EXHIBIT 10.3
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT
(“Deed
of Trust”) is made as of the 6th day of June, 2008, between
HUNTER BATES MINING CORPORATION ,
a
Minnesota corporation (“Grantor”), having an office at
900 IDS Center, 80 South 8
th Street,
Minneapolis MN 55402-8773, and the Gilpin County Public Trustee
(“Trustee”), whose address is 203 Eureka Street, P.O.
Box 368, Central City, CO, 80427.
W I T N E S S E T H:
WHEREAS ,
this Deed of Trust is made by Grantor to secure and enforce the
payment of the following note, obligations, indebtedness and
liabilities: (a) a certain Promissory Note of even date herewith in
the principal amount of Six Million Seven Hundred Fifty Thousand
and 00/100 Canadian Dollars (CND $6,750,000.00) made by Grantor and
payable to the order of George E. Otten, a Colorado resident whose
address is 11438 Weld County Rd, Fort Lupton, CO, 80621 (or his
nominee or assignee), with interest and payments, all as provided
therein, being due and payable in full on December 31, 2015 (or
earlier as provided for therein), and all modifications, renewals
or extensions thereof (the “Note”) (said payee and all
subsequent holders of the Note or any part thereof or any interest
therein or in any of the Secured Indebtedness, as hereinafter
defined, are hereinafter collectively called the
“Beneficiary”); and (b) all obligations of this Deed of
Trust or any other instruments (“Loan Documents”)
executed by Grantor in favor of Beneficiary now or hereafter
evidencing or securing the above-described indebtedness or any part
thereof (collectively the “Secured Indebtedness”). The
terms and provisions of the Note are incorporated herein by this
reference.
In
order to secure payment of the Secured Indebtedness, Grantor
does hereby grant, bargain, sell and convey unto the Trustee,
in trust forever, that certain property situate in the Gilpin
County, Colorado, more particularly described on Exhibit A
attached hereto and incorporated herein by this reference,
which is commonly known as the Hunter Gold Mine (sometimes
collectively hereinafter referred to as the
“Property” or the “Mortgaged
Property”); and
TOGETHER with
all and singular the tenements, hereditaments, easements, rights of
way and appurtenances thereunto belonging or in any wise
appertaining, whether now owned or hereafter acquired by Grantor,
and any and all rights of ingress and egress to and from adjoining
property (whether such rights now exist or subsequently arise),
together with the reversion or reversions, remainder or remainders,
and rents, issues and profits thereof, and also the entire estate,
right, title, interest, claim and demand whatsoever of Grantor of,
in and to the same and of, in and to every part and parcel thereof;
and
TOGETHER with
all buildings, structures, parking structures and improvements now
or hereafter located on the Mortgaged Property, including any and
all easements and rights of way used in connection therewith;
and
TOGETHER with
all right, title and interest of Grantor, if any, in all trees,
shrubs, flowers and other landscaping features and all oil, gas,
minerals, water, water rights, drains and drainage rights
appurtenant to, located on, under or above or used in connection
with the Mortgaged Property and the improvements situate thereon,
or any part thereof, whether now existing or hereafter created or
acquired; and
TOGETHER with
all leases, rents, issues, royalties, bonus, income and profits, of
each and every kind, now or hereafter relating to or arising from
the Mortgaged Property and the improvements situate thereon;
and
All
of the foregoing property, interests and rights are sometimes
hereinafter collectively referred to as the "Mortgaged
Property, Improvements and Rights, or the
“Property”;
AND ,
Grantor, for itself and its successors and assigns, represents,
warrants and covenants that, and has good right and authority to
grant, bargain, sell, convey, transfer, assign and mortgage the
Property; that the execution and delivery of this Deed of Trust,
the Note and all other instruments securing the payment of the Note
do not contravene any law, order, decree, rule or regulation to
which Grantor is subject; that the Note, this Deed of Trust and all
other instruments securing the payment of the Note constitute the
legal, valid and binding obligations of Grantor and that Grantor
will warrant and forever defend the title to the Property against
the claims of all persons whomsoever claiming or to claim the same
or any part thereof, subject to all matters of record.
AND ,
that for so long as the Secured Indebtedness or any part thereof
remains unpaid, Grantor covenants and agrees for itself and its
successors and assigns as follows:
1.
Covenants .
1.1
General Covenants .
1.1.1
Payment .
Grantor will make prompt payment, as the same become due, of all
installments of principal and interest on the Note and of all the
other Secured Indebtedness.
1.1.2
Maintenance of Mortgaged Property
.
Grantor will cause the Mortgaged Property to be used, occupied and
operated in accordance with all applicable laws and rules,
regulations and orders promulgated by all duly constituted
authorities. Grantor will allow the Beneficiary and/or its
authorized representatives to enter the Property at any reasonable
time upon advance written notice to inspect the Property and
Grantor's books and records pertaining thereto, and Grantor will
reasonably assist the Beneficiary and said representatives in
whatever way necessary to make such inspection.
1.1.3
Taxes .
Grantor shall pay or cause to be paid prior to delinquency, except
to the extent provision is actually made therefor as set forth
hereinafter, all taxes and assessments theretofore or hereafter
levied or assessed against the Property, or any part thereof, or
any other tax asserted as a substitute therefor and upon request,
will furnish the Beneficiary with receipts showing payment of such
taxes and assessments on or before the applicable due date
therefor; except that Grantor may in good faith, by appropriate
proceedings, contest and diligently pursue such contest, the
validity, applicability or amount of any asserted tax or
assessment; provided, however, that in any event each such contest
shall be concluded and the taxes, assessments, interests, costs and
penalties shall be paid prior to the date any writ or order is
issued under which the Property may be sold.
1.1.4
Condemnation .
Immediately upon obtaining knowledge of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Grantor will notify the
Beneficiary of the pendency of such proceedings and the time and
place of all settings, hearings, trials or other proceedings
relating thereto. The Beneficiary may participate in any such
proceedings, and Grantor shall from time to time deliver to the
Beneficiary all instruments required by it to permit such
participation. Grantor shall, at its expense, diligently prosecute
any such proceedings. All proceeds of condemnation awards or
proceeds of sale in lieu of condemnation with respect to the
Property and all judgments, decrees and awards for injury or damage
to the Property shall be paid to the Grantor and shall be applied
to the repair, restoration or replacement of the property
condemned. In the event the proceeds of the condemnation award
(after deduction for reimbursements to the Beneficiary and Trustee)
are deemed inadequate, in the sole discretion of a licensed
engineer or architect hired by Grantor, to repair or restore any
injury or damage arising from such condemnation, Grantor shall pay
said amount necessary for such repair, restoration or replacement.
Determination by Grantor's licensed engineer or architect, acting
reasonably, of the amount required to be contributed by the Grantor
shall be deemed conclusive. If (i) there exists an event of default
under the Note, this Deed of Trust, or the Loan Documents, the
condemnation proceeds shall be applied by the Beneficiary to cure
such default and the remainder shall be paid to Grantor for the
restoration or repair of the Property, or (ii) Grantor and the
Beneficiary mutually agree, in which case the condemnation proceeds
shall be applied in payment of the Secured Indebtedness, either in
whole or in part (without a premium or penalty), in the inverse
order of maturity, with the remainder, if any, to be paid to
Grantor. The Beneficiary shall send to Grantor a notice of the
balance of the Secured Indebtedness remaining, if any, after the
application of said funds. Grantor shall not be obligated to repair
or rebuild the damaged portion of the Property.
1.1.5
Books and Records .
Grantor will keep accurate books and records in accordance with
generally accepted accounting principles in which full, true and
correct entries shall be promptly made as to all operations on the
Property, and, as often as reasonably requested by the Beneficiary,
but nor more often than once in each calendar quarter, Grantor will
make reports of operations in such form as the Beneficiary
prescribes, setting out full data as to the exploration activities
and expenditures, mine development activities and expenditures,
mining activities and expenditures and all revenues from the
Property.
2.
Remedies and Events of Default .
2.1
Events of Default .
The term "default" or "event of default" as used in this Deed of
Trust shall mean the occurrence of any of the following
events:
(a)
The
failure of Grantor to make any installment of principal or
interest due under the Note within forty-five (45) days from
the date such payment is due;
(b)
The
failure of Grantor to make any payment except for a payment
described in paragraph (a) hereof, within forty-five (45) days
of the Trustee’s and/or the Beneficiary's notice of such
failure; or
(c)
The
failure of Grantor to timely and properly observe, keep or
perform any material nonmonetary covenant, agreement, warranty
or condition herein or of any Loan Documents required to be
observed, kept or performed, except that Grantor shall have
one hundred and twenty (120) days from notice of such failure
to cure such default and if such default cannot be cured
within one hundred and twenty (120) days, Grantor shall have a
reasonable period of time within which to cure such default,
provided Grantor promptly commences curative action and
prosec
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