Exhibit 10.4
OPTION TO PURCHASE
AGREEMENT
THIS AGREEMENT entered into this 14th day
of February, 2005, by and between High Desert Winds, LLC, a Nevada
limited liability company, of 2152 Reno Highway, Suite A, Fallon,
Nevada, 86406, (hereinafter referred to as “Optionor”)
and Idaho General Mines, Inc., an Idaho corporation, of N. 10
Post Street, Suite 610, Spokane, Washington, 99201 (hereinafter
referred to as “Optionee”).
RECITALS
WHEREAS, Optionor is the owner of certain
real and personal property more particularly described below;
and
WHEREAS, Optionee desires to obtain an
Option to Purchase said property;
WHEREAS, Optionee needs a six to nine
month period of due diligence to determine whether the property is
suitable for the use of producing alternative energy or its highest
and best use;
NOW THEREFORE, far and in consideration
of the sum of Fifty Thousand Dollars ($50,000.00), receipt of which
is hereby acknowledged and pursuant to that certain Letter
Agreement entered into between the parties on February 4, 2005
and the covenants and conditions contained herein and other good
and valuable consideration, the receipt of which are hereby
acknowledged, the parties agree as follows:
WITNESSETH
1.
Description of Premises
: For and in consideration of the
sums to be paid in the amounts and in the manner hereinafter set
forth, and the covenants and conditions to be kept and performed by
Optionee, Optionor does hereby grant to Optionee an irrevocable and
exclusive Option to purchase (hereinafter the
“Option”), the following described real and personal
property, including all fixtures, rights, mining data, intellectual
property applicable to the property, privileges, improvements and
appurtenances thereto, if any, in Optionor’s possession,
mineral rights, and water rights, to wit:
See Exhibits “1” and
“2” attached hereto and by this reference incorporated
herein and made a part hereof.
(a)
In addition, Optionor is in possession of
twenty-eight (28) unpatented mining claims which are included in
the sale and are identified in Exhibit “3” attached
hereto and incorporated herein by reference.
OPTION TO PURCHASE
AGREEMENT - PAGE 1
2.
Option Terms : This
Option shall be in effect for six (6) months from February 4,
2005. Optionee shall also be entitled one three (3) month
extension of this Option provided Optionee pays an additional sum
of Fifty Thousand Dollars ($50,000.00) to Optionor for said
extension. Either Option may be exercised at any time by
Optionee during the respective Option term. Optionee shall
provide Optionor at least sixty (60) days written notice of intent
to exercise either Option before the end of the Option term.
The Closing date shall be mutually agreed upon by the parties
and thereafter shall not be changed unless done so in writing,
signed by all parties. In any event, the Closing date shall
occur within the nine (9) month due diligence/Option period and no
later than 5:00 p.m. PST on August 4, 2005 or
November 4, 2005, as the case may be. Upon
Optionee’s providing written notice of exercising either
Option, the purchase documents necessary to effectuate this
transaction shall be forwarded and deposited with the closing agent
in a timely fashion for closing on the agreed upon date.
3.
Optionee agrees, within forty five
(45) days of the execution of this Option to provide to Optionor an
asset purchase agreement to be entered into at closing upon
Optionee’s exercise of this Option. In case of need for
an extension of this deadline, approval by Optionor shall not be
unreasonably withheld. The parties further agree that the
fact a fully negotiated and agreed upon asset purchase agreement is
not attached hereto does not render this Option or the agreements
set forth herein unenforceable.
(a)
Optionee agrees during the due
diligence/Option term and/or until the Equatorial Tonopah, Inc.,
bond is released by the Nevada Department of Environmental
Protection (NDEP) and/or the Bureau of Land Management (BLM) or
Optionee has assumed liability under the bond, that it will not
seek a reclassification or change in use or classification of the
property from its present use/classification. Further,
Optionee agrees it will not contact NDEP, BLM or Equatorial
Tonopah, Inc., seeking or suggesting such a change.
(b)
After passage of the time period set
forth in 3.a) above or the events cited therein occur, the Optionee
may deem it necessary or appropriate to seek a different use and/or
taxing classification or zoning for the Premises. If Optionee
proceeds with the filing of any such application with Federal,
State or local authorities regarding the Premises, Optionor agrees
to cooperate with Optionee and, if requested, consent and/or concur
in said application and not, directly or indirectly, oppose the
same. This provision shall survive closing.
(c)
Upon execution of this Option, Optionor
shall provide Optionee (for it to copy at its own expense) all data
and information in its possession, control, and/or ownership with
respect to the Premises and the wind and hydrothermal potential and
any other data concerning the Premises to the extent Optionor is
legally and contractually entitled to disclose such data and
information. Optionee acknowledges and agrees that Optionor
makes no representation or warranty as to the accuracy, reliability
or completeness of any such data or information, and Optionee shall
rely on the same at its sole risk.
4.
Option Consideration
: The agreed consideration for this
Option is Fifty Thousand Dollars ($50,000.00), all of which has
been paid by the Optionee and is nonrefundable if Optionee does not
exercise this Option. The consideration for the extension,
Fifty Thousand Dollars ($50,000.00) is also nonrefundable if the
Option is not exercised. Optionee
OPTION TO PURCHASE
AGREEMENT - PAGE 2
acknowledges and agrees it is reasonable
that said sums are nonrefundable. If either Option is
exercised, only the Option consideration paid for the first option
shall be applied to the Purchase Price.
A.
At the time Optionee provides Notice of
its intent to exercise this Option, Optionee shall pay an
additional One Hundred Thousand Dollars ($100,000 00). If
Optionee fails to close the transaction, said sum shall be
non-refundable as and for liquidated damages to Optionor. If
the transaction is closed, the One Hundred Thousand Dollars
($100,000.00) paid at the time of delivery of the Notice of intent
to exercise the Option shall be applied to the purchase
price.
B.
If Optionee properly and timely exercises
this Option, including any extension hereof, and Optionor refuses
or fails to promptly and timely execute an asset purchase agreement
and/or any other documents required therein and fails to convey the
property as provided herein, Optionee may seek specific performance
of this Option. In addition, Optionee may seek any and all
other alternative remedies which may be available to it in law and
or equity.
5.
Effective Date : This Agreement is in full force and effect
upon execution by both parties and the effective date hereof is
February 4, 2005. A Memorandum of Agreement in the form
attached hereto as Exhibit “4” shall be recorded in the
Records of Nye County, Nevada evidencing this Option.
6.
Purchase Price : The Purchase Price for the Premises described
above, if the Option is exercised, is the sum of FIVE MILLION
DOLLARS ($5,000,000.00), payable in full at the time of
closing.
A.
Optionor represents and warrants the
premises are not subject to any liens, encumbrances, debts or
mortgages and that Optionor has clear and marketable title to the
Premises and all assets the subject of this Option. During
the Option term, Optionor shall not encumber, lien or permit any
liens or encumbrances to attach to the premises.
7.
Title Insurance
: Optionor shall furnish a
Preliminary Title Report from a reputable title insurance company
within thirty (30) days of the date of execution of this Option,
evidencing marketable title to said property in fee simple, subject
to printed exceptions and easements and covenants of record.
The parties shall equally split the cost of said report and
pay their share of the cost upon presentment of the report
bill.
A.
The Optionee shall examine said report
and advise the Optionor in writing, signed by Optionee or its
attorney, specifying in detail, the objections, if any; Optionee
makes to the title. Said objections all be made to the
Optionor within twenty one (21) days of receipt of the report or
the right to so object shall be considered waived.
B.
It is further understood and agreed that
if, for any reason, the Optionor shall fail to so furnish said
report within thirty (30) days, or are unable to meet the
Optionee’s objections as indicated in the aforementioned
letter, then the Optionee shall have the option to
OPTION TO PURCHASE
AGREEMENT - PAGE 3
declare this Agreement null and void or
Optionee can elect to waive the objections and proceed with the
purchase. If the Optionee has no objections or waives its
objections, the Optionor shall, within fifteen (15) days cause a
supplemental policy to be issued pending the closing of this
transaction. At closing, a Title Insurance Policy shall be
delivered to Optionee.
C.
And furthermore, the Optionor shall be
allowed thirty (30) days in which to commence action to cure any
such defects in the title and the Optionor hereby agrees that said
defect or defects shall be made good and the title perfected as
soon as reasonably possible at Optionor’s own
expense.
D.
Optionee acknowledges it has been
provided notice of that certain non-participating production
royalty equal to twelve percent (12%) of Net Smelter Returns (NSR)
held by Equatorial Tonopah, Inc. and Tonopah CTMC, Inc. which NSR
is applicable to the real property set forth in Exhibits
“1” and “2”, respectively.
8.
Closing : Upon exercising this Option, closing shall take
place at a reputable title company in Fallon, Nevada, to be
designated by Optionor, after consultation with
Optionee.
A.
Closing Costs : Closing costs, including but not limited to
county transfer tax and title insurance and shall be paid one-half
(1/2) by the Optionee and one-half (1/2) by the
Optionor.
B.
Other Documents
: The parties hereto agree to
execute the usual, customary and necessary documents to effectuate
and complete the transaction herein described.
C.
Taxes : Real property taxes and assessments,
including assessments for the unpatented mining claims, identified
in Exhibit “3” shall be prorated to the date of
closing.
9.
Representation of Attorney
:
A.
It is understood that both parties have
retained attorneys of their own choosing and each party shall bear
their own attorney fees.
10.
Brokerage and Finder’s Fees,
Indemnity : That parties
acknowledge Lee Hutchens and his spouse are real estate brokers,
however, neither are or have been acting in that capacity in this
transaction. There is no real estate broker involved in this
transaction and no commissions or finder’s fees are due any
third parties. Optionor has disclosed it previously retained
Carlson and Associates of Las Vegas, Nevada to market the property
for alternative energy development. Optionor warrants no fees
are due Carlson in connection with this transaction. Optionee
warrants it and its employees, representatives and directors have
had no contact or dealings with Carlson and Associates regarding
this transaction. In the event that any claim is asserted for
a commission or finder’s fee with respect to this Option
Agreement or the transaction contemplated hereby, Optionor shall
defend, indemnify and hold harmless Optionee from and against any
losses with respect thereto.
11.
Time is of the Essence
: Time shall be of the essence of
this Agreement.
OPTION TO PURCHASE
AGREEMENT - PAGE 4
12.
Attorney Fees to Prevailing
Party : Should any suit
be instituted by either party to seek enforcement of this
Agreement, the prevailing party shall be entitled to receive from
the losing party, a reasonable amount of attorney fees to be fixed
by the court having jurisdiction thereof and taxed as costs in such
suit.
13.
Notices .
(a)
All Notices and other communication
required by this Option shall be in writing and shall be addressed
respectively as follows:
Optionor:
High Desert Winds, LLC
2152 Reno Highway, Suite A
Fallon, NV 89406
c/o Lee Hutchens
Copy to:
Ryan T. Campbell, Esq.
427 Ridge Street, Suite B
Reno, NV 89501
Optionee:
Idaho General Mines, Inc.
N. 10 Post Street, Suite 610
Spokane, WA 99201
All notices shall be given by either (a)
personal delivery to the party, (b) electronic communication, with
confirmation of transmission, (c) registered or certified mail
returned receipt requested, or (d) commercial carrier. All
notice shall be effective and shall be deemed delivered (i) if by
personal delivery, on the date of delivery if delivered during
normal business hours and, if not delivered during normal business
hours, on the next business day following delivery, and
(
