Document:

Unassociated Document

    EXHIBIT
      10.2

    

    LIMITED
      RECOURSE PROMISSORY NOTE

    

    CDN
      $6,750,000.00Minneapolis,
      Minnesota, USA

    June
      6,
      2008

    

    1.  FOR
      VALUE
      RECEIVED, the undersigned, HUNTER
      BATES MINING CORPORATION,
      a
      Minnesota corporation (hereinafter “Borrower”) whose address is 900 IDS Center,
      80 South 8th
      Street,
      Minneapolis MN 55402-8773, promises to pay to the order of GEORGE
      E. OTTEN, (“Holder”),
      a
      Colorado resident whose address is 11438 Weld County Rd 19, Fort Lupton, CO
      80621 (or his nominee or assignee) the principal sum of Six Million Seven
      Hundred Fifty Thousand and 00/100 Canadian Dollars (CDN $6,750,000.00), in
      lawful money of Canada, together with interest on the unpaid principal balance,
      at the interest rate as set forth below, in installments as
      follows:

    

    (i) On
      or
      before December 1, 2008, the sum of $250,000;

    

    (ii) Commencing
      on April 1, 2010, and continuing on each January 1, April 1, July 1, and October
      1 thereafter (each, a “Payment Date”) until the Maturity Date (as defined
      below), the Borrower shall pay a quarterly installment of accrued interest
      only
      plus a Production Revenue Payment (as defined below), calculated at the interest
      rate as set forth below. 

    

    (iii) On
      the
      earlier of (i) fifth anniversary of the first Production Revenue Payment or
      (ii)
      December 31, 2015 (such earlier date is referred to herein as the “Maturity
      Date”), the entire remaining principal balance together with any unpaid accrued
      interest shall be due and payable.

    

    2.  From
      the
      date hereof until December 31, 2009, no interest shall accrue on the unpaid
      balance hereunder. From January 1, 2010 until this Note is paid in full,
      interest shall accrue on the unpaid balance hereunder at the rate of six percent
      (6.00%) per annum; provided, however, that in the event of a default hereunder,
      the unpaid balance shall accrue interest at the rate of eight (8%) (the “Default
      Rate”) during the period of such default. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    3.  In
      addition to the interest payments due above, Borrower agrees that, on the first
      Payment Date following the first Calendar Quarter (which is defined as any
      (i)
      January 1 to March 31, (ii) April 1 to June 30, (iii) July 1 to September 30,
      or
      (iv) October 1 to December 31, of any year) in which Borrower realizes Profit
      (as defined below) in excess of US$100,000 in such Calendar Quarter from the
      real estate commonly known as the “Hunter Gold Mine”, located in the Gilpin
      County, Colorado, USA (the “Mine”), which was acquired by Borrower in part from
      Hunter Gold Mining Inc. (“HGM Inc.”), in part from Central City Consolidated
      Corp. (“Central City”) and in part from George Otten (“Otten”) on the date of
      this Note, and continuing on each Payment Date thereafter until this Note is
      repaid in full, Borrower shall make principal repayments hereunder (each a
      “Production Revenue Payment”), which payment(s) shall equal:

    

    
      	 	
              (i)

            	
              For
                all Calendar Quarters ending on or prior to December 31, 2012,
                seventy-five per cent (75%) of the Profit realized by the Borrower
                for the
                immediately preceding Calendar Quarter,
                and

            

    

    
      	 	
              (ii)

            	
              For
                Calendar Quarters ending after December 31, 2012, the greater of
                (a)
                Seventy-five per cent (75%) of the Profit realized by the Borrower
                for the
                relevant Calendar Quarter and (b) CDN
                $300,000.00.

            

    

    

    Notwithstanding
      the foregoing, if the Borrower has not been obligated to make a Production
      Revenue Payment by December 31, 2012, then beginning on April 1, 2013 and
      continuing on each Payment Date until the Borrower has become obligated to
      make
      a Production Revenue Payment, the Borrower shall make principal repayments
      hereunder in the amount of CDN $550,000. Upon the Borrower becoming obligated
      to
      make a Production Revenue Payment at anytime after April 1, 2013, the Borrower
      shall thereafter make Production Revenue Payments in accordance with the
      foregoing subsection 3(ii).

    

    For
      the
      purposes of the foregoing, “Profit” shall be defined as any positive number
      comprising all revenue received by Borrower from sales of minerals or mineral
      by-products from the Mine, less all Borrower’s expenses, including interest
      expense but excluding depreciation, distributions or dividends paid to
      shareholders of Borrower, incurred in connection with such sales or the
      operation of the Mine for the immediately preceding Calendar
      Quarter.

    

    4.  Notwithstanding
      anything contained in this Note to the contrary, the Holder may demand payment
      in full and declare the outstanding balance due hereunder immediately due and
      payable in the event that (i) there has been a change of control of the Borrower
      by virtue of any party (other than the “Covenantor”, as defined below) acquiring
      more than 50% of the issued and outstanding shares of any class of the Borrower,
      or (ii) if the Borrower disposes of its interests in the Mine. .

    

    5.  All
      payments hereunder shall be made by way of guaranteed or immediately available
      funds delivered to the offices of Pushor Mitchell LLP, 3rd
      Floor,
      1665 Ellis Street, Kelowna, British Columbia, Canada, V1W 4T7, Attention: E.
      Blair Forrest. The parties hereto specifically agree that any payments made
      to
      or for the benefit of Holder, HGM Inc., Hunter Gold Mining Corp. (“HGM Corp.”),
      a British Columbia corporation, or Central City by Borrower or Covenantor,
      shall
      be deemed to be payments made hereunder and credited against sums next due
      and
      owing hereunder, provided that, (i) prior to making such payment(s), Borrower
      shall have received written approval from Pushor Mitchell, LLP (as escrow agent
      in respect of this Note, or their successor) that such payments shall be for
      the
      account of Holder hereunder and (ii) payments referenced in Section 19 of the
      Fifth Amendment to Asset Purchase Agreement, dated of even date herewith, by
      and
      among the foregoing parties, are deemed to be payments made hereunder. The
      Holder shall promptly provide the Borrower with a written receipt for all
      payments received from the Borrower and/or the Covenantor in respect of the
      sums
      due hereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    6.  It
      is
      hereby expressly agreed that should default be made in the payment of any
      installment of principal, interest or other sums when due hereunder, and such
      default continues for forty-five (45) days after the date due, an “Event of
      Default” shall occur under the Deed of Trust and Security Agreement (“Deed of
      Trust”) of even date herewith securing this Note and covering property located
      in Gilpin County, Colorado, the whole sum of principal, accrued interest and
      other sums outstanding hereunder shall, at the option of the Holder hereof,
      be
      fully accelerated and become immediately due and payable, anything contained
      herein or in any instrument now or hereafter securing this Note to the contrary
      notwithstanding. Said acceleration option and Default Rate shall continue until
      all such defaults have been cured. In the event of such acceleration, the term
      “Maturity Date” shall be deemed to mean the date on which this Note is due and
      payable as a result of such acceleration. 

    

    6.1 Notwithstanding
      any other provision of this Note, if an “Event of Default” shall occur under the
      Deed of Trust, the Borrower and Wits Basin Precious Minerals Inc., a Minnesota
      corporation (hereinafter the “Covenantor”), whose address is 900 IDS Center, 80
      South 8th
      Street,
      Minneapolis MN 55402-8773, shall be jointly and severally personally liable
      solely for the amount (the “Limited Recourse Amount”) of CDN $2,000,000 less the
      aggregate of (i) all payments of principal and interest hereunder received
      by or
      on behalf of the Holder, (ii) any cash proceeds (the “Cash Proceeds”) received
      by or on behalf of the Holder from the cash sale, prior to such default, of
      any
      of the 3,620,000 shares of the .01 par value common stock of Wits Basin Precious
      Minerals Inc. which represents part of the purchase price for the Mine (the
      “Stock Consideration”), and (iii) any deemed proceeds (the “Deemed Proceeds”)
      resulting from the in specie disposition of the Stock Compensation by the Holder
      to any of Otten, Central City, HGM Inc., Hunter Gold Mining Corp. and/or the
      shareholders of any of them (a “Transferee”). For the purposes of the foregoing,
      the “Deemed Proceeds” shall be calculated on the basis of CDN $0.5525 per share
      disposed of by the Holder and the “Cash Proceeds” shall be deemed to be the
      greater of CDN $0.5525 per share disposed of and the actual proceeds per share
      disposed of by the Holder (expressed in Canadian dollars). The Holder’s sole
      recourse for any amounts due on default hereunder in excess of the Limited
      Recourse Amount shall be the secured property described in the Deed of Trust.
      For greater certainty, the cash proceeds received by any Transferee in respect
      of a subsequent sale of any transferred shares shall not be included in the
      foregoing Limited Recourse Amount calculations. If an “Event of Default” shall
      occur under the Deed of Trust, any remaining shares comprising the Stock
      Consideration that are sold by or on behalf of the Holder after the time of
      such
“Event of Default” shall be deemed to have been sold for Cash Proceeds
      calculated in the foregoing manner unless the Holder has complied with the
      right
      of first refusal provisions set forth in paragraph 10 below, in which case
      the
      provisions of paragraph 10 shall apply. 

    

    6.2 Notwithstanding
      the provisions of Section 6.1 above, the parties hereto agree that the recourse
      provisions of Section 6.1 shall not apply until and unless the obligations
      and
      deliveries required by that certain Undertaking Agreement of even date herewith,
      by and among HGM Corp., the Holder, Dell Balfour, Douglas McNaughton, the
      Covenantor and the Borrower have been fully satisfied, as evidenced by the
      certificate of an officer of HGM Corp. to that effect and delivered to the
      Borrower and the Covenantor. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    7.       Notwithstanding
      any other provision of this Note to the contrary, it is agreed that, for a
      period of four (4) years commencing on the date of this Note, Borrower reserves
      the right to conduct mineral title research on the Hunter Gold Mine after the
      Borrower has entered the advanced exploration project phase (drill intercepts
      showing an economically viable mine) in the Hunter Gold Mine. If the results
      of
      such mineral title research do not show that good and marketable title to the
      Hunter Gold Mine was properly transferred to the Borrower, Borrower may offset
      against the principal amount and any accrued interest thereon of this Note
      any
      and all costs deemed appropriate by Borrower, acting reasonably, to settle
      adverse claims in, or to acquire arm’s length third-party interests in relation
      to, the Hunter Gold Mine. In the event that the Borrower’s mineral title
      research discloses such an arm’s length third-party adverse claim and the
      Borrower proposes to settle such claim, the Borrower shall first advise and
      confer with the Holder and the Trustee under the Trust Deed and shall permit
      the
      Holder and the Trustee to participate in the settlement negotiations regarding
      such adverse claims.

    

    8.  Borrower
      may prepay a portion or the entire principal amount due hereunder at any time
      without penalty, and such prepayment shall be applied as hereinabove
      provided.

    

    9.  Borrower
      consents to the personal jurisdiction of the state and federal courts located
      in
      the State of Colorado in connection with any controversy related in any way
      to
      this Note or any security or guaranty for this Note, waives any argument that
      venue in such forums is not convenient, and agrees that any litigation initiated
      by any of them against the Holder or any other holder of this Note relating
      in
      any way to this Note or any security or guaranty for this Note shall be venued
      in either the District Court of Gilpin County, Colorado, or the United States
      District Court for the District of Colorado.

    

    10.  In
      the
      event of a default under this Note, the Holder agrees that no further shares
      comprising the Stock Consideration shall be sold by or on behalf of the Holder
      unless the Holder has first offered such shares to the Covenantor (or its
      nominee), which offer (the “Offer”) shall be delivered in writing to the
      Covenantor in the manner set forth in paragraph 12 (below) and shall state
      the
      number of shares offered, the price per share offered and the deadline for
      acceptance of the Offer, which deadline shall not be less than 48 hours from
      the
      time of delivery of the Offer. The Offer may be accepted by the Covenantor,
      in
      whole or in part, at any time prior to the deadline for acceptance of the Offer
      by delivering a written notice of acceptance to the Holder in the manner set
      forth in paragraph 12 (below). If the Offer is accepted by the Covenantor,
      in
      whole or in part, the Covenantor shall deliver the purchase price to the Holder
      (or its nominee) by certified check, bank draft or wire transfer with 3 business
      days thereafter and the Limited Recourse Amount shall be reduced by the actual
      amount of such purchase price, whether such purchase price is greater or less
      than CDN $0.5525 per share. To the extent that the Offer is not accepted by
      the
      Covenantor, the Holder shall be at liberty to sell all of any of the shares
      offered but not purchased by the Covenantor to any arm’s length purchaser(s) and
      the Limited Recourse Amount shall be reduced by the actual amount of the cash
      proceeds of such sale(s) received by the Holder, whether such cash proceeds
      are
      greater or less than CDN $0.5525 per share.

    

    11.       For
      the
      purposes of paragraphs 6 and 10 of this Note, the Holder agrees to provide
      the
      Covenantor with written confirmation of any sales or distributions of the shares
      comprising the Stock Consideration, other than sales to the Covenantor under
      paragraph 10 (above).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    12.  All
      payments pursuant to this Note which are made or remitted in currency of the
      United States shall be deemed to have been made in Canadian currency at a rate
      equal to 1.5% below the reported Daily 12 Noon Foreign Exchange Rate of the
      Federal Reserve Bank of New York on the date such payment is made or remitted.
      

    

    13.  Any
      notices to be delivered under paragraph 10 (above) shall be delivered by
      facsimile transmission as follows:

    

    If
      to
      the Borrower and/or the Covenantor:

     

    Care
      of
      Wits Basin Precious Minerals Inc.

    Attention:
      Chief Executive Officer

    Facsimile:
      (612) 395-5276

    

    With
      a copy to:

    Maslon
      Edelman Borman & Brand LLP

    Attention:
      William Mower, Esq.

    Facsimile:
      (612) 642-8358

    

    If
      to
      the Holder:

    George
      E.
      Otten

    Facsimile:
      (970) 785-6248 

    

    With
      a copy to:

    Hunter
      Gold Mining Corp.

    Attention:
      Dell Balfour

    Facsimile:
      (250) 765-4420

    

    And
      a
      copy to:

    Pushor
      Mitchell LLP

    Attention:
      E. Blair Forrest

    Facsimile:
      (250) 762-9115

     

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BORROWER:

    
      	 	 	 	 	 	 	
              Hunter
                Bates Mining Corporation

            

    

    

    /s/
      Mark D. Dacko

    Name:
      Mark
      D. Dacko

    Title:
      CFO

    

    

    COVENANTOR:

    
      	 	 	 	 	 	 	
              Wits
                Basin Precious Minerals
                Inc.

            

    

    

    /s/
      Mark D. Dacko

    Name:
      Mark
      D. Dacko

    Title:
      CFO

    

    

    HOLDER:

    /s/
      George E. Otten 

    George
      E.
      OttenUnassociated Document

    EXHIBIT
      10.3

    

    DEED
      OF TRUST AND SECURITY AGREEMENT

    

    

    THIS
      DEED OF TRUST AND SECURITY AGREEMENT
      (“Deed
      of Trust”) is made as of the 6th day of June, 2008, between HUNTER BATES MINING
      CORPORATION,
      a
      Minnesota corporation (“Grantor”), having an office at 900 IDS Center, 80 South
      8th
      Street,
      Minneapolis MN 55402-8773, and the Gilpin County Public Trustee (“Trustee”),
      whose address is 203 Eureka Street, P.O. Box 368, Central City, CO,
      80427.

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      this
      Deed of Trust is made by Grantor to secure and enforce the payment of the
      following note, obligations, indebtedness and liabilities: (a) a certain
      Promissory Note of even date herewith in the principal amount of Six Million
      Seven Hundred Fifty Thousand and 00/100 Canadian Dollars (CND $6,750,000.00)
      made by Grantor and payable to the order of George E. Otten, a Colorado resident
      whose address is 11438 Weld County Rd, Fort Lupton, CO, 80621 (or his nominee
      or
      assignee), with interest and payments, all as provided therein, being due and
      payable in full on December 31, 2015 (or earlier as provided for therein),
      and
      all modifications, renewals or extensions thereof (the “Note”) (said payee and
      all subsequent holders of the Note or any part thereof or any interest therein
      or in any of the Secured Indebtedness, as hereinafter defined, are hereinafter
      collectively called the “Beneficiary”); and (b) all obligations of this Deed of
      Trust or any other instruments (“Loan Documents”) executed by Grantor in favor
      of Beneficiary now or hereafter evidencing or securing the above-described
      indebtedness or any part thereof (collectively the “Secured Indebtedness”). The
      terms and provisions of the Note are incorporated herein by this
      reference.

    

    In
      order
      to secure payment of the Secured Indebtedness, Grantor does hereby grant,
      bargain, sell and convey unto the Trustee, in trust forever, that certain
      property situate in the Gilpin County, Colorado, more particularly described
      on
      Exhibit A attached hereto and incorporated herein by this reference, which
      is
      commonly known as the Hunter Gold Mine (sometimes collectively hereinafter
      referred to as the “Property” or the “Mortgaged Property”); and

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    TOGETHER
      with all
      and singular the tenements, hereditaments, easements, rights of way and
      appurtenances thereunto belonging or in any wise appertaining, whether now
      owned
      or hereafter acquired by Grantor, and any and all rights of ingress and egress
      to and from adjoining property (whether such rights now exist or subsequently
      arise), together with the reversion or reversions, remainder or remainders,
      and
      rents, issues and profits thereof, and also the entire estate, right, title,
      interest, claim and demand whatsoever of Grantor of, in and to the same and
      of,
      in and to every part and parcel thereof; and

    

    TOGETHER
      with all
      buildings, structures, parking structures and improvements now or hereafter
      located on the Mortgaged Property, including any and all easements and rights
      of
      way used in connection therewith; and

    

    TOGETHER
      with all
      right, title and interest of Grantor, if any, in all trees, shrubs, flowers
      and
      other landscaping features and all oil, gas, minerals, water, water rights,
      drains and drainage rights appurtenant to, located on, under or above or used
      in
      connection with the Mortgaged Property and the improvements situate thereon,
      or
      any part thereof, whether now existing or hereafter created or acquired;
      and

    

    TOGETHER
      with all
      leases, rents, issues, royalties, bonus, income and profits, of each and every
      kind, now or hereafter relating to or arising from the Mortgaged Property and
      the improvements situate thereon; and

    

    All
      of
      the foregoing property, interests and rights are sometimes hereinafter
      collectively referred to as the "Mortgaged Property, Improvements and Rights,
      or
      the “Property”;

    

    AND,
      Grantor, for itself and its successors and assigns, represents, warrants and
      covenants that, and has good right and authority to grant, bargain, sell,
      convey, transfer, assign and mortgage the Property; that the execution and
      delivery of this Deed of Trust, the Note and all other instruments securing
      the
      payment of the Note do not contravene any law, order, decree, rule or regulation
      to which Grantor is subject; that the Note, this Deed of Trust and all other
      instruments securing the payment of the Note constitute the legal, valid and
      binding obligations of Grantor and that Grantor will warrant and forever defend
      the title to the Property against the claims of all persons whomsoever claiming
      or to claim the same or any part thereof, subject to all matters of record.
      

    

    AND,
      that
      for so long as the Secured Indebtedness or any part thereof remains unpaid,
      Grantor covenants and agrees for itself and its successors and assigns as
      follows:

    

    1. Covenants.

    

    1.1 General
      Covenants.

    

    1.1.1 Payment.
      Grantor
      will make prompt payment, as the same become due, of all installments of
      principal and interest on the Note and of all the other Secured
      Indebtedness.

    

    1.1.2 Maintenance
      of Mortgaged Property.
      Grantor
      will cause the Mortgaged Property to be used, occupied and operated in
      accordance with all applicable laws and rules, regulations and orders
      promulgated by all duly constituted authorities. Grantor will allow the
      Beneficiary and/or its authorized representatives to enter the Property at
      any
      reasonable time upon advance written notice to inspect the Property and
      Grantor's books and records pertaining thereto, and Grantor will reasonably
      assist the Beneficiary and said representatives in whatever way necessary to
      make such inspection. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    1.1.3 Taxes.
      Grantor
      shall pay or cause to be paid prior to delinquency, except to the extent
      provision is actually made therefor as set forth hereinafter, all taxes and
      assessments theretofore or hereafter levied or assessed against the Property,
      or
      any part thereof, or any other tax asserted as a substitute therefor and upon
      request, will furnish the Beneficiary with receipts showing payment of such
      taxes and assessments on or before the applicable due date therefor; except
      that
      Grantor may in good faith, by appropriate proceedings, contest and diligently
      pursue such contest, the validity, applicability or amount of any asserted
      tax
      or assessment; provided, however, that in any event each such contest shall
      be
      concluded and the taxes, assessments, interests, costs and penalties shall
      be
      paid prior to the date any writ or order is issued under which the Property
      may
      be sold.

    

    1.1.4 Condemnation.
      Immediately upon obtaining knowledge of the institution of any proceedings
      for
      the condemnation of the Property or any portion thereof, or any other
      proceedings arising out of injury or damage to the Property, or any portion
      thereof, Grantor will notify the Beneficiary of the pendency of such proceedings
      and the time and place of all settings, hearings, trials or other proceedings
      relating thereto. The Beneficiary may participate in any such proceedings,
      and
      Grantor shall from time to time deliver to the Beneficiary all instruments
      required by it to permit such participation. Grantor shall, at its expense,
      diligently prosecute any such proceedings. All proceeds of condemnation awards
      or proceeds of sale in lieu of condemnation with respect to the Property and
      all
      judgments, decrees and awards for injury or damage to the Property shall be
      paid
      to the Grantor and shall be applied to the repair, restoration or replacement
      of
      the property condemned. In the event the proceeds of the condemnation award
      (after deduction for reimbursements to the Beneficiary and Trustee) are deemed
      inadequate, in the sole discretion of a licensed engineer or architect hired
      by
      Grantor, to repair or restore any injury or damage arising from such
      condemnation, Grantor shall pay said amount necessary for such repair,
      restoration or replacement. Determination by Grantor's licensed engineer or
      architect, acting reasonably, of the amount required to be contributed by the
      Grantor shall be deemed conclusive. If (i) there exists an event of default
      under the Note, this Deed of Trust, or the Loan Documents, the condemnation
      proceeds shall be applied by the Beneficiary to cure such default and the
      remainder shall be paid to Grantor for the restoration or repair of the
      Property, or (ii) Grantor and the Beneficiary mutually agree, in which case
      the
      condemnation proceeds shall be applied in payment of the Secured Indebtedness,
      either in whole or in part (without a premium or penalty), in the inverse order
      of maturity, with the remainder, if any, to be paid to Grantor. The Beneficiary
      shall send to Grantor a notice of the balance of the Secured Indebtedness
      remaining, if any, after the application of said funds. Grantor shall not be
      obligated to repair or rebuild the damaged portion of the Property.

    

    1.1.5 Books
      and Records.
      Grantor
      will keep accurate books and records in accordance with generally accepted
      accounting principles in which full, true and correct entries shall be promptly
      made as to all operations on the Property, and, as often as reasonably requested
      by the Beneficiary, but nor more often than once in each calendar quarter,
      Grantor will make reports of operations in such form as the Beneficiary
      prescribes, setting out full data as to the exploration activities and
      expenditures, mine development activities and expenditures, mining activities
      and expenditures and all revenues from the Property.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2. Remedies
      and Events of Default.

    

    2.1 Events
      of Default.
      The
      term "default" or "event of default" as used in this Deed of Trust shall mean
      the occurrence of any of the following events:

    

    (a) The
      failure of Grantor to make any installment of principal or interest due under
      the Note within forty-five (45) days from the date such payment is
      due;

    

    (b) The
      failure of Grantor to make any payment except for a payment described in
      paragraph (a) hereof, within forty-five (45) days of the Trustee’s and/or the
      Beneficiary's notice of such failure; or

    

    (c) The
      failure of Grantor to timely and properly observe, keep or perform any material
      nonmonetary covenant, agreement, warranty or condition herein or of any Loan
      Documents required to be observed, kept or performed, except that Grantor shall
      have one hundred and twenty (120) days from notice of such failure to cure
      such
      default and if such default cannot be cured within one hundred and twenty (120)
      days, Grantor shall have a reasonable period of time within which to cure such
      default, provided Grantor promptly commences curative action and prosecutes
      such
      curative action diligently to completion and provided such default or failure
      can be and is cured within six months from the date of such notice.

    

    2.2 Acceleration.
      Upon
      the occurrence of a default, which is not cured during the applicable cure
      period, if any, the Beneficiary shall have the option of declaring all the
      Secured Indebtedness in its entirety to be immediately due and payable without
      notice to Grantor, and the liens and security interests evidenced hereby shall
      be subject to foreclosure in any manner provided for herein and as provided
      by
      law.

    

    2.3 Management
      and Possession.
      Upon
      the occurrence of a default which is not cured during the applicable cure
      period, if any, the Beneficiary is authorized, whether prior or subsequent
      to
      the institution of any foreclosure proceedings, to enter upon the Property,
      or
      any part thereof, and to take possession of the Property and to exercise,
      without interference from Grantor, any and all rights to construct, manage,
      possess, operate, protect or preserve the Property and all equipment, data,
      documents, records, samples, minerals, ore and other materials relating to
      and/or derived from the Property (the “Associated Materials”), and to deduct
      from the proceeds (if any) resulting from the exercise of such rights all
      reasonable costs, expenses and liabilities of every character incurred by the
      Beneficiary in exercising such rights and in managing, operating, maintaining,
      protecting or preserving the Property and the Associated Materials and to apply
      the remainder of such proceeds on the indebtedness secured hereby in such manner
      as the Beneficiary may elect. If necessary to obtain the possession provided
      for
      above, the Beneficiary may invoke any and all legal remedies to dispossess
      Grantor. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2.4 Foreclosure
      as Deed of Trust.
      Upon
      the occurrence of a default hereunder, which is not cured during the applicable
      cure period, if any, the Beneficiary may declare a violation of any of the
      covenants hereof and elect to advertise the Mortgaged Property, the Associated
      Materials, and all improvements and other rights relating to the foregoing,
      for
      sale and demand such sale. Then, upon filing notice of such election and demand
      for sale with the Trustee, the Trustee shall proceed to foreclose upon the
      Property and, if directed to do so by the Beneficiary, upon the Associated
      Materials, all as provided by applicable law. The Trustee shall provide public
      notice of such foreclosure sale as provided by applicable law. The Trustee
      shall
      sell and dispose of the Property, the Associated Materials, and all improvements
      and rights relating to the foregoing (en masse or in separate parcels, as the
      Trustee may think best) and all the right, title and interest of Grantor, and
      its successors and assigns therein, at public auction all in accordance with
      the
      provisions of Colorado Statutes. Such sale(s) shall be a perpetual bar, both
      in
      law and equity, against Grantor and its successors and assigns, and all other
      persons claiming the Mortgaged Property, the Associated Materials, and all
      improvements and rights relating to the foregoing, or any part thereof by,
      through, from or under Grantor. The Beneficiary may purchase the Mortgaged
      Property, the Associated Materials, and all improvements and rights relating
      the
      foregoing, or any part thereof, and may bid in any part or all of the
      indebtedness secured hereby, and the purchaser(s) at any such sale shall not
      be
      obligated to see to the application of the purchase money.

    

    Any
      reasonable costs incurred by Beneficiary or its attorney as a part of the cost
      of foreclosure in conjunction with Grantor's default hereunder shall be deemed
      allowable by the Trustee in a foreclosure action. Such allowable costs shall
      include, but not be limited to, appraisal fees, attorney fees and all costs
      incurred by Beneficiary or its attorney in conjunction with securing, preserving
      and maintaining the Property, the Associated Materials and any improvements
      and
      rights relating to the foregoing, such as, by way of example and not by way
      of
      limitation, costs incurred in conjunction with the appointment and/or
      institution of a receivership (whether or not a receiver be
      appointed).

    

    2.5 Foreclosure
      as Mortgage.
      This
      instrument shall be effective as a mortgage and a security agreement as well
      as
      a deed of trust and, upon the occurrence of a default, may be foreclosed, at
      the
      election of the Beneficiary, as to any of the Property or the Associated
      Materials in any manner permitted by the laws of the State of
      Colorado.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2.6 Application
      of Proceeds.
      The
      proceeds of any sale in foreclosure of the liens evidenced hereby shall be
      applied:

    

    FIRST,
      to the
      payment of all costs and expenses incident to such foreclosure sale, including,
      but not limited to, all reasonable attorneys' fees and court costs and charges
      of every character, and the statutory fee to the Trustee;

    

    SECOND,
      to the
      payment in full of the Secured Indebtedness (including, specifically, without
      limitation, the principal, interest, late charges and attorneys' fees due and
      unpaid on the Note and the amounts due and unpaid and owed to the Beneficiary
      under this Deed of Trust) in such order as the Beneficiary may elect;
      and

    

    THIRD,
      the
      remainder, if any, shall be paid in accordance with applicable statutory
      provisions or court order.

    

    2.7 Receiver.
      In
      addition to all other remedies herein provided for, Grantor agrees that upon
      the
      occurrence of a default, the Beneficiary shall, as a matter of right, be
      entitled to an ex parte appointment of a receiver or receivers for all or any
      part of the Property and the Associated Materials without regard to the value
      of
      the Property or the Associated Materials or to the solvency of any person or
      persons liable for the payment of the indebtedness secured hereby, and Grantor
      does hereby consent to the appointment of such receiver or receivers, waives
      any
      and all defenses to such appointment and agrees not to oppose any application
      therefor by the Beneficiary, but nothing herein is to be construed to deprive
      Beneficiary of any other right, remedy or privilege it may now have under the
      law to have a receiver appointed; provided, however, that the appointment of
      such receiver, trustee or other appointee by virtue of any court order, statute
      or regulation shall not impair or in any manner prejudice the rights of the
      Beneficiary to receive payment of the rents and income. The receiver or
      his/her/its agents shall be entitled to enter upon and take possession of any
      and all of the Property and the Associated Materials. The receiver, personally
      or through its agents or attorneys, may exclude Grantor and its agents, servants
      and employees wholly from the Property and the Associated Materials and have,
      hold, use, operate, manage and control the same and each and every part thereof,
      and keep insured, the Property and the Associated Materials. Such receivership
      shall, at the option of the Beneficiary, continue until full payment of all
      sums, hereby secured, then due and payable or until title to the Property and
      the Associated Materials shall have passed by foreclosure sale under this Deed
      of Trust and the period of redemption, if any, shall have expired.

    

    2.8 Remedies
      Cumulative.
      All
      remedies herein expressly provided for are cumulative of any and all other
      remedies existing at law or in equity and are cumulative of any and all other
      remedies provided for in any other instrument securing the payment of the
      Secured Indebtedness, or any part thereof, or otherwise benefiting the
      Beneficiary, and the Trustee and the Beneficiary shall, in addition to the
      remedies herein provided, be entitled to avail themselves of all such other
      remedies as may now or hereafter exist at law or in equity for the collection
      of
      the Secured Indebtedness and the enforcement of the covenants herein and the
      foreclosure of the liens and security interests evidenced hereby, and the use
      of
      any remedy provided for hereunder or under any such other instrument or provided
      for by law shall not prevent the concurrent or subsequent use of any other
      appropriate remedy or remedies. The Beneficiary shall be entitled to enforce
      the
      provisions of this Deed of Trust and to exercise its rights and remedies
      hereunder notwithstanding that some or all of the indebtedness hereby secured
      is
      now or shall hereafter be otherwise secured, whether by mortgage, pledge, lien,
      assignment or otherwise. Neither the acceptance of this Deed of Trust nor the
      enforcement thereof shall prejudice or in any manner affect the right of the
      Beneficiary to realize upon or enforce any other security now or hereafter
      held
      by the Beneficiary, it being understood that the Beneficiary shall be entitled
      to enforce this Deed of Trust and any other security now or hereafter held
      by it
      in such order and manner as it may in its sole discretion
      determine.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    2.9 Election
      of Remedies.
      The
      Beneficiary may resort to any security given by this Deed of Trust or to any
      other security now existing or hereafter given to secure the payment of the
      Secured Indebtedness, in whole or in part, and in such portions and in such
      order as may seem best to the Beneficiary in its sole discretion.

    

    2.10 Tenancy
      of Grantor.
      In the
      event there is a foreclosure sale hereunder and at the time of such sale Grantor
      or its representatives, successors or assigns or any other persons claiming
      any
      interest in the Property and/or the Associated Materials by, through or under
      Grantor are occupying or using the Property and/or the Associated Materials,
      or
      any part thereof, each and all shall, at the option of the Beneficiary or the
      purchaser at such sale, as the case may be, immediately become the tenant of
      the
      Beneficiary or said purchaser and said tenancy shall be terminable at will
      by
      the Beneficiary or said purchaser, as the case may be. In the event any tenant
      fails to surrender possession of said Property and Associated Materials upon
      the
      exercise of such option, the purchaser shall be entitled to institute and
      maintain an action for forcible entry and detainer.

    

    3. Miscellaneous.

    

    3.1 Release.
      If the
      Secured Indebtedness is paid in full, then and in that event only, all rights
      under this Deed of Trust shall be released by the Beneficiary in due form at
      Grantor's cost. No release of this Deed of Trust or the lien thereof shall
      be
      valid unless executed by the Beneficiary.

    

    3.2 Beneficiary
      Rights.
      Without
      affecting the responsibility of Grantor for the performance of the covenants
      and
      agreements herein contained, and without affecting the lien of this Deed of
      Trust upon any of the Property and the Associated Materials, the Beneficiary
      may
      at any time and from time to time without notice in writing: (a) waive
      compliance by Grantor with any covenant herein made by Grantor to the extent
      and
      in the manner specified in such writing; (b) consent to Grantor doing any act
      which hereunder Grantor is required to do, to the extent and in the manner
      specified in such writing; (c) release any part of the Property and/or the
      Associated Materials, or any interest therein, from the lien and security
      interest of this Deed of Trust; (d) release any party liable, either directly
      or
      indirectly, for the Secured Indebtedness or for any covenant herein or in any
      other instrument now or hereafter securing the payment of the Secured
      Indebtedness, without impairing or releasing the liability of any other party;
      (e) extend the time for payment of the Note or otherwise grant indulgences
      or
      modify the Note, or (f) subordinate the lien hereof. 

    

    3.3 Maximum
      Interest.
      Any
      provision contained herein, in the Note or in any other instrument evidencing,
      securing or otherwise relating to any of the Secured Indebtedness to the
      contrary notwithstanding, the Beneficiary shall not be entitled to receive
      or
      collect, nor shall Grantor be obligated to pay, interest on any of the Secured
      Indebtedness in excess of the maximum rate of interest permitted by applicable
      law, and if any provision herein, in the Note or in such other instrument shall
      ever be construed or held to permit the collection or to require the payment
      of
      any amount of interest in excess of that permitted by applicable law, the
      provisions of the Note shall control and shall override any contrary or
      inconsistent provision herein or in such other document or
      instrument.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    3.4 Notices.
      Any and
      all notices, elections, demands, requests, and responses thereto permitted
      or
      required to be given under this Deed of Trust shall be in writing, signed by
      or
      on behalf of the party giving the same, and shall be deemed to have been
      properly given and shall be effective upon being personally delivered, or upon
      being deposited in the United States mail, postage prepaid, certified with
      return receipt requested, or upon being deposited with an overnight commercial
      delivery service requiring proof of delivery, to the other party at the address
      of such other party set forth above or at such other address within the
      continental United States or Canada as such other party may designate by notice
      specifically designated as a notice of change of address and given in accordance
      herewith; provided, however, that the time period in which a response to any
      such notice, election, demand or request must be given shall commence on the
      date of receipt thereof; and provided further that no notice of change of
      address shall be effective until the date of receipt thereof. Personal delivery
      to a party or to any officer, partner, agent or employee of such party at said
      address shall constitute receipt. Rejection or other refusal to accept or
      inability to deliver because of changed address of which no notice has been
      received shall also constitute receipt. Any such notice, election, demand,
      request or response to the respective parties shall be addressed to the
      addresses provided above. A copy of any notices addressed to the Trustee and/or
      the Beneficiary shall be delivered at the same time to Pushor Mitchell LLP,
      3rd
      Floor,
      1665 Ellis Street, Kelowna, BC, Canada, V1Y 2B3, attention E. Blair
      Forrest.

    

    3.5 Binding
      Effect.
      The
      terms, provisions, covenants and conditions hereof shall be binding upon Grantor
      and the heirs, representatives, successors and assigns of Grantor, including
      all
      heirs and successors in interest of Grantor in and to all or any part of the
      Property and/or the Associated Materials, and shall inure to the benefit of
      Grantor, the Trustee and the Beneficiary and their respective successors and
      assigns, substitutes and assigns and shall constitute covenants running with
      the
      land. All references in this Deed of Trust to Grantor, the Trustee or the
      Beneficiary shall be deemed to include all such representatives, successors,
      substitutes and assigns.

    

    3.6 Invalidity.
      A
      determination that any provision of this Deed of Trust is unenforceable or
      invalid shall not affect the enforceability or validity of any remaining
      provision, and any determination that the application of any provision of this
      Deed of Trust to any person or circumstance is illegal or unenforceable shall
      not affect the enforceability or validity of such provision as it may apply
      to
      any other persons or circumstances.

    

    3.7 Redemption.
      In the
      event the Property or any part thereof shall be sold upon foreclosure as
      provided hereunder, the sum for which the same shall have been sold shall,
      for
      purposes of redemption (pursuant to Section 38-38-301, et seq., C.R.S., or
      the
      corresponding provisions of any future law), bear interest at the rate of
      interest provided in the Note from the date of sale until paid. 

    

    3.8 Governing
      Law.
      This
      Deed of Trust and the Note secured hereby shall be governed by and construed
      according to the laws of the State of Colorado at the date of
      execution.

    

    3.9 Grantor’s
      Liability.
      The
      Grantor’s liability is limited pursuant to the terms of the Note. In the event
      of a default under the Note, the Grantor shall be personally liable solely
      for
      the Limited Recourse Amount as defined in the Note, subject to the terms and
      limitations contained in the Note..

    

    

    

    

    Signature
      Page Follows

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Grantor has executed this instrument as of the date first set forth
      above.

    

    
      	 	GRANTOR: 
	 	HUNTER
              BATES
              MINING CORPORATION
	 
 	 
 	 
 
	 	By:/s/
              Mark D. Dacko	 
	 	
            
	 	 

     

    

     

    

    

    

    
 

    

    

    

    STATE
      OF
      MINNESOTA          )

    )
      ss.

    COUNTY
      OF
      Hennepin  )

    

    The
      foregoing instrument was acknowledged before me this 6th day of June, 2008,
      by
      Mark D. Dacko, as CFO of Hunter Bates Mining Corporation, a Minnesota
      corporation, on behalf of the corporation.

    

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	 	/s/
              Karen Bjorkman 
	 	
            
	 	Notary
              Public

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