MINERAL PROPERTY OPTION AGREEMENT
THIS AGREEMENT dated for reference July 6, 2004.
BETWEEN:
XXXXX XXXXXX, of 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0;
("SOSTAD")
OF THE FIRST PART
AND:
SCALA MINERALS INC., a body corporate, duly incorporated under the
laws of the State of Nevada and having its head office at 000 Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0;
("SCALA")
OF THE SECOND PART
W H E R E A S:
A. Sostad is the registered and beneficial owner of two mineral claims located
in the Nicola Mining Division, British Columbia, and known as the Shore claims,
which claims are more particularly described in Schedule "A" attached hereto
which forms a material part hereof (collectively, the "Claims");
B. Sostad has agreed to grant to Scala the sole and exclusive
right, privilege and option to explore the Claims together with the sole and
exclusive right, privilege and option to purchase the Claims upon the terms and
conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
of the mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE
AS FOLLOWS:
1. OPTIONOR'S REPRESENTATIONS
1.1 Sostad represents and warrants to Scala that:
(a) Sostad is the registered and beneficial owner of the Claims
and holds the right to explore and develop the Claims;
(b) Sostad holds the Claims free and clear of all liens, charges
and claims of others, and the Sostad has a free and unimpeded
right of access to the Claims and have use of the Claims
surface for the herein purposes;
(c) The Claims have been duly and validly located and recorded in
a good and miner-like manner pursuant to the laws of the
Province of British Columbia and are in good standing in
British Columbia as of the date of this Agreement;
(d) There are no adverse claims or challenges against or to
Sostad's ownership of or title to any of the Claims nor to the
knowledge of Sostad is there any basis therefor, and there are
no outstanding agreements or options to acquire or purchase
the Claims or any portion thereof;
(e) Sostad has the full right, authority and capacity to enter
into this Agreement without first obtaining the consent of any
other person or body corporate and the consummation of the
transaction 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 any indenture,
agreement or other instrument whatsoever to which Sostad is a
party or by which he is bound or to which he is subject; and
(f) No proceedings are pending for, and Sostad is unaware of any
basis for, the institution of any proceedings which could lead
to the placing of Sostad in bankruptcy, or in any position
similar to bankruptcy.
1.2 The representations and warranties of Sostad set out in paragraph 1.1 above
form a part of this Agreement and are conditions upon which Scala has relied in
entering into this Agreement and shall survive the acquisition of any interest
in the Claims by Scala.
1.3 Sostad will indemnify Scala 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 Sostad and contained in this Agreement.
1.4 Sostad acknowledges and agrees that Scala has entered into this Agreement
relying on the warranties and representations and other terms and conditions of
this Agreement and that no information which is now known or which may hereafter
become known to Scala shall limit or extinguish the right to indemnity
hereunder, and, in addition to any other remedies it may pursue, Scala may
deduct the amount of any such loss or damage from any amounts payable by it to
Sostad hereunder.
2. SCALA'S REPRESENTATIONS
Scala warrants and represents to Sostad that it is a body
corporate, duly incorporated under the laws of the State of Nevada with full
power and absolute capacity to enter into this Agreement and that the terms of
this Agreement have been authorized by all necessary corporate acts and deeds in
order to give effect to the terms hereof.
3. GRANT OF OPTION
Sostad hereby gives and grants to Scala the sole and exclusive
right and option to acquire a 100% undivided right, title and interest in and to
the Claims (the "Option") by performing the acts and deeds and paying the sums
provided for in paragraph 4.
4. CONSIDERATION FOR THE GRANT OF OPTION
4.1 In order to keep the Option granted to Scala in respect of the Claims in
good standing and in force and effect, Scala shall be obligated to:
Cash Payment
------------
(a) pay to Sostad a total of $13,000 as follows:
(i) $3, 000 by July 2, 2004; and
(ii) an additional $10,000 by December 1, 2005;
Expenditure Commitments
-----------------------
(b) incur, or cause to be incurred, exploration and development
work on the Claims totalling at least $150,000 by December 1,
2005, which work shall be conducted by Scala under the
direction of a qualified geologist or project engineer, as
follows:
(i) $5,000 in expenditures on the Claims by July 1, 2005;
(ii) an additional $45,000 in expenditures on the Claims by
July 1, 2006; and
(iii) an additional $100,000 in expenditures on the Claims by
July 1, 2007.
Assessment Work
---------------
(c) pay, or cause to be paid, to Sostad, or on Sostad's behalf, as
Scala may determine, all Claims payments and assessment work
required to keep the Claims and this Option in good standing
during the term of this Agreement.
5. RIGHT TO ABANDON PROPERTY INTERESTS
5.1 Should Scala, in its sole discretion, determine that any part of the Claims
no longer warrants further exploration and development, then Scala may abandon
such interest or interests without affecting its rights or obligations under
this Agreement, so long as Scala provides Sostad with 60 days notice of its
intention to do so. Upon receipt of such notice, Sostad may request Scala to
retransfer the title to such interest or interests to them, and Scala hereby
agrees to do so, and upon expiry of the 60 days, or upon the earlier transfer
thereof, such interests shall cease to be part of the Claims for the purposes of
this Agreement.
5.2 Any part of the Claims that Scala returns to Sostad in accordance with
paragraph 5.1 shall have a minimum of one year of assessment work credited
against it at the time of return.
6. TERMINATION OF OPTION
6.1 Subject to paragraph 6.2, the Option shall terminate if Scala fails to make
the required cash payments or fails to complete the required assessment
work in accordance with paragraph 4.1 herein within the time periods specified
therein.
6.2 If Scala shall be in default of any requirement set forth in paragraph 4.1
herein, Sostad shall give written notice to Scala specifying the default and
Scala shall not lose any rights granted under this Agreement, unless within 60
days after the giving of notice of default by Sostad, Scala has failed to take
reasonable steps to cure the default by the appropriate performance.
6.3 If the Option is terminated in accordance with paragraphs 6.1 and 6.2
herein, Scala shall have no interest in or to the Claims, and all expenditures
and payments made by Scala to or on behalf of Sostad under this Agreement shall
be non-refundable by Sostad to Scala for which Scala shall have no recourse.
Within 60 days of such termination, Scala shall transfer the Claims back to
Sostad, failing which, Sostad shall have the right to act as attorney for Scala
for the purpose of such transfer.
7. ACQUISITION OF INTERESTS IN THE PROPERTY
At such time as Scala has made the required cash payments and
exploration expenditures in accordance with paragraph 4.1 herein, within the
time periods specified therein, then the Option shall be deemed to have been
exercised by Scala, and Scala shall have thereby, without any further act,
acquired an undivided 100% interest in and to the Claims.
8. RIGHT OF ENTRY
For so long as the Option continues in full force and effect,
Scala, its employees, agents, permitted assigns and independent contractors
shall have the right to:
(a) enter upon the Claims;
(b) have exclusive and quiet possession of the Claims;
(c) incur expenditures;
(d) bring upon and erect upon the Claims such mining facilities as
Scala may consider advisable; and
(e) remove from the Claims and sell or otherwise dispose of mineral
products.
9. OPERATOR
After the execution of this Agreement, Scala, or at Scala's
option, its associate or nominee or such other unrelated entity as it may
determine, will act as the operator of the Claims under this Agreement. Scala,
if operator, may resign as the operator at any time by giving 60 calendar days
prior written notice to Sostad, and within such 60 day period, Scala may appoint
another party who covenants to act as the operator of the Claims upon such terms
as Scala sees fit.
10. POWER AND AUTHORITY OF THE OPERATOR
10.1 After the execution of this Agreement, the Operator shall have full right,
power and authority to do everything necessary or desirable in connection with
the exploration and development of the Claims and to determine the manner of
operation of the Claims as a mine.
10.2 Where possible, the Operator shall insure that all field work is conducted,
and that all assay and work program results are verified, by a third party
independent from Scala.
11. FURTHER ASSURANCES
The parties hereto agree to do or cause to be done all acts or
things necessary to implement and carry into effect the provisions and intent of
this Agreement.
12. FORCE MAJEURE
If Scala is prevented from or delayed in complying with any
provisions of this Agreement by reasons of strikes, labour disputes, lockouts,
labour shortages, power shortages, fires, wars, acts of God, governmental
regulations restricting normal operations or any other reason or reasons beyond
the control of Scala, the time limited for the performance of the various
provisions of this Agreement as set out above shall be extended by a period of
time equal in length to the period of such prevention and delay, and Scala,
insofar as is possible, shall promptly give written notice to Sostad of the
particulars of the reasons for any prevention or delay under this section, and
shall take all reasonable steps to remove the cause of such prevention or delay
and shall give written notice to Sostad as soon as such cause ceases to exist.
13. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement to date
between the parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
parties hereto with respect to the subject matter of this Agreement.
14. NOTICE
14.1 Any notice required to be given under this Agreement shall be deemed to be
well and sufficiently given if delivered, or if mailed by registered mail, in
the case of Sostad addressed to them as follows:
Xxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
and in the case of Scala addressed as follows:
Scala Minerals Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxxx, President
and any notice given as aforesaid shall be deemed to have been given, if
delivered, when delivered, or if mailed by registered mail, on the fourth
business day after the date of mailing thereof.
14.2 Either party hereto may from time to time by notice in writing
change its address for the purpose of this section.
15. OPTION ONLY
Until the Option is exercised, this is an option only and
except as specifically provided otherwise, nothing herein contained shall be
construed as obligating Scala to do any acts or make any payments hereunder and
any acts or payments made hereunder shall not be construed as obligating Scala
to do any further acts or make any further payments.
16. RELATIONSHIP OF PARTIES
Nothing contained in this Agreement shall, except to the
extent specifically authorized hereunder, be deemed to constitute either party
hereto a partner, agent or legal representative of the other party.
17. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
18. TITLES
The titles to the respective sections hereof shall not be
deemed a part of this Agreement but shall be regarded as having been used for
convenience only.
19. CURRENCY
All funds referred to under the terms of this Agreement shall
be funds designated in the lawful currency of the United Stares of America.
20. SEVERABILITY
In the event that any of the paragraphs contained in this
Agreement, or any portion of thereof, is unenforceable or is declared invalid
for any reason whatsoever, such unenforceability or invalidity shall not affect
the enforceability or validity of the remaining terms or portions thereof
contained in this Agreement and such unenforceable or invalid paragraph, or
portion thereof, shall be severable from the remainder of the Agreement.
21. APPLICABLE LAW
The situs of the Agreement is Vancouver, British Columbia, and
for all purposes this Agreement will be governed exclusively by and construed
and enforced in accordance with the laws prevailing in the Province of British
Columbia.
22. ENUREMENT
This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF this Agreement has been executed as of the
day and year first above written.
SCALA MINERALS, INC.
/s/ Xxxxx Xxxxxx per: /s/ Xxxxx Xxxxxxxxx
---------------- ------------------------
Xxxxx Xxxxxx Xxxxx Xxxxxxxxx, President
SCHEDULE "A"
TO THAT CERTAIN AGREEMENT MADE AS OF July 6, 2004
BETWEEN XXXXX XXXXXX AND SCALA MINERAL INC.
The Shore claims consist of a total of two mineral claims located in the Nicola
Mining Division, British Columbia, Canada with the following record numbers and
area:
Name of Claim Tenure Number
Shore 1 408582
Shore 2 408583
