EXHIBIT 10.3
 
After Recording Return To:

__________________________
__________________________
__________________________
 

--------------------------------------------------------------------------------

Above Space for Recorder’s use only
 
MORTGAGE

THIS MORTGAGE is given as of October 1, 2012, by Tonaquint, Inc., a Utah
corporation, with an office at 303 East Wacker Drive, Suite 1200, Chicago,
Illinois 60601 (“Mortgagor”), in favor of Bonanza Goldfields Corp., a Nevada
corporation, with its principal office at 2415 East Camelback Road, Suite 700,
Phoenix, AZ 85016 (“Mortgagee”), whereby Mortgagor and Mortgagee witnesseth:
 
THAT WHEREAS Mortgagor is justly indebted to Mortgagee pursuant to the terms of
certain secured promissory notes known as Buyer Mortgage Note #1, Buyer Mortgage
Note #2 and Buyer Mortgage Note #3, each dated October 1, 2012 (including any
extensions, revisions, modifications, substitutions, or renewals thereof, each a
“Note” and collectively, the “Notes”), in the aggregate principal sum of Six
Hundred Thousand Dollars ($600,000.00), each Note payable to the order of and
delivered to Mortgagee, in and by which Mortgagor promises to pay the said
aggregate principal sum and interest at the rate provided in the Notes, with a
lump sum payment of the principal and accrued interest of each Note due and
payable as set forth in each of the Notes.  All of said principal and interest
are made payable at such place as the holders of the Notes may, from time to
time, in writing appoint, and in absence of such appointment, then at the office
of Mortgagee.

NOW, THEREFORE, Mortgagor, to secure the payment of the said principal sum of
money and said interest in accordance with the terms, provisions and limitations
of the Notes, and the performance of the covenants and agreements therein
contained, by Mortgagor to be performed, and also in consideration of the sum of
One Dollar in hand paid, the receipt whereof is hereby acknowledged, does by
these presents CONVEY AND WARRANT unto Mortgagee, and Mortgagee’s successors and
assigns, the following described real estate and all of Mortgagor’s estate,
right, title and interest therein, situate, lying and being in the CITY OF
ARLINGTON HEIGHTS, COUNTY OF COOK, STATE OF ILLINOIS, to wit:

 
1

--------------------------------------------------------------------------------

 
 
PARCEL ONE:

That part of the Southwest quarter of the Northeast quarter of Section 7,
Township 42 North, Range 11, East of the Third Principal Meridian, bounded by a
line described as follows:

Commencing at the Southwest corner of said Southwest quarter of the Northeast
quarter of Section 7; thence East along the South line of the said Southwest
quarter of the Northeast quarter of Section 7, a distance of 128.79 feet to the
West line of Kennicott Avenue; thence North and West along the said West line of
Kennicott Avenue, the following three courses, North and West along a curved
line, convex to the East and having a radius of 351.76 feet for a distance of
173.75 feet, arc measure, to a point of tangent; thence Northwesterly tangent
with the last described curved line, 81.96 feet to a point of curve; thence
North and West along a curved line, convex to the West and having a radius of
390.00 feet, a distance of 193.80 feet to a point of tangent, said point being a
point on the West line of the said Southwest quarter of the Northeast quarter,
425.00 feet North of the Southwest corner thereof and thence South along said
West line of the Southwest quarter of the Northeast quarter, 425.00 feet to the
place of beginning, in Cook County, Illinois.

PARCEL TWO:

The East 80.0 feet of the North 198.0 feet of the South 200.60 feet of the
Northwest quarter of Section 7, Township 42 North, Range 11, East of the Third
Principal Meridian, in Cook County, Illinois.

Permanent Real Estate Index Numbers: 03-07-100-017 and 03-07-200-007

Addresses of Real Estate: 3050-3060 North Kennicott Avenue, Arlington Heights,
Illinois 60004

which, with the property hereinafter described, is referred to herein as the
“premises,”

TOGETHER with all improvements, tenements, easements, fixtures, and
appurtenances thereto belonging, and all rents, issues and profits thereof for
so long and during all such times as Mortgagor may be entitled thereto (which
are pledged primarily and on a parity with said real estate and not secondarily)
and all apparatus, equipment or articles now or hereafter therein or thereon
used to supply heat, gas, air conditioning, water, light, power, refrigeration
(whether single units or centrally controlled), and ventilation, including
(without restricting the foregoing), screens, window shades, storm doors and
windows, floor coverings, awnings, stoves and water heaters, if any. All of the
foregoing are declared to be a part of said real estate whether physically
attached thereto or not, and it is agreed that all similar apparatus, equipment
or articles hereafter placed in the premises by Mortgagor or its successors or
assigns shall be considered as constituting part of the real estate.

TO HAVE AND TO HOLD the premises unto Mortgagee, and Mortgagee’s successors and
assigns, forever, for the purposes, and upon the uses herein set forth, free
from all rights and benefits under and by virtue of the Homestead Exemption Laws
of the State of Illinois, which said rights and benefits Mortgagor does hereby
expressly release and waive.

The name of the record owner is: Tonaquint, Inc.

This mortgage consists of six pages. The covenants, conditions and provisions
appearing on pages 4, 5 and 6 are incorporated herein by reference and are a
part hereof and shall be binding on Mortgagor, its heirs, successors and
assigns.
 
 
2

--------------------------------------------------------------------------------

 
 
Witness the hand of Mortgagor the day and year first above written.
 

  TONAQUINT, INC.          
 
By:
        John M. Fife, President  

State of Illinois, County of ______________ ss.

I, the undersigned, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that John M. Fife, President of Tonaquint, Inc.,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person, and acknowledged
that he signed, sealed and delivered the said instrument as his own free and
voluntary act, for the uses and purposes therein set forth, including the
release and waiver of the right of homestead.
 
 

Given under my hand and official seal, this ___day of October,  2012.          
  Commission expires ______________             NOTARY PUBLIC   This instrument
was prepared by       (Name and Address)  

                                                                           
 
3

--------------------------------------------------------------------------------

 

THE COVENANTS, CONDITIONS AND PROVISIONS REFERRED TO ON PAGE 2

1. Mortgagor shall (A) promptly repair, restore or rebuild any buildings or
improvements now or hereafter on the premises which may become damaged or be
destroyed; (B) keep said premises in good condition, and repair, without waste
and free from mechanics’ or other liens or claims for lien not expressly
subordinated to the lien hereof; (C) pay when due any indebtedness which may be
secured by a lien or charge on the premises superior to the lien hereof, and
upon request exhibit satisfactory evidence of the discharge of such prior lien
to Mortgagee; (D) complete within a reasonable time any building or buildings
now or at any time in process of erection upon said premises; (E) comply with
all requirements of law or municipal ordinances with respect to the premises and
the use thereof; and (F) make no material alterations in said premises except as
required by law or municipal ordinance.
 
2. Mortgagor shall pay before any penalty attaches all general taxes, and shall
pay special taxes, special assessments, water charges, sewer service charges,
and other charges against the premises when due, and shall, upon written
request, furnish to Mortgagee duplicate receipts therefor. To prevent default
hereunder, Mortgagor shall pay in full under protest, in the manner provided by
statute, any tax or assessment which Mortgagor may desire to contest.
 
3. If, by the laws of the United States of America or of any state having
jurisdiction over the premises, any tax is due or becomes due in respect of the
issuance of the Notes hereby secured, Mortgagor covenants and agrees to pay such
tax in the manner required by any such law. Mortgagor further covenants to hold
harmless and agrees to indemnify Mortgagee, and Mortgagee’s successors or
assigns, against any liability incurred by reason of the imposition of any tax
on the issuance of the Notes secured hereby.
 
4. Mortgagor shall have such privilege of making prepayments on the principal of
the Notes (in addition to the required payments) as may be provided in the
Notes.
 
5. Mortgagor shall keep all buildings and improvements now or hereafter situated
on said premises insured against loss or damage by fire, lightning and windstorm
under policies providing for payment by the insurance companies of moneys
sufficient either to pay the cost of replacing or repairing the same or to pay
in full the indebtedness secured hereby, all with companies satisfactory to
Mortgagee, under insurance policies payable, in case of loss or damage, to
Mortgagee, such rights to be evidenced by the standard mortgage clause to be
attached to each policy, and shall deliver all policies, including additional
and renewal policies, to Mortgagee upon request.
 
6. In case of default herein, Mortgagee may, but need not, make any payment or
perform any act hereinbefore required of Mortgagor in any form and manner deemed
expedient, and may, but need not, make full or partial payments of principal or
interest on prior encumbrances, if any, and purchase, discharge, compromise or
settle any tax lien or other prior lien or title or claim thereof, or redeem
from any tax sale or forfeiture affecting said premises or contest any tax or
assessment. All moneys paid for any of the purposes herein authorized and all
expenses paid or incurred in connection therewith, including reasonable
attorneys’ fees, and any other moneys advanced by Mortgagee to protect the
mortgaged premises and the lien hereof, shall be so much additional indebtedness
secured hereby and shall become immediately due and payable without notice and
with interest thereon at the default rate set forth in the Notes (as
applicable). Inaction of Mortgagee shall never be considered as a waiver of any
right accruing to Mortgagee on account of any default hereunder on the part of
Mortgagor.
 
7. Mortgagee making any payment hereby authorized relating to taxes or
assessments may do so according to any bill, statement or estimate procured from
the appropriate public office without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof.
 
 
4

--------------------------------------------------------------------------------

 
 
8. Mortgagor shall pay each item of indebtedness herein mentioned, both
principal and interest, when due according to the terms of the Notes. At the
option of Mortgagee, all unpaid indebtedness secured by this mortgage shall
become due and payable (a) immediately in the case of default in making payment
of any installment of principal or interest on the Notes, or (b) when default in
the performance of any other agreement of Mortgagor herein contained shall
occur; provided, however, that if any default by Mortgagor is curable, then such
default may be cured (and no default will have occurred) if Mortgagor, after
receiving written notice from Mortgagee demanding cure of such default, either
(x) cures such default within fifteen (15) days, or (y) if the cure requires
more than fifteen (15) days, immediately initiates steps that Mortgagee deems in
Mortgagee’s reasonable discretion to be sufficient to cure such default and
thereafter diligently continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
 
9. When the indebtedness hereby shall become due whether by acceleration or
otherwise, Mortgagee shall have the right to foreclose the lien hereof. In any
suit to foreclose the lien hereof, there shall be allowed and included as
additional indebtedness in the decree for sale all expenditures and expenses
which may be paid or incurred by or on behalf of Mortgagee for attorneys’ fees,
appraiser’s fees, outlays for documentary and expert evidence, stenographers’
charges, publication costs and costs (which may be estimated as to items to be
expended after entry of the decree) of procuring all such abstracts of title,
title searches, and examinations, title insurance policies, Torrens
certificates, and similar data and assurances with respect to title as Mortgagee
may deem to be reasonably necessary either to prosecute such suit or to evidence
to bidders at any sale which may be had pursuant to such decree the true
condition of the title to or the value of the premises. All expenditures and
expenses of the nature in this paragraph mentioned shall become so much
additional indebtedness secured hereby and immediately due and payable, with
interest thereon at the default rate set forth in the Notes (as applicable),
when paid or incurred by Mortgagee in connection with (a) any proceeding,
including probate and bankruptcy proceedings, to which Mortgagee shall be a
party, either as plaintiff, claimant or defendant, by reason of this mortgage or
any indebtedness hereby secured; or (b) preparations for the commencement of any
suit for the foreclosure hereof after accrual of such right to foreclose whether
or not actually commenced; or (c) preparations for the defense of any actual or
threatened suit or proceeding which might affect the premises or the security
hereof.
 
10. The proceeds of any foreclosure sale of the premises shall be distributed
and applied in the following order of priority: first, on account of all costs
and expenses incident to the foreclosure proceedings, including all such items
as are mentioned in the preceding paragraph hereof; second, all other items
which under the terms hereof constitute secured indebtedness additional to that
evidenced by the Notes, with interest thereon as herein provided; third, all
principal and interest remaining unpaid on the Notes; and fourth, any surplus to
Mortgagor, its heirs, legal representatives or assigns, as their rights may
appear.
 
11. Upon or any time after the filing of a complaint to foreclose this mortgage,
the court in which such complaint is filed may appoint a receiver of said
premises. Such appointment may be made either before or after the sale, without
notice, without regard to the solvency or insolvency of Mortgagor at the time of
application for such receiver and without regard to the then value of the
premises or whether the same shall be then occupied as a homestead or not, and
Mortgagee may be appointed as such receiver. Such receiver shall have power to
collect the rents, issues and profits of said premises during the pendency of
such foreclosure suit and, in case of a sale and a deficiency, during the full
statutory period of redemption, whether there be redemption or not, as well as
during any further times when Mortgagor, except for the intervention of such
receiver, would be entitled to collect such rents, issues and profits, and all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the premises during
the whole of said period. The court from time to time may authorize the receiver
to apply the net income in his hands in payment in whole or in part of (1) the
indebtedness secured hereby, or by any decree foreclosing this mortgage, any
tax, special assessment or other lien which may be or become superior to the
lien hereof or of such decree, provided such application is made prior to
foreclosure sale; and (2) the deficiency in case of a sale and deficiency.
 
 
5

--------------------------------------------------------------------------------

 
 
12. No action for the enforcement of the lien or of any provision hereof shall
be subject to any defense which would not be good and available to the party
interposing the same in an action at law upon the Notes secured hereby.
 
13. Mortgagee shall have the right to inspect the premises at all reasonable
times and access thereto shall be permitted for that purpose.
 
14. If the payment of said indebtedness or any part thereof be extended or
varied or if any part of the security be released, all persons now or at any
time hereafter liable therefor, or interested in said premises, shall be held to
assent to such extension, variation or release, and their liability and the lien
and all provisions hereof shall continue in full force, the right of recourse
against all such persons being expressly reserved by Mortgagee, notwithstanding
such extension, variation or release.
 
15. Mortgagee shall release or cause to be released this mortgage and lien
thereof in accordance with the terms of that certain Escrow Agreement dated
October 1, 2012, by and among Mortgagor, Mortgagee and Griffiths & Turner / GT
Title Services, Inc., a Utah corporation, as escrow agent.
 
16. This mortgage and all provisions hereof, shall extend to and be binding upon
Mortgagor and all persons claiming under or through Mortgagor, and the word
“Mortgagor” when used herein shall include all such persons and all persons
liable for the payment of the indebtedness or any part thereof, whether or not
such persons shall have executed the Notes or this mortgage. The word
“Mortgagee” when used herein shall include the successors and assigns of
Mortgagee named herein and the holder or holders, from time to time, of the
Notes secured hereby.
 
6

--------------------------------------------------------------------------------