OPTION AGREEMENT
----------------
THIS AGREEMENT made as of the 22nd day of November, 2000
BETWEEN:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, of
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
(the "Optionor")
OF THE FIRST PART
AND:
COMMODORE MINERALS INC., a Nevada corporation,
having a registered office located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
(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
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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 51% 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;
(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 51% 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 $2,500.00 US on the
execution of this Agreement, the receipt of
which is hereby acknowledged by the Optionor;
(ii) paying the Optionor $235,000.00 US as follows:
(A) $10,000.00 US on or before the first
anniversary of the date of this Agreement;
(B) an additional $50,000.00 on or before the
second anniversary of the date of this
Agreement;
(C) an additional $75,000.00 on or before the
third anniversary of the date of this
Agreement; and
(D) an additional $100,000.00 on or before the
fourth anniversary of the date of this
Agreement.
(ii) incurring Exploration Expenditures of $1,357,500
US on the Property as follows;
(A) $7,500 on or before October 31,
2001(advances of $3750 concurrent with
execution and a further advance of $3,750
on or before March 1, 2001);
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(B) further $100,000.00 on or before October
31, 2002;
(C) a further $200,000.00 on or before October
31, 2003;
(D) a further $300,000.00 on or before October
31, 2004; and
(E) a further $750,000.00 on or before October
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 51% 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
------------------------------------------------
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6. During the Option Period, the Optionor shall:
(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;
(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
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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
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11. ( INTENTIONALLY LEFT BLANK)
FORCE MAJEURE
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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 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
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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
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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 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,
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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.
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
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMODORE MINERALS, INC.
by its authorized signatory
/s/ ▇▇▇▇▇▇▇ Hand
__________________________________
Signature of Authorized Signatory
GRAYSON W. HAND
__________________________________
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
---------- ---------- ------------- -----
Bako 5 378299 June 25, 2001 16