais pursuant to subsection 9.1. | |
| (h) | "Dollars ($)" means legal currency of Canada. |
| 2. | REPRESENTATIONS AND WARRANTIES
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|
| 2.1 | Cavalier represents and warrants to Gervais
that: |
|
| (a)
|
Cavalier is a body corporate duly incorporated,
organized and validly subsisting under the laws of its incorporating jurisdiction;
|
|
| (b) |
Cavalier has full power and authority to carry on
its business and to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement; |
|
| (c) |
neither the execution and delivery of this Agreement
nor any of the agreements referred to herein or contemplated hereby, nor
the consummation of the transactions hereby contemplated will conflict
with, result in the breach of or accelerate the performance required by
any agreement to which Cavalier is a party; and |
|
| (d) |
the execution and delivery of this Agreement and
the agreements contemplated hereby will not violate or result in the breach
of laws of any jurisdiction applicable or pertaining thereto or of Cavalier's
constating documents. |
|
| 2.2 | Gervais represents and warrants to Cavalier:
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|
| (a) |
the Claims consist of the Casa Xxxxxxx Mineral Claims
which have been duly and validly staked and recorded, are accurately described
in Schedule "A", are presently in good standing under the laws of the
jurisdiction in which they are located and, except as set forth herein,
are free and clear of all liens, charges and encumbrances; |
|
| (b) |
Gervais is the sole beneficial owner of a 100% interest
in and to the Claims and has the exclusive right to enter into this Agreement
and all necessary authority to dispose of an undivided 100% interest in
and to the Claims in accordance with the terms of this Agreement; |
|
| (c) |
no person, firm or corporation has any proprietary
or possessory interest in the Claims other than Gervais and no person
is entitled to any royalty or other payment in the nature of rent or royalty
on any minerals, ores, metals or concentrates or any other such products
removed from the Claims; |
|
| (e) |
neither the execution and delivery of this Agreement
nor any of the agreements referred to herein or contemplated hereby, nor
the consummation of the transactions hereby contemplated will conflict
with, result in the breach of or accelerate the performance required by
any agreement to which Gervais is a party or by which it is bound; |
|
| (f) |
the execution and delivery of this Agreement and
the agreements contemplated hereby will not violate or result in the breach
of the laws of any jurisdiction applicable or pertaining thereto. |
|
| 2.3 | The representations and warranties hereinbefore
set out are conditions on which the parties have relied in entering into
this Agreement and will survive the acquisition of any interest in the
Claims by Cavalier and each party will indemnify and save the other party
harmless from all loss, damage, costs, actions and suits arising out of
or in connection with any breach or any |
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| representation, warranty, covenant, agreement
or condition made by the other party and contained in this Agreement.
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| 3. | OPTION |
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| 3.1 | Gervais hereby gives and grants to Cavalier
the sole and exclusive right and option to acquire an undivided 100% of
the right, title and interest of Gervais in and to the Claims, subject
only to Gervais receiving the annual payments and the Royalty, in accordance
with the terms of this Agreement for and in consideration of the following:
|
|
| (b)
|
Cavalier, or its permitted assigns, incurring exploration
expenditures on the Claims of a minimum of $50,000 on or before October
31, 2006; and |
|
| (c) |
Cavalier, or its permitted assigns, incurring exploration
expenditures on the Claims of a further $100,000 (for aggregate minimum
exploration expenses of $150,000) on or before October 31, 2007. |
|
| 3.2 | Upon exercise of the Option, Cavalier
agrees to pay Gervais, commencing January 1, 2009, the sum of $50,000
per annum as prepayment of the Net Smelter Royalty for so long as Cavalier,
or its permitted assigns, hold any interest in the Claims. Failure to
make any such annual payment shall result in termination of this Agreement
in accordance with Section 5.1. |
|
| 4. | RIGHT OF ENTRY |
|
| 4.1 | Until such time as the Option has been
exercised, Cavalier, its employees, agents and independent contractors,
will have the sole and exclusive right and option to: |
|
| (a) |
enter upon the Claims; |
|
| (b) |
have exclusive and quiet possession thereof; |
|
| (c) |
do such prospecting, exploration, development or
other mining work thereon and thereunder as Cavalier in its sole discretion
may consider advisable; and |
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| (d) |
bring and erect upon the Claims such facilities
as Cavalier may consider advisable. |
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| 5. | TERMINATION |
|
| 5.1 | Subject to Section 8, this Agreement and
the Option will terminate: |
|
| (a) |
on October 31, 2006 at 11:59 P.M., unless on or
before that date, Cavalier has incurred exploration expenditures of a
minimum of $50,000 on the Claims; |
|
| (b) |
on October 31, 2007 at 11:59 P.M., unless on or
before that date, Cavalier has incurred exploration expenditures of a
cumulative minimum of $150,000 on the Claims; |
|
| (c) |
at 11:59 P.M. on January 1 of each and every year,
commencing on January 1, 2009, unless Cavalier has paid to Gervais the
sum of $50,000 on or before that date. |
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| 6. | COVENANTS OF GERVAIS |
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| 6.1 | Gervais will: |
|
| (a) |
not do any act or thing which would or might in
any way adversely affect the rights of Cavalier hereunder; |
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| (b) | make available to Cavalier and its representatives
all records and files in the possession of Gervais relating to the Claims
and permit Cavalier and its representatives at its own expense to take
abstracts therefrom and make copies thereof; and |
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| (c) | promptly provide Cavalier with any and all notices
and correspondence from government agencies in respect of the Claims.
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| 7. | COVENANTS OF CAVALIER |
|
| 7.1 | Cavalier will: |
|
| (a)
|
keep the Claims free and clear of all liens, charges
and encumbrances arising from their operations hereunder and in good standing
by the doing and filing of all necessary work and by the doing of all
other acts and things and making all other payments which may be necessary
in that regard; |
|
| (b) |
permit Gervais, or its representatives duly authorized
by it in writing, at their own risk and expense, access to the Claims
at all reasonable times and to all records prepared by Cavalier in connection
with work done on or with respect to the Claims; |
|
| (c) |
conduct all work on or with respect to the Claims
in a careful and miner-like manner and in compliance with all applicable
Federal, Provincial and local laws, rules, orders and regulations, and
indemnify and save Gervais harmless from any and all claims, suits, actions
made or brought against it as a result of work done by Cavalier on or
with respect to the Claims; and |
|
| (d) |
obtain and maintain, or cause any contractor engaged
hereunder to obtain and maintain, during any period in which active work
is carried out hereunder, adequate insurance. |
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| 8. | EXERCISE OF OPTION |
|
| 8.1 | Once Cavalier has incurred the exploration
expenditures, and made the payments set out in Section 3.1, Cavalier will,
subject to the right of Gervais to receive the Royalty and the obligation
of Cavalier to make the annual payments set out in Section 3.2, own an
undivided 100% of Gervais' right, title, and interest in and to the Claims.
|
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| 9. | ROYALTY |
|
| 9.1 | Cavalier will pay to Gervais an annual
royalty equal to three percent (3%) of Net Smelter Returns, subject to
Section 9.4. |
|
| 9.2 | After the exercise of the Option, payment
of the Royalty will be made quarterly within 30 days after the end of
each yearly quarter based upon a year commencing on the 1st day of January
and expiring on the 31st day of December in any year in which production
occurs. Within 60 days after the end of each year for which the Royalty
is payable, the records relating to the calculation of Net Smelter Returns
for such year will be audited by Cavalier and any adjustments in the payment
of the Royalty will be made forthwith after completion of the audit. All
payments of the Royalty for a year will be deemed final and in full satisfaction
of all obligations of Cavalier in respect thereof if such payments or
calculations thereof are not disputed by Gervais within 60 days after
receipt by Gervais of the said audit statement. Cavalier will maintain
accurate records relevant to the determination of Net Smelter Returns
and Gervais, or its authorized agent, shall be permitted the right to
examine such records at all reasonable times. |
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| 9.3 | The determination
of Net Smelter Returns royalty hereunder is based on the premise that
production will be developed solely on the Claims except that Cavalier
will have the right to commingle ore mined from the Claims with ore mined
and produced from other properties provided Cavalier will adopt and employ
reasonable practices and procedures for weighing, sampling and assaying,
in order to determine the amounts of products derived from, or attributable
to commingled ore mined and produced from the Claims. Cavalier will maintain
accurate records of the results of such sampling, weighing and analysis
with respect to any commingled ore mined and produced from the Claims.
Gervais or its authorized agents will be permitted the right to examine
at all reasonable times such records pertaining to comingling of ore or
to the calculation of Net Smelter Returns. |
|
| 9.4 | Cavalier shall
have the right at any time to purchase one-half of the Royalty by paying
to Gervais the sum of $1,000,000 per Royalty percentage point. |
|
| 10. | OBLIGATIONS
OF CAVALIER AFTER TERMINATION |
|
| 10.1 | In the event
of the termination of the Option, Cavalier will: |
|
(a) |
leave the Claims in good
standing for a minimum of one (1) year under all applicable legislation,
free and clear of all liens, charges and encumbrances arising from this
Agreement or their operations hereunder and in a safe and orderly condition; |
|
(b) |
deliver to Gervais within
60 days of its written request a comprehensive report on all work carried
out by Cavalier on the Claims (limited to factual matter only) together
with copies of all maps, drill logs, assay results and other technical
data compiled by Cavalier with respect to the Claims; |
|
(c) |
have the right, and obligation
on demand made by Gervais, to remove from the Claims within six (6) months
of the effective date of termination all facilities erected, installed
or brought upon the Claims by or at the instance of Cavalier provided
that at the option of Gervais, any or all of facilities not so removed
will become the property of Gervais; and |
|
(d) |
deliver to Gervais a duly
executed transfer in registrable form of an undivided 100% right, title
and interest in and to the Claims in favour of Gervais, or its nominee. |
|
| 11. | TRANSFER
OF TITLE |
|
| 11.1 | Upon the request
of Cavalier, Gervais will deliver to Cavalier a duly executed transfer
in registrable form of an undivided 100% of Gervais' right, title and
interest in and to the Claims in favour of Cavalier which Cavalier will
be entitled to register against title to the Claims provided that transfer
of legal title to the Claims as set forth in this Subsection 11.1 is for
administrative convenience only and beneficial ownership of an undivided
100% interest in the Claims will pass to Cavalier only in accordance with
the terms and conditions of this Agreement. |
|
| 12. | REGISTRATION
OF AGREEMENT |
|
| 12.1 | Notwithstanding
Section 11 of this Agreement, Cavalier or Gervais will have the right
at any time to register this Agreement or a Memorandum thereof against
title to the Claims. |
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| 13. | DISPOSITION
OF CLAIM |
|
| 13.1 | Cavalier may
at any time sell, transfer or otherwise dispose of all or any portion
of its interest in and to the Claims and this Agreement provided that,
at any time, Cavalier has first obtained the |
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consent in writing of Gervais, such consent not to be unreasonably withheld and further provided that, at any time during the currency of this Agreement, any purchaser, grantee or transferee of any such interest will have first delivered to Gervais its agreement related to this Agreement and to the Claims, containing:
| (a) | a covenant with Gervais by such transferee to perform
all the obligations of Cavalier to be performed under this Agreement in
respect of the interest to be acquired by it from Cavalier, and |
|
| (b) | a provision subjecting any further sale, transfer
or other disposition of such interest in the Claims and this Agreement
or any portion thereof to the restrictions contained in this Subsection
13.1. |
|
| 13.2 | The provisions or Subsection 13.1 of this Agreement
will not prevent either party from entering into an amalgamation or corporate
reorganization which will have the effect in law of the amalgamated or
surviving company possessing all the property, rights and interests and
being subject to all the debts, liabilities and obligations of each amalgamating
or predecessor company. |
| 14. | ABANDONMENT OF PROPERTY |
| 14. | Cavalier shall have the unfettered right at any
time after the exercise of the Option to abandon all or any part of its
interest in the Claims by delivering a notice in writing of their intention
to do so to Gervais, such notice to list the part or parts of the Claims
to be abandoned, and if within 30 days of receipt of such notice Gervais
delivers to Cavalier a notice ("Reacquisition Notice") stating its intention
to reacquire all or part or parts of the Claims, Cavalier will deliver
to Gervais duly executed recordable transfers of its interest in such
part or parts of the Claims as Gervais has set forth in the Reacquisition
Notice, such part or parts to be in good standing for at least one year
beyond the date of delivery of such transfers and to be free and clear
of all liens, charges, and encumbrances arising from the operations of
Cavalier or its agents or subcontractors hereunder. |
| 15. | CONFIDENTIAL NATURE OF INFORMATION |
| 15.1 | The parties agree that all information obtained
from the work carried out hereunder and under the operation of this Agreement
will be the exclusive property of the parties and will not be used other
than for the activities contemplated hereunder except as required by law
or by the rules and regulations of any regulatory authority having jurisdiction,
or with the written consent of both parties, such consent not to be unreasonably
withheld. Notwithstanding the foregoing, it is understood and agreed that
a party will not be liable to the other party for the fraudulent or negligent
disclosure of information by any of its employees, servants or agents,
provided that such party has taken reasonable steps to ensure the preservation
of the confidential nature of such information. |
| 16. | FURTHER ASSURANCES |
| 16.1 | The parties hereto agree that they and each of them
will execute all documents and do all acts and things within their respective
powers to carry out and implement the provisions or intent of this Agreement.
|
| 17. | NOTICE |
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| 17.1 | Any notice, direction or other instrument required
or permitted to be given under this Agreement will be in writing
and will be given by the delivery or the same or by mailing the same by
prepaid registered or certified mail in each case addressed as follows: |
| (a) | if to Xxxxx Xxxx Xxxxxxx |
|
| (b) | if to The Cavalier Group 00000 Xxxxxxx Xxxxxx, Xxxx 00 Xxxxxxxx, X.X. X0X 0X0 Attention: Xxxxxx X. Xxxxxxxx |
| l7.2 | Any notice, direction or
other instrument aforesaid will, if delivered, be deemed to have been
given and received on the day it was delivered, and if mailed, be deemed
to have been given and received on the tenth business day following the
day of mailing, except in the event of disruption of the postal services
in which event notice will be deemed to be received only when actually
received. |
| 17.3 | Any party may at any time
give to the other notice in writing of any change of address of the party
giving such notice and from and after the giving of such notice, the address
or addresses therein specified will be deemed to be the address of such
party for the purpose of giving notice hereunder. |
| 18. | HEADINGS |
| 18.1 | The headings to the respective
sections herein will not be deemed part of this Agreement but will be
regarded as having been used for convenience only. |
| 19. | DEFAULT |
| 19.1 | If any party (a "Defaulting
Party") is in default of any requirement herein set forth other than the
provisions of Section 5 for which notice of default need not be given,
the party affected by such default will give written notice to the defaulting
Party specifying the default and the Defaulting Party will not lose any
rights under this Agreement, unless within 30 days after the giving of
notice of default by the affected party the Defaulting Party has cured
the default by the appropriate performance and if the Defaulting Party
fails within such period to cure any such default, the affected party
will be entitled to seek any remedy it may have on account of such default. |
| 20. | PAYMENT |
| 20.1 | All references to monies
hereunder will be in Canadian funds except where otherwise designated.
All payments to be made to any party hereunder will be mailed or delivered
to such party at its address for notice purposes as provided herein, or
for the account of such party at such bank or banks in Canada as such
party may designate from time to time by written notice. Said bank or
banks will be deemed the agent of the designating party for the purpose
of receiving and collecting such payment. |
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| 21. |
ENUREMENT |
| 21.1 | Subject to Section 13, this Agreement will enure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. |
| 22. | TERMS |
| 22.1 | The terms and provisions of this Agreement shall
be interpreted in accordance with the laws of British Columbia. |
| 23. | FORCE MAJEURE |
| 23.1 | No party will be liable for its failure to perform
any of its obligations under this Agreement due to a cause beyond its
control (except those caused by its own lack of funds) including, but
not limited to acts of God, fire, flood, explosion, strikes, lockouts
or other industrial disturbances, laws, rules and regulations or orders
of any duly constituted governmental authority or non- availability of
materials or transportation (each an "Intervening Event"). |
| 23.2 | All time limits imposed by this Agreement, other
than those imposed by Section 5, will be extended by a period equivalent
to the period of delay resulting from an Intervening Event described in
Subsection 23.1. |
| 23.3 | A party relying on the provisions of Subsection
23.1 will take all reasonable steps to eliminate an Intervening Event
and, if possible, will perform its obligations under this Agreement as
far as practical, but nothing herein will require such party to settle
or adjust any labour dispute or to question or to test the validity of
any law, rule, regulation or order of any duly constituted governmental
authority or to complete its obligations under this Agreement if an Intervening
Event renders completion impossible. |
| 24. | ENTIRE AGREEMENT |
| 24.1 | This Agreement constitutes the entire agreement
between the parties and replaces and supersedes all prior agreements,
memoranda, correspondence, communications, negotiations and representations,
whether verbal or written, express or implied, statutory or otherwise
between the parties with respect to the subject matter herein. |
| 25. | TIME OF ESSENCE |
| 25.1 | Time will be of the essence in this Agreement. |
| 26. | ENFORCEMENT OF AGREEMENT |
| 26.1 | The covenants, promises, terms and conditions contained
herein will be binding upon the parties jointly and severally and may
be enforced by each as against each other inter se. |
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.
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XXXXX XXXX XXXXXXX
Per: /s/ Xxxxx Xxxx Xxxxxxx
CAVALIER GROUP VENTURES INC.
Per: /s/ Xxxxxx X. Xxxxxxxx”
by its Authorized Signatory
This is SCHEDULE "A" to an Agreement made as of the 25th day of April, 2005 between XXXXX XXXX XXXXXXX and THE CAVALIER GROUP
| Claim Name | Tenure Number | Recording Date | Expiry Date |
| Casa 1 | P 3012728 | February 02, 2004 | February 02, 2007 |
| Casa 2 | P 3012010 | May 26, 2004 | May 26, 2007 |
| Casa 3 | P 3019152 | December 07, 2004 | December 07, 2007 |
| Casa 4 | P 3019153 | December 07, 2004 | December 07, 2007 |
