EXECUTION VERSION

 

SECURED PROMISSORY NOTE

 

 

US$20,000,000

Dated: March 28, 2007

 

 

FOR VALUE RECEIVED, the undersigned, Battle Mountain Gold Exploration Corp., a
Nevada corporation (“Battle Mountain”), and BMGX (Barbados) Corporation, a
Barbados corporation (collectively with Battle Mountain, the “Borrowers”),
hereby promise to pay to the order of Royal Gold, Inc., a Delaware corporation
(the “Lender”), the principal sum of TWENTY MILLION DOLLARS (US$20,000,000), or
so much thereof as has been advanced hereunder and evidenced on the grid
attached hereto as Schedule 1, together with interest from the date hereof as
set forth in the terms of this secured promissory note (this “Note”).
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Bridge Loan Agreement (as defined below).

 

This Note is executed and delivered in connection with that certain Bridge
Finance Facility Agreement, dated as of the date hereof, between the Borrowers
and the Lender (the “Bridge Loan Agreement”), and reference is hereby made to
the Bridge Loan Agreement and the Credit Facility Documents for the benefits,
security interests, and terms and conditions under which the loans evidenced by
this Note were made and are required to be repaid.

 

The terms of the Bridge Loan Agreement, the Credit Facility Documents, and this
Note shall supersede the terms of that certain US$13,914,552.39 Promissory Note,
dated March 23, 2007, issued by Battle Mountain to the Lender (the “Interim
Note”), and such Interim Note shall be terminated, canceled, and replaced by
this Note.

 

1.          Payment and Interest

 

The term of this Note shall commence as of the date hereof and, if not sooner
paid, the entire unpaid principal indebtedness, all accrued and unpaid interest,
and all other sums payable in connection with this Note shall be due and payable
in full on the Final Maturity Date or such earlier date as provided for by the
Bridge Loan Agreement.

 

The Lender is irrevocably authorized to endorse on the grid attached hereto as
Schedule 1, or on a continuation thereof, the date and amount of each Advance
evidenced hereby and the date and amount of each payment or prepayment of
principal thereof in accordance with the Bridge Loan Agreement; provided that
the failure of Lender to make, or any error in making, any such recordation or
endorsement shall not affect the obligations of the Borrowers hereunder or under
the Bridge Loan Agreement. All such notations shall constitute prima facie
evidence of the accuracy of the information so recorded and be enforceable
against the Borrowers with the same force and effect as if such amounts were
each set forth in a separate note executed by each Borrower.

 

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During the period commencing on the date hereof and continuing until this Note
is paid in full, interest on the principal balance of this Note shall accrue at
the rate of LIBOR plus three percent (3%) per annum (the “Interest Rate”). For
purposes of this Note, “LIBOR” shall mean the rate of interest per annum
determined on the basis of the rate for deposits in US Dollars in minimum
amounts of at least $500,000 for a period equal to three months which appears in
the Money and Investing section of the Wall Street Journal on the date hereof
(rounded upward, if necessary, to the nearest 1/100th of 1%). If any payment is
not paid when due hereunder or within three (3) days thereafter, then the entire
outstanding principal balance of this Note shall bear interest from the date
such payment was due until such payment is paid in full, such interest to be at
a rate equal to LIBOR plus five percent (5%) per annum (the “Default Rate”).
Interest shall be calculated on a daily rate equal to 1/360th for the actual
number of calendar days elapsed in each interest calculation period. Interest
shall accrue through and be payable in full on the Final Maturity Date or such
earlier date as provided for by the Bridge Loan Agreement.

 

The Borrowers may prepay this Note in whole or in part, at any time upon two (2)
Business Days’ advance written notice.

 

All payments of principal, interest, and any other amounts due under or in
connection with this Note shall be made by the Borrowers to the Lender free and
clear of, and without deduction or withholding for, any and all present and
future taxes, levies, duties or withholdings of any kind or, if any deduction or
withholding from any amount payable hereunder or under any other document or in
connection herewith or therewith shall be legally required, such amount shall be
increased by the Borrowers as may be necessary so that after making all required
deductions or withholdings (including deductions or withholdings applicable to
additional amounts payable under this paragraph) the Lender shall receive an
amount equal to the amount it would have received had no such deductions or
withholdings been required.

 

Payments of principal, interest, fees, commissions and any other amounts payable
to the Lender hereunder will be made to the Lender in lawful money of the United
States of America, in immediately available funds in such account as the Lender
may designate. All such payments by the Borrowers shall be without set-off,
recoupment, defense, counterclaim, deduction or withholding. Payments shall be
made under this Note not later than 11:00 a.m. (Denver time) on the day when
due.

 

2.          Defaults and Remedies

 

Upon the occurrence of an Event of Default, and as specifically provided in the
Bridge Loan Agreement, the Lender has the right to declare all or any portion of
this Note then outstanding to be immediately due and payable, without
presentment, demand, protest or further notice of any kind. The Lender’s rights
and remedies hereunder and under the Bridge Loan Agreement are subject to
certain provisions of the Intercreditor Agreements, as more particularly set
forth in the Credit Facility Documents.

 

 

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3.          Miscellaneous

 

The provisions of this Note and of all agreements between each of the Borrowers
and the Lender are hereby expressly limited so that in no contingency or event
whatever shall the amount paid, or agreed to be paid, to the Lender for the use,
forbearance, or detention of the money to be loaned hereunder exceed the maximum
amount permissible under applicable law. If from any circumstance whatever, the
performance or fulfillment of any provision hereof or of any other agreement
between the Borrowers and the Lender shall, at the time performance or
fulfillment of such provision is due, involve or purport to require any payment
in excess of the limits prescribed by law, then the obligation to be performed
or fulfilled is hereby reduced to the limit of such validity, and if from any
circumstance whatever the Lender should ever receive as interest an amount which
would exceed the highest lawful rate, the amount which would be excessive
interest shall be applied to the reduction of the principal balance owing
hereunder and shall not be counted as interest.

 

Except as provided hereunder, this Note may be extended and any term of this
Note may be amended and the observance of any term of this Note may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of each of the Borrowers and the
Lender.

 

The rights and obligations of the each of the parties to this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and
permitted transferees of the parties. Neither of the Borrowers, nor the Lender
shall assign, in whole or in part, any of its obligations under this Note
without the prior written consent of the other party, which consent shall not be
unreasonably withheld.

 

The provisions of this Note shall be construed and interpreted, and all rights
and obligations hereunder determined, in accordance with the laws of the State
of Nevada. Each of the parties to this Note hereby agree to jurisdiction of the
state and federal courts located in Reno, Nevada and Denver, Colorado.

 

[Signature Page to Follow]

 

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                              IN WITNESS WHEREOF, the parties hereto have caused
this Note to be signed in its name as of the date first above written.

 

BATTLE MOUNTAIN GOLD

EXPLORATION CORP.

as Borrower

 

By: /s/ Mark D. Kucher

 

Name:

Mark D. Kucher

 

Title:

Chairman, Chief Executive Officer

 

and President

 

 

 

BMGX (BARBADOS) CORPORATION

as Borrower

 

By: /s/ Mark D. Kucher

 

Name:

Mark D. Kucher

 

Title:

Chairman, Chief Executive Officer

and President

 

SIGNATURE PAGE TO SECURED PROMISSORY NOTE

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SCHEDULE 1

 

 

Date of Advance

 

Amount of Advance

Date of Payment

 

Payments of Principal

Unpaid Principal Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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