OPTION TO PURCHASE AGREEMENT
THIS AGREEMENT made as of the
30th day of September,
2009.
BETWEEN:
American
Mining Corporation, of Xxxxxx Idaho, with offices at 0000 Xxxx Xxxxx Xxx
Xxxxxx, Xxxxx 00000
(hereinafter
referred to as the "Vendor")
PARTIES
OF THE FIRST PART
AND:
XXXXXXX
RESOURCES, INC.,
a company duly incorporated under the laws of the State of Nevada, having
an office at 0000 Xxxx Xxxxxxx, Xxx. 000, Xxxxxxx, XX 00000
(hereinafter
referred to as "SRI")
OF
THE SECOND PART
WHEREAS:
A.
|
Vendor
is the sole beneficial owner of 100% of four (4) en bloc unpatented mining
claims located in Xxxxxxx County known as the Young American Lead-Zinc
Mine Property. The property is located SW ¼ of Section 28, and
NW ¼ of Section 33, both Township 38N Range 38E Willamette Meridian,
Xxxxxxx County Washington. The property is about 15 mile north of Kettle
Falls, Washington. As described in Schedule "A" attached hereto
and forming part hereof (hereinafter together with any form of successor
or substitute mineral tenure called the
"Claim").
|
B.
|
The
parties now wish to enter into an agreement granting to SRI the exclusive
right and option to acquire an undivided 100% of the right, title and
interest in and to the Claim 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
|
|
1.1
|
In
this Agreement:
|
|
(a)
|
"Effective
Date" means the date that both parties have signed this
Agreement;
|
(b)
|
"Mineral
Products" means the products derived from operating the Claim as a
mine;
|
(c)
|
"Net
Smelter Returns" means the proceeds received by SRI from any smelter or
other purchaser from the sale of any ores, concentrates or minerals
produced from the Claim 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:
|
||
(i)
|
the
cost of transportation of the ores, concentrates or minerals from the
Claim to such smelter or other purchaser, including related
transport;
|
1
(ii)
|
smelting
and refining charges including penalties;
and
|
(iii)
|
marketing
costs.
|
(d)
|
"Option"
means the option granted by Vendor to SRI pursuant to Section
3;
|
(e)
|
"Operating
the Claim as a mine" or "Operation of the Claim 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
Claim;
|
(f)
|
"Dollars
($)" means legal currency of the United
States.
|
2.
|
REPRESENTATIONS
AND WARRANTIES
|
2.1
|
SRI
represents and warrants to Vendor
that:
|
(a)
|
SRI
is a body corporate duly incorporated, organized and validly subsisting
under the laws of its incorporating
jurisdiction;
|
(b)
|
SRI
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 SRI 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 SRI's constantan
documents.
|
2.2
|
Vendor
represents and warrants to SRI:
|
(a)
|
the
Claim consists of the mineral claims YAM 1-4. The property is
located SW ¼ of Section 28, and NW ¼ of Section 33, both Township 38N
Range 38E Willamette Meridian, Xxxxxxx County Washington which has been
duly and validly staked and recorded, as accurately described in Schedule
"A", is presently in good standing under the laws of the jurisdiction in
which it is located and, except as set forth herein, is free and clear of
all liens, charges and
encumbrances;
|
(b)
|
Vendor
is the sole beneficial owner of a 100% interest in and to the Claim 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 Claim in
accordance with the terms of this
Agreement;
|
(c)
|
no
person, firm or corporation has any proprietary or possessory interest in
the Claim other than Vendor 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
Claim;
|
2
(d)
|
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 Vendor
is a party or by which he is bound;
|
(e)
|
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 Claim by SRI 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 representation, warranty, covenant, agreement or condition made by
the other party and contained in this
Agreement.
|
3.
|
OPTION
|
3.1
|
Vendor
hereby gives and grants to SRI the sole and exclusive right and option to
acquire an undivided 100% of the right, title and interest of Vendor in
and to the Claim, subject only to Vendor receiving the annual payments in
accordance with the terms of this Agreement for and in consideration of
the following:
|
(a)
|
SRI,
or its permitted assigns, incurring exploration expenditures on the Claims
of a minimum of $5,000 on or before September 30, 2010;
and
|
(b)
|
SRI,
or its permitted assigns, incurring exploration expenditures on the Claims
of a further $25,000 (for aggregate minimum exploration expenses of
$30,000) on or before September 30, 2011;
and
|
3.2
|
Upon
exercise of the Option, SRI agrees to pay Vendor, commencing January 1,
2012, the sum of $25,000 per annum for so long as SRI, or its permitted
assigns, holds 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, SRI, 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 there under as SRI in its sole discretion may consider advisable;
and
|
(d)
|
bring
and erect upon the Claims such facilities as SRI may consider
advisable.
|
3
5.
|
TERMINATION
|
5.1
|
Subject
to Section 8, this Agreement and the Option will
terminate:
|
(a)
|
on
September 30, 2010 at 11:59 P.M., unless on or before that date, SRI has
incurred exploration expenditures of a minimum of $5,000 on the
Claims;
|
(b)
|
on
September 30, 2011 at 11:59 P.M., unless SRI has incurred a further
$25,000 of exploration expenditures on the Claims (for an aggregate of
$30,000); or
|
(c)
|
at
11:59 P.M. on January 1 of each and every year, commencing on January 1,
2012, unless SRI or its successor or assign has paid to Vendor the sum of
$25,000 on or before that date.
|
6.
|
COVENANTS
OF VENDOR
|
6.1
|
Vendor
will:
|
(a)
|
not
do any act or thing which would or might in any way adversely affect the
rights of SRI hereunder;
|
(b)
|
make
available to SRI and its representatives all records and files in the
possession of Vendor relating to the Claims and permit SRI and its
representatives at its own expense to take abstracts there from and make
copies thereof; and
|
(c)
|
promptly
provide SRI with any and all notices and correspondence from government
agencies in respect of the Claims.
|
7.
|
COVENANTS
OF SRI
|
7.1
|
SRI
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
Vendor, 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 SRI 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, State and local
laws, rules, orders and regulations, and indemnify and save Vendor
harmless from any and all Claims, suits, actions made or brought against
it as a result of work done by SRI 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.
|
8.
|
EXERCISE
OF OPTION
|
8.1
|
Once
SRI has incurred the exploration expenditures, and made the payments set
out in Section 3.1, SRI will, subject to the right of Vendor to receive
the obligation of SRI to make the annual payments set out in Section 3.2,
own an undivided 100% of Vendor's right, title, and interest in and to the
Claims.
|
4
9.
|
OBLIGATIONS
OF SRI AFTER TERMINATION
|
9.1
|
In
the event of the termination of the Option, SRI
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 Vendor within 60 days of its written request a comprehensive report on
all work carried out by SRI on the Claims (limited to factual matter only)
together with copies of all maps, drill logs, assay results and other
technical data compiled by SRI with respect to the
Claims;
|
(c)
|
have
the right, and obligation on demand made by Vendor, 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 SRI provided that at the option of Vendor, any or all of
facilities not so removed will SRI from the property of Vendor;
and
|
(d)
|
deliver
to Vendor a duly executed transfer in registrable form of an undivided
100% right, title and interest in and to the Claims in favors of Vendor,
or its nominee.
|
||
10.
|
TRANSFER
OF TITLE
|
|
10.1
|
Upon
the request of SRI, Vendor will deliver to SRI a duly executed transfer in
registrable form of an undivided 100% of Vendor's right, title and
interest in and to the Claims in favor of SRI which SRI 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 10.1 is for
administrative convenience only and beneficial ownership of an undivided
100% interest in the Claims will pass to SRI only in accordance with the
terms and conditions of this Agreement.
|
|
11.
|
REGISTRATION
OF AGREEMENT
|
|
11.1
|
Notwithstanding
Section 10 of this Agreement, SRI or Vendor will have the right at any
time to register this Agreement or a Memorandum thereof against title to
the Claims.
|
|
12.
|
DISPOSITION
OF CLAIMS
|
|
12.1
|
SRI
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, SRI has first obtained the consent in writing of Vendor, 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 Vendor its
agreement related to this Agreement and to the Claims,
containing:
|
5
(a)
|
a
covenant with Vendor by such transferee to perform all the obligations of
SRI to be performed under this Agreement in respect of the interest to be
acquired by it from SRI, 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 12.1.
|
||
12.2
|
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.
|
13.
|
ABANDONMENT
OF PROPERTY
|
13.l
|
SRI
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 Vendor, such
notice to list the part or parts of the Claims to be abandoned, and if
within 30 days of receipt of such notice Vendor delivers to SRI a notice
("Reacquisition Notice") stating its intention to reacquire all or part or
parts of the Claims, SRI will deliver to Vendor duly executed recordable
transfers of its interest in such part or parts of the Claims as Vendor
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 SRI or its agents or subcontractors
hereunder.
|
14.
|
CONFIDENTIAL
NATURE OF INFORMATION
|
14.1
|
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.
|
15.
|
FURTHER
ASSURANCES
|
|
15.1
|
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.
|
|
16.
|
NOTICE
|
|
16.1
|
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:
|
|
6
(a)
|
if
to Vendor
|
||
0000
Xxxx Xxxxx Xxx
Xxxxxx,
Xxxxx 00000
Attention :
AMC
|
(b)
|
if
to Xxxxxxx Resources,
Inc.
|
0000 Xxxx
Xxxxxxx, Xxx. 000
Xxxxxxx,
XX 00000
l6.2
|
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 fifth 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.
|
16.3
|
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.
|
|
17.
|
HEADINGS
|
|
17.1
|
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.
|
|
18.
|
DEFAULT
|
|
18.1
|
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.
|
19.
|
PAYMENT
|
19.1
|
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
the United States 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.
|
|
20.
|
ENUREMENT
|
|
20.1
|
Subject
to Section 13, this Agreement will endure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted
assigns.
|
|
7
21.
|
TERMS
|
|
21.1
|
The
terms and provisions of this Agreement shall be interpreted in accordance
with the laws of the State of Nevada.
|
|
22.
|
FORCE
MAJEURE
|
|
22.1
|
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").
|
|
22.2
|
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.
|
|
22.3
|
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.
|
|
23.
|
ENTIRE
AGREEMENT
|
|
23.1
|
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.
|
24.
|
TIME
OF ESSENCE
|
24.1
|
Time
will be of the essence in this
Agreement.
|
25.
|
ENFORCEMENT
OF AGREEMENT
|
25.1
|
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.
|
8
IN WITNESS WHEREOF the parties
hereto have executed this Agreement as of the day and year first above
written.
AMERICAN
MINING CORPORATION
/s/Xxxx
XxxXxxxxx
|
|
By: Xxxx
XxxXxxxxx
|
|
XXXXXXX
RESOURCES, INC.
|
|
Per:
|
/s/
Xxxxxx Xxxxxx
|
by
its Authorized Signatory: Xxxxxx Xxxxxx,
President
|
Four (4)
en bloc unpatented mining claims located in Xxxxxxx County known as the Young
American Lead-Zinc Mine Property YAM 1-4). The property is located SW
¼ of Section 28, and NW ¼ of Section 33, both Township 38N Range 38E Willamette
Meridian, Xxxxxxx County Washington. The property is about 15 mile north of
Kettle Falls, Washington.
9