WHEREAS the Optionors and the Optionee entered into an option agreement dated for reference the 2nd day of May 2006 and amended the 27th day of July 2007 and (collectively, the “Patent Agreement”). The agreement was terminated on December 9, 2008 and the parties wish to reinstate the Patent Agreement.
WITNESSES THAT WHEREAS the Optionors are the recorded and beneficial owner of a 100% legal and beneficial interest in and to certain mining claims situated in Ontario, more particularly described in Schedule "A" attached hereto (collectively the "Property");
AND WHEREAS the Optionors desire to grant and the Optionee is desirous of obtaining an option to acquire a 100% undivided interest in and to the Property upon terms and subject to the conditions herein contained.
NOW THEREFORE in consideration of the premises and the mutual covenants and agreements herein contained, the parties agree as follows:
The Optionors grant to the Optionee the sole, exclusive and irrevocable right and option (the “Option”) to acquire an undivided 100% right, title and interest in and to the Property, in accordance with the terms of this Agreement.
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. If the Option is terminated before the Option is exercised, the Optionee shall not be bound thereafter in debt, damages or otherwise under this Agreement, except as provided for in this Agreement, and all payments theretofore paid by the Optionee shall be retained by the Optionors for their own use absolutely.
In order to maintain the Option in good standing and earn a 100% right, title and undivided interest in and to the Property, the Optionee, subject to paragraph 2, shall:
(a) pay to the Optionors $15,000 by May 12, 2006 (paid);
| (b) | pay to the Optionors a further $15,000 on or before July 10, 2007 (paid); |
| (c) | pay to the Optionors a further $20,000 on or before August 31, 2009; |
| (d) | pay to the Optionors a further $20,000 on or before August 31, 2010; |
| (e) | pay to the Optionors a further $20,000 on or before August 31, 2011; |
| (f) | issue to the Optionors 50,000 common shares of the Optionee on or before August 10, 2006 (issued); |
| (g) | issue to the Optionors a further 50,000 common shares of the Optionee on or before July 10, 2007 (issued); |
| (h) | issue to the Optionors a further 75,000 common shares of the Optionee on or before July 10, 2008 (issued); |
| (i) | issue to the Optionors a further 75,000 common shares of the Optionee on or before September 30, 2009; |
| (j) | incur at least an aggregate of $130,000 in exploration expenses on the Property on or before July 10, 2009 (incurred); |
| (k) | incur at least an aggregate of $180,000 in exploration expenses on the Property on or before August 31, 2010; |
| (l) | incur at least an aggregate of $280,000 in exploration expenses on the Property on or before August 31, 2011; and |
| (m) | incur at least an aggregate of $380,000 in exploration expenses on the Property on or before August 31, 2012. |
For the purposes of this Agreement, ”exploration expenses” means all costs, expenses and charges of whatsoever kind or nature incurred by the Optionee in connection with the exploration, development and maintenance of the Property, determined in accordance with Canadian generally accepted accounting practices.
If the Optionee has paid $90,000, issued 250,000 common shares to the Optionor, and incurred an aggregate of $380,000 in exploration expenses, the Optionee shall be deemed to have exercised the Option and will have acquired an undivided 100% right, title and interest in and to the Property, subject only to the Royalty Interest reserved to the Optionors pursuant to paragraph 6 hereof.
During the term of the Option, the Optionee shall be the operator for purposes of developing and executing exploration programs.
The Optionors shall be entitled to receive and the Optionee shall pay to the Optionors a royalty equal to 3% of the net smelter returns (the “Royalty Interest”) calculated and payable from the Property in accordance with the provisions of Schedule “B” attached hereto.
The Optionee may at any time purchase two-thirds (2%) of the Royalty Interest from the Optionors for $1,000,000, thereby leaving the Optionors with a 1% Royalty Interest.
The Optionor grants to the Optionee the right of first refusal on any sale of the Royalty Interest.
During the currency of the Option the Optionee and its employees, agents and any person duly authorized by the Optionors shall have the sole and exclusive right to:
| | (a) | enter in, under and upon the Property; |
| | (b) | have exclusive and quiet possession thereof subject to the rights of the Optionors hereunder; |
| | (c) | do such prospecting, exploration, development or other mining work thereon and thereunder as the Optionee in its sole discretion may consider desirable; |
| | (d) | bring upon and erect upon the Property such mining facilities as the Optionee may consider advisable; and |
| | (e) | remove from the Property and dispose of reasonable quantities of ores, minerals and metals for the purposes of sampling, obtaining assays or making other tests. |
| 8. | NOTICE OF DEFAULT AND TERMINATION BY OPTIONORS |
If the Optionee should be in default in making any payments or performing any other of its obligations hereunder, the Optionors may give written notice to the Optionee specifying the default. The Optionee shall not lose any rights granted under this Agreement so long as, within thirty (30) days after the giving of such notice of default by the Optionors, the Optionee shall cure the specified default. If the Optionee fails to cure the default within the thirty (30) day period, this Agreement shall terminate. Upon termination of this Agreement by the Optionors, the provisions of the paragraph in this Agreement entitled “Termination Prior to Acquisition of Interest” shall apply.
| 9. | NO PRODUCTION OBLIGATION |
The Optionee shall be under no obligation whatsoever to place the Property into production.
The Property will be transferred when the provisions in paragraph 3 have been met.
The Optionee shall have the right at any time and from time to time to elect to exclude from this Agreement any portion of the Property by not less than thirty (30) days prior written notice to the Optionors of this election; provided that any portion of the Property so excluded shall be in good standing, free and clear of all liens, charges and encumbrances, and provided further that the Optionee, if requested by the Optionors in writing, shall deliver to the Optionors recorded transfers of any mineral claims and other property interests which are included in the portion of the Property so excluded in favour of the Optionors. Upon termination of a portion of the Property, the terminated portion of the Property shall be subject to the provisions of the paragraph in this Agreement entitled “Termination Prior to Acquisition of Interest”.
| 12. | COVENANTS OF THE OPTIONEE |
During the currency of this Agreement, the Optionee shall:
| | (a) | keep the Property in good standing by doing and filing of all assessment work and by the doing all other acts and things and making all other payments which may be necessary in that regard; |
| | (b) | permit the Optionors, or their representative, duly authorized by it in writing, at its own risk and expense, access to the Property at all reasonable times and to all records prepared by the Optionee in connection with work done or with respect to the Property, provided the Optionors shall not, without the prior written consent of the Optionee, such consent not to be unreasonably withheld, disclose any information obtained by it or communicated to it, to any third party except as may be required by regulatory bodies having jurisdiction over it; and |
| | (c) | conduct all work on or with respect to the Property in a careful and workmanlike manner and in compliance with the applicable laws of the jurisdiction in which the Property is located and indemnify and save the Optionors harmless from any and all claims, suits or actions made or brought against the Optionors as a result of work done by the Optionee on or with respect to the Property. |
| 13. | COVENANTS OF THE OPTIONORS |
During the currency of this Agreement, the Optionors covenant and agree with the Optionee to:
| | (a) | not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder; |
| | (b) | make available to the Optionee and its representatives all records and files relating to the Property in its possession and permit the Optionee and its representatives to take abstracts therefrom and make copies thereof; |
| | (c) | co-operate with the Optionee in obtaining any water appropriation license, surface licenses and any other rights or licenses on or related to the Property, the Optionee deems necessary or desirable; and |
| | (d) | promptly provide the Optionee with any and all notices and correspondence from government or regulatory agencies in respect of the Property. |
| 14. | REPRESENTATIONS AND WARRANTIES OF THE OPTIONORS |
The Optionors hereby represent and warrant to the Optionee that:
| | (a) | the Optionors are the legal and beneficial owner of the Property; |
| | (b) | the Property consists of those mining claims more particularly described in Schedule “A”, all of which were duly and validly located and recorded in accordance with the applicable laws of Ontario and are valid and subsisting as of the date of execution and delivery of this Agreement; |
| | (c) | the Property is in good standing, free and clear of all liens, charges and encumbrances; |
| | (d) | there are no pending or threatened actions, suits, claims or proceedings regarding the Property; and |
| | (e) | the Optionors have the exclusive right and authority to enter into this Agreement and to dispose of the Property in accordance with the terms hereof, and that no other person, firm or corporation has any proprietary or other interest in the same. |
The representations and warranties of the Optionors herein before set out, form a part of this Agreement and are conditions upon which the Optionee has relied on in entering into this Agreement and shall survive the exercise of the Option by the Optionee. The Optionors shall indemnify and save the Optionee 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 contained in this Agreement. The Optionors acknowledge and agree that the Optionee 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 the Optionee or its officers, directors or professional advisors shall limit or extinguish the right to indemnity hereunder. The Optionee may deduct the amount of any such loss or damage from any amounts payable by it to the Optionors hereunder.
| 15. | TERMINATION PRIOR TO ACQUISITION OF INTEREST |
If the Option is terminated, or if this Agreement is terminated prior to the exercise of the Option by the Optionee, the Optionee shall return to the Optionors forthwith exclusive and quiet possession of the following claims: P-3005388; P-4202901; P-4220807; P-1236943; P-3005387; P-3017352; P-4209634; P-4209636; P-4209637; P-4209638; P-4209635 (or any restaking thereof); such claims to be returned in good standing for a period of one year, free and clear of all liens, charges and encumbrances.
| 16. | ADDITIONAL TERMINATION |
In addition to any other termination provisions contained in this Agreement, the Optionee shall at any time have the right to terminate its rights and future obligations under this Agreement by giving notice in writing of such termination to the Optionors, and in the event of such termination, the Optionee shall not earn any interest in the Property, and this Agreement, save and except for the provisions of the paragraph in this Agreement entitled “Termination Prior to Acquisition of Interest” hereof, shall be of no further force and effect.
If the Optionee is prevented or delayed in complying with any provisions of this Agreement by reason of strikes, 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 the Optionee, 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. The Optionee, insofar as is possible, shall promptly give written notice to the Optionors of the particulars of the reasons for any prevention or delay under this paragraph, and shall take all reasonable steps to remove the cause of such prevention or delay and shall give written notice to the Optionors as soon as such cause ceases to subsist.
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 Canada, (save and except during the period of any interruption in the normal postal service within Canada) or sent by facsimile transfer to either party at the addresses first set out above and any notice given as aforesaid shall be deemed to have been given, if delivered or
sent by facsimile transfer, when delivered or faxed, or if by mail, on the third business day after the date sent by mail . Either party may from time to time by notice in writing change its address for the purpose of this paragraph.
The parties hereto agree to execute all such further or other assurances and documents and to do or cause to be done all acts necessary to implement and carry into effect the provisions and intent of this Agreement.
Time shall be of the essence of this Agreement.
The titles to the respective paragraphs hereof shall not be deemed to form part of this Agreement but shall be regarded as having been used for convenience of reference only.
The Schedules to this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if they were contained in the body hereof.
| 23. | VOID OR INVALID PROVISION |
If any term, provision, covenant or condition of this Agreement, or any application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all applications thereof not held invalid, void or unenforceable shall continue in full force and effect and in no way be affected, impaired or invalidated thereby.
| 24. | SUCCESSORS AND ASSIGNS |
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors, assigns, heirs, executors or administrators as the case may be.
The Optionee and the Optionors hereby acknowledge that this Agreement shall be subject to all necessary regulatory approvals.
If any question, difference or dispute shall arise between the parties or any of them in respect of any matter arising under or in connection with the subject matter of this Agreement, or in relation to the construction hereof, the same shall be determined by the award of a single arbitrator under the Commercial Arbitration Act of the Province of Ontario, and the decision of the arbitrator shall in all respects be conclusive and binding upon all the parties.
This Agreement and any Agreement contemplated hereby may not be assigned by the Optionee without the written consent of the Optionors, such consent not to be unreasonably withheld.
This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario.
This Agreement contains the entire agreement between the parties in respect of the Property and supersedes all prior agreements between the parties hereto with respect to the Property, which said prior agreements shall be deemed to be null and void upon the execution hereof.
| 30. | EXECUTION IN COUNTERPARTS |
This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document.
IN WITNESS WHEREOF the parties hereto have executed these presents as of the day and year first above written.
SIGNED, SEALED and DELIVERED by FREDERICK ROSS in the presence of: | ) ) | |
| | ) ) ) | |
| Witness Signature | ) ) ) | /s/ Frederick Ross FREDERICK ROSS |
Witness Name (printed) | ) ) ) | |
| Address | ) | |
| | | |
GARRY WINDSOR in the presence of: | ) | |
| | ) ) | |
Witness Signature | ) ) ) | /s/ Garry Windsor GARRY WINDSOR |
| Witness Name (printed) | ) ) ) | |
| Address | ) | |
| | | |
BRUCE DURHAM in the presence of: | ) ) ) | |
| Witness Signature | ) ) ) | /s/ Bruce Durham BRUCE DURHAM |
| Witness Name (printed) | ) ) ) | |
| Address | ) | |
| | | |
| AMADOR GOLD CORP. | ) ) ) | |
Per: /s/ Alan D. Campbell________________ Alan D. Campbell, CFO & Director | ) ) | |
