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Amendment No. 2 To Royalty Assignment And Agreement

Royalty Agreement

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 This Royalty Agreement involves

AMERICA WEST RESOURCES, INC. | America West Resources, Inc | America West Services, Inc | Denly Utah Coal, LLC | Hidden Splendor Resources, Inc | John Thomas Bridge and Opportunity Fund, LP | My Commission

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Title: AMENDMENT NO. 2 TO ROYALTY ASSIGNMENT AND AGREEMENT
Date: 4/5/2011
Industry: Coal     Sector: Energy

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Execution Version

 

Exhibit 10.3

 

AMENDMENT NO. 2 TO ROYALTY ASSIGNMENT AND AGREEMENT

 

This Amendment No. 2 to Royalty Assignment and Agreement dated February 11, 2011 (the “ Amendment ”) amends that certain that certain Royalty Assignment and Agreement, Grant of Security Interest and Financing Statement dated May 27, 2009, as amended by that certain Amendment No. 1 to Royalty Agreement dated October 23, 2009, (collectively, the “ Royalty Agreement ”) by and among Hidden Splendor Resources, Inc. (“ Grantor ”), Denly Utah Coal, LLC, a Texas limited liability company (“ Denly ”), John Thomas Bridge and Opportunity Fund, L.P., a Delaware limited partnership (“ JTF ” or “ Fund ”), Thomas Murch (“ Murch ”), James Moore (“ Moore ”) and John Meeks (“ Meeks ”) (Denly, JTF, Murch, Moore and Meeks are hereinafter collectively referred to as the “ Grantees ”).  Unless otherwise specifically defined herein, the terms used in this Amendment have the same meanings given such terms in the Royalty Agreement.

 

WHEREAS, Grantor is a wholly owned subsidiary of America West Resources, Inc. (the “ Parent ”) and America West Services, Inc., a Nevada corporation, is also a wholly owned subsidiary of the Parent;  

 

WHEREAS, Grantor has granted to the Grantees certain royalty interests with respect to the Subject Lands (as defined in the Royalty Agreement) pursuant to the Royalty Agreement;

 

WHEREAS, on the date hereof, the Parent, Denly, John Thomas Bridge and Opportunity Fund, L.P., a Delaware limited partnership, and John Thomas Bridge and Opportunity Fund, L.P. II, a Delaware limited partnership have entered into that certain Loan Agreement and associated documents relating to certain financing transactions (the “ Financing Transactions ”); and

 

WHEREAS, in connection with the Financing Transactions, the parties desire to enter into this Amendment for the purposes of (a) adjusting the production periods and royalty amounts applicable to the royalty interests granted to Grantees and (b) addressing certain related matters, all on the terms and conditions set forth in this Amendment.

 

NOW THEREFORE, in consideration of the mutual covenants contained in this Amendment and for other good and valuable consideration, the parties hereto agree as follows:  

 

ARTICLE I

WAIVER AND RELEASE

 

1.1

Waiver and Release of Grantees .  The Grantor hereby acknowledge and agree that Grantees have performed all of their obligations under the Royalty Agreement as of the effective date of this Amendment, and the Grantor hereby releases, acquits and discharges Grantees from any and all claims and causes of actions of every kind and character arising out of, or in connection with, the Royalty Agreement or any of the transactions described in the same to the extent the same have arisen or accrued prior to the execution of this Amendment.

 

ARTICLE II

AMENDMENTS

 

2.1

Royalty .   Section 1 of the Royalty Agreement is hereby amended and restated in its entirety to hereafter read as follows:

 

“1.

Royalty .  For the sum of $50,000.00, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby assigns, grants and conveys to Grantees an overriding royalty interest on all coal mined, removed and sold from the Subject Lands, in the production periods and in the amounts as followings, on the terms and subject to the conditions herein specified:

 

Production Period

Royalty per ton of coal (2,000 pounds)

 

Denly

Fund

Murch

Moore

Meeks

Total

January 1, 2012 through December 31, 2019 (1)

$1.00

$0.70

$0.12

$0.10

$0.08

$2.00

 

(1) The royalty interest herein granted shall terminate on December 31, 2019, subject to any extension provided in the following sentence.  However, if during any calendar month beginning January 1, 2012, less than 15,000 tons of coal from the Subject Lands are sold, then for each such month one month shall be added to the term of the royalty (i.e., the production period will be extended) herein granted.

 

Grantor warrants and represents that its conveyance of the above-described overriding royalty interest does not violate the terms of any lease agreement covering the Subject Lands; subject to the Code of Federal Regulations.”

 


2.2

Payment .   Section 2 of the Royalty Agreement is hereby amended and restated in its entirety to hereafter read as follows:

 

“2.

Payment .  Royalty payments shall be paid not later than fifteen (15) days after the end of each calendar month that includes any portion of the production period covered by this Agreement with respect to all coal from the Subject Lands that is sold during that portion of such calendar month that is included in the production period, beginning with coal sold on or after January 1, 2012 (whether or not such coal was mined before or after January 1, 2012).”

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1

In order to induce the Grantees to enter into this Amendment, the Grantor hereby represents, warrants and commits to the Grantees as follows:  

 

(a)

The Grantor has the corporate power and authority to enter into and perform this Amendment and all documents and actions required or contemplated hereunder and thereunder; all corporate actions necessary or appropriate for the execution and performance of this Amendment and all documents and actions re


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