MCU Agreement

Agreement.

MCU Investment.

Upon such documentation being finalized, Comstock commits $2 million of capital contributions to MCU, with $350,000 payable on or before July 1, 2019, of signing this Agreement, $150,000 payable no later than 30 days, $250,000 payable no later than 60 days, $250,000 payable no later than 90 days, and $150,000 payable no later than 120 days after the date this Agreement is signed by both parties and the remaining $850,000 to be paid to MCU in shares of restricted stock of Comstock to be used for the working capital needs of MCU starting in the seventh month after this Agreement is signed by both parties, based on an agreed upon capital plan (equipment and working capital uses) and a time-specific project schedule, including the timing of the capital needs as approved in writing by MCU and Comstock. As will be specified in the capital plan, such capital contributions shall solely be used for the purpose of building Units for use in the Pilot and such approved working capital expenditures.

If the value of the liquidated shares plus excess liquidity available from the original $850,000 restricted stock investment is not sufficient to fund the remaining monthly working capital requirements, for any given month during the liquidation period, Comstock will fund MCU up to $100,000 per month, starting in the seventh month after this Agreement is signed by both parties, as required based upon the agreed upon the capital plan. This additional funding will apply directly, dollar for dollar, towards Comstock’s investments contemplated by Section 8 below.

Promptly after this Agreement has been executed and delivered by the parties, Comstock shall prepare documentation to form Comstock Mercury Remediation LLC (“CMRL” or the “Joint Venture”). The Joint Venture will be owned 50% by Comstock and 50% by MCU.

Site Access.

Comstock will grant MCU and its Affiliates access to Comstock’s site as described in Exhibit B (the “Site”) beginning in April 2019, and continuing for thirty (30) days after the expiration of the Pilot Period, as defined in Paragraph 3(b), below (or such other period as the parties may mutually agree) for the placement of one or more Units, and ancillary equipment. To the extent acceptable to Comstock based upon Site conditions, MCU shall have the right to install one or more Units, including ancillary equipment, on the Site during the Pilot Period.

Each party will provide, at its sole expense, all of the materials, equipment, facilities, and other items listed in Exhibit B that are to be provided by such party in support of the operation of the Units.

MCU will be responsible for the operation of the Units at the Site, in a safe and environmentally compliant manner. Comstock personnel will observe the setup, operation, and maintenance of the Units, and obtain training on their use, but may not

Pilot.

Comstock’s investment pursuant to Section 2(a) above shall entitle Comstock to 15% of the fully-diluted equity ownership of MCU for the purchase price of $2,000,000 and shall also entitle Comstock to 50% of the equity of the Joint Venture. The $2,000,000 investment will be deployed in accordance with the Budget attached as Appendix 1. $1,150,000 of such investment will be delivered in cash on the dates indicated above in Section 2(a). $850,000 will be delivered to MCU in shares of restricted stock of Comstock. The number of shares delivered will be calculated by dividing $850,000 by the closing share price on the primary trading market two business days prior to the delivery of the shares. Six months after the delivery of the shares, if the shares are valued at less than the $850,000, Comstock shall deliver additional shares equal in value to any decline in the value from the initial delivery to such six-month date. Commencing six months after delivery of the shares, MCU shall commence selling such shares, provided that MCU shall not sell more than 5% of the daily trading volume on any single trading day. If, upon selling such shares, the proceeds to MCU exceed $850,000, such surplus will apply directly, dollar for dollar, towards Comstock’s investments contemplated by Section 8 below. As a condition to any investment by Comstock in MCU, MCU shall be required to represent and warrant (and indemnify Comstock to the extent that such representations and warranties are false) as to the capital structure and the status of all outstanding Equity Interests (as defined below) of MCU. As used herein, “Equity Interests” means, collectively, all shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in an entity (however designated), and any warrants, options or other rights entitling the holder thereof to purchase, exchange or acquire any of the foregoing (including through convertible securities). Comstock shall be entitled to designate one of four seats on the board of directors (or similar management/governing body) of MCU upon signing the Joint Venture Agreement. The number of directors on the board shall not be increased without the consent of Comstock.

As soon as practicable, MCU will deliver one or more Units to the Site. After delivery to the Site, MCU will prepare the Units for operation. MCU estimates that the Units will be ready for operation no later than two (2) weeks after the Units have been delivered to the Site.

MCU will inform Comstock in writing when the Units are ready to commence the Pilot. The “Pilot Period” shall commence upon the date so nominated by MCU, beginning in July 2019, and shall continue until May 31, 2021, or such other period mutually agreed by the parties.

During the Pilot Period, Comstock will use all commercially reasonable efforts to make available, to MCU and the Joint Venture, sufficient quantities of water at the Site, to the maximum extent practicable, and more particularly described in Part 1 of Exhibit E (the “Fresh Water”).

MCU will process the material brought in from offsite locations during the Pilot Period using the Units and will return the materials and any remaining Extraneous Material as defined in Section 1.1(b) of Exhibit C to Comstock’s heap leach at the delivery points mutually agreed by Comstock and MCU. MCU will ensure all Process Water and unused Fresh Water is discharged in compliance with Comstock’s water pollution control permit and dispose of all Extraneous Material in compliance with applicable federal, state and local Law, as explained in Exhibit C.

Evaluation.

MCU plans to work during the Pilot Period toward the goal of building capacity and the ability to process approximately five to twenty-five tons of ore and sediment per hour, depending on the final approved pilot design, on the Site.

At the expiration of the Pilot Period, MCU will evaluate the results of the Pilot and will provide the Project Report described in Section 1.1(f) of Exhibit C to Comstock.

If, based on the Pilot, MCU and Comstock mutually agree that producing and operating the Units is not sufficiently economically feasible to justify dedicating additional resources or investments, then Comstock and MCU agree that, in consideration of Comstock’s investment into MCU and the Joint Venture, any of the following equitable remedies shall be available to the parties (in order of preference): (i) Comstock shall have the full unencumbered right to use the Technology, the Units and related equipment to operate on Comstock’s own property; (ii) the parties may, subject to mutual agreement, contribute the 25-ton-per-hour system into the Joint Venture and continue the Joint Venture at agreed upon mining site(s), with MCU continuing to operate at such sites for the benefit of both members of the Joint Venture; (iii) MCU may reimburse all of Comstock’s unrecovered investment and cancel the Joint Venture; or (iv) the parties may, subject to mutual agreement, sell the Technology, the Units and related equipment with the proceeds of such sale first being used to reimburse Comstock’s unrecovered investment before further distributions are made.

ORO Industries.

The Agreement and all services performed hereunder shall be subject to the terms and conditions attached hereto as Exhibit C.

Second Phase.

MCU individually, and through the Joint Venture, hereby agrees to use best efforts to establish compliant, qualifying investments of both MCU and such Joint Venture in an existing, certified “opportunity zone” under the Tax Cuts and Jobs Act on December 22, 2017, preferably within the Site or other properties in Storey County, Nevada or Silver Springs, Nevada, where Comstock, its affiliates or a related designee, owns suitable property.

Future Investments.

Beyond the approved and scheduled expenses in the spending plan, neither Comstock nor MCU will be requested to make payments to the other or to third parties outside the Joint Venture.

Any mercury produced by MCU during the Pilot period will be handled, stored, and disposed of in accordance with all relevant environmental and safety regulations. MCU will remove all such material from the Site at the end of the Pilot Period and will pay all costs of transportation and disposal.

MCU agrees to provide copies of records clearly showing the property of origin for each batch of concentrates. MCU agrees to produce and maintain accurate and complete records of all minerals and profits recovered and shall be responsible for calculating and timely paying any Net Smelter Returns or other royalties, if any, associated with the properties of origin. MCU shall keep and make available for the examination and audit by Comstock or Comstock’s authorized employees, agents or representatives during normal business hours, and upon reasonable prior notice, at Comstock’s expense, all data, materials and information, including but not limited to records of all receipts, costs and disbursements made by MCU with respect to the minerals recovered and sold, all books, accounts, memoranda, files and all or any other documents indicating, documenting, verifying or substantiating the cost and appropriateness of any and all costs, expenditures and receipts relating to the refining of such minerals. MCU shall allow Comstock (and any of Comstock’s employees, representatives, accountants and auditors) reasonable access to personnel, representatives and employees of MCU and all books and records and other business records and files of MCU that are reasonably required by Comstock for audit and tax matters.

The Joint Venture will retain earnings equal to thirteen months’ of projected cash flow needs as a minimum liquidity reserve. Thereafter, profits of the Joint Venture shall be split between MCU and Comstock, consistent with their membership interest in the Joint Venture. For purposes of clarity, profit is defined as residual cash profit after payment of all expenses, payments and/or accruals for anticipated tax obligations, if any, and the establishment of the minimum liquidity reserve.

During the Pilot Period, MCU hereby grants Comstock the right of first refusal to purchase 75% of the gold and silver produced from the CRMSS boundaries, at a 3.5% discount to the then spot prices of such metals (primarily for the purposes of recovering additional logistics, refining costs and other associated costs for processing such metals), in quantities that Comstock is willing and able to purchase. MCU shall be entitled to retain or sell the remaining 25% of the gold and silver produced from the CRMSS boundaries with the intent of marketing and selling those metals for higher value-added product sales. MCU agrees to provide written notice to Comstock prior to any sale. Comstock’s response to such notice must be in writing and confirmed within three (3)

Right of First Refusal - Technology. If at any time, MCU or Oro Industries has a bona fide offer to purchase the Technology or the exclusive rights for the use of the Technology from any third party, MCU or Oro Industries must first offer such opportunity to Comstock to purchase the Technology or the exclusive rights for the use of the Technology, on the same terms as offered by the third party. Should Comstock be unwilling or unable to commit to purchase the Technology or the exclusive rights for the use of the Technology from MCU or Oro Industries within 10 business days from receipt of written notice of the offer (the "Technology Purchase Offer Notice") from MCU or Oro Industries, then MCU or Oro Industries may sell the Technology or the exclusive rights for the use of the Technology to that respective third party upon the same terms and conditions offered by MCU or Oro Industries to Comstock, which transaction must be completed within 90 days after the date of the Technology Purchase Offer Notice. If MCU or Oro Industries does not complete such transaction within such time period, then MCU and Oro Industries must again offer to sell the Technology or the exclusive rights for the use of the Technology to Comstock on the same terms, and the process detailed above shall be repeated. In any such third-party purchase, the continuing, non-exclusive rights of Comstock to purchase and use the technology must be explicitly guaranteed.