DEED OF TRUST AND SECURITY AGREEMENT
EXHIBIT
10.3
THIS
DEED OF TRUST AND SECURITY AGREEMENT
(“Deed
of Trust”) is made as of the 6th day of June, 2008, between XXXXXX XXXXX MINING
CORPORATION,
a
Minnesota corporation (“Grantor”), having an office at 900 IDS Center, 00 Xxxxx
0xx
Xxxxxx,
Xxxxxxxxxxx XX 00000-0000, and the Xxxxxx County Public Trustee (“Trustee”),
whose address is 000 Xxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxx Xxxx, XX,
00000.
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 Xxxxxx X. Xxxxx, a Colorado resident
whose address is 00000 Xxxx Xxxxxx Xx, Xxxx Xxxxxx, XX, 00000 (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 Xxxxxx 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 Xxxxxx Xxxxxxxx XXX,
0xx
Xxxxx,
0000 Xxxxx Xxxxxx, Xxxxxxx, XX, Xxxxxx, X0X 0X0, attention E. Xxxxx
Xxxxxxx.
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 00-00-000, 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: | ||
| XXXXXX XXXXX MINING CORPORATION | ||
| |
|
|
| By:/s/ Xxxx X. Xxxxx | ||
STATE
OF
MINNESOTA )
)
ss.
COUNTY
OF
Hennepin )
The
foregoing instrument was acknowledged before me this 6th day of June, 2008,
by
Xxxx X. Xxxxx, as CFO of Xxxxxx Xxxxx Mining Corporation, a Minnesota
corporation, on behalf of the corporation.
| |
|
|
| /s/ Xxxxx Xxxxxxxx | ||
| Notary Public | ||
