EXHIBIT 10.1

APN(s):  N/A

property also includes
unpatented mining claims

Recording Requested By:
Name: Joel O. Benson, Esq.
Address: 1550 17th Street, Suite 500, Denver, Colorado 80202
 
 
When Recorded Mail to:
Name: Joel O. Benson, Esq., Davis Graham & Stubbs LLP
Address: 1550 17th Street, Suite 500, Denver, Colorado 80202
 
 
 
Affirmation Statement:
The undersigned hereby affirms that this document does not contain the personal
information of any person.  (Per NRS 239B.030)
 
 

DEED OF TRUST, SECURITY AGREEMENT,
 
ASSIGNMENT OF PRODUCTION, RENTS AND LEASEHOLD INTERESTS, FINANCING STATEMENT AND
FIXTURE FILING
 
FROM
 
BOREALIS MINING COMPANY, as Trustor
 
TO
 
STEWART TITLE OF NEVADA HOLDINGS, INC., as Trustee
 
AND
 
WATERTON GLOBAL VALUE, L.P., BY ITS INVESTMENT MANAGER, ALTITUDE MANAGEMENT
LIMITED, as Beneficiary
 

 
DATED AS OF MARCH 20, 2012
 

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
 
THIS INSTRUMENT SECURES FUTURE ADVANCES.
 
THIS INSTRUMENT COVERS FIXTURES AND GOODS THAT WILL BECOME FIXTURES ON THE
PROPERTY DESCRIBED IN EXHIBIT A.
 
THIS INSTRUMENT COVERS AS-EXTRACTED COLLATERAL.
 

 
 
 

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DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION, RENTS AND LEASEHOLD INTERESTS,
FINANCING STATEMENT AND FIXTURE FILING

 
This Deed of Trust, Security Agreement, Assignment of Production, Rents and
Leasehold Interests, Financing Statement and Fixture Filing (the “Deed of
Trust”) is entered into by and among BOREALIS MINING COMPANY, a corporation
formed and existing under the laws of the State of Nevada, and whose address is
611 N Nevada Street, Carson City, Nevada 89703 (herein called “Trustor”),
Stewart Title of Nevada Holdings, Inc., whose address is 5335 Kietzke Lane, Ste
110, Reno, NV 89519 (herein called “Trustee”), and WATERTON GLOBAL VALUE, L.P.,
by its Investment Manager, Altitude Management Limited, whose address is Folio
House, P.O. Box 800, Road Town, Tortola, VG 1110  (herein called “Beneficiary”).
 
Recitals
 
A.           Pursuant to that certain Bridge Loan Agreement dated March 20, 2012
among Gryphon Gold Corporation, a Nevada corporation, as the borrower (the
“Borrower”), the Trustor, as a guarantor, and the Beneficiary, as the lender (as
amended, modified, supplemented or restated from time to time, the “Loan
Agreement”), and subject to the satisfaction of the conditions precedent stated
therein, the Beneficiary has agreed to advance a Loan to the Borrower in the
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), all
on the terms and conditions stated in the Loan Agreement.  This Deed of Trust
secures the Trustor’s guarantee of the repayment and performance of the Loan
Agreement, as further described herein, including future advances, and advances
under the Loan Agreement are obligatory.  Capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
 
B.           It is a condition precedent to the Beneficiary entering into the
Loan Agreement and making and maintaining the Loan thereunder, that the Trustor
shall have executed and delivered this Deed of Trust to secure the Trustor’s
performance of the Guarantee (defined below), which guarantees the payment and
performance of the Loan Agreement and such other payment and performance
obligations and liabilities of the Trustor and the Borrower, all as more fully
described herein.
 
C.           The Trustor owns, leases or holds, or has an option to purchase,
those certain properties consisting of unpatented mining claims, unpatented
millsite claims, mineral rights, leasehold and other rights and interests in
Mineral County, Nevada as further described herein, including on Exhibit A
attached hereto and incorporated herein by reference, which are commonly
referred to herein as the “Properties”.
 
D.           The Trustor is a wholly-owned subsidiary of the Borrower, and the
Trustor will directly and indirectly benefit from the Loan Agreement and the
loans made to the Borrower pursuant thereto.  The Trustor has irrevocably and
unconditionally guaranteed the payment and performance obligations of the
Borrower arising under the Loan Agreement and each other Loan
 
 
 
 

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Document (as defined in the Loan Agreement) pursuant to a Guarantee of even date
herewith (the “Guarantee”).
 
E.           The Trustor expects to derive substantial direct and indirect
benefit from the amounts made available under the Loan Agreement, including for
preservation and development of the Properties, and from such financial and
other support as the Borrower may in the future provide to the Trustor.  The
Trustor and the Borrower are engaged in related businesses and are integrated to
such an extent that the financial strength and flexibility of each of them has a
direct, tangible and immediate impact on the success of the other.  The Trustor
is interested in and will be financially benefited by the business success of
the Borrower and has entered into this Agreement and the other Loan Documents
(defined below) for legitimate business purposes.
 
F.           The Trustor and the Beneficiary have entered into that certain Gold
and Silver Supply Agreement dated March 20, 2012 (the “Gold and Silver Supply
Agreement”), whereby the Trustor has agreed to sell gold and silver to the
Beneficiary at the price, and subject to the terms and conditions, stated
therein.
 
G.           THIS DEED OF TRUST IS GOVERNED BY THE PROVISIONS OF NRS 106.300 TO
106.400, INCLUSIVE, AND SECURES FUTURE ADVANCES TO A MAXIMUM PRINCIPAL AMOUNT OF
TWENTY MILLION DOLLARS ($20,000,000).
 
THIS DEED OF TRUST COVERS GOOD WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL
ESTATE DESCRIBED IN THIS DEED OF TRUST AND ALSO COVERS AS-EXTRACTED COLLATERAL
AND MINERALS OR THE LIKE TO BE FINANCED AT THE MINEHEAD OF THE MINE OR MINES
LOCATED ON THE REAL ESTATE DESCRIBED IN THIS DEED OF TRUST.  THIS DEED OF TRUST
IS TO BE FILED FOR RECORD IN THE REAL ESTATE RECORDS AS, AMONG OTHER THINGS, A
FINANCING STATEMENT AND A FIXTURE FILING.
 
H.           This Deed of Trust is intended to act and operate as either a deed
of trust or as a mortgage (but not both), at the sole option and direction of
the Beneficiary.  Upon foreclosure, pursuant to the terms and conditions stated
herein, the Beneficiary may elect to treat this instrument either as a deed of
trust and pursue a non-judicial foreclosure pursuant to the power of sale
granted herein, or as a mortgage and pursue a judicial foreclosure.
 
Agreement
 
NOW, THEREFORE, in consideration of the premises, to induce the Beneficiary to
enter into the Loan Agreement and the other Loan Documents, and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
 
ARTICLE 1 – CREATION OF SECURITY
 
Section 1.1   Grant.  In consideration of the moneys and credit advanced under
the Loan Agreement for  the benefit of the Trustor, and in consideration of the
mutual covenants contained herein, and for the purpose of securing payment and
performance of the Obligations (as defined below in Section 1.4), Trustor hereby
grants, bargains, sells, warrants, assigns, pledges, transfers
 
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and conveys to the Trustee, IN TRUST, with power of sale and right of entry and
possession subject to the terms hereof, for the benefit of the Beneficiary, all
of Trustor’s right, title and interest in and to the following real and personal
property, rights, title and interests (collectively, the “Collateral”), whether
presently owned or held or hereafter acquired:
 
(a)           Lands and Realty.  All lands and real property, including all
leasehold, option rights, mineral interests, unpatented mining claims (lode and
placer), unpatented millsites, tunnel sites and rights, amended claims,
relocated claims, royalties and other real property interests (whether surface,
underground, mineral, or other), as more particularly described on Exhibit A
attached hereto and incorporated herein by reference (collectively, the
“Lands”);
 
(b)           Gold, Silver and Minerals.  All gold, silver and other ores,
minerals, metals, mineral elements and compounds, dore, concentrate, veins,
lodes and mineral deposits that are on, in, under, extending from or into,
produced or to be produced from, stored, stacked, handled, processed, refined,
beneficiated, transported or marketed on or from all or any part of the Lands,
including “As-Extracted Collateral” as defined in N.R.S. 104.9102, Section 9102
of the Nevada Uniform Commercial Code (the “UCC”), all whether in place,
extracted, produced, processed, stored or otherwise severed (collectively, the
“Minerals”);
 
(c)           Leases.  All leases and subleases (howsoever named or
characterized), licenses of use, exploration agreements, joint venture
agreements and other agreements and rights in, to or relating to the Lands or
the use of any part thereof (the “Leases”), including any extensions or renewals
 
(d)           Fixtures and Improvements.  All buildings, structures, mills,
crushers, facilities, offices, shops, tanks, pipelines, fixtures and other
improvements, howsoever designated, now or hereafter located or constructed on
the Lands (collectively, the “Improvements”);
 
(e)           Water Rights.  All water, water rights (whether vested,
certificated, permitted or otherwise, whether or not adjudicated, and whether or
not with a place of use or point of diversion on the Lands), water right
applications, reservoirs and reservoir rights, ditches and ditch rights,
irrigation systems and irrigation rights, wells, well permits and other rights
of use appertaining or belonging to or used in connection with the Lands and all
wells, pumps, pumping stations, machinery and equipment associated therewith,
and all shares of stock or similar interest (if any) evidencing reservoir,
ditch, irrigation or other water rights or rights of use (collectively, the
“Water Rights”);
 
(f)           Access Rights.  All rights of way, easements, licenses, profits,
privileges, tenements, hereditaments, appurtenances, roads, trails,
transportation improvements, and other access rights or rights of use
appertaining or belonging to or used in connection with the Lands, the Water
Rights and/or the Improvements (collectively, the “Access Rights”);
 
(g)           Property Data.  All records, data, reports and information
relating to or associated with all or any portion of the Lands, the Minerals or
the Water Rights, including maps, surveys, drilling data, drill logs, core
samples and core data, technical, engineering and
 
 
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permitting information and reports, and all geological, metallurgical,
geophysical, geochemical and analytical data and reports (collectively, the
“Data”);
 
(h)           Permits and Approvals.  All approvals, authorizations, licenses,
permits, consents, variances, land use entitlements, applications, plans, bonds,
filings or registrations by, with or from any governmental authority (federal,
state or local) or other person associated with or necessary for the use or
development of all or any portion of the Lands, Minerals, Improvements, Water
Rights or Access Rights and all bonds, letters of credit and other financial
accommodations that secure the performance of the foregoing (collectively, the
“Permits”);
 
(i)           Accounts; Contract Rights; General Intangibles.  All accounts,
accounts receivable, contracts and contract rights, option and purchase rights,
agreements, documents, instruments, income, receipts, revenues, earnings, rents,
profits, deposits, security deposits, royalties and revenue arising from the use
or enjoyment of all or any portion of the Lands, the Improvements or other
Collateral, from the production, crushing, milling, treatment, storage,
marketing, hedging, sale or transfer of all or any portion of the Minerals and
from the use, sale, assignment, conveyance or transfer of all or any portion of
any other Collateral (collectively, the “Accounts”);
 
(j)           Machinery; Equipment; Personal Property.  All goods, machinery,
equipment, drilling rigs and equipment, facilities, parts, supplies, power
lines, tools, vehicles, rolling stock, furnishings, apparatus, inventory,
fixtures and other personal property of every kind and nature, howsoever defined
and whether or not attached or affixed in any manner to any building, structure
or Improvement on the Lands (collectively, the “Personal Property”);
 
(k)           All Associated Property.  All other property (whether real,
personal or mixed), right, title or interest of any kind, nature or character,
howsoever defined or identified, related to or associated with the Properties,
the Lands, the Minerals, the Improvements, the Water Rights, the Access Rights,
the Data, the Permits, the Accounts, the Personal Property or other property
described herein; and
 
(l)           Proceeds and Products.  All proceeds and products of the Lands,
Minerals, Improvements, Water Rights, Access Rights, Data, Permits, Personal
Property, Accounts and other property rights and interests described herein.
 
TO HAVE AND TO HOLD all of the Collateral, together with all and singular the
rights, privileges, benefits, contracts, hereditaments and appurtenances now or
hereafter at any time before the foreclosure or release hereof, in any way
appertaining or belonging thereto, unto the Trustee and to its substitutes or
successors, forever, IN TRUST, upon the terms and conditions herein set forth;
and Trustor hereby binds and obligates itself and its successors and assigns, to
warrant and to defend, all and singular, title to the Collateral unto the
Trustee, its substitutes or successors, forever, against the claims of any and
all persons whomsoever claiming any part thereof.
 
Section 1.2   Creation of Security Interest.  In addition to the grant contained
in Section 1.1, and for the same consideration and purpose, the Trustor hereby
grants to the Beneficiary, a first and prior continuing security interest in all
Collateral constituting personal
 
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property, now owned or hereafter acquired by the Trustor, and in all Proceeds
thereof (as defined below).  The Trustor, without limiting the foregoing
provisions of this Section 1.2, stipulates that the grant made by this
Section 1.2 includes a grant of a security interest in all Minerals extracted or
produced from or otherwise attributable to or severed from the Lands and in the
Proceeds resulting from sale of such Minerals, such security interest to attach
to such Minerals as-extracted, at the minehead of any mine located thereon, and
to the Accounts resulting from such sales.  “Proceeds” shall have the meaning
given to such term in Article 9 of the UCC, and includes whatever is received or
receivable upon the sale, exchange, collection or other disposition of the
Collateral and insurance payable or damages or other payments by reason of loss
or damage to the Collateral, and all additions thereto, substitutions and
replacements thereof or accessions thereto.
 
Section 1.3   Pledge and Assignment.  The Trustor hereby grants and makes a
common law pledge and assignment to the Beneficiary of all Refinery Accounts
(defined below) and all credit balances therein from time to time.  “Refinery
Accounts” means any account or allocation, and the credit balances in dollars or
Minerals therein, of or for the benefit of the Trustor at or with any refinery
or processing facility to which Minerals severed from or attributable to the
Lands are delivered or held, expressly including all accounts of the Trustor
presently in effect, or hereafter constituted, at Johnson Matthey in Salt Lake
City, Utah.
 
Section 1.4   Obligations Secured.  This instrument is executed and delivered by
the Trustor to secure and enforce the irrevocable, full, punctual and complete
payment and performance when due (whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise) of:
 
(a)           All amounts due or to become due under the Loan Agreement,
including the payment of all indebtedness, liabilities and amounts due or to
become due under the Loan Agreement, in the original principal amount of One
Million Five Hundred Dollars ($1,500,000) and under any other Loan Document,
together with any amendment, modification, renewal, restatement, replacement,
extension or increase thereof, and all advances shall be governed by NRS
Sections 106.380 through 106.400. Notwithstanding the amount outstanding at any
particular time, this Deed of Trust secures all amounts due under the Loan
Agreement plus all costs, fees, expenses and charges provided therein, which is
made a part hereof by reference.  All advances under the Loan Agreement are
obligatory and are secured by this Deed of Trust.  All such obligatory advances,
including future advances, and interest, fees, costs and charges thereon will
have the same priority as the funds initially advanced under the Loan Agreement;
 
(b)           Any and all other or additional indebtedness, liabilities or sums
for which Trustor is now or may become liable to any Beneficiary or Trustee in
any manner, whether under this instrument, the Guarantee, the Loan Agreement,
any Loan Document or any other or future instrument or document, either
primarily or secondarily, absolutely or contingently, directly or indirectly,
jointly, severally, or jointly and severally, and whether matured or unmatured,
and whether or not created after payment in full of the Obligations if this
instrument shall not have been released of record by Beneficiary;
 
(c)           All sums advanced and costs and expenses incurred by the
Beneficiary or the Trustee (directly or indirectly), including all legal,
accounting, engineering, management,
 
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consulting or like fees and expenses made or incurred in connection with the
Loan Documents or the Obligations or any part thereof, any amendment,
modification, renewal, restatement, replacement or extension thereof,  the
acquisition or perfection of any security therefor or otherwise in connection
with the administration, preservation, perfection, enforcement and realization
of the rights of the Trustee or the Beneficiary hereunder or under any of the
other obligations secured hereby, including reasonable attorneys fees, courts
costs and other litigation and foreclosure expenses;
 
(d)           All renewals, extensions, amendments, modifications, restatements
and changes of, or substitutions or replacements for, all or any part of the
items described above; and
 
(e)           Each and every covenant and agreement of Trustor contained in any
Loan Document.
 
The indebtedness, liabilities and obligations secured hereby, as described in
the foregoing clauses (a) – (e) are sometimes referred to herein as the
“Obligations”.
 
Section 1.5   Proceeds.  The security interest of the Beneficiary hereunder in
the Proceeds shall not be construed to mean that the Beneficiary consents to the
sale or other disposition of any part of the Collateral other than Minerals
extracted from or attributable to the Lands and sold in the ordinary course of
business.
 
Section 1.6   Substitution of Beneficiary for Trustor.  This instrument shall be
effective, at the Beneficiary’s option and as allowed by applicable law, either
as a mortgage or as a deed of trust, and every grant herein to the Trustee of
interests, powers, rights and remedies shall likewise be a grant of the same
interests, powers, rights and remedies to the Beneficiary, as
mortgagee.  Subject to applicable law, the Beneficiary shall in all instances,
and in its sole discretion, elect whether this instrument shall be effective as
a mortgage or as a deed of trust.
 
Section 1.7   Future Advances.  Trustor, and each party at any time claiming an
interest in or lien or encumbrances against the Collateral, agrees that all
advances made by the Beneficiary from time to time under any Loan Document, and
all other portions of the Obligations herein referred to, shall be secured by
this Deed of Trust with priority as if all of the same had been advanced, had
arisen or became owing or performable on the date of this Deed of Trust.  No
reduction of the outstanding principal balance under the Loan Agreement shall
extinguish, release or subordinate any rights, titles, interests, liens,
security interests, powers or privileges intended, created or arising hereunder
or under any other Loan Document, and this Deed of Trust shall remain in full
force and effect as to any subsequent advances or subsequently arising portions
of the indebtedness without loss of priority until all Obligations are fully
paid, performed and satisfied, all agreements and obligations, if any, of
Beneficiary for future advances have been terminated, and this Deed of Trust has
been released of record by Beneficiary.  THIS DEED OF TRUST IS TO BE GOVERNED BY
THE PROVISIONS OF THE FUTURE ADVANCES STATUTES IN THE STATE OF NEVADA REVISED
STATUTES 106.300-106.400, INCLUSIVE.  THIS DEED OF TRUST SECURES FUTURE ADVANCES
AND THE MAXIMUM AMOUNT OF PRINCIPAL TO BE SECURED IS TWENTY MILLION DOLLARS
($20,000,000).
 
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Section 1.8   Continuing Status of Lien, Security Interest and Pledge.  So long
as the commitment to advance funds under the Loan Agreement remains in effect,
whether or not subject to the satisfaction of any conditions precedent, the lien
on the Collateral constituting real property and the security interest in and
pledge relating to the Collateral constituting personal property created hereby
shall remain in effect with the priority date established by the recording or
filing hereof, notwithstanding the fact that from time to time the outstanding
balance of the loans outstanding under the Loan Agreement may be zero.
 
ARTICLE 2 – ASSIGNMENT OF PRODUCTION PROCEEDS, RENTS AND LEASEHOLD INTERESTS
 
Section 2.1   Assignment of Production Proceeds.  As further security for the
payment and performance of the Obligations, the Trustor hereby absolutely and
unconditionally assigns and transfers to the Beneficiary, effective upon and
during the continuance of an Event of Default, all Minerals (and the Proceeds
therefrom) which are produced, extracted or severed from or attributable to the
Lands and, effective automatically upon and during the continuance of an Event
of Default, the Trustor hereby transfers, assigns, warrants and conveys to the
Beneficiary all Minerals (and the Proceeds therefrom) which are produced,
extracted or severed from or attributable to the Lands.  Upon the occurrence and
during the continuance of an Event of Default, all persons producing, purchasing
or receiving such Minerals or the Proceeds therefrom are authorized and directed
to treat the Beneficiary as the person entitled in the Trustor’s place and stead
to receive the same; and further, those persons will be fully protected in so
treating the Beneficiary and will be under no obligation to see to the
application by Beneficiary of any Proceeds received by it.  The Trustor agrees
that, if, after the occurrence and during the continuance of an Event of
Default, any Proceeds from such Minerals are paid to the Trustor, such proceeds
shall constitute trust funds in the hands of the Trustor, shall be segregated
from all other funds of the Trustor and separately held by the Trustor, and
shall be forthwith paid over by the Trustor to the Beneficiary.  Upon the
occurrence and during the continuance of an Event of Default, the Trustor shall,
if and when requested by the Beneficiary, execute and file with any production
purchaser a transfer order or other instrument declaring the Beneficiary to be
entitled to the Proceeds of severed Minerals and instructing such purchaser to
pay such Proceeds to the Beneficiary.  After the occurrence and during the
continuance of an Event of Default, should any purchaser fail to make payment
promptly to the Beneficiary of the proceeds derived from the sale thereof, the
Beneficiary shall have the right, subject only to any contractual rights of such
purchaser or any operator, to designate another purchaser to purchase and take
such Products, without liability of any kind on the Beneficiary in making such
selection so long as ordinary care is used in respect thereof.
 
Section 2.2   Assignment of Rents and Leasehold Interests.  As further security
for the payment and performance of the Obligations, the Trustor hereby
absolutely and unconditionally assigns and transfers to Trustee, for the benefit
of the Beneficiary, all the leases, income, rent, issues, deposits, profits and
proceeds of the Lands and the Improvements to which the Trustor may be entitled,
whether now due or to become due, and hereby gives to and confers upon the
Trustee, on the occurrence of an Event of Default, the right, power and
authority to collect such income, rents, issues, deposits, profits and proceeds
of the Lands and the Improvements to which the Trustor may be entitled, whether
now due, past due or to become due.  This assignment constitutes an irrevocable
direction and authorization of all tenants, account payors and other
 
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Persons, under any lease, contract, agreement or other Instrument to pay all
income, rent, issues, deposits, profits and proceeds into an account specified
by the Trustee upon demand and without further consent or other action by the
Trustor.  This assignment of rents and leasehold interests shall be governed by
NRS Sections 107A.010 through 107A.370.
 
Section 2.3   Power-of-Attorney; Collection.  The Trustor hereby irrevocably
appoints the Trustee its true and lawful attorney, at the option of the Trustee
upon the occurrence and during the continuance of an Event of Default, to
demand, receive and enforce payment, to give receipts, releases, and
satisfactions, and to sue, either in the name of the Trustor or in the name of
the Trustee, for all such income, rents, issues, deposits, profits and proceeds
and apply the same to the Obligations secured hereby.  It is understood and
agreed that neither the foregoing assignments in Sections 2.1 and 2.2 nor the
exercise by the Trustee of any of its rights or remedies under this Article 2 or
otherwise hereunder shall be deemed to make the Trustee a
“mortgagee-in-possession” or otherwise responsible or liable in any manner with
respect to the Collateral or the use, occupancy, enjoyment, or operation of all
or any portion thereof.  Notwithstanding anything to the contrary contained
herein, so long as no Event of Default shall have occurred and be continuing,
the Trustor shall have a license to collect all Proceeds from the Collateral as
trustee for the benefit of the Trustee and shall apply such Proceeds in the
following order of priority: (a) first, to the payment of the Obligations then
due and payable, and (b) second, to such other obligations or matters as Trustor
may reasonably determine.  Upon the occurrence and during the continuance of an
Event of Default, such license shall be deemed automatically revoked and any
income, rents, issues, deposits, profits and proceeds received thereafter by the
Trustor shall be delivered in kind to the Trustee.  The Trustor hereby
irrevocably constitutes and appoints the Trustee its true and lawful
attorney-in-fact to enforce in the Trustor’s name or in the Beneficiary’s name
or otherwise all rights of the Trustor and to do any and all things necessary
and proper to carry out and implement the purposes hereof, which Trustee may
exercise at any time after the occurrence and during the continuance of an Event
of Default.
 
Section 2.4   Trustor’s Payment Duties.  Nothing contained herein will limit the
Trustor’s duty to make payment on the Obligations when the Proceeds received
pursuant to this Article 2 are insufficient to pay the costs, interest,
principal and any other portion of the Obligations then owing, and the receipt
of Proceeds pursuant hereto will be in addition to all other security now or
hereafter existing to secure payment of the Obligations.
 
Section 2.5   Liability of Trustee and Beneficiary.  Neither the Trustee nor the
Beneficiary has any obligation to enforce collection of any of the Proceeds or
other amounts described in this Article 2, and the Trustee and the Beneficiary
are hereby released from all liability and responsibility in connection
therewith, except the responsibility to account to Trustor for Proceeds and
other amounts actually received.
 
Section 2.6   Indemnification.  The Trustor agrees to indemnify and save and
hold harmless the Trustee, the Beneficiary, their respective successors and
affiliates and their respective directors, partners, managers, principals,
officers, employees, agents, consultants and representatives (collectively, the
“Indemnified Parties”) from and against all claims, actions, liabilities,
losses, judgments, reasonable attorneys’ fees, costs and expenses and other
charges of any description whatsoever (all of which are hereafter referred to in
this Section 2.6 as “Claims”)
 
 
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made against or sustained or incurred by any such Indemnified Party as a
consequence of the assertion, either before or after the payment in full of the
Obligations, that the Beneficiary received Minerals, Proceeds or rents, profits,
income or proceeds of Collateral pursuant to this instrument, except to the
extent any Claims arise out of any Indemnified Party’s gross negligence or
willful misconduct.  The Indemnified Parties have the right to employ attorneys
and to defend against any Claims and unless furnished with satisfactory
indemnity, after notice to the Trustor, the Indemnified Parties will have the
right to pay or compromise and adjust all Claims in its sole reasonable
discretion. The Trustor shall indemnify and pay to the Indemnified Parties all
amounts paid by any Indemnified Party in compromise or adjustment of any of the
Claims or amounts adjudged against any Indemnified Party in respect of any of
the Claims.  The liabilities of Trustor as set forth in this Section 2.6 will
constitute Obligations and will survive the termination of this instrument.
 
ARTICLE 3 – TRUSTOR’S REPRESENTATIONS AND WARRANTIES
 
The Trustor hereby represents and warrants as follows (except as set forth in,
and subject to the disclosures in, the Loan Agreement and the Schedules
thereto):
 
Section 3.1   Due Organization, Good Standing and Authority.  The Trustor is
duly organized, validly existing and in good standing under the laws of Delaware
and is qualified to do business in Nevada and every other jurisdiction where
necessary in light of its business and properties.  The Trustor has full power,
authority and legal right (i) to own or lease its assets and properties
(including the Lands owned or leased by the Trustor) and to conduct its business
as now being conducted, and (ii) to enter into its obligations under this Deed
of Trust and each other agreement, document and instrument executed or to be
executed by it pursuant hereto or in connection herewith and to perform the
terms hereof and thereof applicable to it.
 
Section 3.2   Authorization and No Conflict.  The execution and delivery by the
Trustor of this Deed of Trust, and the performance of all transactions
contemplated hereby and the fulfillment of and compliance with the terms of this
Deed of Trust, have been duly authorized by all necessary action, corporate,
partnership or otherwise, and do not and will not (i) conflict with or result in
a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) give any third party any right to accelerate any obligation under,
(iv) result in a violation of, or (v) require any authorization, consent,
approval, exemption or other action by or notice to any court or administrative
or governmental body pursuant to (A) the operating agreement or other constating
documents of the Trustor, (B) any law, statute or rule, or (C) any agreement,
instrument, order, judgment or decree to which the Trustor is subject or by
which any of its properties are bound.
 
Section 3.3   No Approvals.  No authorization or approval or other action by,
and no notice to or filing with, any governmental authority, regulatory body or
other person or entity is required for the due execution, delivery and
performance by the Trustor under this Deed of Trust.
 
Section 3.4   Validity.  This Deed of Trust is, and when delivered hereunder
will be, the legal, valid and binding obligation of the Trustor enforceable
against the Trustor in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency or similar laws
 
 
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affecting the enforcement of creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
law).
 
Section 3.5   Name and Location of Office.  The Trustor has not used any
corporate name or done business under any name other than its own, and the
Trustor further covenants and agrees that it will not do so, nor will it change
its state of organization outside of the State of Delaware or relocate its chief
executive office outside of the State of Nevada without at least thirty days’
prior notice to the Trustee and the Beneficiary.
 
Section 3.6   Litigation.  Except as disclosed to the Beneficiary in Schedule
6.1(f) to the Loan Agreement, there is no action, suit or proceeding at law or
in equity, by or before any governmental or regulatory authority, court,
arbitral tribunal or other body now pending (or, to the knowledge of the
Trustor, threatened) against or affecting the Trustor, the Lands or any of the
other Collateral which may materially adversely impact the Trustor or its
business or the Lands or otherwise affect the legality, validity or
enforceability of this Deed of Trust.
 
Section 3.7   Title.
 
(i)           Exhibit A attached hereto and incorporated herein accurately and
completely sets forth and describes all real property owned, held or controlled
by the Trustor, including all fee interests, patented mining claims, unpatented
mining claims, unpatented millsite claims, leasehold interests, option rights
and other real property interests, and such Exhibit A is in a form that, when
appended to this instrument, is adequate and sufficient for acceptance by
Mineral County, Nevada for the recording of real property instruments.
 
(ii)           The Trustor is the exclusive owner or lessee of, and has good
title to an undivided one hundred percent (100%) of unpatented mining claims and
millsite claims set forth on Exhibit A to this Deed of Trust, which title is,
subject to Permitted Liens and the matters disclosed on Schedule 6.1(j) to the
Loan Agreement, superior and paramount to any adverse claim or right of title
which may be asserted, subject only to the paramount title of the United States
as to any unpatented mining claims and millsite claims and the rights, if any,
of third parties to the lands within such unpatented mining claims pursuant to
the Multiple Mineral Development Act of 1954 and the Surface Resources and
Multiple Use Act of 1955.  With respect to any lease or option to purchase
identified on Exhibit A, except as disclosed in writing to Beneficiary in
Schedule 6.1(j) to the Loan Agreement, each such lease creates a valid and
subsisting leasehold estate in the lands described in such lease and each option
creates a valid right to purchase the lands described in such option, each such
lease and option is in full force and effect, no event has occurred that, with
the giving of notice or the passage of time, would constitute a default under
such lease or option and all rent, royalties or other payments due under such
lease or option have been timely paid;
 
(iii)           With respect to the unpatented mining claims and unpatented
millsite claims listed on the attached Exhibit A, except as disclosed to
Beneficiary in Schedule 6.1(j) to the Loan Agreement: (A) subject to the
paramount title of the United States, the Trustor is in exclusive possession
thereof, free and clear of all Liens, claims,
 
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encumbrances or other burdens on production, other than Permitted Liens; (B) all
such claims were located, staked, filed and recorded on available public domain
land in compliance with all applicable state and federal laws and regulations;
(C) assessment work, intended in good faith to satisfy the requirements of state
and federal laws and regulations and generally regarded in the mining industry
as sufficient, for all assessment years up to and including the assessment year
ending September 1, 1992, was timely and properly performed on or for the
benefit of the claims, and affidavits evidencing such work were timely recorded;
(D) claim rental and maintenance fees required to be paid under federal law in
lieu of the performance of assessment work, in order to maintain the claims
commencing with the assessment year ending on September 1, 1993 and through the
assessment year ending on September 1, 2011, have been timely and properly paid,
and affidavits or other notices evidencing such payments and required under
federal or state laws or regulation have been timely and properly filed and
recorded; (E) all filings with the BLM with respect to such claims which are
required under FLPMA have been timely and properly made; and (F) there are no
actions or administrative or other proceedings pending or to the best of the
Trustor’s knowledge threatened against or affecting any of the claims.  Nothing
herein shall be deemed a representation that any unpatented mining claim
contains a discovery of valuable minerals or that any unpatented millsite claim
is located on non-mineral land;
 
(iv)           The Trustor has good and marketable title to the Improvements and
the Personal Property.  The Lands, the Improvements located thereon and the
Personal Property constitute all of the properties and assets, tangible or
intangible, real or personal, which are used in the conduct of the business of
the Trustor, as such business is presently being conducted and as pertains to
the Lands.  No other material properties or assets, whether or not owned by the
Trustor, are required for the operation of such business or the Lands as
presently being operated or developed.  All such properties and assets are owned
free and clear of all clouds to title and of all Liens, except Permitted Liens
or Liens permitted under the provisions of this Deed of Trust.  All Improvements
and Personal Property owned or held by the Trustor are in a state of repair
adequate for normal operations and are in all material respects in good working
order and condition for the conduct of the business of the Trustor as such
business is presently being conducted.
 
Section 3.8   Leases and Royalties.  Except as disclosed in writing to
Beneficiary in Schedule 6.1(j) to the Loan Agreement, the Leases are in full
force and effect, in good standing and free from breach or default, and except
as disclosed in writing to Beneficiary in Schedule 6.1(j) to the Loan Agreement,
the Trustor is not aware of, and has not received notice of, any act or
omission, which would constitute a material breach or default under the Lease or
which would otherwise allow the lessor to terminate any Lease.  Trustor has good
right and full power and authority to assign, convey, grant and to transfer the
interests in the Leases, without consent of the lessor (or Trustor has obtained
sufficient consent from the lessor).  Except as disclosed in writing to
Beneficiary in Schedule 6.1(j) to the Loan Agreement, there are no Royalties (as
defined below) burdening or otherwise associated with such Lands.  For purposes
hereof, “Royalties” shall mean any amount payable as a share of the product or
profit from the Lands or any Minerals produced therefrom and includes without
limitation, production payments, net
 
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profits interests, net smelter return royalties, landowner’s royalties, minimum
royalties, overriding royalties and royalty bonuses.
 
Section 3.9   Transportation, Utilities and Water Supply.  All utility services,
means of transportation, ingress and egress roadways, easements, servitudes,
rights of passage, facilities, water rights and other materials necessary for
the operation of and access to the Lands (including, without limitation, gas,
electrical, water supply and sewage services and facilities) are available on
commercially reasonable terms in compliance with all applicable legal
requirements, and the Trustor is not aware of any information that would lead it
to believe that any of the foregoing will not be available in the future.
 
Section 3.10   Payment of Taxes.  The Trustor has filed or caused to be filed
all federal, state and local tax returns which to the knowledge of the Trustor
are required to be filed and has paid or caused to be paid all taxes as shown on
such returns or any assessment received by the Trustor to the extent that such
taxes or assessments have become due, except such as may be diligently contested
in good faith and by appropriate proceedings or as to which a bona fide dispute
may exist and for which adequate reserves are being maintained.
 
Section 3.11   Compliance with Laws.  With respect to the Lands and operations
thereon, the Trustor has complied in all material respects with all applicable
local, state and federal laws, including Environmental Laws (as defined in the
Loan Agreement), and regulations relating to the operation of the Lands, and the
Trustor is not aware of any investigation (other than a routine inspection) of
the Trustor or the Lands by any local, state or federal agency with respect to
enforcement of such laws and regulations.  The existing and planned use of the
Properties complies or will comply with all applicable legal requirements,
including but not limited to applicable regulations and restrictive covenants
affecting the Lands, as well as all environmental, ecological, landmark and
other applicable laws and regulations; and all requirements for such use have
been satisfied to the extent necessary for the current operations involving the
Lands.  No release, emission or discharge into the environment of hazardous
substances, as defined under any Environmental Law, has occurred or is presently
occurring or will occur in operating the Properties in its intended form in
excess of federally or state permitted releases or reportable quantities, or
other concentrations, standards or limitations under the foregoing laws or under
any other federal, state or local laws, regulations or governmental approvals in
connection with the construction, operation, ore treatment, heap leaching, fuel
supply, power generation and transmission or waste disposal, or any other
operations or processes relating to the Properties, other than as allowed by or
in compliance with applicable federal, state and local laws.  The Lands and the
Trustor’s use and proposed use thereof are not and will not be in violation of
any environmental, occupational safety and health or other applicable law now in
effect, the effect of which violation, in any case or in the aggregate, would
materially adversely affect the Lands or the Trustor’s use thereof, or which, in
any case or in the aggregate, would impose a material liability on the Trustee
or the Beneficiary or jeopardize the interest of the Trustee or the Beneficiary
in the Collateral.  The Trustor has no knowledge of any past or existing
violations of any such laws, ordinances or regulations issued by any
governmental authority.
 
Section 3.12   Permits Affecting Properties.  The Trustor has obtained all
licenses, operating bonds, permits, authorizations and approvals from all
governments, governmental commissions, boards and other agencies required in
respect of its present use of and operations on the Lands.
 
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ARTICLE 4 – COVENANTS
 
Section 4.1   Affirmative Covenants.  The Trustor covenants and agrees that so
long as any of the Obligations secured hereby remain unpaid or outstanding
(except as specifically set forth in the Loan Agreement):
 
(a)           Due Payment.  The Trustor will promptly pay when due, or within
any applicable grace periods with respect thereto, any and all amounts for which
it is obligated under the terms of the Loan Agreement, this Deed of Trust and
each other Loan Document and will comply with all of the terms and provisions
thereof and hereof;
 
(b)           Perfection; Maintenance of Liens.  The Trustor shall promptly, at
the Trustor’s own expense and insofar as not contrary to applicable law, execute
such documents and provide such authorizations as Beneficiary may request so
that Beneficiary may file and refile in such offices, at such times and as often
as may be necessary, any instrument as may be necessary to create, perfect,
maintain and preserve the lien and security interest intended to be created
hereby and the rights and remedies hereunder; shall promptly furnish to the
Trustee evidence satisfactory to the Trustee of all such filings and refilings;
and otherwise shall do all things necessary or expedient to be done to
effectively create, perfect, maintain and preserve the liens and security
interests intended to be created hereby as a valid lien of first priority on
real property and fixtures and a perfected security interest in personal
property and fixtures, subject to Permitted Liens.  The Trustor hereby
authorizes the Trustee and the Beneficiary to file this Deed of Trust and one or
more financing or continuation statements, and amendments thereto, relative to
any or all of the Collateral;
 
(c)           Maintenance of Lands.  The Trustor will (i) cause each of the
Water Rights and Access Rights owned, held or hereafter acquired by or for the
Trustor and necessary or appropriate to the operation of a mine or mines upon
the Lands to be kept in full force and effect by the payment of whatever sums
may become payable and by the fulfillment of whatever other obligations, and the
performance of whatever other acts may be required to the end that forfeiture or
termination of each such interest shall be prevented unless the termination,
forfeiture or other relinquishment of the interest is authorized by any
operating plan or plan of operations then in effect thereunder, (ii) conduct all
drilling, mining, exploratory work and related operations and activities in
accordance with applicable federal, state and local laws and good and minerlike
practice, (iii) maintain the Trustor as the sole owner of, and retain their
exclusive possession of, all mining and millsite claims, free and clear of all
Liens, subject only to the paramount title of the United States and Permitted
Liens, (iv) timely pay all required federal claim maintenance fees, and timely
record and file in the appropriate county and federal offices adequate
affidavits and notices of timely payment of such fees, and amend, relocate, and
locate new mining claims with respect to those unpatented mining claims as
reasonably necessary to protect the Trustor’s and the Trustee’s interest in the
Collateral, (v) timely make all payments and perform all obligations to prevent
the forfeiture or termination of any portion of the Lands, (vi) permit the
Trustee and the Beneficiary, through their employees, representatives and
agents, to enter upon the Lands at any time, subject to appropriate safety
procedures, for the purpose of
 
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investigating and inspecting the condition and operation of the Collateral, and
do all other things necessary or proper to enable the Trustee and the
Beneficiary to exercise this right upon reasonable notice at such times as the
Trustee or the Beneficiary may reasonably request, and (vii) do all other things
necessary to preserve and maintain the right, title and interest of the Trustee
and the Beneficiary in the Collateral.  The Trustor shall not abandon all or any
portion of the Lands that is producing or capable of commercial production or
forfeit, surrender or release any lease, sublease, operating agreement or other
agreement or instrument comprising or affecting the Collateral;
 
(d)           Maintenance of Unpatented Claims.  To the extent not otherwise
addressed herein, the Trustor covenants and agrees to timely pay all claim
maintenance fees, to timely make all filings and recordings, including
affidavits of payment, and to otherwise timely take all other necessary actions
and pay such amounts relating to the preservation, maintenance, continuance and
validity of unpatented mining claims and unpatented millsite claims as may be
required by any federal, state or local governmental authority, including
payment of claim maintenance fees to the U.S. Bureau of Land Management on or
before July 15th of each year.  The Trustor further covenants and agrees to
provide the Beneficiary, on or before August 1 of each year, written notice and
evidence of the payment of such claim maintenance fees for such unpatented
claims.  In the event that the Beneficiary has not received the notice and
evidence described in the preceding sentence by August 1, the Trustee or the
Beneficiary may, on behalf of the Trustor, make and pay any claim maintenance
fees, in which event the Trustor shall promptly reimburse the Trustee and the
Beneficiary for any such fees, with interest at the rate set forth in the Loan
Agreement, in addition to any costs and expenses incurred in making such
payments, and all such amounts shall be Obligations hereunder;
 
(e)           Maintenance of Collateral.  The Trustor will keep all
Improvements, Personal Property, inventory and fixtures of every kind now or
hereafter included in the Collateral in good working order and condition
(ordinary wear and tear excepted), and all repairs, renewals, replacements,
additions, substitutions and improvements needful to such end shall be promptly
made. The Trustor will comply fully with all of the terms and conditions of all
leases, agreements and other instruments of title and all Access Rights and
privileges necessary for the proper operation of such leases and instruments,
and otherwise do all things necessary to keep Trustor’s rights and Beneficiary’s
interest in the Collateral unimpaired;
 
(f)           Compliance with Laws and Permits.  The Trustor will (i) comply
with all lawful rulings and regulations of each regulatory authority having
jurisdiction over the Trustor or the Lands; (ii) conduct any and all operations
and activities on the Lands in compliance with applicable federal, state and
local laws, rules and regulations and with all Permits; (iii) reclaim the Lands
in accordance with applicable federal, state and local laws, rules and
regulations and all Permits; and (iv) obtain and maintain in full force and
effect all Permits necessary or appropriate for the use or operation of the
Collateral or activities on the Lands, in each case as currently conducted;
 
(g)           Payment of Obligations.  The Trustor will pay when due all
liabilities and obligations of any nature, including all liabilities and
obligations for labor, material, equipment and contracted services, incurred in
or arising from the administration, operation or use of the Lands and the other
Collateral;
 
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(h)           Protection of Collateral.  The Trustor will protect every part of
the Collateral from removal, destruction and damage, and will protect same from
the doing or suffering to be done of any act, other than the use of the
Collateral as hereby contemplated, whereby the value of the Collateral may be
lessened;
 
(i)           Insurance.  The Trustor will carry (i) workmen’s compensation
insurance covering persons who are employed by or for the benefit of the
Properties in compliance with applicable laws, and (ii) other insurance as
required by the Loan Documents;
 
(j)           Further Assurances.  The Trustor shall execute, acknowledge and
deliver to the Trustee and the Beneficiary all and any such other and further
instruments, documents and certificates and do and perform such other acts as in
the opinion of the Trustee or the Beneficiary may be necessary or desirable to
implement, effect and maintain the intent of this Deed of Trust, upon the
reasonable request of the Trustee or the Beneficiary, and at the Trustor’s
expense;
 
(k)           Defend Title.  The Trustor warrants and shall forever defend the
Collateral against every person whomsoever lawfully claiming the same or any
part thereof, and the Trustor shall maintain and preserve the lien and security
interest herein created until this instrument has been terminated and released
as provided herein.  If the title or the right of the Trustor or the Trustee or
the Beneficiary to the Lands or any other Collateral or any part thereof shall
be challenged or attacked, either directly or indirectly, or if any legal
proceedings are commenced against the Trustor or all or any portion of the
Lands, the Trustor shall promptly give written notice thereof to the Trustee
and, at the Trustor’s own expense, shall proceed diligently to defend against
any such attack or proceedings, and the Trustee and the Beneficiary may take
such independent action in connection therewith as either of them may, in its
reasonable discretion, deem advisable to protect its interest in the Collateral,
and all costs, expenses and reasonable attorneys’ fees incurred by the Trustee
or the Beneficiary in connection therewith shall be a demand obligation owing by
the Trustor, and shall bear interest at the rate specified in the Loan Agreement
from the date such expenses are incurred until paid, and shall be part of the
Obligations;
 
(l)           Change in General Mining Law.  In the event of the repeal or
modification of the current General Mining Law of 1872 during the term of this
Deed of Trust, such that the interest of the Trustor in those lands which are
material to the exploration, development or operation of the Lands is affected,
modified or transformed, the Trustor will use its best efforts to retain its
interest in those lands and will consult with the Trustee and the Beneficiary to
determine how best to preserve the interest of the Trustor and the interest of
the Trustee and the Beneficiary in the affected Collateral, and the Trustor
shall take no action, which in the reasonable opinion of the Trustee or the
Beneficiary or their counsel could adversely affect or impair their interest in
the Collateral or under this Deed of Trust;
 
(m)           Information.  The Trustor shall promptly furnish to the Trustee
and the Beneficiary such information concerning the Trustor, the Trustor’s
business affairs and financial condition, the Collateral and the operations and
financial condition of the Trustor, as the Trustee or the Beneficiary may
reasonably request; and
 
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(n)           Access.  The Trustor shall keep proper books, records and accounts
in which complete and correct entries shall be made of the Trustor’s
transactions in accordance with generally accepted accounting principles, and
shall keep the records concerning the accounts and contract rights included in
the Collateral at the Trustor’s place of business, and the Trustee and the
Beneficiary shall have the right to inspect such records, and the Trustor shall
furnish copies upon reasonable request and upon reasonable notice in accordance
with the Loan Agreement.
 
Section 4.2   Negative Covenants.  The Trustor covenants and agrees that, so
long as any of the Obligations secured hereby remains unpaid or outstanding, the
Trustor shall not, either directly or indirectly:
 
(a)           No Disposition of Assets.  Except as permitted under the Loan
Agreement, sell, transfer, assign, convey or otherwise dispose of all or any
part of the Collateral;
 
(b)           No Debt.  Except as permitted under the Loan Agreement, incur,
create, issue, assume or permit any borrowing or indebtedness to exist or incur,
create or enter into any guaranty of any obligation of any other person or
entity;
 
(c)           No Liens.  Except as permitted under the Loan Agreement, incur,
create, grant, assume, allow or suffer to exist any Lien on all or any part of
the Lands or any other Collateral, except Permitted Liens; or
 
(d)           Changes in Business.  Except as permitted under the Loan
Agreement, liquidate or dissolve, or enter into any consolidation, merger,
amalgamation, or sale or enter into any partnership, joint venture or other
combination, where such transaction involves a contribution by the Trustor of
all or a significant portion of the Collateral, or sell, lease or dispose of its
business or the assets of the Trustor.
 
ARTICLE 5 – DEFAULT
 
The occurrence of any one or more of the following events in Section 5.1(a)
through Section 5.1(f) shall constitute an “Event of Default”:
 
Section 5.1   Events of Default.  The term “Event of Default” shall have the
meaning given thereto in the Loan Agreement and each other Loan Document, but
shall also include the occurrence or the existence of any of the following
conditions:
 
(a)           The failure by the Trustor to keep, punctually perform, or observe
any of the covenants, agreements, obligations or prohibitions contained herein,
in the Loan Agreement, in any Loan Document, in any other written instrument
evidencing any of the Obligations or in any other agreement with the Trustee or
the Beneficiary (whether now existing or entered into hereafter), and such
failure remains unremedied for a period of five Business Days; or
 
(b)           This Deed of Trust or any other collateral security granted by the
Trustor with respect to the Obligations shall fail to constitute a valid and
enforceable, perfected first priority security interest in or lien on any
Collateral for any reason, subject to any Permitted
 
 
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Liens, or Trustor shall so state in writing or Trustor or any other Person shall
take or agree to take any action threatening the validity, perfection or
priority of any such security interest; or
 
(c)           (i) The Trustor shall initiate or commence any case, proceeding or
other action (A) under any existing or future bankruptcy or insolvency law, or
otherwise seek to have it judged bankrupt or insolvent, or seek reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) any such case, proceeding
or other action shall seek appointment of a receiver, trustee, custodian,
administrator, conservator or other similar official for it or for all or any
substantial part of its assets, or the Trustor shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Trustor any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against the Trustor any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of their assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the
Trustor shall take any action in furtherance of, or indicating its consent to,
approval of, authorization of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Trustor generally shall not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
 
(d)           Any governmental authority shall condemn, seize or appropriate all
or any portion of the Collateral that is material to the financial condition,
business or operations of the Trustor or the Properties; or
 
(e)           The voluntary or involuntary dissolution, merger, consolidation,
winding up or reorganization of Trustor or the occurrence of any action
preparatory thereto.
 
(f)           The assertion (except by the owner of an encumbrance expressly
excepted from the Trustor’s warranty of title herein) of any claim of priority
over this instrument, by title, lien or otherwise, unless the Trustor within 30
days after such assertion either causes the assertion to be withdrawn or
provides the Beneficiary with such further or additional security as the
Beneficiary may require to protect the Beneficiary against all loss, damage, or
expense, including attorneys’ fees, which the Beneficiary may incur in the event
such assertion is upheld.
 
Section 5.2   Acceleration Upon Default.  Upon the occurrence of any Event of
Default, or at any time thereafter during the continuance of an Event of
Default, the Beneficiary may, at its option, by notice to the Trustor, declare
all Obligations to be due and payable forthwith without any further notice,
presentment or demand of any kind, all of which are hereby expressly waived.
 
Section 5.3   Possession and Operation of Property.  Upon the occurrence of any
Event of Default, or at any time thereafter during the continuance of an Event
of Default, and in addition to all other rights therein conferred on the Trustee
or the Beneficiary, the Trustee, the Beneficiary or any person, firm or
corporation designated by Beneficiary, will have the right and power, but will
not be obligated, to have an audit performed, at Trustor’s expense, of the books
 
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and records of Trustor, and to enter upon and take possession of all or any part
of the Collateral, to exclude Trustor therefrom, and to hold, use, administer
and manage the same to the extent that Trustor could do so.  The Trustee, the
Beneficiary or any person, firm or corporation designated by the Beneficiary,
may manage the Collateral, or any portion thereof, without any liability to the
Trustor in connection with such management except with respect to gross
negligence or willful misconduct; and the Trustee, the Beneficiary or any
person, firm or corporation designated by the Beneficiary will have the right to
collect, receive and receipt for all Products  produced and sold from the
Royalty Interests, and to exercise every power, right and privilege of the
Trustor with respect to the Collateral.  Providing there has been no foreclosure
sale, when and if the expenses of the management of the Collateral have been
paid and the Obligations paid in full, the remaining Collateral shall be
returned to the Trustor.
 
Section 5.4   Ancillary Rights.  Upon the occurrence of an Event of Default, or
at any time thereafter during the continuance of an Event of Default, and in
addition to all other rights of the Beneficiary hereunder, the Beneficiary may,
without notice, demand or declaration of default, all of which are hereby
expressly waived by the Trustor, proceed by a suit or suits in equity or at law
(i) for the seizure and sale of the Collateral or any part thereof, (ii) for the
specific performance of any covenant or agreement herein contained or in aid of
the execution of any power herein granted, (iii) for the foreclosure or sale of
the Collateral or any part thereof under the judgment or decree of any court of
competent jurisdiction, (iv) without regard to the solvency or insolvency of any
person, and without regard to the value of the Collateral, and without notice to
Trustor (notice being hereby expressly waived), for the ex parte appointment of
a receiver to serve without bond pending any foreclosure or sale hereunder, or
(v) for the enforcement of any other appropriate legal or equitable remedy.
 
Section 5.5   Availability of Rights and Remedies; Cumulative Rights and
Remedies.  Upon the occurrence of an Event of Default, or at any time thereafter
during the continuance of an Event of Default, all of the rights and remedies
provided to the Trustee or the Beneficiary in this Deed of Trust and each other
collateral security documents shall immediately become available to the Trustee
and the Beneficiary, and the Trustee and the Beneficiary shall have all other
rights and remedies available at law or in equity.  All rights and remedies of
the Trustee and the Beneficiary set out in this Deed of Trust, each other
collateral security document and as otherwise available are cumulative, and no
right or remedy contained herein or therein is intended to be exclusive; each
such right and remedy is in addition to every other right and remedy contained
in this Deed of Trust, each other collateral security document or in any
existing or future agreement or now or in the future existing at law, in equity,
by statute or otherwise.  Every right, power and remedy given by this Deed of
Trust to the Trustee or the Beneficiary or to which either of them may be
otherwise entitled, may be exercised concurrently or independently, from time to
time and as often as may be deemed expedient by the Trustee or the Beneficiary,
and either of them may pursue inconsistent remedies.
 
ARTICLE 6 – BENEFICIARY’S RIGHTS AS TO REALTY COLLATERAL UPON DEFAULT
 
Section 6.1   Deed of Trust or Mortgage.  The Beneficiary may elect to treat
this instrument as either a deed of trust or as a mortgage, but not both.  Upon
the occurrence of an Event of Default, or at any time thereafter, the
Beneficiary or the Trustee may declare all sums
 
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secured hereby immediately due and payable either by commencing an action to
foreclose this Deed of Trust as a mortgage, or by the delivery to the Trustee of
a written declaration of default and demand for sale and of written notice of
default and of election to cause the Collateral to be sold, which notice the
Trustee shall cause to be duly filed for record in case of foreclosure by
exercise of the power of sale herein.  The decision by the Beneficiary to pursue
its remedies and foreclose either by acting under the Deed of Trust as a deed of
trust by exercise of the power of sale (and as otherwise set forth herein) or by
acting under the Deed of Trust as a mortgage by exercise of a judicial
foreclosure (and as otherwise set forth herein) may be made by the Beneficiary
at the Beneficiary’s sole option and discretion.
 
Section 6.2   Judicial Foreclosure.  Upon the occurrence of an Event of Default,
or at any time thereafter, in lieu of the exercise of the non-judicial power of
sale hereafter given, the Beneficiary may, subject to any mandatory requirement
of applicable law, proceed by suit to foreclose its lien hereunder and to sell
or have sold the Collateral or any part thereof at one or more sales, as an
entirety or in parcels, at such place or places and otherwise, in such manner
and upon such notice as may be required by law, or, in the absence of any such
requirement, as the Beneficiary may deem appropriate, and the Beneficiary shall
thereafter make or cause to be made a conveyance to the purchaser or purchasers
thereof.  The Beneficiary may postpone the sale of the real property included in
the Collateral or any part thereof by public announcement at the time and place
of such sale, and from time to time thereafter may further postpone such sale by
public announcement made at the time of sale fixed by the preceding
postponement.  Sale of a part of the real property included in the Collateral
will not exhaust the power of sale, and sales may be made from time to time
until all such property is sold or the Obligations are paid in full.
 
Section 6.3   Non-Judicial Foreclosure; Power of Sale.  Upon the occurrence of
an Event of Default, or at any time thereafter, the Trustee is hereby authorized
and empowered, and it shall be its duty, upon request of the Beneficiary, and to
the extent permitted by applicable law, to exercise the power of sale contained
herein and sell any part of the Collateral at one or more sales, as an entirety
or in parcels, at such place or places and otherwise in such manner and upon
such notice as may be required by applicable law, or in the absence of any such
requirement, as Trustee and/or Beneficiary may deem appropriate, and to make
conveyance to the purchaser or purchasers thereof.  Any sale shall be made to
the highest bidder for cash at the door of the county courthouse of, or in such
other place as may be required or permitted by applicable law in, the county in
the state where the Collateral or any part thereof is situated; provided that
and if the  Collateral lies in more than one county, such part of the Collateral
may be sold at the courthouse door of any one of such counties, and the notice
so posted shall designate in which county such property shall be sold. Any such
sale shall be made at public outcry, on the day of any month, during the hours
of such day and after such written notices thereof have been publicly posted in
such places and for such time periods and after all persons entitled to notice
thereof have been sent such notice, all as required by applicable law in effect
at the time of such sale.  The affidavit of any person having knowledge of the
facts to the effect that such a service was completed shall be prima facie
evidence of the fact of service.  The Trustor agrees that no notice of any sale,
other than as required by applicable law, need be given by the Trustor, the
Beneficiary or any other person.  The Trustor hereby designates as its address
for the purposes of such notice the address set out on page one hereof; and
agrees that such address shall be changed only by depositing notice of such
change enclosed in a postpaid wrapper in a post office or official depository
under the care and custody of the United States Postal Service, certified mail,
 
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postage prepaid, return receipt requested, addressed to the Beneficiary or other
holder of the Obligations at the address for the Beneficiary set out herein (or
to such other address as the Beneficiary or other holder of the Obligations may
have designated by notice given as above provided to the Trustor and such other
debtors).  Any such notice or change of address of the Trustor or other debtors
or of the Beneficiary or of other holder of the Obligations shall be effective
upon receipt.  The Trustor authorizes and empowers the Trustee to sell the
Collateral in lots or parcels or in its entirety as the Trustee shall deem
expedient; and to execute and deliver to the purchaser or purchasers thereof
good and sufficient deeds of conveyance thereto by fee simple title, with
evidence of general warranty by the Trustee, and the title of such purchaser or
purchasers when so made by the Trustee, the Trustor binds itself to warrant and
forever defend, subject to Permitted Liens and the paramount ownership of the
United States as to any unpatented mining or millsite claims.  Where portions of
the Collateral lie in different counties, sales in such counties may be
conducted in any order that the Trustee may deem expedient; and one or more such
sales may be conducted in the same month, or in successive or different months
as the Trustee may deem expedient.
 
ARTICLE 7 – BENEFICIARY’S RIGHTS AS TO PERSONALTY AND FIXTURE COLLATERAL UPON
DEFAULT
 
Section 7.1   Personalty Collateral.  Upon the occurrence of an Event of
Default, or at any time thereafter during the continuance of an Event of
Default, the Beneficiary may, without notice to the Trustor, exercise its rights
to declare all of the Obligations to be immediately due and payable, in which
case the Beneficiary will have all rights and remedies granted by law, and
particularly by the UCC, including, but not limited to, the right to take
possession of any and all Collateral constituting personal property (the
“Personalty Collateral”), and for this purpose the Beneficiary may enter upon
any premises on which any or all of the Personalty Collateral is situated and
take possession of and operate the Personalty Collateral or remove it
therefrom.  The Beneficiary may require the Trustor to assemble the Personalty
Collateral and make it available to the Beneficiary or the Trustee at a place to
be designated by Beneficiary which is reasonably convenient to all
parties.  Unless the Personalty Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Beneficiary will give the Trustor reasonable notice of the time and place of any
public sale or of the time after which any private sale or other disposition of
the Personalty Collateral is to be made.  This requirement of sending reasonable
notice will be met if the notice is mailed, postage prepaid, to the Trustor at
the address designated above at least ten (10) days before the time of the sale
or disposition.
 
Section 7.2   Sale with Realty Collateral.  In the event of foreclosure, whether
judicial or non-judicial, at the Beneficiary’s option it may proceed under the
Uniform Commercial Code as to the Personalty Collateral or it may proceed as to
both Personalty Collateral and Collateral constituting real property in
accordance with its rights and remedies in respect of the Collateral
constituting real property.
 
Section 7.3   Private Sale.  If the Beneficiary in good faith believes that any
state or federal law prohibits or restricts the customary manner of sale or
distribution of any of the Personalty Collateral, or if the Beneficiary
determines that there is any other restraint or restriction limiting the timely
sale or distribution of any such property in accordance with the
 
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customary manner of sale or distribution, the Beneficiary may sell or may cause
the Trustee to sell such property privately or in any other manner it deems
advisable at such price or prices as it determines in its sole discretion and
without any liability whatsoever to the Trustor in connection therewith.  The
Trustor recognizes and agrees that such prohibition or restriction may cause
such property to have less value than it otherwise would have and that,
consequently, such sale or disposition by the Beneficiary may result in a lower
sales price than if the sale were otherwise held.
 
ARTICLE 8 – OTHER PROVISIONS CONCERNING FORECLOSURE
 
Section 8.1   Possession and Delivery of Collateral.  It shall not be necessary
for the Beneficiary or the Trustee to have physically present or constructively
in its possession any of the Collateral at any foreclosure sale, and the Trustor
shall deliver to the purchasers at such sale on the date of sale the Collateral
purchased by such purchasers at such sale, and if it should be impossible or
impracticable for any of such purchasers to take actual delivery of the
Collateral, then the title and right of possession to the Collateral shall pass
to the purchaser at such sale as completely as if the same had been actually
present and delivered.
 
Section 8.2   Beneficiary as Purchaser.  The Beneficiary will have the right to
become the purchaser at any foreclosure sale, and it will have the right to
credit upon the amount of the bid the amount payable to it out of the net
proceeds of sale.  Upon compliance with the terms of any sale, Beneficiary may
hold, retain, possess and dispose of such property in its own absolute right
without further accountability.
 
Section 8.3   Recitals Conclusive; Warranty Deed; Ratification.  Recitals
contained in any conveyance to any purchaser at any sale made hereunder will
conclusively establish the truth and accuracy of the matters therein stated,
including, without limiting the generality of the foregoing, nonpayment of the
unpaid principal sum of, and the interest accrued on, the written instruments
constituting part or all of the Obligations after the same have become due and
payable, nonpayment of any other of the Obligations or advertisement and conduct
of the sale in the manner provided herein, and appointment of any successor
Trustee hereunder.  The Trustor ratifies and confirms all legal acts that
Beneficiary and/or Trustee may do in carrying out the provisions of this
instrument.
 
Section 8.4   Effect of Sale.  Any sale or sales of the Collateral or any part
thereof will operate to divest all right, title, interest, claim and demand
whatsoever, either at law or in equity, of the Trustor in and to the premises
and the property sold, and will be a perpetual bar, both at law and in equity,
against the Trustor, Trustor’s successors or assigns and against any and all
persons claiming or who shall thereafter claim all or any of the property sold
from, through or under the Trustor, or Trustor’s successors or assigns.  Subject
to applicable rights of redemption under applicable law, the purchaser or
purchasers at the foreclosure sale will receive immediate possession of the
property purchased; and if the Trustor retains possession of the Collateral, or
any part thereof, subsequent to sale, the Trustor will be considered a tenant at
sufferance of the purchaser or purchasers, and if the Trustor remains in such
possession after demand of the purchaser or purchasers to remove, the Trustor
will be guilty of forcible detainer and will be subject to eviction and removal,
forcible or otherwise, with or without process of law, and without any right to
damages arising out of such removal.
 
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Section 8.5   Application of Proceeds.  The proceeds of any sale of the
Collateral or any part thereof will be applied as follows:
 
(a)           first, to the payment of all out of pocket expenses incurred by
the Trustee and Beneficiary in connection therewith, including, without limiting
the generality of the foregoing, reasonable court costs, legal fees and
expenses, fees of accountants, engineers, consultants, agents or managers and
expenses of any entry or taking of possession, holding, valuing, preparing for
sale, advertising, selling and conveying;
 
(b)           second, to the payment of the Obligations; and
 
(c)           third, any surplus thereafter remaining to Trustor or Trustor’s
successors or assigns, as their interests may be established to Beneficiary’s
reasonable satisfaction.
 
Section 8.6   Deficiency.  Subject to applicable law, the Trustor will remain
liable for any deficiency owing to the Beneficiary after application of the net
proceeds of any foreclosure sale.
 
Section 8.7   Waiver of One-Action Rule.  The Trustor, for the Trustor and all
who may claim through or under the Trustor, to the extent that the Trustor may
lawfully do so under applicable law, hereby waives and agrees to forego the
benefit and application of Nevada’s “one-action rule”, whether arising at common
law or by statute, expressly including Nevada Revised Statute Section 40.430 et
seq.
 
Section 8.8   Trustor’s Waiver of Appraisement, Marshaling, Etc.  The Trustor
agrees that the Trustor will not at any time insist upon or plead or in any
manner whatsoever claim the benefit of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this instrument, the absolute sale of
the Collateral or the possession thereof by any purchaser at any sale made
pursuant to this instrument or pursuant to the decree of any court of competent
jurisdiction.  The Trustor, for the Trustor and all who may claim through or
under the Trustor, hereby waives the benefit of all such laws and to the extent
that the Trustor may lawfully do so under applicable state law, waives any and
all right to have the Collateral marshaled upon any foreclosure of the lien
hereof or sold in inverse order of alienation and, the Trustor agrees that the
Trustor may sell the Collateral as an entirety.
 
ARTICLE 9 – MISCELLANEOUS
 
Section 9.1   Recording and Filing.  The Trustor shall pay all costs of filing,
registering and recording this and every other instrument in addition or
supplemental hereto and all financing statements the Beneficiary may require, in
such offices and places and at such times and as often as may be, in the
judgment of the Beneficiary, necessary to preserve, protect and renew the lien
and security interest herein created as a first lien and prior security interest
on and in the Collateral and otherwise do and perform all matters or things
necessary or expedient to be done or observed by reason of any law or regulation
of any State or of the United States or of any other competent authority for the
purpose of effectively creating, maintaining and preserving the lien and
security interest created herein and on the Collateral and the priority
thereof.  The Trustor shall also pay the costs of obtaining reports from
appropriate filing officers concerning financing statement filings in respect of
any of the Collateral in which a security interest is granted herein.
 
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Section 9.2   Trustee’s and Beneficiary’s Right to Perform Trustor’s
Obligations.  The Trustor agrees that, if Trustor fails to perform any act which
Trustor is required to perform under this instrument, the Beneficiary or the
Trustee or any receiver appointed hereunder may, but shall not be obligated to,
perform or cause to be performed such act, and any expense incurred by the
Beneficiary or the Trustee in so doing shall be a demand obligation owing by the
Trustor to the Beneficiary, shall bear interest at an annual rate equal to the
maximum interest rate provided in the Loan Agreement until paid and shall be a
part of the Obligations, and the Beneficiary, the Trustee or any receiver shall
be subrogated to all of the rights of the party receiving the benefit of such
performance.  The undertaking of such performance by the Beneficiary, the
Trustee or any receiver as aforesaid shall not obligate such person to continue
such performance or to engage in such performance or performance of any other
act in the future, shall not relieve the Trustor from the observance or
performance of any covenant, warranty or agreement contained in this instrument
or constitute a waiver of default hereunder and shall not affect the right of
the Beneficiary to accelerate the payment of all indebtedness and other sums
secured hereby or to resort to any other of its rights or remedies hereunder or
under applicable law.  In the event the Beneficiary, the Trustee or any receiver
appointed hereunder undertakes any such action, no such party shall have any
liability to the Trustor in the absence of a showing of gross negligence or
willful misconduct of such party, and in all events no party other than the
acting party shall be liable to Trustor.
 
Section 9.3   Discharge of Purchaser.  Upon any sale made under the powers of
sale herein granted and conferred, the receipt of Beneficiary will be sufficient
discharge to the purchaser or purchasers at any sale for the purchase money, and
such purchaser or purchasers and the heirs, devisees, personal representatives,
successors and assigns thereof will not, after paying such purchase money and
receiving such receipt of Beneficiary, be obliged to see to the application
thereof or be in anywise answerable for any loss, misapplication or
nonapplication thereof.
 
Section 9.4   Indebtedness of Obligations Absolute.  Nothing herein contained
shall be construed as limiting the Beneficiary to the collection of any
indebtedness of the Trustor to the Beneficiary only out of the income, revenue,
rents, issues and profits from the Collateral or as obligating the Beneficiary
to delay or withhold action upon any default which may be occasioned by failure
of such income or revenue to be sufficient to retire the principal or interest
when due on the indebtedness secured hereby.  It is expressly understood between
the Beneficiary and the Trustor that any indebtedness of the Trustor to the
Beneficiary secured hereby shall constitute an absolute, unconditional
obligation of the Trustor to pay as provided herein or therein in accordance
with the terms of the instrument evidencing such indebtedness in the amount
therein specified at the maturity date or at the respective maturity dates of
the installments thereof, whether by acceleration or otherwise.
 
Section 9.5   Defense of Claims.  The Trustee will promptly notify the Trustor
and the Beneficiary in writing of the commencement of any legal proceedings
affecting Beneficiary’s or Trustee’s interest in the Collateral, or any part
thereof, and shall take such action, employing attorneys acceptable to the
Beneficiary (acting reasonably), as may be necessary to preserve the
 
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Trustor’s, the Trustee’s and the Beneficiary’s rights affected thereby; and
should the Trustor fail or refuse to take any such action, the Trustee or the
Beneficiary may take the action on behalf of and in the name of the Trustor and
at the Trustor’s expense.  Moreover, the Beneficiary or the Trustee on behalf of
Beneficiary may take independent action in connection therewith as they may in
their discretion deem proper, and the Trustor hereby agrees to make
reimbursement for all sums advanced and all expenses incurred in such actions
plus interest at a rate equal to the maximum interest rate provided in the Loan
Agreement.
 
Section 9.6   Termination.  If all the Obligations are irrevocably and finally
paid in full, the covenants herein contained are well and truly performed, and
the Loan Documents are all terminated and no longer in effect, and if the
Trustor and the Beneficiary intend at such time that this instrument not secure
any obligation of the Trustor thereafter arising, then the Beneficiary shall,
upon the request of the Trustor and at the Trustor’s cost and expense, deliver
to Trustor proper instruments executed by the Beneficiary evidencing the release
of this instrument.  Until such delivery, this instrument shall remain and
continue in full force and effect.  All indemnifications provided by the Trustor
for the benefit of the Trustee and/or the Beneficiary shall survive any release
or termination of this Deed of Trust and shall remain in full force and effect.
 
Section 9.7   Renewals, Amendments and Other Security.  Renewals, restatements,
replacements and extensions of the Obligations may be given at any time,
amendments may be made to the agreements with third parties relating to any part
of the Obligations or the Collateral, and the Beneficiary or the Trustee may
take or hold other security for the Obligations without notice to or consent of
the Trustor.  The Trustee or the Beneficiary may resort first to other security
or any part thereof, or first to the security herein given or any part thereof,
or from time to time to either or both, even to the partial or complete
abandonment of either security, and such action will not be a waiver of any
rights conferred by this instrument.
 
Section 9.8   Successor Trustees.  The Trustee may resign in writing addressed
to Beneficiary or be removed at any time with or without cause by an instrument
in writing duly executed by Beneficiary.  In case of the resignation or removal
of the Trustee, a successor Trustee may be appointed by Beneficiary by
instrument of substitution complying with any applicable requirements of law,
and in the absence of any such requirement, without other formality than an
appointment and designation in writing.  Any appointment and designation will be
full evidence of the right and authority to make the same and of all facts
therein recited.  Upon the making of any appointment and designation, all the
estate and title of the Trustee in all of the Collateral will vest in the named
successor Trustee, and the successor will thereupon succeed to all the rights,
powers, privileges, immunities and duties hereby conferred upon the
Trustee.  All references herein to the Trustee will be deemed to refer to the
Trustee from time to time acting hereunder.
 
Section 9.9   Limitations on Interest.  No provision of the Loan Agreement, the
other Loan Documents, or other instrument constituting or evidencing any of the
Obligations or any other agreement between the parties shall require the payment
or permit the collection of interest in excess of the maximum non-usurious rate
which Trustor may agree to pay under applicable laws.  The intention of the
parties being to conform strictly to applicable usury laws now in force, the
interest on the principal amount of the Loan Agreement and the interest on other
 
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amounts due under and/or secured by this instrument shall be held to be subject
to reduction to the amount allowed under said applicable usury laws as now or
hereafter construed by the courts having jurisdiction, and any excess interest
paid shall be credited to Trustor.
 
Section 9.10   Effect of Instrument.  This instrument shall be deemed and
construed to be, and may be enforced as, an assignment, chattel mortgage or
security agreement, common law pledge, contract, deed of trust, financing
statement, real estate mortgage, and as any one or more of them if appropriate
under applicable state law.  This instrument shall be effective as a financing
statement covering minerals, As-Extracted Collateral or the like and accounts
subject to Article 9 of the Uniform Commercial Code as enacted in the
appropriate jurisdiction and is to be filed for record in the Office of the
County Clerk or other appropriate office of each county where any part of the
Collateral is situated.  A carbon, photographic, or other reproduction of this
Deed of Trust or of any financing statement relating to this Deed of Trust shall
be sufficient as a financing statement.
 
Section 9.11   Unenforceable or Inapplicable Provisions.  If any provision
hereof or of any of the written instruments constituting part or all of the
Obligations is invalid or unenforceable in any jurisdiction, whether with
respect to all parties hereto or with respect to less than all of such parties,
the other provisions hereof and of the written instruments will remain in full
force and effect in that jurisdiction with respect to the parties as to which
such provision is valid and enforceable, and the remaining provisions hereof
will be liberally construed in favor of Beneficiary in order to carry out the
provisions hereof.  The invalidity of any provision of this instrument in any
jurisdiction will not affect the validity or enforceability of any provision in
any other jurisdiction.
 
Section 9.12   Rights Cumulative; Delay or Omission No Waiver.
 
(a)           Each and every right, power and remedy given to Beneficiary herein
or in any other written instrument relating to the Obligations will be
cumulative and not exclusive; and each and every right, power and remedy whether
specifically given herein or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by Beneficiary,
and the exercise, or the beginning of the exercise, of any such right, power or
remedy will not be deemed a waiver of the right to exercise, at the same time or
thereafter, any other right, power or remedy.  No waiver, delay, omission, or
forbearance by Beneficiary of any right, power or remedy hereunder or under
applicable law on any occasion will act as, or shall be deemed to be, a bar to
the exercise of any right, power or remedy on any subsequent occasion or shall
otherwise exhaust or impair any such right, power or remedy or shall be deemed
to waive any Event of Default or to constitute acquiescence.  Every right, power
and remedy given to Trustee or Beneficiary may be exercised from time to time
and as often as may be deemed expedient by Trustee or Beneficiary.
 
(b)           No failure on the part of Beneficiary to exercise, no course of
dealing with respect to, and no delay on the part of Beneficiary in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power, privilege or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power, privilege or remedy.
 
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(c)           In the event that Beneficiary shall have instituted any proceeding
to enforce any right, power, privilege or remedy under this Deed of Trust or any
other Loan Document by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason, then and in
every such case, the Trustor and Beneficiary shall be restored to its respective
former positions and rights hereunder with respect to the Collateral, and all
rights, remedies, privileges and powers of Beneficiary shall continue as if no
such proceeding had been instituted.
 
Section 9.13   Non-Waiver.  No act, delay, forbearance, omission or course of
dealing between Beneficiary and Trustor will be a waiver of any of Beneficiary’s
rights or remedies hereunder or under applicable law.  No waiver, change or
modification in whole or in part of this instrument or any other written
instrument will be effective unless in a writing signed by Beneficiary.
 
Section 9.14   Beneficiary’s Expenses.  The Trustor agrees to pay in full all
expenses and reasonable attorneys’ fees of the Beneficiary or the Trustee which
may have been or may be incurred by the Beneficiary or the Trustee in connection
with the collection of the Obligations and the enforcement of any of Trustor’s
obligations hereunder and under any documents executed in connection with the
Obligations.
 
Section 9.15   Indemnification.  In addition to any other indemnifications or
similar obligations contained in this instrument or elsewhere, the Trustor
hereby indemnifies, saves and holds harmless, and agrees to defend, the
Beneficiary, the Trustee, their respective successors and assigns, their
respective Affiliates and their respective directors, partners, managers,
principals, officers, employees, agents, consultants and representatives (each,
an “Indemnified Party) from, and no such Indemnified Party shall be liable for,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, fines, suits, costs, charges, claims, taxes, fees, expenses, payments
or disbursements of any kind whatsoever, including attorneys’ fees and expenses
(collectively “Losses”) which may at any time (including, without limitation, at
any time following the payment of the Obligations) be imposed on, incurred or
suffered by or asserted against any Indemnified Party in any way relating to or
arising out of this Deed of Trust or any other Loan Document or any instrument
contemplated by or referred to herein or therein (including exercise by the
Beneficiary or the Trustee of any right, power or remedy conferred upon it by
this instrument or any other instrument pertaining hereto, or from the attempt
or failure of the Beneficiary or the Trustee to exercise any such right, power
or remedy), or the transactions contemplated hereby or thereby, or any act or
omission of the Trustor, or the ownership, management, administration,
operation, use or condition of the Lands, the other Collateral or the Properties
or any other property, except with respect to Losses arising entirely out of the
gross negligence or willful misconduct of such Indemnified
Party.  Notwithstanding any provision hereof to the contrary, the foregoing
indemnity shall in all respects survive, continue and remain in full force and
effect even though all Obligations, indebtedness and other sums secured hereby
may be fully paid and the lien of this instrument released.
 
Section 9.16   Partial Releases.  In the event the Trustor sells for monetary
consideration or otherwise any portion of the Collateral, in compliance with and
as permitted by the Loan Agreement, the Beneficiary and the Trustee shall
release the lien of this instrument with respect to the portion sold, at the
reasonable request of the Trustor, at the Trustor’s cost and expense.  
 
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No release from the lien of this instrument of any part of the Collateral by
Beneficiary shall in anywise alter, vary or diminish the force, effect or lien
of this instrument on the balance or remainder of the Collateral.
 
Section 9.17   Subrogation.  This instrument is made with full substitution and
subrogation of Beneficiary and Trustee in and to all covenants and warranties by
others heretofore given or made in respect of the Collateral or any part
thereof.
 
Section 9.18   Notice.  All notices and deliveries of information hereunder
shall be deemed to have been duly given if actually delivered or mailed by
registered or certified mail, postage prepaid, addressed to the parties hereto
at the addresses set forth above on page 1; if by mail, then as of the date of
such mailing.  Each party may, by written notice so delivered to the others,
change the address to which delivery shall thereafter be made.
 
Section 9.19   Successors.  This instrument shall bind and inure to the benefit
of the respective successors and assigns of the parties.
 
Section 9.20   Interpretation.
 
(a)           Article and section headings used in this instrument are intended
for convenience only and shall be given no significance whatever in interpreting
and construing the provisions of this instrument.
 
(b)           As used in this instrument, “Beneficiary” and “Trustee” include
their respective successors and assigns.  Unless context otherwise requires,
words in the singular number include the plural and in the plural number include
the singular.  Words of the masculine gender include the feminine and neuter
gender and words of the neuter gender may refer to any gender.
 
Section 9.21   Counterparts.  This instrument may be executed in any number of
counterparts, each of which will for all purposes be deemed to be an original,
and all of which are identical except that to facilitate recordation, in
particular counterparts hereof, portions of Exhibit A hereto which describe
properties situated in counties other than the county in which the counterpart
is to be recorded have been omitted.
 
Section 9.22   Survival of Representations and Warranties.  All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Deed of Trust and the advance of any amounts in connection
with the Loan Agreement.
 
Section 9.23   Rights Absolute.  All rights of the Trustee and the Beneficiary
and the deed of trust, pledge, assignment, charge and security interest
hereunder, and all obligations of the Trustor hereunder, shall be absolute and
unconditional, irrespective of:
 
(a)           any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
 
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(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from any Loan Document, including, without
limitation, any increase in the Obligations;
 
(c)           any taking, exchange, release or non-perfection of any other
collateral, or any taking, release, amendment or waiver of or consent to
departure from any guaranty, surety or support agreement for all or any of the
Obligations;
 
(d)           any manner of application of collateral or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Obligations or any other assets of any
principal, guarantor or surety;
 
(e)           any change, restructuring or termination of the corporate or
company structure or existence of the Borrower, the Trustor or any affiliate
thereof; and
 
(f)           any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Trustor or any affiliate of the Trustor,
any other Person liable for the Obligations or a third party guarantor or
grantor of a security interest.
 
Section 9.24   Joint and Several Liability. Trustor and Borrower are engaged in
related businesses and are integrated to such an extent that the financial
strength and flexibility of each such party has a direct, tangible and immediate
impact on the success of the other parties.  Trustor will derive substantial and
immediate direct and indirect benefit from the Loan Agreement, the Loan
Documents, the Gold and Silver Supply Agreement and the transactions entered
into in connection therewith.  Trustor expressly waives any right to revoke,
terminate or suspend this Agreement and acknowledges that it entered into such
Agreement in contemplation of the benefits that it would receive by the Loan
Agreement, the Gold and Silver Supply Agreement and the other Loan Documents.
 
Section 9.25   Entire Agreement; Exhibits»
 
.  The Exhibits to this Deed of Trust form an integral part of this Deed of
Trust and are incorporated herein by reference and expressly made a part
hereof.  This Deed of Trust constitutes the entire agreement among the parties
with respect to the subject matter hereof, superseding all prior statements,
representations, discussions, agreements and understandings, oral or written,
relating to such subject matter, including all term sheets and commitment
letters.
 
Section 9.26  Acknowledgments.   The Trustor hereby acknowledges that:
 
(a)           it has been advised by its own legal counsel in the negotiation,
preparation, execution and delivery of this Deed of Trust and each other Loan
Document;
 
(b)           this Deed of Trust shall not be construed against any party or
more favorably in favor of any party based upon which party drafted the same, it
being agreed and acknowledged that all parties contributed substantially to the
negotiation and preparation of this Agreement;
 
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(c)           the Beneficiary has no fiduciary relationship with or duty to the
Trustor, and the relationship between the Beneficiary, on the one hand, and the
Trustor, on the other hand, in connection herewith is solely that of creditor
and debtor; and
 
(d)           this Deed of Trust does not create a joint venture or partnership
among the parties hereto or for whom it benefits, and no joint venture,
partnership or other fiduciary relationship exists, or shall be deemed to exist,
among the Beneficiary and the Trustor or among the Trustee and the Trustor.
 
Section 9.27    Governing Law.  This Deed of Trust shall be governed by the laws
of the State of Nevada.
 

 

 
[Signature Page to Follow]
 
 
 

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IN WITNESS WHEREOF, this Deed of Trust has been duly and validly executed and
delivered by the Trustor as of the date first written above.
 
 

 
TRUSTOR:

BOREALIS MINING COMPANY,
a Nevada corporation
      By:  ___________________________________       Name:       Title: 

 
 
ATTEST:
_____________________________
_____________________________
   (Name and Title)
 
 
 
 
 
 

[Signature Page to Borealis Deed of Trust]
 
 

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STATE OF                       )
                                           )  ss.
COUNTY OF                    )

On March ___, 2012 personally appeared before me, a notary public,
__________________, the _______________________ of Borealis Mining Company, a
Nevada corporation, who acknowledged that he executed the above instrument for
and on behalf of Borealis Mining Company.
 
Witness my hand and official seal.
 
My commission expires  ______________________________.
 
 

   _________________________________
Notary Public
       

 
 
 
 
 
 
 
            
[Acknowledgment Page to Borealis Deed of Trust]
 
 

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Exhibit A

To
Deed of Trust, Security Agreement, Assignment of Production,
Rents and Leasehold Interests, Financing Statement and Fixture Filing
Among
Borealis Mining Company, as the Trustor
Stewart Title of Nevada Holdings, Inc., as the Trustee
Waterton Global Value, L.P., as the Beneficiary

 
 

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