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THIS OPTION AGREEMENT made as of the 21 day of January, 1999.
BETWEEN:
BIOMETRIC SECURITY CORP. (FORMERLY SONOMA RESOURCES CORPORATION),
a body corporate, having a head office at #1940 - 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter called the "Optionor")
OF THE FIRST PART
AND:
INLET RESOURCES LTD., a body corporate, having a head office at
#304 - 700 West Xxxxxx Street, Vancouver, British Columbia, V6C IG8
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS
A. The Optionor has represented that it is the sole recorded and beneficial
owner in and to the properties (the "Properties") described in Schedule "A"
hereto subject to the pending and granted provisions described on the said
Schedule;
B. The Optionor now wishes to grant to the Optionee the exclusive fight and
option to acquire up to an undivided 90% fight, title and interest in and to the
Properties, subject to a 10% Carried Working Interest in favour of the Optionor,
on the terms and conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT for and in consideration of the
mutual covenants and agreements herein contained and the sum of US $25,000 paid
by the Optionee to the Optionor, the receipt, and sufficiency whereof is hereby
acknowledged by the Optionor, the parties hereto mutually agree as follows:
1. DEFINITIONS
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1.1 For the purposes of this Agreement:
(a) "EXPENDITURES ON THE PROPERTIES" means monies spent pursuant to
this Agreement on the exploration, development and related
operations conducted on or with respect to any part of the
Properties and shall include but not be limited to:
(i) keeping the Properties in good standing;
(ii) geophysical, geochemical, geological and related
operations;
(iii) drilling, development and mining;
(iv) assaying, metallurgical testing;
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(v) salaries and wages of personnel directly engaged in a
work program on the Properties together with all
employee benefits and allowances normally paid during
the option period for holiday and vacation pay,
Canada Pension Plan, pension benefit plan costs,
unemployment insurance, aviation accident insurance,
medical insurance, group term life and income
protection insurance, employer's liability insurance
and workmen's compensation as normally paid;
(vi) travelling and directly related expenses including food
and lodgings of personnel engaged in work within the
Properties;
(vii) insurance premiums to the extent applicable to the
exploration, development and related operations
conducted within the Properties;
(viii) direct supervision and direct management of the
exploration, development and related operations
conducted within the Properties;
(ix) charges with respect to equipment leased in connection
with the exploration, development and related
operations conducted within the Properties; and
(x) all charges made with respect to equipment purchased
and services rendered in connection with the
exploration, development and related operations
conducted within the Properties.
(b) "Facilities" means all mines and plants, including without
limitation, all pits, shafts, haulageways, and other underground
workings, and all buildings, plants, facilities and other
structures, fixtures and improvements, and all other Properties,
whether fixed or moveable, as the same may exist at any time in,
or on the Properties and relating to the operation of the
Properties as a mine or outside the Properties if for the
exclusive benefit of the Properties only.
(c) "Option" means the option granted by the Optionor to the Optionee
to acquire an undivided 90% right, title and interest in and to
the Properties as more particularly set forth in Section 3).
2. REPRESENTATIONS AND WARRANTIES
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2.1 The Optionee represents and warrants to the Optionor that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction and
is qualified to do business in British Columbia;
(b) it 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 conflict
with, result in the breach of or accelerate the performance
required by, any agreement to which it is a party;
(d) 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 or
of its constating documents;
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(e) the Optionee is an "exchange issuer" listed on the VSE, in good
standing and, to the best of its knowledge, in good standing
under the B.C. Securities Act and regulations thereto and, will
remain so throughout the term of this Agreement; and
(f) the shares to be issued by the Optionee as provided for in Part
3.1 of this Agreement will be, when issued, issued as fully paid
and non-assessable common shares of the Optionee and will have a
hold period expiring no later than four (4) months from the
Closing Date and will otherwise be free and clear of all liens,
charges or encumbrances of any kind whatsoever.
2.2 The Optionor represents and warrants to the Optionee that to the best of
the Optionor's knowledge:
(a) the Properties are accurately described in Schedule "A", are in
good standing under the laws of the jurisdiction in which they
are located and are free and clear of all liens, charges and
encumbrances;
(b) the Optionor is the sole recorded and beneficial owner of the
Properties subject to the pending and granted provisions and has
the exclusive right to enter into this Agreement and all
necessary authority to dispose of an interest in the Properties
in accordance with the terms of this Agreement;
(c) no person, firm or corporation has any proprietary or possessory
interest in the Properties other than the Optionor and no person,
firm or corporation 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
Properties.
2.3 The representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and shall
survive the acquisition of any interest in the Properties by the Optionee
and each of the parties will indemnify and save the other harmless from
all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation, warranty, covenant, agreement or
condition made by them and contained in this Agreement.
3. OPTION
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3.1 The Optionor hereby gives and grants to the Optionee the sole and
exclusive irrevocable right and option to acquire up to an undivided 90%
right, title and interest in and to the Property in accordance with the
following terms:
(a) By the Optionee paying the sum of US $125,000 and issuing to the
Optionor as fully paid and non-assessable, 100,000 common shares
of Inlet Resources Ltd. within 5 business days of the date of
regulatory acceptance ("Closing Date") of this Agreement and the
Optionee incurring Expenditures on the Property of at least US
$650,000 no later than 12 months from the Closing Date, the
Optionee will acquire an undivided 50% right, title and interest
in the Properties (the "First Option");and
(b) By the Optionee paying the additional sum of US $250,000 and
issuing to the Optionor as fully paid and non-assessable a
further 100,000 common shares of Inlet Resources Ltd. and the
Optionee incurring cumulative Expenditures on the Property of at
least US $1,400,000 and the prior filing of an engineering report
indicating the work carried out and recommending an additional
exploration program acceptable to the regulatory authorities no
later than 24 months from the Closing Date, the Optionee will
acquire a cumulative undivided 70% right (being an additional
20%), title and interest in the Properties (the "Second Option");
and
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(c) By the Optionee paying the additional sum of US $350,000 and
issuing to the Optionor as fully paid and non-assessable a
further 100,000 common shares of Inlet Resources Ltd. and the
Optionee incurring cumulative Expenditures on the Property of at
least US $2,150,000 and the prior filing of an engineering report
indicating the work carried out and recommending an additional
exploration program acceptable to the regulatory authorities no
later than 36 months from the Closing Date, the Optionee will
acquire a cumulative undivided 90% right (being an additional
20%), title and interest in the Properties (the "Third Option");
and
(d) Upon the exercise of the Third Option, the Optionor will have a
10% Carried Working Interest in the Properties and the Optionee
will hold an undivided 90% right, title and interest in the
Properties. The Optionee may acquire the 10% Carried Working
Interest from the Optionee for the sum of US $2,000,000 payable
on or before November 25, 2004.
4. RIGHT OF ENTRY
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4.1 During the currency of the Option, the Optionee, its employees, agents and
independent contractors shall have the sole and exclusive right and option
to:
(a) enter upon the Properties,
(b) have exclusive and quiet possession thereof,
(c) do such prospecting, exploration, development or other mining
work thereon and thereunder as the Optionee in its sole
discretion may deem advisable;
(d) bring and erect upon the Properties such Facilities as the
Optionee may deem advisable; and
5. TERMINATION
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(a) This Agreement and the Option will terminate 5 business days
after Closing Date unless on or before that date the Optionee has
paid to the Optionor the sum of US $125,000 and issued to the
Optionor as fully paid and non-assessable 100,000 shares of Inlet
Resources Ltd.; and
(b) The Agreement and the Option will terminate on the day that is 12
months after the Closing Date unless, on or before that day the
Optionee has incurred, Expenditures on the Property of at least
US $650,000; and
(c) The Second Option and Third Option will terminate on the day that
is 24 months after the Closing Date unless, on or before that day
the Optionee has incurred, cumulative Expenditures on the
Property of at least US $1,400,000 and issued to the Optionor as
fully paid and non-assessable a further 100,000 shares of Inlet
Resources Ltd.; and
(d) The Third Option will terminate on the day that is 36 months
after the Closing Date unless, on or before that day the Optionee
has incurred, cumulative Expenditures on the Property of at least
US $2,150,000 and issued to the Optionor as fully paid and
non-assessable a further 100,000 shares of Inlet Resources Ltd.
5.2 The parties hereto may extend in writing any of the deadlines set out in
subsection 5.1
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6. COVENANTS OF THE OPTIONOR
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6.1 During the currency of this Agreement and the Option, the Optionor
covenants and agrees with the Optionee to:
(a) not do any act or thing which would prevent the Optionee from
exercising its rights in accordance with the terms and conditions
of this Agreement provided the Optionee has and continues to meet
all of its obligations hereunder;
(b) make available to the Optionee and its representatives all
records and files relating to the Properties and permit the
Optionee and its representatives at its own expense to take
abstracts therefrom and make copies thereof, and
(c) promptly provide the Optionee with any and all notices and
correspondence from Government agencies in respect of the
Properties.
7. COVENANTS OF THE OPTIONEE
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7.1 During the currency of the Option, the Optionee covenants and agrees with
the Optionor to:
(a) keep the Properties in good standing, and free and clear of all
liens, charges and encumbrances arising from its 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 the Optionor, or its representatives duly authorized by it
in writing, at their own risk and expense, access to the
Properties at all reasonable times and to all records prepared by
the Optionee in connection with work done on or with respect to
the Properties and furnish the Optionor with annual reports with
respect to the work carried out by the Optionee on or with
respect to the Properties and results obtained, together with
timely current reports and information on any material results
obtained;
(c) conduct all work on or with respect to the Properties in a
careful and minerlike manner and in compliance with all
applicable laws, rules, orders and regulations, and indemnify and
save the Optionor harmless from any and all claims, suits or
actions made or brought against it as a result of work done by
the Optionee on or with respect to the Properties;
(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. OBLIGATIONS OF THE OPTIONEE AFTER TERMINATION
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8.1 In the event of the termination of the Option, the Optionee will:
(a) leave the Properties in good standing for a period of at least 90
days, free and clear of all liens, charges and encumbrances
arising from its operations hereunder and in a safe and orderly
condition;
(b) deliver to the Optionor within sixty (60) days of his written
request a comprehensive report on all work carried out by the
Optionee on the Properties (limited to factual matters only)
together with copies of all maps, drill logs, assay
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results and other factual technical data compiled by the Optionee
with respect to the Properties;
(c) have the right and obligation to remove from the Properties
within six (6) months from the effective date of termination all
Facilities erected, installed or brought upon the Properties by
or at the instance of the Optionee; and
(d) notify the Escrow Holder pursuant to subparagraph 9.3(b)(i).
9. TRANSFER OF TITLE AND ESCROW HOLDER
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9.1 Upon the written request of the Optionee, the Optionor will deliver or
cause to be delivered to the Optionee a duly executed transfer of the
Properties in favour of the Optionee or a wholly-owned subsidiary (the
"Optionee Transfer"). The Optionee shall be entitled to record the
Optionee Transfer with the appropriate government offices to effect
registration of title of the Properties into its own name or that of its
subsidiary, provided the Optionee shall hold the Properties subject to the
terms of this Agreement, it being understood that registration of title to
the Properties prior to the exercise of the Option is for administrative
convenience only and that beneficial ownership of the Properties shall
pass to the Optionee only upon the Optionee having exercised the Option.
9.2 Forthwith after the delivery to Xx. Xxxxx X. Xxxxxxxx (the "Escrow
Holder") of the Optionee Transfer pursuant to subsection 9.1, the Optionee
or its subsidiary will execute and deliver to the Escrow Holder a duly
executed transfer in favour of the Optionor providing for the registration
of title to the Properties into the name of the Optionor (the "Optionor
Transfer").
9.3 The Escrow Holder will hold the Optionor Transfer subject to the
following:
(a) in the event the Optionee exercises the Option, the Escrow Holder
will deliver the Optionor Transfer to the Optionee and for the
purposes of this paragraph 9.3(a) will accept as conclusive
evidence of the exercise of the Option by the Optionee:
(i) a notice to that effect from the Optionor, or
(ii) a Statutory Declaration to that effect made by the
Optionee provided the Escrow Holder has delivered a copy
of the Statutory Declaration to the Optionor and the
Optionor has been in receipt of same for ten days and
the Optionor has not objected in writing to the Escrow
Holder.
(b) in the event of termination of the Option, the Escrow Holder
shall deliver the Optionor Transfer to the Optionor and for the
purposes of this paragraph 9.3(b), the Escrow Holder will accept
as conclusive evidence of the termination of the Option:
(i) a notice to that effect from the Optionee; or
(ii) a Statutory Declaration to that effect made by the
Optionor specifying full particulars of the Optionee's
default, provided the Escrow Holder has delivered a
copy of the Statutory Declaration to the Optionee and
the Optionee has been in receipt of same for ten (10)
days and the Optionee has not objected in writing to the
Escrow Holder.
9.4 The duties of the Escrow Holder will be limited to the holding of the
Optionor Transfer and the delivery thereof in accordance with the terms of
this section and in the event of any dispute between the Optionee and the
Optionor, the Escrow Holder will hold the Optionor Transfer until the said
dispute has been settled by agreement between them or by adjudication.
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9.5 The Optionor and the Optionee will indemnify and save harmless the Escrow
Holder of and from all claims, demands, suits, actions, liabilities,
costs, expenses and damages suffered, incurred or brought, by or against
the Escrow Holder, arising out of acting as Escrow Holder hereunder, save
and except any claim against the Optionor for the payment of the
reasonable fees and expenses of the Escrow Holder, and will execute such
escrow instructions as are not inconsistent with the terms of this section
and as are required by the Escrow Holder setting its duties and
responsibilities hereunder. The Optionee will pay to the Escrow Holder its
reasonable fees and expenses for so acting.
10. FURTHER ASSURANCES
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10.1 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.
11. NOTICE
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11.1 Any notice, direction or other instrument required or permitted to be
given under this Agreement shall be in writing and may be given by the
delivery of the same or by mailing the same by prepaid registered or
certified mail or by sending the same by telegram, telex,
telecommunication or other similar form of communication, in each case
addressed as follows:
(a) if to the Optionor at:
BIOMETRIC SECURITY CORP.
(FORMERLY SONOMA RESOURCES CORPORATION)
#0000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
(b) if to the Optionee at:
INLET RESOURCES LTD.
#000 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
11.2 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 third business
day following the day of mailing, except in the event of disruption of the
postal service in which event notice will be deemed to be received only
when actually received and, if sent by telegram, telex, telecommunication
or other similar form of communication, be deemed to have been given or
received on the day it was so sent.
11.3 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 purposes of giving notice
hereunder.
12. ABANDONMENT
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12.1 The Optionee shall have the unfettered right at any time and for any
reason after the exercise of the Option to abandon the Properties or part
of them provided that if the Properties are so abandoned, the Optionee
shall, if requested by the Optionor, transfer the abandoned Properties to
the Optionor and have no other obligations or liabilities to the Optionor
under this Agreement whatsoever.
13. ADDITIONAL TERMINATION
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13.1 In addition to any other termination provision contained in this
Agreement, the Optionee shall have the right to terminate this Agreement
by giving thirty (30) days' notice of such termination to the Optionor,
and in the event of such termination, this Agreement, save and except for
the provisions of section 8 and 9 hereto, shall be of no further force and
effect.
14. HEADINGS
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14.1 The headings to the respective sections herein shall not be deemed part of
this Agreement but shall be regarded as having been used for convenience
only.
15. DEFAULT
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15.1 Notwithstanding anything in this Agreement to the contrary if any party (a
"Defaulting Party") is in default of any requirement herein set forth the
party affected by such default shall give written notice to the Defaulting
Party specifying the default and the Defaulting Party shall not lose any
rights under this Agreement, unless within thirty (30) days after the
giving of notice of default by the affected party the Defaulting Party
has failed to take reasonable steps to cure the default by the appropriate
performance and if the Defaulting Party fails within such period to take
reasonable steps to cure any such default, the affected party shall be
entitled to seek any remedy it may have on account of such default,
including termination of this Agreement.
16. OPTION ONLY
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16.1 This is an option only and except as specifically provided otherwise,
nothing herein contained shall be construed as obligating the Optionee to
do any acts or make any payments hereunder, and any act or acts or payment
or payments as shall be made hereunder shall not be construed as
obligating the Optionee to do any further act or make any further payment
or payments.
17. ENUREMENT
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17.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
19. FORCE MAJEURE
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19.1 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").
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19.2 All time limits imposed by this Agreement will be extended by a period
equivalent to the period of delay resulting from an Intervening Event
described in subsection 19.1.
19.3 A party relying on the provisions of subsection 19.1 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 nor 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.
20. ENTIRE AGREEMENT
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20.1 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, expressed or implied, statutory or otherwise between the parties
with respect to the subject matter herein.
21. TIME OF THE ESSENCE
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21.1. Time shall be of the essence of this Agreement.
22. CONDITIONS PRECEDENT
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22.1 This Agreement is subject, no later than February 28, 1999 to:
(a) its acceptance for filing by the Vancouver Stock Exchange on
behalf of the Optionee and the Optionor, which each party
covenants to use its best efforts to obtain forthwith;
(b) approval of the boards of directors of the Optionee; and
(c) satisfactory due diligence on the Properties and the Optionor by
the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
The CORPORATE SEAL of )
BIOMETRIC SECURITY )
CORP., the Optionor, was )
hereunto affixed in the presence of: )
)
)
)
/s/ Xxxxxxx X. XxXxxxxx )
-------------------------- ) c/s
Authorized Signatory )
)
)
)
/s/ Xxxxx Xxxxxxxxx )
-------------------------- )
Authorized Signatory )
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The CORPORATE SEAL of )
INLET RESOURCES LTD., )
the Optionee, was hereunto )
affixed in the presence of: )
)
)
/s/ Xxxxxxx Xxxx )
------------------------- ) c/s
Authorized Signatory )
)
)
)
________________________ )
Authorized Signatory )
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