OPTION AGREEMENT
THIS AGREEMENT made as of the 16th day of April, 2003.
BETWEEN:
RUBY RED RESOURCES INC.
#000, 000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
(the "Optionor")
OF THE FIRST PART
AND:
FIRST CYPRESS TECHNOLOGIES, INC.,
a company duly incorporated pursuant to the laws
of the state of Nevada, and having an office at
Suite 501, 1281 West Georgia Street, Vancouver,
British Columbia, V6E 3J7
(the "Optionee")
OF THE SECOND PART
WHEREAS:
(a) The Optionor is the owner of certain mineral claims located in the Fort
Xxxxxx Mining District of B.C., Canada
(b) The Optionor has agreed to grant an exclusive option to the Optionee to
acquire an interest in and to the Property, on the terms and condtions
hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of
$1.000 now paid by the Optionee to the Optionor (the receipt of which is hereby
acknowledged), the parties agree as follows:
DEFINITIONS
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 development of the Property, and
all other costs and expenses of whatsoever kind or nature, including
those of a capital nature, incurred or chargeable by the ptionee
with respect to the exploration of the Property; and
(ii) as compensation for general overhead expenses which the Optionor may
incur,an amount equal to 10% of all amounts included in subparagraph(i)
in each year but only 5% of such amounts when paid by the Optionor
under any contract involving payments by it in excess of $100,000 in
one year;
(b) "Option" means the option to acquire a 70% 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 claim 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 mineral
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;
(f) "Shares" means the up to 650,000 common shares in the capital of the
Optionee to be issued to the Optionor pursuant to the exercise of the
Option.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONOR
2. (a) The Optionor represents and warrants to and covenants with the
Optionee that:
(i) 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;
(ii) 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, and no taxes or rentals are or will
be due in respect of any of the mineral claims;
(iii) the mineral claims comprising the Property have been duly and validly
located and recorded pursuant to the laws of the jurisdiction in which
the Property is situate and are in good standing with respect to all
filings, fees, taxes, assessments,work commitments or other conditions
on the date hereof and unti the dates set opposite the respective
names thereof in Schedule "A";
(iv) there are not any adverse claim 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
therefore, 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;
(v) 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;
(b) 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 OPTIONEE
3. (a) The Optionee represents and warrants to and covenants with the
Optionor that:
(i) 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;
(ii) it is lawfully authorized to hold mineral claims and real property under
the laws of the jurisdiction in which the Property is situate;
(iii) 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;
(iv) 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;
(v) the Shares will, at the time of delivery to the Optionor, be duly
authorized and validly allotted and issued as fully paid and
non-assessable free of any liens, charges or encumbrances;
(b) The representations and warranties contained in this section are
provided for the exclusively 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.
(c) The parties acknowledge and agree that the certificates representing the
Shares shall be endorsed with the following legend pursuant to the
United States Securities Act of 1933:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE PROPOSED TO BE
ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED
UNDER THE ACT. UPON ANY SALE, SUCH SECURITIES MAY NOT BE
REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT
IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE ACT.
GRANT AND EXERCISE OF OPTION
4. (a) The Optionor hereby grants to the Optionee the sole and
exclusive right and option to acquire a 70% undivided interest in and
to the Property free and clear of all charges, encumbrances and claims.
(b) The Option shall be exercised by the Optionee:
(i) paying the Optionor $1,000.00 U.S. on the execution of this Agreement,
the receipt of which is hereby acknowledged by the Optionor;
(ii) allotting and issuing to the Optionor, as fully paid and non-assesable,
the Shares as follows:
(A) 200,000 shares forthwith upon execution of this Agreement;
(B) 150,000 shares upon the completion of the first phase of an exploration
program on the Property on or before the first Anniversary date of this
Agreement;
(C) 150,000 shares upon the completion of the second phase of an
exploration program on the Property on or before the second
Anniversary date of this Agreement.
(D) 150,000 shares upon the completion of the third phase of an exploration
program on the Property on or before the third Anniversary date of this
Agreement.
(iii) incurring Exploration Expenditures of $775,000 U.S. on the Property on
a four-phase exploration program as follows:
(A) $75,000 U.S. on or before the first Anniversary date of this Agreement.
(B) a further $150,000 U.S. on or before the second Anniversary date of
this Agreement.
(C) a further $250,000 U.S. on or before the third Anniversary date of
this Agreement.
(D) a further $300,000 U.S. on or before the fourth Anniversary date of
this Agreement.
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 penod 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.
The Option shall be deemed to be exercised upon the Optionee making all
payments issuing all shares and incurring all Exploration Expenditures in
accordance with this Paragraph 4(b).
(c) if and when the Option has been exercised, a 70% undivided right, title
and interest in and to the Property shall vest in the Optionee free and
clear of all charges, encumbrances and claims.
TRANSFER OF PROPERTY
5 . The Optionor shall, forthwith after the exercise of the Option by the
Optionee, deliver to the Optionee duly executed transfers of the
appropriate interest in the Property which shall have been acquired by
the Optionee upon exercise of the Option.
RIGHT OF ENTRY
6. Throughout the Option Period the directors and officers of the Optionee
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 Optionee in its sole discretion may
determine advisable;
(d) bring upon and erect upon the Property such buildings, plant, machinery
and equipment as the Optionee may deem advisable; and
(e) remove therefrom and dispose of reasonable quantities of ores, minerals
and metals for the purposes of obtaining assays or making other tests.
OBLIGATIONS OF THE OPTIONEE DURING OPTION PERIOD
7. During the Option Period the Optionee shall:
(a) maintain in good standing those minerals 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 the regard and in order
to keep such minerals claims free and clear of all liens and other
charges arising from the Optionee's activities thereon except those at
the time contested in good faith by the Optionee;
(b) permit the directors, officers, employees and designated consultants of
the Optionor, at their own risk and expense, access to the Property at
all reasonable times, and the Optionor agrees to indemnify the Optionee
against and to save it harmless from all costs, claims, liabilities and
expenses that the Optionee may incur or suffer as a result of any
injury (including injury causing death) to any director, officer,
employee or designated consultant of the Optionor while on the Property;
(c) 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;
(d) indemnify and save the Optionor harmless in respect of any and all
costs, claims, liabilities and expenses arising out of the Optionee's
activities on the Property, but the Optionee 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 improvement to the Property made by the Optionee are
left in a safe condition;
(e) permit the Optionor, at its own expense, reasonable access to the
results of the work done on the Property during the last completed
calendar year,
(f) deliver to the Optionor, forthwith upon receipt thereof, copies of all
reports, maps, assay results and other technical data compiled by or
prepared at the direction of the Optionee with respect to the Property.
TERMINATION OF OPTION BY OPTIONEE
8. (a) The Option shall terminate:
(i) upon the Optionee failing to incur or make any expenditure or
issuance of shares which must be incurred or made or issued in exercise
of the Option; or
(ii) at any other time, by the Optionee giving notice of such termination to
the Optionor.
(b) If the Option is terminated the Optionee shall:
(i) leave in good standing for a period of at least 12 months from the
termination of the Option Period those mineral claims comprising the
Property;
(ii) 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.
(c) Notwithstanding the termination of the Option, the Optionee shall have
the right, within a period of 180 days following the end of the Option
Period, to remove from the Property all buildings, plant, equipment,
machinery, tools, appliances and supplies which have been brought upon
the Property by or on behalf of the Optionee, and any such property not
removed within such 180 day period shall thereafter become the property
of the Optionor.
TRANSFERS
9. (a) 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:
(i) 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
(ii) 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).
(b) 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 nunber of successive transfer,
the Optionee shall be deemed to be discharged from all obligations
hereunder save and except for the fulfillment of contractual commitment
accrued due prior to the date on which the Optionee shall have no
further interest in this Agreement.
(c) If the Optionor should receive a bona fide offer from an independent
third party (the "Proposed Purchaser")dealing at arms'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:
(i) 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.
(ii) 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.
(iii) 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 resulting 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 determinated by binding
arbitration and shall be payable by the Optionee, subject to prepayment
as hereinafter provided, 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 determinated following arbitration of the cash
equivalent of any non-cash consideration.
(iv) If the Optionee fails to notify the Opfionor 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.
(v) 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
10. The Optionee 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 Optionor of such intention. Any claims so
abandoned shall be in good standing under the laws of the jurisdiction
in which they are situated for at least 12 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 and, if title to such claims has been transferred
to the Optionee the Optionee shall retransfer such title to the
Optionor at the Optionee's expense.
FORCE MAJEURE
11. (a) If the Optionee 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
maintain the Property in good standing;
(b) 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
12. No information furnished by the Optionee to the Optionor hereunder in
respect of the activities carried out on the Property by the Optionee,
or related to the sale of minerals, ore, bullion or other product
derived from the Property, 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
13. (a) All questions or matters in dispute under this Agreement shall
be submitted to arbitration pursuant to the terms hereof.
(b) It shall be a condition precedent to the right of any party to submit
any matter to arbitration 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).
(c) 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 able 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, 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, hall 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.
(d) 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
14. If at any time during the Option Period the Optionee is in default of
any provision in this Agreement (other than the provisions of
subparagraph 4(b) for which no notice of default need be given), 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, to cured such default or commenced proceedings to cure such
default by appropriate payment or perfomance, 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 subparagraph (b),
the Optionor may thereafter terminate this Agreement by giving notice thereof
to the Optionee.
NOTICES
15. 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 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 fiom time to
time notify t he other arty in writing of a change of address and the
new address to which notice shall be given to it thereafter further
change.
GENERAL
16. (a) 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.
(b) 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.
(c) 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.
(d) This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
(e) This Agreement shall be governed by and construed in accordance with the
laws of Bntish Columbia.
(f) Time shall be of the essence in this Agreement.
(g) 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.
(h) Except where otherwise provided herein, any reference in this Agreement
to currency shall be deemed to be Canadian currency.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.
SIGNED, SEALED AND DELIVERED )
BY )
in the presence of: )
) /s/ Xxxx Xxxxx
/s/ Xxxx Xxxxxx )
_________________________________ )_________________________________________
Signature ) Signature
Xxxx Xxxxxx )
_________________________________ )
Name )
0000 00xx Xxx XX, Xxxxxxx, XX )
X0X 0X0 )
__________________________________)
Address )
THE COMMON SEAL OF
FIRST CYPRESS TECHNOLOGIES, INC.
was hereunto affixed in the
presence of:
/s/ Xxxxxx Xxxxxx
________________________________ C/S
Authorized Signatory
SCHEDULE "A"
Located Mineral Claims
