Option Earn-Ins | First Option Within fourteen days of the effective date of this Term Sheet, upon payment of C$20,000 by Snow Lake to Free Battery (the "First Option"), Snow Lake shall earn a 10% interest in the Mound Lake Property (the "First Option Interest"). Second Option On or before the first anniversary of the effective date of the Definitive Agreement, Snow Lake shall have the right to acquire (the "Second Option") an additional 41% interest in the Mound Lake Property (for an aggregate 51% interest) (the "Second Option Interest") upon Snow Lake (x) having made Work Expenditures (as defined below) of at least C$1,000,000 and (y) paying C$500,000 to Free Battery. Third Option On or before the second anniversary of the effective date of the Definitive Agreement, Snow Lake shall have the right to acquire (the "Third Option" and together with the First Option and Second Option, the "Option Earn-Ins")) an additional 29% interest in the Mound Lake Property (for an aggregate 80% interest) (the "Third Option Interest") upon Snow Lake (x) having made additional Work Expenditures of C$1,000,000 (for aggregate Work Expenditures of C$2,000,000 (the "Work Commitment")) and (y) paying an additional C$1,000,000 to Free Battery (for aggregate cash payments of C$1,500,000). Shortfalls in Work Expenditures below the Work Commitment may be paid by Snow Lake to Free Battery as cash in lieu to satisfy the Work Expenditures' requirement. The period between the date of the Definitive Agreement and the date that is the earlier of: (i) the date at which Snow Lake withdraws from the Option Earn-In; or (ii) the second anniversary of the date of the Definitive Agreement is referred to in this Term Sheet as the "Earn-In Period". Snow Lake may withdraw from the Option Earn-Ins at any time. In the event of an election to withdraw from the Option Earn-Ins prior to the exercise of the First Option, Snow Lake will forfeit all rights and interests in the Mound Lake Property with no further liability, and the Definitive Agreement shall be immediately terminated upon such election. However, if the Second Option is terminated, then Snow Lake will not acquire the Second Option Interest, but shall retain the First Option Interest and if the Third Option is terminated, then Snow Lake will not acquire the Third Option Interest, but shall retain the First Option Interest and the Second Option Interest. |
