EXHIBIT 10.1
OPTION AGREEMENT
Agreement entered into as of July 15, 2000
BETWEEN: Richard Simpson
#1201-1166 Quebec Street
Vancouver, BC V6A 4B3
(hereinafter referred to as "Simpson")
THE SELLER
AND:
Galaxy Investments
604-750 West Pender Street
Vancouver, B.C.
(hereinafter referred to as "Galaxy")
THE BUYER
WHEREAS Simpson has agreed to grant Galaxy, the exclusive right and option to
acquire a 100% undivided interest in mineral claim Treadwell #1 located in the
Kamloops Mining Division as described in Schedule I (designated the Property):
THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
All references to Dollars are in Canadian Dollars.
I. REPRESENTATIONS AND WARRANTIES OF SIMPSON
1.1 The Property is registered in the name of Simpson, is free and clear
of any liens, privileges, mortgages, hypothecs, charges, encumbrances
and royalties.
1.2 Simpson is the beneficial owner of the Property;
1.3 Simpson has the right to enter into this agreement and the
performance of the claim obligations hereunder shall not be in breach
of, or in conflict with any agreements or undertakings between
themselves and any governmental authority in Canada or any other
party:
1.4 Simpson has no knowledge of any claim or litigation as to their
ownership of the Property;
1.5 The Property is in conformity with all laws, regulations, orders,
policies and requirements in matters of environment,
1.6 Simpson has no knowledge of any fact pertaining to the Property or of
any work carried out that may in any way breach said laws,
regulations, orders, policies and requirements,
1.7 Simpson acknowledges and covenants that these representations and
warranties are conditions on which Galaxy has relied upon to enter
into this Agreement and that said representations and warranties will
survive the termination of the Agreement.
1.8 There are no prior Net Smelter Return royalties on the Property.
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II REPRESENTATIONS AND WARRANTIES OF GALAXY
2.1 Galaxy hereby represents and warrants that, as of the date of
execution of this agreement, the entering into and execution of this
agreement has been duly authorized by all necessary corporate
proceedings of Galaxy.
2.2 Galaxy will maintain the Property in good assessment standing
III. INTEREST
3.1 Simpson hereby agrees to grant Galaxy an exclusive and non-revocable
right to acquire an interest of one hundred percent (100%) in the
Property in consideration for treasury common shares, cash payments
and royalties as follows:
3.1.1 Galaxy hereby agree to pay cash and common shares as follows:
Payment of $2,500 dollars and 2,000 common shares on signing
this Option Agreement; receipt of which is hereby
acknowledged;
Payment of $7,500 dollars and 8,000 free-trading Galaxy common
shares on or before July 31, 2001;
Payment of $10,000 dollars and 40,000 free-trading Galaxy
common shares on or before July 31, 2002;
Payment of $20,000 dollars and 50,000 free-trading Galaxy
common shares on or before July 31, 2003;
Cumulative payments of $40,000 dollars and 100,000 free-
trading shares of Galaxy.
The common shares issued under 3.1.1 will be subject to the
restrictions imposed by regulatory authorities and the laws
and regulations to which the securities of Galaxy are subject.
3.1.2 The interest in the Property granted by Simpson shall be
subject to a royalty of 1.0 percent Net Smelter Return (NSR)
from mineral substances extracted from the Property, as
defined in Schedule II to this Agreement. Galaxy shall have
the option to acquire this NSR after the commencement of
commercial production. Commencement of commercial production
shall be defined as the first day after the mill has operated
continuously for thirty (30) days at 60% or more of design
capacity, or if no mill is present on the Property, then the
first day after which ore has been mined and shipped from the
Property for a period of thirty (30) days.
3.1.3 Galaxy shall issue Simpson an advance royalty $ 25,000 or the
equivalent in free-trading shares per year as of April 30,
2004, until the commencement of commercial production. Galaxy
shall recoup its advance royalty investment including interest
at a rate equal the prime rate (as quoted from time to time by
the Canadian Imperial Bank of Commerce, Main Branch, Toronto,
Ontario) plus two percent (2%), from 90 percent of share of
production royalty NSR.
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3.2 Galaxy will be responsible and liable for any damage caused
while carrying out work on the Property and shall indemnify
and hold Simpson harmless from any and all claims, actions,
causes of action and costs (including all legal costs)
resulting from, of in any way related to, any activity carried
out by Galaxy on the Property
3.3 While the option is in force, Galaxy shall have the exclusive
right of access to the Property and to explore for minerals on
the Property. Galaxy or its' assigns shall have the right to
construct a mine on the property.
3.4 Galaxy shall operate in a manner consistent with mining
industry standards, including the maintenance of proper
security measures.
3.5 Galaxy shall ensure that all environmental reclamation work
required to be done in connection with exploration or other
activity carried out by Galaxy on the Property is completed
in a timely manner at Galaxy's expense in accordance with
applicable law.
IV. WORK COMMITMENT
4.1 Galaxy shall earn a 100 percent interest in the Property by
incurring expenditures of at least $500,000 on the Property,
subject to force majeure, on or before the dates set forth
below:
i) $ 25,000 in work by July 31, 2001
ii) An additional $ 50,000 in work by July 31, 2002
iii) An additional $ 100,000 in work by July 31, 2003
iv) An additional $ 150,000 in work by July 31, 2004
v) An additional $ 175,000 in work by July 31, 2005
A cumulative total of $ 500,000, in addition to the cash and share issuances
stated in section 3.1.1 will vest Galaxy a 100 percent interest in the Property.
Any amount spent by Galaxy in any year in excess of the minimum amount shall be
applied as a credit on account of the minimum amount to be spent in the future.
V. TRANSFER OF PROPERTY
5.1 Upon execution of this agreement, Simpson will deliver to
Galaxy transfers to the Property
VI. RIGHT OF FIRST REFUSAL
6.1 Galaxy shall not sell or dispose of, or grant any other person
an interest in the Property without first offering the same to
Simpson or an equivalent value in cash.
VII. TERMINATION OF OPTION
7.1 If Galaxy defaults in its cash or share payments or work
commitments stipulated in sections 3.1.1 and 4.1, subject to
force majeure, and such default has not been remedied within
sixty (60) days after receipt of written notice of default
from Simpson, or if it elects to terminate the option, it will
retransfer the Property to Simpson free and clear of any
liens, charges, hypothecs. encumbrances and royalties, within
five (5) business days of termination of this agreement.
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7.2 Prior to acquiring its 100% interest in the Property, Galaxy
shall have the right to terminate this agreement by giving
wirtten notice to Simpson of such termination in which event
this agreement shall terminate and Galaxy shall be under no
further obligation or liability to Simpson except to transfer
its interest in the Property to Simpson. If Galaxy terminates
this agreement, sufficient assessment work will have been
recorded against the Property in order that it will be in good
standing under the British Columbia Mining Act for not less
than 3 years following the date of termination.
VIII. CLOSING
8.1 Closing will take place within five days following regulatory
approval, should any approval be required.
IX GENERAL PROVISIONS
9.1 This agreement shall replace and supersede all previous
agreements between the parties. The parties agree that this
agreement shall be interpreted and governed according to the
laws of the Province of British Columbia and that the
addresses for any written notices hereunder shall be as set
out below:
Notice to Simpson shall be addressed to:
Richard Simpson
#1201-1166 Quebec Street,
Vancouver BC V6A 4B3
Notice to Galaxy shall be addressed to:
Galaxy Investments Inc.
604-750 West Pender Street
Vancouver BC V6C 2T7
9.2 Time shall be the essence hereof.
IN WITNESS WHEREOF the parties here signed as of the first herein above
mentioned.
Signed this 18 day of July, 2000.
Per:
Per:
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SCHEDULE I
List of Mining Rights
Treadwell Claim
Kamloops Mining Division (Map 92I/15E)
Cannell Creek BC
Claim number
Treadwell#1 - Tenure #360262
28km N. 35 degrees W. of Kamloops, B.C.
on Cannell Creek
50 degrees 120 degrees NW
N.T.S. 92I/15E
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SCHEDULE II
NET SMELTER RETURN
Net Smelter Return shall mean the actual proceeds received for the sales of
ores, metals or concentrates (other than products used for testing) after the
date on which the Property enters into commercial production, after deducting
from such proceeds, to the extent that they were not deducted by the purchaser
in computing costs: of all charges for smelting and refining or penalties, all
costs or charges regarding insurance, transportation, manutention or testing and
sampling, (including arbitration analysis)of the product or any part of it ex
head frame it in the case of minerals and ex mill or other installations of
treatment in the case of concentrates or other products; all marketing costs
incurred as to said product, all the Federal or Provincial or Municipal taxes,
revenue or royalty related to the sale or to the added value that has been the
object of a levy for the vendor or payable by him, all custom taxes, import
taxes or all tariffs or mining taxes payable on said products and, all costs and
charges that apply (including penalties) spent for resmelting or refining on
demand or similar treatment of ores, minerals and concentrates that are part of
the product.
