AMENDMENT TO MINERAL LEASE AGREEMENT
AMENDMENT TO MINERAL LEASE AGREEMENT
THIS AMENDMENT (the “Amendment”) is made effective as of the 19 day of April 2018
BETWEEN:
XXXXXXX XXXXXXXX of 000 Xxxxx Xxx, Xxxxxx, Xxxxxx, 00000-0000, XXX
(the “Lessor”)
AND:
PROPHECY DEVELOPMENT CORP., a company amalgamated under the laws of British Columbia, having an office at Suite 1610 – 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Xxxxxx
(the “Lessee”)
RECITALS
A. The Lessor and the Lessee (together, the “Parties” and individually, a “Party”) entered into a Mineral Lease Agreement dated June 22, 2017 (the “Agreement”) pertaining to the lease of certain unpatented lode mining claims located in Eureka County, Nevada, USA as described in Exhibit A attached to the Agreement (the “Premises”).
B. The Lessor failed to disclose to the Lessee, contrary to Sections 4.A.(1) and (5) of the Agreement, the existence of a Notice of Federal Tax Lien, dated January 27, 2015 and recorded February 3, 2015 at Book 577, Page 1, Document No. 229081 with Eureka Country records (the “Lien”) against the Premises by the United States Internal Revenue Service (“IRS”) pending payment of unpaid federal taxes for the year ending December 31, 2010, penalties and interest charges totaling $99,027,22 as of April 30, 2018, owning by the Lessor to the IRS (the “Amounts Owing”).
C. The Lessee has agreed to pay before April 30, 2018 the Amounts Owing to the IRS on behalf of the Lessor and to discharge the Lien against the Premises, pursuant to those provisions outlined in Section 7 of the Agreement.
D. In lieu of the Lessor reimbursing the Lessee, as required pursuant to Section 7 of the Agreement, for those Amounts Owing and paid by the Lessee to discharge the Lien, the Parties wish to instead, amend the Agreement as provided herein.
AGREEMENT
FOR AND IN CONSIDERATION of the Lessee’s payment of the Amounts Owing by the Lessor to the IRS to discharge the Lien against the Premises, the Lessee’s waiver of its right to reimbursement of such payment from the Lessor pursuant to Section 7 of the Agreement, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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1. AMENDMENTS
The Agreement is amended as follows:
A. Lessee will pay to the IRS the Amounts Owing and cause the IRS to discharge and release the Lien. The Amounts Owing paid by Lessee to the IRS shall be credited in Lessee’s favor if Lessee elects to exercise the Title transfer option in accordance with Section 1.H as amended by this Amendment.
B. Section 1.H. is deleted in its entirety and replaced with the following:
“H. Title transfer. If Lessee intends to develop a mine or to construct mine-related facilities on the Premises, Lessee shall notify Lessor. The notice shall specify which portions of, the Premises will be required for Lessee’s proposed uses. Lessee shall have the option to, at any time during the term of this Agreement, require Lessor to transfer title over all of the unpatented lode mining claims that constitute the Premises (excluding the four (4) claims named: Black Iron 1-N, Black Iron 4-N, Black Iron 5-N and Manganese 3-N) (the “Transferred Claims”) to Lessee in exchange for $1,000,000, to be paid as an Advance Royalty payment (the “Transfer Payment”). $99,027.22 of the Transfer Payment will be due and payable by Lessee as a payment to the United States Internal Revenue Service to discharge and release the Notice of Federal Tax Lien, dated January 27, 2015 and recorded February 3, 2015 at Book 577, Page 1, Document No. 229081 with the Eureka Country records registered against the Premises, prior to April 30, 2018, with the remaining $900,972.78 portion of the Transfer Payment due and payable by Lessee to Lessor immediately upon completion of transfer of the Transferred Claims from Lessor to Lessee. At any time during the term of this Agreement, Lessor shall have the option to require Lessee to acquire title to the portion of the Premises required for Lessee’s proposed uses for nominal consideration of $1. The Advance Royalty obligation and Production Royalty shall not be affected, reduced or relieved by the transfer of title to Lessee.”
C. Section 4.A(5) is deleted in its entirety and replaced with the following:
“(5) Other than the Notice of Federal Tax Lien, dated January 27, 2015 and recorded February 3, 2015 at Book 577, Page 1, Document No. 229081 with the Eureka Country records registered against the Premises by the United States Internal Revenue Service, Lessor has not committed, nor shall she commit in future, any act or acts that will encumber or cause a lien to be placed against the Premises, which going forward, shall be kept strictly free of any further liens or encumbrances, except those specifically contemplated herein. The Parties acknowledge that Lessor may, in future xxxxx x xxxx or other security interest against any Advance Royalty or Production Royalty contemplated in Section 3 of this Agreement, provided any such grant will remain subject and subordinate to Lessee’s right under this Agreement.”
2. GENERAL
D. Except as specifically modified herein, all other terms and provisions of the Agreement shall remain unchanged and in full force and effect. This Amendment, together with the Agreement, constitutes the entire agreement between the Parties concerning the Premises and subject matter herein and replaces any prior oral or written communications between the Parties.
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E. The provisions of this Amendment shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns.
F. This Amendment shall be construed, interpreted and governed by the laws of the State of Nevada. All disputes concerning the construction or enforcement of this Amendment shall be heard and determined in the Second Judicial District Court of the State of Nevada in and for Washoe County. Both Parties agree that jurisdiction of and venue in such court are acceptable to the Parties and the Parties covenant and agree to not object to the exercise of jurisdiction by such court or the venue of such court.
G. Each Party shall execute all documents, do all such things, and otherwise cooperate with the other Party as reasonably needed or desirable to consummate or give effect to the purposes of this Amendment and carry out its provisions.
H. This Amendment may be executed in counterparts and delivered electronically or by fax, each of which shall be deemed to be an original and both of which shall constitute the same document.
I. Lessee acknowledges that this Amendment satisfies Lessor’s obligations under Section 7 of the Agreement in respect of the Lien and the Amounts Owing.
TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Amendment as of the date first above written.
| Per: | /s/ Xxxx Xxx |
| XXXX XXX, Executive Chairman |
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| AGREED AND ACCEPTED: | |||
| Signed and Delivered by Xxxxxxx Xxxxxxxx in the | ) | ||
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| Name (please print) | ) | /s/ Xxxxxxx Xxxxxxxx | |
| ) | XXXXXXX XXXXXXXX | ||
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