Silver Bow Mining Corp DEFA14A, filed Sep 11, 2026
Silver Bow Mining Corp. (SBMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 4, 2026
Silver Bow Mining Corp.
(Exact name of registrant as specified in its charter)
| British Columbia | 001-43242 | 98-1858068 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
|
1401 Idaho Street Butte, Montana |
59701 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 406-718-7593
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol | Name of each exchange on which registered: | ||
| Common Shares, no par value | SBMT | NYSE American, LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act or 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Initial Closing under Asset Purchase Agreement
On September 4, 2026, the U.S. Bankruptcy Court for the District of Montana entered an order approving the sale of specified assets of Montana Tunnels Mining, Inc. (“MTMI”) to Silver Bow Mining, Inc. (the “Company”) and its wholly owned subsidiary, Silver Bow Tunnels Corp. (“SBTC”), pursuant to Sections 105(a) and 363 of the U.S. Bankruptcy Code (the “Court Order”).
Pursuant to the terms and conditions of that certain previously announced asset purchase agreement by and among the Company and SBTC and Montana Goldfields, Inc. (“MTGF”) and MTMI dated August 21, 2026 (the “APA”), upon receipt of the Court Order and satisfaction of certain other conditions contained in the APA, the initial closing (the “Initial Closing”) as set forth in the APA occurred on September 4, 2026.
As part of the Initial Closing, the Company released approximately $28.58 million from an escrow account to satisfy specified creditor obligations associated with the acquired assets under the APA, including approximately $4.27 million in respect of amounts owing to Jefferson County, Montana and approximately $20.78 million in respect of specified obligations owing to the Montana Department of Environmental Quality, with any excess amounts in the escrow account being released to MTGF (the “Cash Payment”).
In exchange for the Cash Payment, on September 4, 2026, MTGF issued to the Company a senior secured promissory note (the “Note”) in the amount of approximately $28.58 million and the Company and MTGF entered into a general security agreement (the “General Security Agreement”) securing the Note against certain assets of MTGF. The Company and MTGF and MTMI also entered into a guaranty and pledge agreement (the “Guaranty and Pledge Agreement”) pursuant to which MTMI guaranteed the payment of MTGF’s obligations under the Note and MTGF pledged its shares of MTMI as security for the payment of the Note. In relation to the Guaranty and Pledge Agreement, MTMI issued to the Company a mortgage, security agreement and fixture financing statement (the “Mortgage”) securing MTMI’s obligation to guaranty the payment of the Note against certain of the real property interests and fixtures of MTMI. The Note does not bear any interest (except with respect to any principal amount not paid at the maturity date, which will bear interest at a rate of 10% per annum) and, if not extinguished at the Final Closing (as defined in the APA), will mature upon the earlier to occur of (i) any event of default (subject to applicable cure periods), (ii) termination of the APA by the Company due to a material breach by MTGF that remains uncured after written notice and a 30 day cure period, or (iii) 5:00 p.m. Denver Time on November 30, 2026.
As part of the Initial Closing, the Company also entered into a support agreement with certain stockholders of MTGF pursuant to which the stockholders of MTGF agreed to support the acquisition transaction under the APA (the “Acquisition”), not support alternative transactions to the Acquisition and not object to or otherwise hinder the closing the Acquisition (the “Support Agreement”).
The foregoing description of the material terms of the Note, the General Security Agreement, the Guaranty and Pledge Agreement, the Mortgage and the Support Agreement is qualified by the terms and conditions of such agreements, copies of which are filed as Exhibits 10.1 through 10.8 hereto. For a description of the material terms of the APA, see Item 1.01 in the Company’s Current Report on Form 8-K as filed with the Commission on August 24, 2026.
Financing Transaction with Montana Goldfields, Inc.
On September 4, 2026, in connection with the Initial Closing, the Company entered into a note purchase agreement with MTGF (the “Note Purchase Agreement”), pursuant to which the Company paid to MTGF $3 million for the purchase of a senior secured note of MTGF in principal amount of $3 million. On September 10, 2026, the Company entered into the same form of note purchase agreement with MTGF, pursuant to which the Company paid to MTGF an additional $2 million for the purchase of an additional senior secured note of MTGF in principal amount of $2 million (together with the $3 million senior secured note of MTGF (the “MTGF Notes”).
The MTGF Notes bear interest at a rate of 8% per annum and become due and payable six months after the date of issuance (the “Maturity Date”). The MTGF Notes can be paid either (i) by MTGF surrendering to the Company for cancellation 1,155,555 final closing contingent value rights to be issued by the Company to MTGF at the Final Closing under the APA (the “Settlement CVRs”) or (ii) if the final closing under the APA has not occurred and the Settlement CVRs have not been issued at the Maturity Date, by payment in cash. Accrued and unpaid interest shall be payable on the Maturity Date. If an Event of Default (as defined in the MTGF Notes) occurs and is ongoing, the MTGF Notes shall bear interest at a rate of ten percent (10%) per annum.
In connection with the issuance of the MTGF Notes, the Company and MTGF entered into security and pledge agreement, amended and restated on September 10, 2026 (the “Amended and Restated Security and Pledge Agreement”), which secures the payment of the MTGF Notes through a security interest granted to the Company in the Settlement CVRs and in the shares of MTGF’s wholly-owned subsidiary, Elkhorn Goldfields, Inc.
The foregoing description of the material terms of the MTGF Notes, the form of Note Purchase Agreement and the Amended and Restated Security and Pledge Agreement is qualified by the terms and conditions of such agreements, copies of which are filed as Exhibits 10.6 through 10.9 hereto. .
Item 9.01 Financial Statements and Exhibits
(*) Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K, but a copy will be furnished supplementally to the SEC upon request.
(**) Certain personal information has been redacted pursuant to Item 601(a)(6) of Regulation S-K.
Additional information and where to find it
This communication may be deemed to be solicitation material in respect of the proposed shareholders meeting of the Company to approve the issuance of the CVRs and the underlying common shares. In connection with the proposed shareholders meeting, the Company intends to file relevant materials with the U.S. Securities and Exchange Commission (the “SEC”), including the Company’s proxy statement in preliminary and definitive form. INVESTORS AND SHAREHOLDERS OF SILVER BOW MINING ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING SILVER BOW MINING’S PROXY STATEMENT (WHEN THEY ARE AVAILABLE), BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE SHAREHOLDER APPROVAL BEING REQUESTED. Investors and shareholders of the Company are or will be able to obtain these documents (when they are available) free of charge from the SEC’s website at www.sec.gov, or free of charge from the Company under the “Investors” section of the Company’s website at www.silverbowmining.com/investors or by sending a request by e-mail to ir@silverbowmining.com or by mail to 1401 Idaho Street, Butte, Montana 59701, attention: Corporate Secretary.
Participants in the solicitation
The Company and certain of its respective directors and executive officers, under SEC rules, may be deemed to be “participants” in the solicitation of proxies from shareholders of the Company in connection with the proposed transaction. Information about the Company’s directors and executive officers is available in the Company’s registration statement on Form S-1/A, which was filed with the SEC on April 21, 2026. To the extent holdings of the Company’s securities by their respective directors or executive officers have changed since the amounts set forth in the Registration Statement on Form S-1/A, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s shareholders generally, will be set forth in the Company’s proxy statement relating to the proposed approval by shareholders, when it becomes available.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SILVER BOW MINING CORP. | |||
| Date: September 11, 2026 | By: | /s/ C. Travis Naugle | |
|
C. Travis Naugle Chief Executive Officer | |||
Exhibit 10.1
SECURED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE.
SECURED PROMISSORY NOTE
$28,575,808.00 |
September 4, 2026 |
FOR VALUE RECEIVED, Montana Goldfields, Inc. (the “Company”), hereby promises to pay to the order of Silver Bow Mining Corp. (including any future holder of this Note, the “Lender”), the principal amount of Twenty-Eight Million Five Hundred Seventy-Five Thousand Eight Hundred Eight Dollars ($28,575,808.00) upon the terms and subject to the conditions set forth herein (this “Note”). This Note is issued in consideration of, and concurrently with, Lender’s payment of $28,575,808.00 of the debts due and payable by the Company and the Company’s wholly-owned subsidiary, Montana Tunnels Mining, Inc. (“MTMI”) pursuant to the terms and conditions of that certain asset purchase agreement dated August 21, 2026 by and between the Company and MTMI on the one hand and the Lender and its wholly-owned subsidiary, Silver Bow Tunnels Corp., on the other hand (the “Purchase Agreement”), with any remainder of the Escrowed Funds (as defined the Purchase Agreement) to be paid directly to MTMI as consideration for this Note, and is secured pursuant to that certain security and pledge agreement between the Company and the Lender of even date herewith (the “Security Agreement”), guaranty agreement between MTMI and the Lender of even date herewith (the “Guaranty”) and that certain Mortgage and Fixture Filing of even date herewith between MTMI and the Lender (the “Mortgage” and, together with this Note, the Security Agreement and the Guaranty, the “Loan Documents”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Purchase Agreement.
1. Payments. The principal amount of this Note shall be due and payable in full on the Maturity Date (as defined herein), except that upon the occurrence of the Final Closing (as defined in the Purchase Agreement (the “Final Closing”), this Note shall automatically be deemed satisfied and extinguished in full, and the principal amount hereof shall be credited against the purchase price payable under the Purchase Agreement (the "Purchase Price") in accordance with the Purchase Agreement. As stated in Section 2.3(a) of the Purchase Agreement, to the extent the principal amount of this Note exceeds the aggregate amount of the MTMI Debts, the remaining balance after payments of the MTMI Debts shall be released directly to the Company in cash concurrently with the First Closing, in accordance with the Final Order and the
terms of the Escrow Agreement. Such release shall constitute payment of a portion of the Purchase Price and shall not be deemed or construed as a cancellation, forgiveness, or discharge of indebtedness, but rather as a disbursement of purchase price consideration from Lender to the Company in accordance with the Purchase Agreement.
2. Maturity; Extinguishment. If this Note is not extinguished at the Final Closing as set forth in Section 1, the outstanding principal amount shall become immediately due and payable upon the earliest to occur of: (i) any Event of Default (as defined herein), (ii) termination of the Purchase Agreement by the Lender due to a material breach by the Company that remains uncured after written notice and a thirty (30) day cure period, or (iii) 5 p.m. Denver Time on November 30, 2026 (the "Maturity Date"). All payments shall be made in lawful money of the United States at such place as the Lender may designate in writing.
3. Interest. This Note is non-interest-bearing. No interest shall accrue or be payable at any time, and no periodic interest payment dates shall apply. No original issue discount or similar fees are payable in respect of this Note. Any principal amount not paid at the Maturity Date will bear interest at the rate of 10% per annum (“Default Interest”) until paid in full.
4. Prepayment. The Company may prepay this Note, in whole or in part, at any time prior to the Maturity Date or extinguishment of this Note pursuant to Section 2, without premium or penalty, upon at least two (2) Business Days’ prior written notice to the Lender.
5. Event of Default. For purposes of this Note, an “Event of Default” shall be deemed to have occurred upon the occurrence of any Event of Default as defined in Section 4.1 of the Mortgage.
Upon the occurrence of an Event of Default, the Lender shall deliver to the Company written notice describing such Event of Default in reasonable detail. If the Event of Default is capable of being cured, the Company shall have until the end of the cure period as set forth in Section 4.1 (or, if no cure period is specified therein, ninety (90) days after receipt of such notice) to cure the Event of Default. If the Event of Default is not cured within such period (or is not reasonably capable of cure), then all outstanding principal under this Note shall, at the Lender’s election, become immediately due and payable, and the Lender may exercise all rights and remedies of a secured party under the applicable Uniform Commercial Code and applicable law, including foreclosing on the real property interests and related fixtures described in the Mortgage, selling foreclosed assets, and receiving all rents, issues, profits, damages, royalties, income and other benefits now or hereafter derived from the real property interests and the fixtures. The Lender may also seek specific performance and injunctive or other equitable relief. All remedies are cumulative and may be exercised separately, successively or concurrently.
Notwithstanding the foregoing, in no event shall the Lender be entitled to recover amounts in excess of the outstanding principal amount of this Note plus any Default Interest and any and all reasonable and documented costs and expenses (including counsel fees and expenses) incurred by the Secured Party in enforcing any rights under this Note.
6. Security Interest.
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(a) Payment of all amounts due or to become due under this Note and of all other obligations of the Company pursuant to the Loan Documents are secured by a first priority security interest in the Collateral described in the Security Agreement and property interests and related fixtures as described in the Mortgage.
7. Notices. All notices provided for in this Note shall be in writing and deemed to be duly given upon (a) personal delivery, (b) four (4) Business Days after deposit in the United States mail, certified or registered, postage prepaid, (c) one (1) Business Day after deposit with a reputable, national overnight courier service for next business day delivery with all charges prepaid, or (d) confirmed fax transmission or email to an email address provided by Lender. Other than as expressly required herein, the Company waives presentment and demand for payment, protest, notice of protest, and notice of dishonor. Notices shall be sent to the parties at the following addresses (or to such other address or electronic mail address as a party may designate by notice given in accordance with this Section):
If to Company:
Montana Goldfields, Inc.
Attn: Patrick W.M. Imeson
Address: 1610 Wynkoop Street, Suite 400
Denver, CO 80202
If to Lender:
Silver Bow Mining Corp.
Attn: C. Travis Naugle
Address: 1401 Idaho Street
Butte, Montana 59701
8. Governing Law. This Note, and any disputes arising under this Note, will be governed by and construed in accordance with the laws of the State of Delaware, without regard to provisions of Delaware law concerning conflicts of laws.
9. Savings Clause. If any provision of this Note is determined to be invalid, illegal or unenforceable, such provision shall be deemed modified to the minimum extent necessary to make it valid and enforceable or, if such modification is not possible, deemed deleted, without affecting the validity or enforceability of the remaining provisions of this Note.
10. Transfer; Successors and Assigns. This Note is in registered form within the meaning of 26 C.F.R. Section 1.871-14(c)(1)(i) for United States federal income and withholding tax purposes. Except as set forth below, this Note may be transferred only in compliance with any applicable laws and upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form reasonably satisfactory to the Company. Notwithstanding the foregoing, the Lender may not sell, transfer, assign, pledge or hypothecate this Note, in whole or in part, without the prior written consent of the Company, which consent may be granted or withheld in the Company’s sole discretion; provided, that no such consent shall be required for a transfer or assignment to an Affiliate of the Lender. Upon such transfer, this Note shall be reissued to and registered in the name of the
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transferee, or a new Note representing the then outstanding principal amount shall be issued and registered in the name of the transferee.
11. Waiver and Amendment. Any provision or provisions of this Note may be amended, waived or modified, and this Note may be amended and restated in its entirety, only upon the written consent of the Company and Lender.
12. Collection Costs. In the event of any action, arbitration or other proceeding to enforce or interpret this Note or any of the Loan Documents, the prevailing party shall be entitled to recover from the non-prevailing party, on demand, its reasonable and documented costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys' fees and expenses, court costs, costs of collection, costs of protecting, preserving or enforcing the Collateral, costs incurred in any bankruptcy, insolvency or restructuring proceeding, and all costs incurred on appeal or in any post-judgment proceedings.
[Remainder of Page Intentionally Left Blank]
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The Company has executed this Secured Promissory Note as of the date first above written.
| Montana Goldfields, Inc. | ||
| By: | /s/ Patrick Imeson | |
| Name: Patrick W.M. Imeson | ||
| Title: Chief Executive Officer | ||
Acknowledged: |
||
| Silver Bow Mining Corp. | ||
| By: | /s/ Wade Black | |
| Name: Wade Black | ||
| Title: Chief Financial Officer | ||
Exhibit 10.2
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT (as amended, restated, supplemented, or otherwise modified, this “Agreement”) is made and entered as of September 4, 2026 by MONTANA GOLDFIELDS, INC. (“Pledgor”), for the benefit of SILVER BOW MINING CORP. (“Lender”). Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Note (as defined below).
W I T N E S S E T H:
WHEREAS, Pledgor and Lender are parties to that certain Secured Promissory Note dated as of September 4, 2026 in the original principal amount of $28,575,808.00 (the “Note”);
WHEREAS, Pledgor and Lender are parties to an asset purchase agreement dated August 21, 2026 (the “Purchase Agreement”), which contemplates, among other things, that the Note will be secured by a first-priority pledge of the equity interests of Pledgor’s subsidiary, Montana Tunnels Mining, Inc. (“MTMI”) and that such Note will be extinguished and credited against the Purchase Price (as defined in the Note) upon the Final Closing under the Purchase Agreement; and
WHEREAS, to secure the prompt payment and performance of all obligations of Pledgor under the Note and this Agreement, Pledgor agrees to grant to Lender a first-priority security interest in the equity interests identified on Schedule I.
NOW, THEREFORE, for and in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
A. PLEDGE OF COLLATERAL
1. Pledge. Pledgor hereby grants to Lender a continuing first-priority security interest in the following collateral, existing as of the date hereof (collectively, the “Collateral”):
| (i) | one hundred percent (100%) of the issued and outstanding equity interests of each subsidiary of Pledgor listed on Schedule I, together with any additional equity interests in such subsidiaries acquired by Pledgor after the date hereof (collectively, the “Pledged Interests”), including, without limitation, the equity interests listed on Schedule I attached hereto, in each case whether or not evidenced or represented by any stock or unit certificate, certificated security or other instrument and any and all certificates, if any, representing the Pledged Interests, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Interests; |
| (ii) | all voting rights, management rights, conversion and registration rights and rights |
of recovery for violations of applicable laws and other rights incidental to the ownership of any of the foregoing, whether arising under the organizational documents of any subsidiary or otherwise; and
| (iii) | any and all proceeds and products of the foregoing. |
Pledgor from time to time shall execute all such documents, and take all such other actions as Lender may reasonably request from time to time to perfect, confirm and/or evidence the security interest granted hereby as a perfected security interest (including without limitation, assigning and delivering to Lender stock certificates, along with stock powers duly executed in blank with respect to the Collateral that are certificated securities and executing control agreements or taking such other actions as Lender may reasonably request with respect to any uncertificated Pledged Interests to perfect or maintain the perfection of Lender’s security interest therein). Pledgor authorizes Lender to file such UCC financing statements, amendments, and continuation statements covering the Collateral and containing such collateral descriptions as are reasonably necessary to perfect or to maintain the perfection of Lender’s security interest. Pledgor agrees to pay all taxes, fees, costs and expenses (including reasonable and documented attorneys' fees and expenses) incurred by Lender in connection with the preparation, filing or recordation thereof. Schedule I reflects each subsidiary of Pledgor and the Pledged Interests owned by Pledgor therein as of the date hereof. Within ten (10) days of acquiring any Pledged Interests, Pledgor shall deliver to Lender an updated Schedule I reflecting such acquisition; provided, however, that the failure of Pledgor to so update or deliver to Lender an updated Schedule I shall not in any way affect Lender’s rights in and to such Pledged Interests and other Collateral in accordance with this Agreement.
2. Voting; Distributions.
a. Voting. So long as no Event of Default shall have occurred and be continuing, Pledgor shall have the sole right to exercise any voting and consensual rights with respect to the Collateral on all matters, and to grant any consents and exercise all other rights as owner or holder of the Collateral. Upon the occurrence and during the continuance of an Event of Default and following five (5) business days’ prior written notice to Pledgor, Lender shall be entitled, in addition to any other rights herein contained, to exercise, in Lender’s judgment, any voting and consensual rights with respect to the Collateral on all matters and to grant any consents and exercise all other rights as owner or holder of the Collateral.
Upon Lender’s written request, Pledgor shall execute and deliver to Lender irrevocable proxies with respect to the Collateral in form satisfactory to Lender, but no such additional proxy shall be necessary for Lender to exercise the voting rights described above. Lender shall not have any duty to exercise any of the foregoing rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. By written notice to Pledgor, Lender may relinquish, either partially or completely, in accordance with any terms or conditions Lender may set forth in such notice, any or all voting rights Lender may acquire pursuant to this Section A.2.
THIS AGREEMENT SHALL CONSTITUTE AN IRREVOCABLE PROXY, COUPLED WITH AN INTEREST, EXERCISABLE BY LENDER IN ACCORDANCE WITH THIS AGREEMENT.
b. Distributions. So long as no Event of Default shall have occurred and be continuing,
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Pledgor shall have the sole right to receive all dividends and other distributions arising from the Collateral. Upon the occurrence and during the continuance of an Event of Default, (i) Pledgor’s right to receive such dividends and other distributions shall terminate upon five (5) business days’ prior written notice to Pledgor, unless and until reinstated in writing by Lender, and (ii) Lender shall be entitled, in addition to any other rights contained herein, to receive all dividends and other distributions arising from the Collateral. Any portion of the Collateral received by Pledgor in violation of this Agreement shall remain subject to Lender’s security interest and lien hereunder, shall be immediately delivered to Lender in the same form as received, except for any necessary endorsements, and, pending such delivery, shall be held in trust for Lender by Pledgor and kept separate from Pledgor’s other assets.
3. Representations; Covenants. Pledgor represents, warrants and covenants to Lender as follows:
a. Pledgor is the legal and beneficial owner of, has good and marketable title to, and has full right and authority to pledge and assign the Collateral, free and clear of all liens except for the security interest granted to Lender pursuant to this Agreement.
b. Pledgor owns one hundred percent (100%) of the issued and outstanding equity interests listed on Schedule I hereof.
c. Pledgor shall keep the Collateral free from any liens other than the security interest granted pursuant to this Agreement and shall pay and discharge when due all taxes, levies and other charges upon the Collateral except for such taxes as are being disputed in good faith by appropriate proceedings. Pledgor shall defend the Collateral against all claims and legal proceedings of third parties that could adversely affect Lender’s security interest therein.
d. Pledgor’s legal name (as set forth in its organizational documents) is Montana Goldfields, Inc. Pledgor has delivered to Lender a true, correct and complete copy of its organizational documents.
e. The execution, delivery and performance of this Agreement have been duly authorized by all necessary organizational action of Pledgor and do not violate Pledgor's organizational documents or any applicable law, judgment, order or material agreement binding upon Pledgor.
4. Action Upon an Event of Default. In addition to its rights and remedies provided hereunder, whenever an Event of Default, as determined in accordance with the terms of the Note, shall have occurred and be continuing, Lender shall have all rights and remedies of a secured party upon default under the applicable Uniform Commercial Code or other applicable law. Notwithstanding the foregoing, Lender shall exercise all remedies hereunder in a commercially reasonable manner. Without limiting the foregoing, Lender shall have the right, at any time and from time to time following the occurrence and during the continuance of an Event of Default, to sell, resell, assign and deliver, in Lender’s discretion, all or any of the Collateral, in one or more transactions at the same or different times, and any right, title, interest, claim and/or demand therein or right of redemption thereof, on any securities exchange on which the Collateral or any of it may be listed or at public or private sale, for cash or upon credit for future delivery, and in connection therewith Lender may grant options, subject in all respects to any rights of redemption that may not be waived under applicable law. If any of the Collateral is sold by Lender upon credit
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for future delivery, Lender shall not be liable for any failure of the purchaser to purchase or pay for the same and, in the event of any such failure, Lender may resell such Collateral. In no event shall Pledgor be credited with any part of the proceeds of sale of any Collateral until cash payment of such sale has actually been received by Lender.
5. Sale of Collateral. Lender shall give Pledgor at least twenty (20) days prior written notice of the time and place of any sale or other disposition to be made pursuant to Section A.4 above. Lender shall not be obligated to make any sale of Collateral if Lender shall determine not to do so, regardless of the fact that notice of sale may have been given. Upon each private sale of Collateral of a type customarily sold in a recognized market and upon each public sale, Lender or any holder of the Note may purchase all or any of the Collateral being sold, free from any equity or right of redemption, subject to any rights that may not be waived under applicable law, and may make payments (by endorsement without recourse) on the Note, in lieu of cash, to the extent of the amount then due thereon, which Pledgor hereby agrees to accept.
6. Private Sale. Pledgor recognizes that Lender may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, as now or hereafter in effect, or in applicable Blue Sky or other state securities laws, as now or hereafter in effect, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor agrees that private sales so made may be at prices and other terms less favorable than if such Collateral were sold at public sales, and that Lender has no obligation to delay sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral to register such Collateral for public sale under such applicable securities laws. Pledgor acknowledges that a private sale conducted under the circumstances described above may be commercially reasonable notwithstanding that the sale could result in a lower price than a public sale.
7. Cumulative Remedies. The remedies provided herein in favor of Lender shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of Lender under the Loan Documents (as defined in the Note) or existing at law or in equity.
8. Power of Attorney to Execute. Upon and during the continuance of an Event of Default, Lender shall have the right, for and in the name, place and stead of Pledgor, to execute such endorsements, assignments or other documents or instruments, including instruments or agreements exercising its voting and consensual rights hereunder and instruments of conveyance or transfer with respect to all or any of the Collateral as may be reasonably necessary in order to assure its rights hereunder. Without limiting the generality of the foregoing, upon and during the continuance of an Event of Default, Lender shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to Pledgor representing any interest, dividend or other distribution payable in respect of the Collateral that Lender is entitled to receive hereunder or any part thereof and to give full discharge for the same. Such rights shall be subject to the limitations and restrictions set forth in this Agreement. This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of Pledgor’s obligations under the Loan Documents (as defined in the Note) remain outstanding.
9. Application of Proceeds. All cash proceeds received by Lender from any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by
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Lender against all or any part of the amounts due under the Note in the following order:
(a) First, to expenses payable by Pledgor pursuant to Section A.10 hereof or otherwise under any of the Loan Documents (as defined in the Note);
(b) Second, on account of all principal of the Note then due or owing; and
(c) Third, to any other amounts under the Note or the other Loan Documents (as defined in the Note) then due or owing.
Any surplus of such cash or cash proceeds held by Lender and remaining after the payment, satisfaction or extinguishment of the Note and the payment or satisfaction of all other obligations under the Loan Documents (as defined in the Note) shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus, and Pledgor shall be liable for any deficiency.
10. Indemnity and Expenses. Pledgor hereby agrees to indemnify and hold harmless Lender from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from Lender’s gross negligence or willful misconduct. Upon demand, Pledgor will pay, or cause to be paid, to Lender the amount of any and all reasonable expenses, including but not limited to reasonable fees and disbursements of its counsel and of any experts and agents, which Lender may incur in connection with the administration of this Agreement, the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, the exercise or enforcement of any of the rights of Lender hereunder, and the failure by Pledgor to perform or observe any of the provisions hereof.
11. No Duty on Lender. The powers conferred on Lender hereunder are solely to protect Lender’s interest in the Collateral and shall not impose any duty to exercise any such powers. Except for the safe custody of any Collateral in Lender’s possession and the accounting for monies actually received by Lender hereunder, Lender shall not have any duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Nothing contained in this Agreement shall be construed or interpreted to transfer to Lender any obligations of a shareholder or member of any issuer of the Pledged Interests, or cause Lender to be deemed a shareholder or member of any such issuer prior to Lender’s express exercise of its rights to become a shareholder or member. To the extent permitted by applicable law, Pledgor waives all claims, damages and demands against Lender arising out of the lawful sale or disposition of the Collateral in accordance with the terms hereof.
B. MISCELLANEOUS
1. Term. The pledge made by Pledgor hereunder shall serve as security for the performance of all the covenants and conditions of Pledgor under the Note and the other Loan Documents (as defined in the Note) until Pledgor has satisfied or discharged its obligations under the Loan Documents (as defined in the Note).
2. Further Assurances. Pledgor shall do, make, execute and deliver all such additional and further acts, things, deeds, assurances, instruments and documents as Lender may reasonably request to perfect, preserve and protect Lender’s rights hereunder or in any of the Collateral, including, without limitation, placing legends on certificates representing the Collateral or on the
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books and records pertaining to the Collateral stating that Lender has a security interest therein and/or executing one or more control agreements.
3. Performance or Termination of Obligations. Upon repayment in full or other satisfaction or extinguishment of the Note in accordance with its terms and the satisfaction of all other obligations under the Loan Documents (as defined in the Note), other than contingent obligations for which no claim has been asserted, the security interest granted herein shall automatically terminate. Lender shall, at the expense of Lender, return any certificates and stock powers then held by Lender and execute such releases, UCC termination statements and other instruments as Pledgor may reasonably request to evidence such termination.
4. Notices. All notices, requests, demands, consents, approvals and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given: (a) upon personal delivery; (b) one (1) business day after deposit with a nationally recognized overnight courier service, postage prepaid; (c) three (3) business days after deposit in the United States mail, certified or registered mail, postage prepaid, return receipt requested; or (d) upon transmission by electronic mail, provided that no automated notice of non-delivery or similar transmission error is received by the sender. Notices shall be sent to the parties at the following addresses (or to such other address or electronic mail address as a party may designate by notice given in accordance with this Section):
If to Pledgor:
Montana Goldfields, Inc.
Attn: Patrick W.M. Imeson
Address: 1610 Wynkoop Street, Suite 400
Denver, CO 80202
If to Lender:
Silver Bow Mining Corp.
Attn: C. Travis Naugle
Address: 1401 Idaho Street
Butte, Montana 59701
5. Governing Law. This Agreement, its construction and the determination of any rights, duties or remedies of the parties arising out of or relating to this Agreement, shall be governed by and construed under and in accordance with the laws of the State of Delaware without respect to any conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
6. Binding Effect. This Agreement shall bind and inure to the benefit of Pledgor and Lender and their legal representatives, successors and permitted assigns.
7. Entire Agreement. This Agreement, together with the Note, the Mortgage(As defined in the Note) and the MOU, and, once executed and delivered, the Definitive Agreement, constitutes the entire agreement of the parties with respect to the subject matter of this Agreement. This Agreement may be modified, amended or terminated only by a written agreement executed
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by Pledgor and Lender.
8. Assignment. This Agreement shall not be assigned by Pledgor without the written consent of Lender. Lender may assign its rights hereunder with prior written notice to Pledgor; provided that no such assignment shall increase the obligations of Pledgor hereunder. This Agreement shall be binding on, and inure to the benefit of, the parties to it and their respective legal representatives, successors and permitted assigns.
9. Rights and Waivers. No failure or delay on the part of Lender in exercising any right, power or privilege under this Agreement or any applicable law shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver or modification of any right, power or privilege of Lender or of any obligation of Pledgor shall be effective unless such waiver or modification is in writing, and signed by Lender and then only to the extent set forth therein. A waiver by Lender of any right, power, or privilege hereunder on any one occasion shall not be construed as a bar to, or waiver of, the exercise of any such right, power or privilege which Lender otherwise would have on any subsequent occasion.
10. Counterparts; Facsimile. This Agreement may be executed in any number of counterparts (including by facsimile, portable document format (PDF) or other electronic transmission) and by different parties hereto on separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.
[Signatures on following page]
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IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement UNDER SEAL effective the day and year first above written.
| Montana Goldfields, Inc. | ||
| By: | /s/ Patrick Imeson | |
| Name: Patrick W.M. Imeson | ||
| Title: Chief Executive Officer | ||
| Silver Bow Mining Corp. | ||
| By: | /s/ Wade Black | |
| Name: Wade Black | ||
| Title: : Chief Financial Officer | ||
[Signature Page to and the Security and Pledge Agreement] |
Schedule I
Pledged Interests
|
Subsidiary |
Pledgor |
Percentage of Issuer Owned by Pledgor | Percentage of Issuer Owned to be Pledged by Pledgor |
| Montana Tunnel Mining, Inc. | Montana Goldfields, Inc. | 100% | 100% |
Exhibit 10.3
GUARANTY
This GUARANTY, dated as of September 4, 2026 (this “Guaranty”), and made by Montana Tunnels Mining, Inc., a Delaware corporation (“Guarantor”), for the benefit of Silver Bow Mining Corp. (the “Secured Party” or “Lender”).
W I T N E S S E T H :
WHEREAS, the Guarantor is the direct, wholly-owned subsidiary of Montana Goldfields, Inc., a Delaware corporation (the “Parent”);
WHEREAS, Parent and Lender are parties to that certain Secured Promissory Note dated as of September 4, 2026 in the original principal amount of $28,575,808.00 (the “Note”);
WHEREAS, Parent and Lender are parties to an asset purchase agreement dated August 21, 2026, (the “Purchase Agreement”), which contemplates, among other things, that the Note will be secured by a first-priority security interest in real property interests and related fixtures described in the Mortgage (as defined below) and that such Note will be extinguished and credited against the Purchase Price (as defined in the Note) upon the Final Closing under the Purchase Agreement; and
WHEREAS, it is a condition precedent to Lender’s purchase of the Note that Guarantor unconditionally guarantee payment and performance to Lender of the Obligations (as herein defined) and issue a Mortgage, Security Agreement, and Fixture Filing for certain real property of the Guarantor and fixtures and improvements thereon (the “Mortgage”) to secure the payment of the Obligations under this Guaranty, subject to the limitations set forth herein.
WHEREAS, the Guarantor as the wholly-owned subsidiary of Parent acknowledges and agrees that is will gain certain benefits from the Lender purchasing the Note from Parent and the use of the proceeds from the sale of the Note by Parent.
NOW, THEREFORE, in consideration of the premises and to induce Lender as the Secured Party to purchase the Note, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor agrees as follows:
SECTION 1. Definitions. Reference is hereby made to the Note for a statement of the terms thereof. All terms used in this Guaranty and the recitals hereto which are defined in the Note, and which are not otherwise defined herein, shall have the same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have the meanings set forth below:
“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency or similar laws).
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided,
however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in New York City generally are open for use by customers on such day.
“Collateral” means the real property and related fixtures of the Guarantor as set forth in the Mortgage.
“Governmental Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed Obligations” shall have the meaning set forth in Section 2 of this Guaranty.
“Guarantor” shall have the meaning set forth in the recitals hereto.
“Indemnified Party” shall have the meaning set forth in Section 13(a) of this Guaranty.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Note” shall have the meaning set forth in the recitals hereto.
“Obligations” means, collectively, (a) all debts, liabilities and obligations, present or future, direct or indirect, absolute or contingent, matured or unmatured, at any time or from time to time due or accruing, due and owing by or otherwise payable by the Company under the Note, and (b) all expenses, costs and charges incurred by or on behalf of the Secured Party in connection with the Note, including all legal fees, court costs, receiver’s or agent’s remuneration and other expenses of taking possession of, repairing, protecting, insuring, preparing for disposition, realizing, collecting, selling, transferring, delivering or obtaining payment for the Collateral, and of taking, defending or participating in any action or proceeding in connection with any of the foregoing matters or otherwise in connection with the Secured Party's interest in the Collateral, whether or not directly relating to the enforcement of the Note..
“Other Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.
“Paid in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations, or the extinguishment, satisfaction or discharge of the Note in accordance with its terms, including, without limitation, through credit against the Purchase Price upon the Final Closing under the MOU or the Definitive Agreement, or through conversion of the Note in accordance with its terms, together with the indefeasible payment in full in cash of any other Guaranteed Obligations then due and owing that survive such extinguishment, satisfaction or discharge.
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“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“Taxes” shall have the meaning set forth in Section 12(a) of this Guaranty.
“Transaction Party” means the Parent and the Guarantor, collectively, the “Transaction Parties”.
SECTION 2. Guaranty.
(a) The Guarantor hereby unconditionally and irrevocably, guaranties to the Secured Party, the punctual payment, as and when due and payable, by stated maturity or otherwise, of all Obligations, including, without limitation, all interest, make- whole and other amounts that accrue after the commencement of any Insolvency Proceeding of the Parent or the Guarantor, but only to the extent allowable under applicable law, and all fees, interest, premiums, penalties, causes of actions, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under the Note (all of the foregoing collectively being the “Guaranteed Obligations”), and agrees to pay any and all reasonable and documented costs and expenses (including counsel fees and expenses) incurred by the Secured Party in enforcing any rights under this Guaranty, the security and pledge agreement between the Parent and the Lender dated on [●], 2026 (the “Security Agreement”) or the Note or the Mortgage (collectively, the “Transaction Documents”). Without limiting the generality of the foregoing, the Guarantor’s liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Parent to the Secured Party under the Note but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Transaction Party, except for any post-petition interest, make-whole or other amounts to the extent not allowable under applicable law.
(b) The Guarantor, and by its acceptance of this Guaranty, the Secured Party, hereby confirms that it is the intention of all such Persons that this Guaranty and the Guaranteed Obligations of the Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and the Guaranteed Obligations of the Guarantor hereunder. To effectuate the foregoing intention, the Secured Party and the Guarantor hereby irrevocably agree that the Guaranteed Obligations of the Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of the Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments.
(a) The Guarantor guaranties that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Transaction Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Secured Party with respect thereto. The obligations of the Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be
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brought and prosecuted against the Guarantor to enforce such obligations, irrespective of whether any action is brought against any Transaction Party or whether any Transaction Party is joined in any such action or actions. The liability of the Guarantor under this Guaranty shall be as a primary obligor (and not merely as a surety) and shall be irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way relating to, any or all of the following:
(i) any lack of validity or enforceability of any Transaction Document;
(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity of any Guaranteed Obligations or otherwise;
(iii) any taking, exchange, release or non-perfection of any Collateral;
(iv) any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(v) any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Transaction Party;
(vi) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party or any of its subsidiaries;
(vii) any failure of the Secured Party to disclose to any Transaction Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter known to the Secured Party (the Guarantor waiving any duty on the part of the Secured Party to disclose such information);
(viii) taking any action in furtherance of the release of the Guarantor or any other Person that is liable for the Obligations from all or any part of any liability arising under or in connection with any Transaction Document without the prior written consent of the Guarantor;
(ix) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Secured Party that might otherwise constitute a defense available to, or a discharge of, any Transaction Party or any other guarantor or surety.
(b) This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
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(c) This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of the Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon the Guarantor and its respective successors and assigns. This Guaranty shall inure to the benefit of and be enforceable by the Secured Party, and its successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Secured Party may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of any Transaction Document to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Secured Party herein or otherwise, in each case as provided in the Transaction Documents.
(d) Notwithstanding anything to the contrary in this Guaranty, the Secured Party shall not enforce this Guaranty against the Guarantor unless and until the Secured Party has delivered written notice to the Guarantor of the applicable Event of Default under the Note and the Guarantor has failed to cause such Event of Default to be cured within the same cure period, if any, afforded to the Parent under the Note with respect to such Event of Default. During such cure period, the Secured Party shall not exercise any rights or remedies under this Guaranty or the Mortgage against the Guarantor or the Collateral.
SECTION 4. Waivers. To the extent permitted by applicable law, the Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other notice or formality of any kind with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Secured Party exhaust any right or take any action against any Transaction Party or any other Person or any Collateral, except to the extent such action by the Secured Party materially and adversely prejudices the Guarantor’s rights or defenses. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, the Guarantor hereby unconditionally and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Guarantor or other rights of the Guarantor to proceed against any of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of the Guarantor hereunder. The Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Secured Party to disclose to the Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Secured Party. Notwithstanding the foregoing or anything else in this Guaranty, nothing in this Section 4 shall be deemed to waive, or relieve the Secured Party of, the notice and cure requirements set forth in Section 3(d) of this Guaranty.
SECTION 5. Subrogation. The Guarantor may not exercise any rights that it may
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now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Secured Party against any Transaction Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until there has been Payment in Full of the Guaranteed Obligations. The rights of the Guarantor described in this Section 5 are suspended, and not permanently or irrevocably waived, and such rights shall automatically be reinstated and become fully exercisable by the Guarantor immediately and without any further action upon the Payment in Full of the Guaranteed Obligations. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to Payment in Full of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Secured Party and shall forthwith be paid to the Secured Party to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Transaction Document, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (a) the Guarantor shall make payment to the Secured Party of all or any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations, the Secured Party will, at the Guarantor’s request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Guaranteed Obligations resulting from such payment by the Guarantor.
SECTION 6. Representations, Warranties and Covenants.
(a) The Guarantor hereby represents and warrants as of the date first written above as follows:
(i) The Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and to execute, deliver and perform its obligations under this Guaranty and each other Transaction Document to which the Guarantor is a party, and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary except where the failure to be so qualified (individually or in the aggregate) would not result in a material adverse effect in the business of the Guarantor or its ability to fulfill its obligations under this Guaranty.
(ii) The execution, delivery and performance by the Guarantor of this Guaranty and each other Transaction Document to which the Guarantor is a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (B) do not and will not contravene its charter, articles, certificate of formation or by-laws, its
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limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on the Guarantor or its properties do not and will not result in or require the creation of any lien, security interest or encumbrance (other than pursuant to any Transaction Document) upon or with respect to any of its properties, and (C) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to it or its operations or any of its properties.
(iii) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required in connection with the due execution, delivery and performance by the Guarantor of this Guaranty or any of the other Transaction Documents to which the Guarantor is a party (other than expressly provided for in any of the Transaction Documents).
(iv) This Guaranty has been duly executed and delivered by the Guarantor and is, and each of the other Transaction Documents to which the Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
(v) There is no pending or, to the best knowledge of the Guarantor, threatened action, suit or proceeding against the Guarantor or to which any of the properties of the Guarantor is subject, before any court or other Governmental Authority or any arbitrator that (A) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (B) relates to this Guaranty or any of the other Transaction Documents to which the Guarantor is a party or any transaction contemplated hereby or thereby.
(vi) The Guarantor (A) has read and understands the terms and conditions of the Transaction Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Parent and the other Transaction Parties, and has no need of, or right to obtain from the Secured Party, any credit or other information concerning the affairs, financial condition or business of the Parent or the other Transaction Parties.
(vii) There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.
(b) The Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the covenants (except to the extent applicable only to a public company) which are set forth in the Note as if the Guarantor were a party thereto.
SECTION 7. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Secured Party may, and is hereby authorized to, at any time and from time to time, upon not less than five (5) Business Days’ prior written notice to the Guarantor (except in the case of an Insolvency Proceeding of any Transaction Party, in which case no prior notice shall be required) and to the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other
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indebtedness at any time owing by the Secured Party to or for the credit or the account of the Guarantor against any and all obligations of the Guarantor now or hereafter existing under this Guaranty or any other Transaction Document, irrespective of whether or not the Secured Party shall have made any demand under this Guaranty or any other Transaction Document and although such obligations may be contingent or unmatured. The Secured Party agrees to notify the Guarantor promptly after any such set-off and application made by the Secured Party, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Secured Party under this Section 7 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Secured Party may have under this Guaranty or any other Transaction Document in law or otherwise.
SECTION 8. Limitation on Guaranteed Obligations.
(a) Notwithstanding any provision herein contained to the contrary, the Guarantor’s liability hereunder shall be limited to an amount not to exceed as of any date of determination the greater of:
(i) the amount of all Guaranteed Obligations; and
(ii) the amount which could be claimed by the Secured Party from the Guarantor under this Guaranty without rendering such claim voidable or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, Guarantor’s right of contribution and indemnification.
(b) The Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Secured Party hereunder or under applicable law.
(c) No payment made by the Parent, the Guarantor, any other guarantor or any other Person or received or collected by the Secured Party from the Parent, any of the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by the Guarantor in respect of the Guaranteed Obligations or any payment received or collected from the Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability of the Guarantor hereunder until after all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been Paid in Full.
(d) Notwithstanding anything to the contrary in this Guaranty, the aggregate liability of the Guarantor under this Guaranty, whether for Guaranteed Obligations, indemnification, fees, expenses or otherwise, shall not exceed the sum of (i) $1,000,000.00, the original principal amount of the Note, plus (ii) the Secured Party’s reasonable, documented, out-of-pocket costs and expenses (including reasonable attorneys’ fees) actually incurred in enforcing this Guaranty, which costs and expenses under this clause (ii) shall not exceed ten percent (10%) of the amount set forth in clause (i).
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SECTION 9. Notices, Etc. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Guaranty must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an nationally recognized overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. All notices and other communications provided for hereunder shall be sent, if to the Guarantor, to the Parent’s address and/or facsimile number, or if to the Secured Party, to it at its respective address and/or facsimile number, each as set forth in Section 6.6 of the Note.
SECTION 10. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Guaranty shall be governed by the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of Nevada.
SECTION 11. WAIVER OF JURY TRIAL, ETC. EACH OF THE GUARANTOR AND THE SECURED PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
SECTION 12. Taxes.
(a) All payments made by the Guarantor hereunder or under any other Transaction Document shall be made in accordance with the terms of the respective Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other defense. Without limiting the foregoing, all such payments shall be made free and clear of and without deduction or withholding for any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of the Secured Party by the jurisdiction in which the Secured Party is organized or where it has its principal lending office, and excluding any taxes attributable to the Secured Party’s failure to comply with any applicable certification, documentation, information or other reporting requirement if such compliance is required by law as a precondition to exemption from, or reduction in the rate of, such Tax (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, “Taxes”). If the Guarantor shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Transaction Document:
(i) the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including Taxes on amounts payable to the Secured Party pursuant to this sentence) the Secured Party receives an amount equal to the sum it would have received had no such deduction or withholding been made,
(ii) the Guarantor shall make such deduction or withholding,
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(iii) the Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and
(iv) as promptly as possible thereafter, the Guarantor shall send the Secured Party an official receipt (or, if an official receipt is not available, such other documentation as shall be satisfactory to the Secured Party, as the case may be) showing payment. In addition, the Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other Taxes”).
(b) The Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid by any Indemnified Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document, and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be paid within thirty (30) days from the date on which the Secured Party makes written demand therefor, which demand shall identify the nature and amount of such Taxes or Other Taxes.
(c) If the Guarantor fails to perform any of its obligations under this Section 12, the Guarantor shall indemnify the Secured Party for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Guarantor under this Section 12 shall survive the termination of this Guaranty and the payment of the Obligations and all other amounts payable hereunder.
SECTION 13. Indemnification.
(a) Without limitation of any other obligations of the Guarantor or remedies of the Secured Party under this Guaranty or applicable law, except to the extent resulting from such Indemnified Party’s gross negligence, fraud or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, the Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Secured Party and each of its affiliates and its officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction Party enforceable against such Transaction Party in accordance with their terms.
(b) The Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) or any fiduciary duty or obligation to any of the Guarantor or any of their respective affiliates or any of their respective officers, directors, employees, agents and advisors, and the Guarantor hereby agrees not to assert
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any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating to the facilities, the actual or proposed use of the proceeds of the advances, the Transaction Documents or any of the transactions contemplated by the Transaction Documents.
Notwithstanding anything to the contrary herein, neither the Secured Party nor any Indemnified Party shall be liable to the Guarantor, the Parent, or any of their respective affiliates for any special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating to this Guaranty or the other Transaction Documents or any transaction contemplated hereby or thereby.
SECTION 14. Miscellaneous.
(a) The Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds to the Secured Party, at such address specified by the Secured Party from time to time by notice to the Guarantor.
(b) No amendment or waiver of any provision of this Guaranty and no consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Guarantor, the Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
(c) No failure on the part of the Secured Party to exercise, and no delay in exercising, any right or remedy hereunder or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any Transaction Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Secured Party provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of the Secured Party under any Transaction Document against any party thereto are not conditional or contingent on any attempt by the Secured Party to exercise any of their respective rights or remedies under any other Transaction Document against such party or against any other Person.
(d) Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
(e) This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon the Guarantor and its respective successors and assigns. This Guaranty shall inure, together with all rights and remedies of the Secured Party hereunder, to the benefit of and be enforceable by the Secured Party and its successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Secured Party may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of any other Transaction Document to any other Person with the prior written consent of the Guarantor (which consent shall not be unreasonably withheld, conditioned or delayed) in accordance with the terms
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thereof, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Secured Party (as applicable) herein or otherwise, in each case as provided in such Transaction Document. None of the rights or obligations of the Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of the Secured Party.
(f) This Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.
(g) All notices provided for in this Guaranty shall be in writing and deemed to be duly given upon (a) personal delivery, (b) four (4) Business Days after deposit in the United States mail, certified or registered, postage prepaid, (c) one (1) Business Day after deposit with a reputable, national overnight courier service for next business day delivery with all charges prepaid, or (d) confirmed fax transmission or email to an email address provided by Lender. Notices shall be given in accordance with Section 5.4 of the Mortgage. Other than as expressly required herein, the Guarantor waives all notices required by law; including without limitation presentment and demand for payment, protest, notice of protest, and notice of demand, protest, dishonor and nonpayment
(h) Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.
SECTION 15. Currency Indemnity.
If, for the purpose of obtaining or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment Currency”) an amount due under this Guaranty in any currency (the “Obligation Currency”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (a) the date of actual payment of the amount due, in the case of any proceeding in the courts of courts of the jurisdiction that will give effect to such conversion being made on such date, or (b) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 15 being hereinafter in this Section 15 referred to as the “Judgment Conversion Date”).
If, in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available funds, the Guarantor shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of’ the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from the Guarantor under this Section 15 shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Guaranty. Notwithstanding the foregoing, the Guarantor shall not be liable under this Section 15 for any currency conversion losses to the extent such losses result
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from the Secured Party’s unreasonable delay in converting the Judgment Currency into the Obligation Currency after receipt thereof.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date first above written.
| GUARANTOR: | |||
| MONTANA TUNNELS MINING, INC. |
|||
| By: | /s/ Patrick Imeson | ||
| Name: Patrick Imeson | |||
| Title: Chief Executive Officer | |||
[Signatures continue on following page]
[Signature Page to Guaranty] |
| ACCEPTED BY: | ||
| Silver Bow Mining Corp., as Secured Party |
||
| By: | /s/ Wade Black | |
| Name: Wade Black | ||
| Title: Chief Financial Officer | ||
[Signature Page to Guaranty] |
Exhibit 10.4
MORTGAGE
| APNs: |
When Recorded Return To:
Dorsey & Whitney LLP
Attn: Jason K. Brenkert
1400 Wewatta Street, Suite 400
Denver, Colorado 80202
Recorder’s Use
MORTGAGE, SECURITY AGREEMENT AND FIXTURE
FINANCING STATEMENT
(With Assignment of Rents)
THIS DOCUMENT IS ALSO TO BE FILED AS A FIXTURE FILING IN THE REAL ESTATE RECORDS OF JEFFERSON COUNTY, MONTANA AND CONSTITUTES A FIXTURE FILING. INFORMATION CONCERNING THE DEBTOR AND THE PROPERTY COVERED BY THIS FILING ARE CONTAINED HEREIN.
A power of sale has been granted in this Instrument. a power of sale may allow Mortgagee to take the Collateral and sell it without going to court in a foreclosure action.
THIS MORTGAGE, SECURITY AGREEMENT, AND FIXTURE FILING (With Assignment of Rents) (as it may be amended and modified from time to time, the “Mortgage”) is made as of September 4, 2026 (the “Effective Date”), by and among MONTANA TUNNELS MINING, INC. (organizational identification number F1049480) (“Mortgagor”), whose mailing address is 270 MT Tunnels Rd, Jefferson City, MT 59638, Attn: Patrick Imeson,
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and SILVER BOW MINING CORP., a British Columbia corporation (the “Mortgagee”), whose mailing address is 1401 Idaho Street, Butte, Montana 59701, Attn: Travis Naugle.
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Mortgagor hereby irrevocably mortgages to Mortgagee, its successors and assigns, under and subject to the terms and conditions hereinafter set forth, the following properties (collectively, the “Premises”):
That certain real property located in the County of Jefferson, State of Montana, more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Real Property”);
TOGETHER WITH any and all buildings, structures and other improvements and all additions or alterations thereto or replacements thereof, now or hereafter erected on the Premises including, without limitation, fixtures, attachments, appliances, equipment, machinery, and other personal property attached to such buildings and other improvements (the “Improvements”), all of which shall be deemed and construed to be a part of the real property;
TOGETHER WITH all rents, issues, profits, damages, royalties, income and other benefits now or hereafter derived from the Premises and the Improvements (collectively the “Rents”), subject to the terms and provisions of Article II of this Mortgage with respect to all leases and subleases of the Premises or Improvements now or hereafter existing or entered into, or portions thereof, granted by , and further subject to the right, power and authority hereinafter given to Mortgagor to collect and apply such Rents;
TOGETHER WITH all interests, estates or other claims, both in law and in equity, which Mortgagor now has or may hereafter acquire in the Premises or the Improvements;
TOGETHER WITH all easements, rights-of-way and other rights now owned or hereafter acquired by Mortgagor used in connection with the Premises or the Improvements or as a means of access thereto (including, without limitation, all rights to the use of common drive entries, and all tenements, hereditaments and appurtenances thereof and thereto) and all water and water rights and shares of stock evidencing the same;
Mortgagor does hereby grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over, and confirm unto Mortgagee all right, title and interest of Mortgagor in and to all oil, gas, and other minerals in, on, or under the Premises, or that may be produced therefrom or allocated thereto, including without limitation all mineral estates, mineral rights, royalty interests, overriding royalty interests, working interests, net profits interests, production payments, and other interests in minerals of every kind and character, whether similar or dissimilar to those enumerated, whether now owned or hereafter acquired (collectively, the “Mineral Estate”);
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Mortgagor does hereby grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over, and confirm unto Mortgagee all right, title and interest of Mortgagor in and to all oil, gas, and mineral leases, subleases, farmout agreements, and other agreements relating to the exploration, development, or production of minerals from or attributable to the Premises, whether now existing or hereafter entered into, including all extensions, renewals, and amendments thereof, and all rentals, royalties, bonuses, delay rentals, shut-in payments, and other payments and proceeds payable or to become payable to Mortgagor thereunder (collectively, the “Mineral Leases”);
TOGETHER WITH all leasehold estate, right, title and interest of Mortgagor in and to all leases or subleases covering the Premises or the Improvements or any portion thereof now or hereafter existing or entered into, and all right, title and interest of Mortgagor thereunder including, without limitation, all rights of Mortgagor against guarantors thereof, all cash or security deposits, advance rentals, and deposits or payments of similar nature (collectively, the “Leases”);
TOGETHER WITH all right, title and interest of Mortgagor under and with respect to any covenants, conditions and restrictions affecting the property (including, without limitation, all of Mortgagor’s rights as “declarant” under any such covenants, conditions and restrictions, all of Mortgagor’s rights to become “declarant” under any such covenants, conditions and restrictions, and all of Mortgagor’s voting, approval and other rights under any such covenants, conditions and restrictions);
TOGETHER WITH all right, title and interest now owned or hereafter acquired by Mortgagor in and to any greater estate in the Premises or the Improvements;
TOGETHER WITH all right, title, and interest of Mortgagor in (i) the property and interests in property described on Exhibit B attached hereto and incorporated herein by reference, (ii) all other personal property now or hereafter owned by Mortgagor that is now or hereafter located on or used in connection with the Premises or the Improvements, (iii) all other rights and interests of Mortgagor now or hereafter held in personal property that is now or hereafter located on or used in connection with the Premises or the Improvements, (iv) all personal property and rights and interests in personal property of similar type or kind hereafter acquired by Mortgagor, and (v) all proceeds thereof (such personal property and proceeds are referred to herein collectively as the “Personal Property”);
TOGETHER WITH all right, title and interest of Mortgagor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Premises, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Premises;
TOGETHER WITH all the estate, interest, right, title, other claim or demand, both in law and in equity (including, without limitation, claims or demands with respect to the proceeds of insurance in effect with respect thereto) that Mortgagor now has or may hereafter acquire in the
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Premises, the Improvements, the Personal Property, or any other part of the Premises (as defined below), and any and all awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or any part of the Premises (including, without limitation, any awards resulting from a change of grade of streets and awards for severance damages); and
TOGETHER WITH all proceeds of the foregoing.
The parties acknowledge and agree that the Premises includes, without limitation, all surface and subsurface estates, including the Mineral Estate and all Mineral Leases. Mortgagor hereby represents and warrants that no severance of the mineral estate from the surface estate has occurred with respect to the Premises, or if any such severance has occurred, Mortgagor owns sufficient rights in the Mineral Estate to grant the mortgage and security interest contemplated herein.
FOR THE PURPOSE OF SECURING (in such order of priority as Mortgagee may elect) the following (the “Obligations”):
A. payment of indebtedness in the total principal amount of $28,575,808.00 (“Loan”), with interest and other charges thereon, evidenced by that certain Secured Promissory Note of even date herewith, (as it may be amended, modified, extended, renewed, replaced, and restated from time to time, the “Note”) executed by Montana Goldfields, Inc. (the “Parent”) to the order of Mortgagee, pursuant to the obligations of the Mortgagor pursuant to that certain guaranty executed by the Mortgagor and the Mortgagee (the “Guaranty”) under which payment of indebtedness has been guaranteed in full by Mortgagor;
B. payment of all sums hereafter advanced by Mortgagee to protect the Premises, with interest thereon equal to ten percent (10%) per annum (which rate of interest is hereinafter referred to as the “Default Interest Rate”);
C. payment of all other sums, with interest thereon, that may hereafter be loaned to Mortgagor, or its successors or assigns, by Mortgagee, or its successors or assigns, when evidenced by a promissory note or notes expressly reciting that they are secured by this Mortgage; provided, that the aggregate principal amount of such future advances shall not exceed $28,575,808.00 without the prior written consent of Mortgagor;
D. performance of every obligation of Mortgagor contained in the Loan Documents (as defined below);
E. performance of every obligation of Mortgagor contained in any agreement, document, or instrument now or hereafter executed by Mortgagor that expressly recites that the obligations thereunder are secured by this Mortgage; provided, hat the obligations of any affiliate of Mortgagee shall not be deemed secured hereby unless such agreement specifically identifies this Mortgage by recording information;
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F. for the benefit of Mortgagee, compliance with and performance of each and every material provision of any declaration of covenants, conditions and restrictions affecting the Premises that is identified on Exhibit C hereto as a Permitted Exception, and any maintenance, easement and party wall agreement to which Mortgagor is a party as of the Effective Date and that is recorded against the Premises;
G. all modifications, extensions and renewals of any of the obligations set forth in Paragraphs A through G above that are secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications extensions or renewals at a different rate of interest whether or not, in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note.
This Mortgage, the Note, the security and pledge agreement executed by the Parent and the Mortgagee on date even herewith (the “Security Agreement”), the Guaranty and any other deeds of trust, mortgages, agreements, guaranties or other instruments given to evidence or further secure the payment and performance of any or all of the Obligations, as the foregoing may be amended, modified, extended, or renewed from time to time may hereinafter be collectively referred to as the “Loan Documents.”
Any term used or defined in the Uniform Commercial Code of Montana, as in effect in the State of Montana (Montana Code Annotated (the “MCA”), Title 30, Chapters 1 through 9A), as amended from time to time (“Uniform Commercial Code of Montana”), and not defined in this Mortgage, has the meaning given to the term in the Uniform Commercial Code of Montana, when used in this Mortgage.
MORTGAGOR HEREBY COVENANTS AND AGREES AS FOLLOWS:
1. COVENANTS AND AGREEMENTS OF MORTGAGOR
Section 1.1 Payment and Performance of Secured Obligations. Mortgagor shall pay when due and/or perform each of the Obligations.
Section 1.2 Maintenance, Repair, Alterations. Mortgagor shall keep the Premises in good condition and repair. Mortgagor shall not remove, demolish, or substantially alter any of the Improvements, except with the prior written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed. Mortgagor shall complete promptly and in a good and workmanlike manner any Improvement that may be now or hereafter constructed on the Premises and promptly restore in like manner any Improvements that may be damaged or destroyed from any cause whatsoever and pay when due all claims for labor performed and materials furnished therefor. Mortgagor shall comply with all Requirements (as defined below) and shall not suffer to occur or exist any violation of any Requirement. Mortgagor shall not commit or permit any waste or deterioration of the Premises, other than as resulting from
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ordinary use, and, to the extent allowed by law, shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair consistent with prior practice. Mortgagor shall perform its obligations under each Lease. “Requirement” and “Requirements” mean, respectively, each and all obligations and requirements now or hereafter in effect by which Mortgagor or the Premises are bound or which are otherwise applicable to the Premises, construction hereafter of any Improvements on the Premises, or operation, occupancy or use of the Premises.
Section 1.3 Required Insurance. Mortgagor shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force with respect to the Premises, at no expense to Mortgagee, policies of commercial general liability insurance, automobile liability and special perils casualty insurance in forms and amounts and issued by companies reasonably satisfactory to Mortgagee. All such policies of insurance required by the terms of this Mortgage shall contain an endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms of such policy notwithstanding any act or negligence of Mortgagor or any party holding under Mortgagor that might otherwise result in forfeiture of said insurance and the further agreement of the insurer waiving all rights of setoff, counterclaim or deductions against Mortgagor.
Section 1.4 Delivery of Policies, Payment of Premiums.
(a) At Mortgagee’s option all policies of insurance shall either have attached thereto a lender’s loss payable endorsement for the benefit of Mortgagee in form satisfactory to Mortgagee or shall name Mortgagee as an additional insured. Mortgagor shall furnish Mortgagee with certificates of insurance for each required policy setting forth the coverage, the limits of liability, the name of the carrier, the policy number and the period of coverage. If Mortgagee consents, Mortgagor may provide any of the required insurance through blanket policies carried by Mortgagor and covering more than one location. At least thirty (30) days prior to the expiration of each required policy, Mortgagor shall deliver to Mortgagee evidence reasonably satisfactory to Mortgagee of the payment of premium and the renewal or replacement of such policy continuing insurance in form as required by this Mortgage. All such policies shall contain a provision that, notwithstanding any contrary agreement between Mortgagor and insurance company, such policies will not be cancelled, allowed to lapse without renewal, surrendered or materially amended, which term shall include any reduction in the scope or limits of coverage, without at least thirty (30) days’ prior written notice to Mortgagee (ten (10) days for non-payment of premium).
(b) In the event Mortgagor fails to obtain, maintain, or deliver to Mortgagee the policies of insurance with respect to the Premises required by this Mortgage, Mortgagee may, at Mortgagee’s election and upon ten days’ written notice to Mortgagor, but without any obligation so to do, procure such insurance or single-interest insurance for such risks covering Mortgagee’s interest, and Mortgagor will pay all premiums thereon promptly upon demand by Mortgagee, and until such payment is made by Mortgagor, the amount of all such premiums shall bear interest at the Default Interest Rate.
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Section 1.5 Casualties; Insurance Proceeds.
(a) Mortgagor shall give prompt written notice thereof to Mortgagee after the happening of any casualty to or in connection with the Premises or any part thereof, whether or not covered by insurance. All proceeds of insurance shall be payable to Mortgagee, and Mortgagor hereby authorizes and directs any affected insurance company to make payment of such proceeds directly to Mortgagee. If Mortgagor receives any proceeds of insurance resulting from such casualty, Mortgagor shall promptly pay over such proceeds to Mortgagee. All proceeds of insurance will be applied by Mortgagee to payment of the Obligations in such order as Mortgagee shall determine.
(b) (i) For purposes of this Section 1.5(b), “Substantial Damage” shall mean damage to or destruction of an aggregate of fifty percent (50%) or more of the net area of the Improvements.
(ii) In the event of Substantial Damage to the Improvements, Mortgagee shall have the absolute right, at its option, upon five (5) days’ written notice to Mortgagor, to declare all sums secured hereby immediately due and payable on the date sixty (60) days following Mortgagee’s election, and Mortgagee shall be entitled to apply all insurance proceeds to the payment required under this Section 1.5(b)(ii). Any proceeds remaining after such application shall be delivered to Mortgagor or the person or persons then legally entitled thereto.
(c) In the event of damage or destruction to the Improvements which is not Substantial Damage, Mortgagor shall have the right to apply all insurance proceeds to reconstruction of the Improvements.
(d) Mortgagor shall promptly, regardless of whether such insurance proceeds shall be sufficient for the purpose, commence and diligently proceed to perform and complete, in a first-class workmanlike manner, the restoration, replacement and rebuilding of the Improvements in accordance with the plans and specifications approved by Mortgagee.
(e) Except as expressly provided in this Section 1.5, Mortgagor shall not be excused from repairing or maintaining the Premises as provided in Section 1.2 hereof or restoring all damage or destruction to the Premises, regardless of whether or not there are insurance proceeds available to Mortgagor or whether any such proceeds are sufficient in amount, and the application or release by Mortgagee of any insurance proceeds shall not cure or waive any default or notice of default under this Mortgage or invalidate any act done pursuant to such default or notice of default.
Section 1.6 Assignment of Policies Upon Foreclosure. In the event of foreclosure of this Mortgage as a mortgage, a sale under the power of sale, or any other transfer of title or assignment of the Premises in extinguishment, in whole or in part, of the Obligations, all right, title and interest of Mortgagor in and to all policies of insurance required by Section 1.3 shall
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inure to the benefit of and pass to the successor in interest to Mortgagor or the purchaser or grantee of the Premises, to the extent such policies are assignable pursuant to the terms thereof.
Section 1.7 Indemnification; Subrogation; Waiver of Offset.
(a) If Mortgagee is made a party to any litigation by any third party concerning the Note, this Mortgage, any of the Loan Documents, the Premises or any part thereof or interest therein, or the occupancy of the Premises by Mortgagor, then Mortgagor shall indemnify, defend and hold Mortgagee harmless for, from and against all liability by reason of said litigation, including reasonable attorneys’ fees and expenses incurred by Mortgagee as a result of any such litigation, whether or not any such litigation is prosecuted to judgment. Mortgagee may employ an attorney or attorneys to protect its rights hereunder, and in the event of such employment following any breach by Mortgagor, Mortgagor shall pay Mortgagee reasonable attorneys’ fees and expenses incurred by Mortgagee, whether or not an action is actually commenced against Mortgagor by reason of its breach. Notwithstanding the foregoing, Mortgagor shall have no obligation to indemnify, defend or hold Mortgagee harmless under this Section 1.7 for any liability resulting from Mortgagee’s gross negligence or willful misconduct.
(b) Mortgagor waives any and all right to claim or recover against Mortgagee, its successors and assigns, their directors, officers, employees, agents and representatives, for loss of or damage to Mortgagor, the Premises, Mortgagor’s property or the property of others under Mortgagor’s control from any cause insured against or required to be insured against by this Mortgage.
(c) All sums payable by Mortgagor pursuant to this Mortgage shall be paid without notice (except for such notice as may be expressly required hereunder or under the other Loan Documents), demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Mortgagor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Premises or any part thereof; (ii) any restriction or prevention of or interference by any Person (as defined below) with any use of the Premises or any part thereof; (iii) any title defect or encumbrance or any eviction from the Premises or the Improvements or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Mortgagee, or any action taken with respect to this Mortgage by any trustee or receiver of Mortgagee, or by any court, in any such proceeding; (v) any claim that Mortgagor has or might have against Mortgagee; (vi) any default or failure on the part of Mortgagee to perform or comply with any of the terms of the Loan Documents or of any other agreement with Mortgagor (other than a material breach by Mortgagee of its obligations under the Purchase Agreement, as to which Mortgagor expressly reserves all rights and defenses); or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Mortgagor shall have notice or knowledge of any of the foregoing. Except as expressly provided herein, Mortgagor waives, except to the extent expressly prohibited by applicable law, all rights now or hereafter conferred
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by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Mortgagor. “Person” means any natural person, any unincorporated association, any corporation, any partnership, any joint venture, any trust, any other legal entity, or any governmental authority (federal, state, local or foreign).
Section 1.8 Impositions.
(a) Mortgagor shall pay, or cause to be paid, prior to delinquency, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, (including, without limitation, nongovernmental levies or assessments such as maintenance charges, levies, or charges resulting from covenants, conditions and restrictions affecting the Premises) that are assessed or imposed upon the Premises or become due and payable and that create, may create, or appear to create a lien upon the Premises (the above are sometimes referred to herein individually as an “Imposition” and collectively as “Impositions”), provided, however, that if by law any Imposition is payable, or may at the option of the taxpayer be paid, in installments, Mortgagor may pay the same or cause it to be paid, together with any accrued interest on the unpaid balance of such Imposition, in installments as the same becomes due and before any fine, penalty, interest, or cost may be added thereto for the nonpayment of any such installment and interest.
(b) If at any time after the date hereof there shall be assessed or imposed a fee, tax, or assessment on Mortgagee and measured by or based in whole or in part upon this Mortgage or the outstanding amount of the Obligations, then all such taxes, assessments or fees shall be deemed to be included within the term “Impositions” as defined in Section 1.8(a) and Mortgagor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Mortgagor fails to pay such Impositions prior to delinquency, Mortgagee may, at its option, with five (5) days’ advance written notice to Mortgagor and Mortgagor’s failure to cure same within such five (5) day period, declare all or part of the Obligations, immediately due and payable. If Mortgagor is prohibited by law from paying such Impositions, Mortgagee may, at its option, declare all or part of the Obligations due and payable on a date which is not less than six (6) months from the date such prohibition is imposed on Mortgagor.
(c) Subject to the provisions of Section 1.8(d) and upon request by Mortgagee, Mortgagor shall deliver to Mortgagee within thirty (30) days after the date upon which any Imposition is delinquent by Mortgagor official receipts of the appropriate taxing authority, or other proof satisfactory to Mortgagee, evidencing the payment thereof.
(d) Mortgagor shall have the right before any delinquency occurs to contest or object to the amount or validity of any Imposition by appropriate proceedings, but this shall not be deemed or construed in any way as relieving, modifying, or extending Mortgagor’s covenant to pay any such Imposition at the time and in the manner provided in this Section 1.8, unless Mortgagor has given prior written notice to Mortgagee of Mortgagor’s intent to so contest or object to an Imposition, and unless, in Mortgagee’s absolute and sole discretion, (i) Mortgagor shall demonstrate to Mortgagee’s satisfaction that the proceedings to be initiated by Mortgagor
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shall conclusively operate to prevent the sale of the Premises or any part thereof or interest therein to satisfy such Imposition prior to final determination of such proceedings, (ii) Mortgagor shall furnish a good and sufficient bond or surety as requested by and satisfactory to Mortgagee, or (iii) Mortgagor shall demonstrate to Mortgagee’s satisfaction that Mortgagor has provided a good and sufficient undertaking as may be required or permitted by law to accomplish a stay of any such sale.
(e) Mortgagor shall not initiate or suffer to occur or exist the joint assessment of any real and personal property included in the Premises or any other procedure whereby the lien of real property taxes and the lien of personal property taxes shall be assessed, levied, or charged to the Premises as a single lien.
Section 1.9 Utilities. Mortgagor shall pay when due all charges that are incurred by Mortgagor for the benefit of the Premises or that may become a charge or lien against the Premises for gas, electricity, water, sewer, or other services furnished to the Premises.
Section 1.10 Actions Affecting Premises. Mortgagor shall appear in and contest any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee; and shall pay all costs and expenses (including, without limitation, costs of evidence of title, litigation, and reasonable attorneys’ fees) in any such action or proceeding in which Mortgagee may appear.
Section 1.11 Actions By Mortgagee. If Mortgagor fails to make any payment or to do any act as and in the manner provided in any of the Loan Documents, Mortgagee in its absolute and sole discretion, without obligation so to do, without releasing Mortgagor from any obligation, and with only such notice to or demand upon Mortgagor as may be reasonable under the then existing circumstances, but in no event with less than ten (10) days prior written notice, may make or do the same in such manner and to such extent as either may reasonably deem necessary or appropriate to the fullest extent permitted by applicable law. In connection therewith (without limiting their general powers, whether conferred herein, in another Loan Document or by law), Mortgagee shall have and are hereby given the right, but not the obligation, (a) to enter upon and take possession of the Premises at a reasonable time; (b) to make additions, alterations, repairs and improvements to the Premises that they or either of them may reasonably consider necessary or appropriate to keep the Premises in good condition and repair; (c) to appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of Mortgagee; (d) to pay, purchase, contest or compromise any Lien or Encumbrance (as defined below) or alleged Lien or Encumbrance whether superior or junior to this Mortgage; (e) to complete construction of any and all improvements theretofore commenced on the Premises, if any; (f) to remediate any environmental activity; and (g) in exercising such powers, to pay necessary expenses (including, without limitation, reasonable expenses of employment of counsel or other necessary or desirable consultants). Mortgagor shall, immediately upon demand therefor by Mortgagee or either of them, pay to Mortgagee an amount equal to all respective costs and expenses incurred by them in connection with the exercise by Mortgagee of the foregoing rights (including, without
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limitation, costs of evidence of title, court costs, appraisals, surveys and receiver’s, trustee’s and reasonable attorneys’ fees) together with interest thereon from the date of such expenditures at the Default Interest Rate.
Section 1.12 Transfer of Premises by Mortgagor. In order to induce Mortgagee to make the Loan, Mortgagor agrees that, in the event of any Transfer (as hereinafter defined), without the prior written consent of Mortgagee, Mortgagee shall have the absolute right, at its option, upon five (5) days’ written notice to Mortgagor, to declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. Mortgagee may grant or deny such consent in its sole discretion, which consent shall not be unreasonably withheld or delayed, and, if consent should be given, any such Transfer shall be subject to this Mortgage, and such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Mortgagor or any maker or guarantor (if any) of the Note from any liability thereunder without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed. As used herein, “Transfer” shall mean:
(a) any sale, transfer, conveyance, hypothecation, encumbrance, lease or vesting of the Premises or any part thereof or interest therein to or in any Person, whether voluntary, involuntary, by operation of law, or otherwise, except the Permitted Exceptions (as such term is defined in Exhibit C attached hereto and incorporated herein by reference);
(b) any sale, transfer, assignment, conveyance, hypothecation, encumbrance or vesting of any general partnership interest in Mortgagor or any beneficiary, partner, member, or shareholder in Mortgagor to or in any Person (if Mortgagor or any partner, member or shareholder in Mortgagor is a trust) whether voluntary, involuntary, by operation of law, or otherwise, except the Permitted Exceptions;
(c) any sale, transfer, assignment, conveyance, hypothecation, encumbrance or vesting of any general partnership interest in Mortgagor or any beneficiary, partner, member, or shareholder in Mortgagor to or in any Person (if Mortgagor or any partner, member or shareholder in Mortgagor is a partnership) whether voluntary, involuntary, by operation of law, or otherwise, except the Permitted Exceptions;
(d) any sale, transfer, assignment, conveyance, hypothecation, encumbrance or vesting of any member interest in Mortgagor or any beneficiary, partner, member, or shareholder in Mortgagor to or in any Person (if Mortgagor or any partner, member, or shareholder in Mortgagor is a limited liability company) whether voluntary, involuntary, by operation of law, or otherwise, except the Permitted Exceptions;
(e) any sale, transfer, assignment, conveyance, hypothecation, encumbrance or vesting of any shares of stock in Mortgagor or any beneficiary, partner, member or shareholder in Mortgagor to or in any Person or any consolidation or merger of Mortgagor or any partner,
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member, or shareholder in Mortgagor into or with any Person (if Mortgagor or any partner, member, or shareholder in Mortgagor is a corporation) whether voluntary, involuntary, by operation of law, or otherwise, except the Permitted Exceptions;
(f) any sale, transfer, assignment, conveyance, hypothecation, encumbrance or vesting of any other legal or beneficial interest in Mortgagor or any beneficiary, partner, member, or shareholder in Mortgagor whether voluntary, involuntary, by operation of law or otherwise, except the Permitted Exceptions; or
(g) the execution of any agreements to do any of the foregoing, except the Permitted Exceptions.
Section 1.13 Eminent Domain.
(a) In the event that any proceeding or action be commenced for the taking of the Premises, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, condemnation (including, without limitation, inverse condemnation) or otherwise (hereinafter collectively referred to as a “Taking”), or if the same be taken or damaged by reason of any public improvement or Taking, or should Mortgagor receive any notice or other information regarding such Taking or damage, Mortgagor shall give prompt written notice thereof to Mortgagee. All compensation, awards, damages, rights of action and proceeds awarded to Mortgagor by reason of any such Taking or damage or received by Mortgagor as the result of a transfer in lieu of a Taking (the “Condemnation Proceeds”) are hereby assigned to Mortgagee, and Mortgagor agrees to execute such further assignments of the Condemnation Proceeds as Mortgagee may require. If Mortgagor receives any Condemnation Proceeds Mortgagor shall promptly pay over such proceeds to Mortgagee. All Condemnation Proceeds will be applied by Mortgagee to payment of the Obligations in such order as Mortgagee shall determine. Mortgagee is hereby authorized and empowered by Mortgagor, at Mortgagee’s option and in Mortgagee’s sole discretion, as attorney-in-fact for Mortgagor, to settle, adjust, or compromise any claim for loss or damage in connection with any Taking or proposed Taking and, without regard to the adequacy of its security, to commence, appear in and prosecute in its own name and/or on behalf of Mortgagor any such action or proceeding arising out of or relating to a Taking or proposed Taking.
(b) For purposes of this Section 1.13(b), “Substantial Taking” shall mean a Taking of an aggregate of fifty percent (50%) or more of the net rentable area of the Improvements or fifty percent (50%) or more of the land area of the Premises.
(i) In the event of a Substantial Taking, Mortgagee shall have the absolute right, at its option, upon five (5) days’ written notice to Mortgagor, to declare all sums secured hereby immediately due and payable on the date sixty (60) days following Mortgagee’s election, and Mortgagee shall be entitled to apply all Condemnation Proceeds to the payment required under this Section 1.13(b)(ii). Any Condemnation Proceeds remaining after such application shall be delivered to Mortgagor or the person or persons then legally entitled thereto.
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(ii) In the event of a Taking which is not a Substantial Taking, Mortgagor shall have the right to apply all Condemnation Proceeds to reconstruction of the Improvements.
(c) Mortgagor shall promptly, regardless of whether such Condemnation Proceeds shall be sufficient for the purpose, commence and diligently proceed to perform and complete, in a first-class workmanlike manner, the restoration, replacement and rebuilding of the Improvements in accordance with the plans and specifications approved by Mortgagee.
(d) Except as expressly provided in this Section 1.13, Mortgagor shall not be excused from repairing or maintaining the Premises as provided in Section 1.2 hereof or restoring all damage or destruction to the Premises, regardless of whether or not there are Condemnation Proceeds available to Mortgagor or whether any such proceeds are sufficient in amount, and the application or release by Mortgagee of any Condemnation Proceeds shall not cure or waive any default or notice of default under this Mortgage or invalidate any act done pursuant to such default or notice of default.
Section 1.14 Additional Security. No other security now existing, or hereafter taken, to secure the obligations secured hereby shall be impaired or affected by the execution of this Mortgage. All security for the Obligations from time to time shall be taken, considered and held as cumulative. Any taking of additional security, execution of partial releases of the security, or any extension of the time of payment of, or modification of other terms of any of the Obligations shall not diminish the force, effect or lien of this Mortgage and shall not affect or impair the liability of any maker, guarantor, surety or endorser for the payment or performance of any of the Obligations. In the event Mortgagee at any time holds additional security for any of the Obligations, it may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently with, or after a sale or realization is made hereunder.
Section 1.15 [RESERVED]
Section 1.16 Inspections. Mortgagee, and its agents, representatives officers, and employees, are authorized to enter at any reasonable time, and upon reasonable prior notice to Mortgagor, upon or in any part of the Premises for the purpose of inspecting the same and for the purpose of performing any of the acts Mortgagee is authorized to perform hereunder or under the terms of any of the Loan Documents.
Section 1.17 Ownership and Liens and Encumbrances. Mortgagor is, and as to any portion of the Premises acquired hereafter will upon such acquisitions be, and shall remain the owner of the Premises free and clear of any Liens and Encumbrances. Mortgagor shall not grant, shall not suffer to exist, and shall pay and promptly discharge, at Mortgagor’s cost and expense, all Liens and Encumbrances and any claims thereof upon the Premises, or any part thereof or interest therein. Mortgagor shall notify Mortgagee immediately in writing of any Lien or Encumbrance or claim thereof. Mortgagor shall have the right to contest in good faith the validity of any involuntary Lien or Encumbrance, provided Mortgagor shall first deposit with Mortgagee a bond or other security satisfactory to Mortgagee in such amount as Mortgagee shall
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reasonably require, but not more than one hundred fifty percent (150%) of the amount of the claim, and provided further that if Mortgagor loses such contest, Mortgagor shall thereafter diligently proceed to cause such Lien or Encumbrance to be removed and discharged. If Mortgagor shall fail to remove and discharge any Lien or Encumbrance or claim thereof, then, in addition to any other right or remedy of Mortgagee, Mortgagee may, after only such notice to Mortgagor as may be reasonable under the then existing circumstances, but shall not be obligated to, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such Lien or Encumbrance by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law. Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee an amount equal to all costs and expenses incurred by Mortgagee in connection with the exercise by Mortgagee of the foregoing right to discharge any Lien or Encumbrance or claim thereof, together with interest thereon from the date of each such expenditure at the Default Interest Rate. Such costs and expenses shall be secured by this Mortgage. “Lien or Encumbrance” and “Liens and Encumbrances” mean, respectively, each and all of the following in respect of the Premises: leases, other rights to occupy or use, mortgages, deeds of trust, pledges, security agreements, assignments, assignments as security, conditional sales, title retention arrangements or agreements, conditions, covenants, and restrictions, and other charges, liens, encumbrances, or adverse interests, whether voluntarily or involuntarily created and regardless of whether prior or subordinate to any estate, right, title, or interest granted to Mortgagee in this Mortgage, excluding from the foregoing the Permitted Exceptions.
Section 1.18 [RESERVED]
Section 1.19 Mortgagee’s Powers. Without affecting the liability of any Person liable for the payment of the Obligations herein mentioned, and without affecting the lien or charge of this Mortgage upon any portion of the Premises not then or theretofore released as security for the Obligations, Mortgagee may, from time to time and without notice (a) release any person so liable, (b) extend the Obligations, (c) grant other indulgences, (d) release or reconvey, or cause to be released or reconveyed, at any time at Mortgagee’s option any parcel, portion or all of the Premises, (e) take or release any other or additional security or any guaranty for any Obligation herein mentioned, or (f) make compositions or other arrangements with debtors in relation thereto.
Section 1.20 Prepayment. Mortgagor shall have the right to prepay the Loan, in whole or in part, at any time. Any partial prepayment shall be applied to installments coming due under the Note in inverse order of maturity. If Mortgagor prepays the Loan in full, together with such prepayment Mortgagor shall pay all accrued unpaid interest on the principal amount prepaid.
Section 1.21 Mineral Estate Protections. Mortgagor covenants and agrees as follows with respect to the Mineral Estate:
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(a) Mortgagor shall not enter into, modify, extend, or terminate any Mineral Lease without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed.
(b) Mortgagor shall promptly deliver to Mortgagee copies of all Mineral Leases and any amendments, modifications, or supplements thereto, together with all division orders, title opinions, and other instruments relating to the Mineral Estate.
(c) All royalties, overriding royalties, bonuses, delay rentals, shut-in payments, and other proceeds from or attributable to the Mineral Estate or the Mineral Leases shall constitute Rents for purposes of this Mortgage and shall be subject to the assignment of rents provisions set forth in Article II hereof.
(d) Mortgagor shall not consent to or permit any pooling, unitization, or communitization of the Mineral Estate or any interest therein without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed.
(e) Mortgagor shall use commercially reasonable efforts to maintain all Mineral Leases in full force and effect and shall not suffer or permit any Mineral Lease to terminate, expire, or be forfeited by reason of Mortgagor’s failure to perform any obligation thereunder.
(f) In the event of any default under a Mineral Lease, Mortgagor shall promptly notify Mortgagee and, at Mortgagee’s election, Mortgagee shall have the right (but not the obligation) to cure such default on behalf of Mortgagor, and any amounts expended by Mortgagee in connection therewith shall be added to the Obligations and shall bear interest at the Default Interest Rate.
2. ASSIGNMENT OF RENTS
Section 2.1 Assignment of Rents. Mortgagor hereby absolutely and irrevocably assigns and transfers to Mortgagee all the Rents of the Premises, and hereby gives to and confers upon Mortgagee the right, power and authority to collect the Rents. Mortgagor irrevocably appoints Mortgagee its true and lawful attorney-in-fact, at the option of Mortgagee at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in the name of Mortgagor or Mortgagee, for all Rents and apply the same to the payment of the Obligations in such order as Mortgagee shall determine. Mortgagor hereby authorizes and directs the lessees, tenants and occupants to make all payments under the Leases directly to Mortgagee upon written demand by Mortgagee, without further consent of Mortgagor; provided, however, that Mortgagor shall have the right to collect such Rents (but not more than one (1) month in advance unless the written approval of Mortgagee is first obtained), and to retain and enjoy same, so long as an Event of Default shall not have both occurred and be continuing hereunder or under the other Loan Documents. The assignment of the Rents of the Premises in this Article II is intended to be an absolute assignment from Mortgagor to Mortgagee
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and not merely the passing of a security interest. Mortgagee’s rights to the Rents are not contingent upon and may be exercised without possession of the Premises.
Section 2.2 Collection Upon an Event of Default. While an Event of Default remains in existence and until such Event of Default is cured, Mortgagee may, at any time without notice, either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the Obligations, enter upon and take possession of the Premises, or any part thereof, and, with or without such entry or taking possession, in its own name sue for or otherwise collect the Rents (including, without limitation, those past due and unpaid) and apply the same, less costs and expenses of operation and collection (including, without limitation, attorneys’ fees) upon payment of the Obligations in such order as Mortgagee may determine. The collection of such Rents, or the entering upon and taking possession of the Premises, or the application of the Rents as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default. Mortgagor also hereby authorizes Mortgagee upon such entry, at its option, to take over and assume the management, operation and maintenance of the Premises and to perform all acts Mortgagee in its sole discretion deems necessary and proper and to expend such sums out of Rents as may be needed in connection therewith, in the same manner and to the same extent as Mortgagor theretofore could do (including, without limitation, the right to enter into new Leases, to cancel, surrender, alter or amend the terms of, and/or renew existing Leases and/or to make concessions to tenants). Mortgagor hereby releases all claims of any kind or nature against Mortgagee arising out of such management, operation and maintenance, excepting the liability of Mortgagee to account as hereinafter set forth.
Section 2.3 Application of Rents. Upon such entry, Mortgagee shall, after payment of all property charges and expenses (including, without limitation, reasonable compensation to such managing agent as it may select and employ) and after the accumulation of a reserve to meet requisite amounts, credit the net amount of the Rents received by it to the Obligations, but the manner of the application of such net income and which items shall be credited shall be determined in the sole discretion of Mortgagee. Mortgagee shall not be accountable for more monies than it actually receives from the Premises; nor shall it be liable for failure to collect Rents. Mortgagee shall make reasonable efforts to collect Rents, reserving, however, within its own absolute and sole discretion, the right to determine the method of collection and the extent to which enforcement of collection of Rents shall be prosecuted and Mortgagee’s judgment shall be deemed conclusive and reasonable.
Section 2.4 Mortgagee in Possession. It is not the intention of the parties hereto that an entry by Mortgagee upon the Premises under the terms of this instrument shall make Mortgagee a party in possession in contemplation of the law, except at the option of Mortgagee.
Section 2.5 Indemnity. Mortgagor hereby agrees to indemnify and hold harmless Mortgagee for, from and against any and all losses, liabilities, obligations, claims, demands, damages, penalties, judgments, costs, and expenses, including reasonable legal fees and expenses, howsoever and by whomsoever asserted, arising out of or in any way connected with
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this assignment; and all such losses, liabilities, obligations, claims, demands, damages, penalties, judgments, costs and expenses shall be deemed added to the indebtedness secured hereby and shall be secured by any and all other instruments securing said indebtedness.
Section 2.6 No Obligation to Perform. Nothing contained herein shall operate or be construed to obligate Mortgagee to perform any obligations of Mortgagor under any Lease (including, without limitation, any obligation arising out of any covenant of quiet enjoyment therein contained in the event the lessee under any such Lease shall have been joined as a party defendant in any action to foreclose and the estate of such lessee shall have been thereby terminated). Prior to actual entry into and taking possession of the Premises by Mortgagee, this assignment shall not operate to place upon Mortgagee any responsibility for the operation, control, care, management or repair of the Premises or any portion thereof, and the execution of this assignment by Mortgagor shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Premises is and shall be that of Mortgagor, prior to such actual entry and taking of possession.
3. SECURITY AGREEMENT
Section 3.1 Creation of Security Interest. Mortgagor hereby grants to Mortgagee, a first priority security interest in and to all the Personal Property.
Section 3.2 Representations, Warranties and Covenants of Mortgagor. Mortgagor hereby represents, warrants and covenants (which representations, warranties and covenants shall survive creation of any indebtedness of Mortgagor to Mortgagee and any extension of credit thereunder) as follows:
(a) The Personal Property is not used or bought for personal, family or household purposes.
(b) The tangible portion of the Personal Property will be kept on or at the Premises or Improvements and Mortgagor will not, without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed, remove the Personal Property or any portion thereof therefrom except such portions or items of Personal Property which are consumed or worn out in ordinary usage, all of which shall be promptly replaced by Mortgagor with similar items of greater value.
(c) At the request of Mortgagee, Mortgagor will authorize Mortgagee to file one or more financing statements and/or execute one or more fixture filings pursuant to the Uniform Commercial Code of Montana, in form satisfactory to Mortgagee and will pay the cost of recording and filing the same in all public offices wherever recording or filing is deemed by Mortgagee to be necessary or desirable.
(d) Mortgagor’s exact legal name is that indicated in the introductory paragraph hereof.
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(e) Mortgagor is an organization of the type, and is organized in the jurisdiction set forth in the introductory paragraph hereof.
(f) Mortgagor’s principal place of business is at the address specified in the introductory paragraph of this Mortgage. Mortgagor does not do business under any trade name except as previously disclosed in writing to Mortgagee. Mortgagor will immediately notify Mortgagee in writing of any change in its place of business or the adoption or change of any organizational name, trade name or fictitious business name, and will upon request of Mortgagee, authorize any additional financing statements or execute any other certificates necessary to reflect the adoption or change in trade name or fictitious business name. Mortgagor will also promptly notify Mortgagee (i) of any change of Mortgagor’s organizational identification number or (ii) if Mortgagor does not now have an organizational identification number and later obtains one, of such organizational identification number.
(g) Mortgagor will not change its name or the type of legal entity that it is without Mortgagee’s prior written consent.
(h) Mortgagor will not change its state of incorporation or organization, without, in each instance, giving Mortgagee at least forty-five (45) days’ prior written notice thereof and taking all actions, at Mortgagor’s sole cost and expense, deemed necessary or appropriate by Mortgagee to continuously protect and perfect Mortgagee’s liens and security interests in the Premises.
(i) Mortgagor shall immediately notify Mortgagee of any claim against the Personal Property adverse to the interest of Mortgagee therein.
Section 3.3 Use of Personal Property by Mortgagor. Unless an Event of Default is in existence hereunder or under any other Loan Document, Mortgagor may have possession of the Personal Property and use it in any lawful manner not inconsistent with this Mortgage and not inconsistent with any policy of insurance thereon.
Section 3.4 Remedies Upon an Event of Default.
(a) In addition to the remedies provided in Section 4.2 hereof, upon the occurrence of an uncured Event of Default hereunder, Mortgagee may, at its option, do any one (1) or more of the following:
(i) Either personally, or by means of a court appointed receiver, take possession of all or any of the Personal Property and exclude therefrom Mortgagor and all others claiming under Mortgagor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Mortgagor with respect to the Personal Property or any part thereof. In the event Mortgagee demands, or attempts to take possession of the Personal Property in the exercise of any rights under this
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Mortgage, Mortgagor agrees to promptly turn over and deliver possession thereof to Mortgagee;
(ii) Without notice to or demand upon Mortgagor, make such payments and do such acts as Mortgagee may deem necessary to protect its security interest in the Personal Property (including, without limitation, paying, purchasing, contesting or compromising any Lien or Encumbrance, whether superior or inferior to such security interest) and in exercising any such powers or authority to pay all expenses (including, without limitation, litigation costs and reasonable attorney’s fees) incurred in connection therewith;
(iii) Require Mortgagor from time to time to assemble the Personal Property, or any portion thereof, at a place designated by Mortgagee and reasonably convenient to both parties, and deliver promptly such Personal Property to Mortgagee, or an agent or representative designated by Mortgagee. Mortgagee, and its agents and representatives, shall have the right to enter upon any or all of Mortgagor’s premises and property to exercise Mortgagee’s rights hereunder;
(iv) Realize upon the Personal Property or any part thereof as herein provided or in any manner permitted by law and exercise any and all of the other rights and remedies conferred upon Mortgagee by this Mortgage, any other Loan Document, or by law, either concurrently or in such order as Mortgagee may determine;
(v) Sell or cause to be sold in such order as Mortgagee may determine, as a whole or in such parcels as Mortgagee may determine, the Personal Property and the remainder of the Premises;
(vi) Sell, lease, or otherwise dispose of the Personal Property at public sale, upon terms and in such manner as Mortgagee may reasonably determine. Mortgagee may be a purchaser at any sale; and
(vii) Exercise any remedies of a secured party under the Uniform Commercial Code of Montana or any other applicable law.
(b) Unless the Personal Property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Mortgagee shall give Mortgagor at least ten (10) days’ prior written notice of the time and place of any public sale of the Personal Property or other intended disposition thereof to be made. Such notice may be mailed to Mortgagor at the address set forth in Section 5.4. If Mortgagee fails to comply with this Section 3.4 in any respect, its liability for such failure shall be limited to the liability (if any) imposed on it as a matter of law under the Uniform Commercial Code of Montana (or under the Uniform Commercial Code, enforced from time to time, in any other state to the extent the same is the applicable law).
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(c) To the extent permitted by applicable law, the proceeds of any sale under Section 3.4(a)(iv) shall be applied as follows:
(i) To the repayment of the reasonable costs and expenses of taking, holding, and preparing for the sale and the selling of the Personal Property (including, without limitation, costs of litigation and attorneys’ fees) and the discharge of all Impositions, Liens and Encumbrances, and claims thereof, if any, on the Personal Property prior to the security interest granted herein (except any Impositions or Liens and Encumbrances subject to which such sale shall have been made);
(ii) To the payment of the Obligations in such order as Mortgagee shall determine; and
(iii) The surplus, if any, shall be paid to the Mortgagor or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.
(d) Mortgagee shall have the right to enforce one or more remedies hereunder, successively or concurrently, and such action shall not operate to estop or prevent Mortgagee from pursuing any further remedy that it may have. Any repossession or retaking or sale of the Personal Property pursuant to the terms hereof shall not operate to release Mortgagor until full payment of any deficiency has been made in cash.
(e) Mortgagee may comply with any applicable state or federal law or regulatory requirements in connection with a disposition of the Personal Property and such compliance will not be considered to affect adversely the commercial reasonableness of any sale of the Personal Property.
(f) Mortgagee may sell the Personal Property without giving any warranties as to such property, and may specifically disclaim any warranties of title, merchantability, fitness for a particular purpose or the like, and this procedure would not be considered to adversely affect the commercial reasonableness of any sale of the Personal Property. Mortgagor acknowledges that a private sale of the Personal Property may result in less proceeds than a public sale.
(g) Mortgagor acknowledges that the Personal Property may be sold at a loss to Mortgagor and that, in such event, Mortgagee shall have no liability or responsibility to Mortgagor for such loss.
Section 3.5 Security Agreement. This Mortgage constitutes and shall be deemed to be a “security agreement” for all purposes of the Uniform Commercial Code of Montana and Mortgagee shall be entitled to all the rights and remedies of a “secured party” under such Uniform Commercial Code of Montana.
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Section 3.6 Fixture Filing. This Security Instrument is intended to be a fixture filing under MCA 30-9A-502 against all of the property of the Premises which is or is to become fixtures. Upon its recording in the real property records, this Mortgage shall be effective as a financing statement filed as a fixture filing. This Mortgage shall also be effective as a financing statement covering as-extracted collateral (including oil and gas), accounts and general intangibles under the Uniform Commercial Code of Montana and the Uniform Commercial Code as in effect from time to time in any other state where the Premises is situated. In addition, a carbon, photographic or other reproduced copy of this Mortgage and/or any financing statement relating hereto shall be sufficient for filing and/or recording as a financing statement. The filing of any other financing statement relating to any personal property, rights or interests described herein shall not be construed to diminish any right or priority hereunder. The information provided in this Section 3.6 is provided so that this Mortgage shall comply with the requirements of the Uniform Commercial Code of Montana for a mortgage instrument to be filed as a financing statement. Mortgagor is the “Debtor” and its name and mailing address are set forth in the preamble of this Mortgage immediately preceding the Recitals hereto. Mortgagee is the “Secured Party” and its name and mailing address from which information concerning the security interest granted herein may be obtained are also set forth in the preamble of this Mortgage immediately preceding the Recitals hereto. This Mortgage covers goods which are or are to become fixtures and a statement describing the portion of the Premises comprising the fixtures hereby secured is set forth in the definition of the Premises contained herein.
Section 3.7 Authorization to File Financing Statements; Power of Attorney. Mortgagor hereby authorizes Mortgagee at any time and from time to time to file any initial financing statements, amendments thereto, and continuation statements with or without signature of Mortgagor as authorized by applicable law, as applicable to the Premises. For purposes of such filing, Mortgagor agrees to furnish any information requested by Mortgagee promptly upon request by Mortgagee. Mortgagor also ratifies its authorization for Mortgagee to have filed any like initial financing statements, amendments thereto, or continuation statements if filed prior to the date of this Mortgage. Mortgagor hereby irrevocably constitutes and appoints Mortgagee and any officer or agent of Mortgagee, with full power of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of Mortgagor or in Mortgagor’s own name to execute in Mortgagor’s name any such documents and to otherwise carry out the purposes of this Section 3.7, to the extent that Mortgagor’s authorization above is not sufficient. To the extent permitted by law, Mortgagor hereby ratifies and affirms all acts said attorneys-in-fact shall lawfully do, have done in the past, or caused to be done in the future by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.
4. REMEDIES UPON DEFAULT
Section 4.1 Events of Default. Each of the following shall constitute an event of default (“Event of Default”):
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(a) Failure by Parent or Mortgagor to pay any monetary amount when due under any Loan Document, including payment of the Note at its Maturity Date, and such failure continues uncured for fifteen (15) days after written notice thereof from Mortgagee to Parent and Mortgagor.
(b) Failure by Parent or Mortgagor to perform any obligation not involving the payment of money, or to comply with any other term or condition applicable to Mortgagor or Parent, under any Loan Document and the expiration of ten (10) days after written notice of such failure by Mortgagee to Parent and Mortgagor; provided, however, that the foregoing ten (10) day cure period shall not apply to any other event set forth in this Section 4.1 or for which a different notice or cure period is set forth in the Loan Documents.
(c) Any representation or warranty by Parent or Mortgagor in any Loan Document is false, incorrect, or misleading in any material respect as of the date made, and, if the underlying facts giving rise to such inaccuracy are curable, such inaccuracy remains uncured for ten (10) days after written notice thereof from Mortgagee to Parent and Mortgagor.
(d) Failure by Mortgagor to be in compliance with the covenants set forth in Section 5.19 of this Mortgage, and such failure remains uncured for ten (10) days after written notice thereof from Mortgagee to Mortgagor.
(e) Parent or Mortgagor (i) is unable or admits in writing Parent’s or Mortgagor’s inability to pay Parent’s or Mortgagor’s monetary obligations as they become due, (ii) fails to pay when due any monetary obligation, whether such obligation be direct or contingent, to any Person that, when aggregated with any other monetary obligations that are not paid when due, exceeds Five Hundred Thousand Dollars ($500,000), and such failure remains uncured for ten (10) days after written notice thereof from Mortgagee to Parent and Mortgagor, (iii) makes a general assignment for the benefit of creditors, or (iv) applies for, consents to, or acquiesces in, the appointment of a trustee, receiver, or other custodian for Mortgagor or the property of Parent or Mortgagor or any part thereof, or in the absence of such application, consent, or acquiescence a trustee, receiver, or other custodian is appointed for Parent or Mortgagor or the property of Parent or Mortgagor or any part thereof, and such appointment is not discharged within sixty (60) days.
(f) Commencement of any case under the Bankruptcy Code, Title 11 of the United States Code, or commencement of any other bankruptcy arrangement, reorganization, receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or against Parent or Mortgagor and with respect to any such case or proceeding that is involuntary, such case or proceeding is not dismissed with prejudice within sixty (60) days of the filing thereof.
(g) A final judgment or decree for monetary damages or a monetary fine or penalty (that is not subject to appeal or as to which the time for appeal has expired) is entered against Parent or Mortgagor by any arbitrator, other private adjudicator, court, government, or
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governmental authority (federal, state, local, or foreign), which together with the aggregate amount of all other such judgments and decrees against Parent or Mortgagor that remain unpaid or that have not been discharged or stayed, exceeds Five Hundred Thousand Dollars ($500,000), is not paid and discharged or stayed within thirty (30) days after the entry thereof.
(h) Commencement of any action or proceeding which seeks as one of its remedies the dissolution of Parent or Mortgagor, unless such action or proceeding is dismissed, discharged, or stayed within sixty (60) days of commencement.
(i) All or any part of the property of Parent or Mortgagor is attached, levied upon, or otherwise seized by legal process, and such attachment, levy, or seizure is not quashed, stayed, or released within forty-five (45) days of the date thereof.
(j) The occurrence of any Transfer, unless prior to such Transfer the holder of the Note has delivered to Mortgagor the written consent of such holder to such Transfer.
(k) The filing or recording of any mechanic’s or material mens’ lien that is not removed of record or otherwise bonded off or insured over by the title company to the satisfaction of Mortgagee within sixty (60) days of recordation.
(l) (i) The neglect, failure or refusal of Mortgagor to keep in full force and effect any material permit, license, consent or approval required for the operation of the Improvements that is not fully reinstated within sixty (60) days after Mortgagee gives Mortgagor notice of the lapse of effectiveness of such material permit, license, consent or approval; or (ii) the curtailment in availability to the Improvements of utilities or other public services necessary for the full occupancy and utilization of the Improvements that is not restored to full availability within sixty (60) days after Mortgagee gives Mortgagor notice of such curtailment of availability; or (iii) the failure by Mortgagor to maintain or cause to be maintained any insurance required under the Loan Documents that is not cured within five (5) days after Mortgagee gives Mortgagor notice of such lapse.
(m) The cessation, for any reason of any Loan Document to be in full force and effect in all material respects, unless Parent or Mortgagor causes such Loan Document to be in full force and effect within ten (10) days after Mortgagee gives Parent and Mortgagor notice of such cessation; the failure of any lien intended to be created by the Loan Documents to exist or to be valid and perfected that is not cured within ten (10) days after Mortgagee gives Parent and Mortgagor notice of such failure; or the cessation of any such lien, for any reason, to have the priority contemplated by the Mortgage or the other Loan Documents unless Mortgagor re-establishes such priority within ten (10) days after Mortgagee gives Mortgagor notice of such cessation.
(n) The occurrence of any Event of Default, as such term is defined in any other Loan Document, that remains uncured after the expiration of any applicable notice and cure period set forth therein.
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(o) The Parent breaches any material covenant contained in the Purchase Agreement (as defined in the Note), including the no solicitation provisions of Section 5.3 thereof, and, if curable, remains uncured for ten (10) days after written notice from the Mortgagee to the Parent and Mortgagor; provided that no cure period applies to any breach that impairs the security interests under any Loan Document; and provided, further, that no Event of Default shall be deemed to have occurred under this subsection (o) or any other provision of this Mortgage to the extent that such Event of Default is caused by, results from, or is attributable to the Mortgagee’s failure to perform or comply with any of Mortgagee’s obligations under the Purchase Agreement.
(p) Notwithstanding anything to the contrary in this Section 4.1 or elsewhere in this Mortgage or the other Loan Documents: (i) no Event of Default shall be deemed to exist, and Mortgagee shall have no right to accelerate the Obligations or exercise any remedies hereunder, if and to the extent that the event or circumstance giving rise to such alleged Event of Default was directly caused by, or is attributable to, a material breach by Mortgagee of any of its obligations under the Purchase Agreement; (ii) during any period in which Mortgagee is in material breach of the Purchase Agreement, all cure periods available to Mortgagor and Parent under this Section 4.1 shall be tolled until such time as Mortgagee has cured its breach or Mortgagor has received written confirmation from Mortgagee that such breach has been waived; and (iii) Mortgagor shall have the right to assert Mortgagee’s material breach of the Purchase Agreement as an affirmative defense to any acceleration, foreclosure, or other enforcement action by Mortgagee under this Mortgage or any other Loan Document.
Section 4.2 Acceleration Upon Default; Additional Remedies. Upon the occurrence of an uncured Event of Default, Mortgagee may, at its option, declare all or any part of the Obligations immediately due and payable without any presentment, demand, protest or notice of any kind, except as required by Montana law or this Mortgage. Mortgagee may, in addition to the exercise of any or all of the remedies specified in Section 3.4:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Premises, or any part thereof, in its own name, and do any acts that it deems necessary or desirable to preserve the value, marketability or rentability of the Premises, or any part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Premises, sue for or otherwise collect the Rents, or any part thereof, including, without limitation, those past due and unpaid, and apply the same, less costs and expenses of operation and collection (including, without limitation, reasonable attorneys’ fees) upon the Obligations, all in such order as Mortgagee may determine. The entering upon and taking possession of the Premises, the collection of such Rents and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of all or any portion of the Premises or the collection, receipt and application of Rents, Mortgagee shall be entitled to exercise every right
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provided for in any of the Loan Documents or by law upon occurrence of any Event of Default, including, without limitation, the right to exercise the power of sale;
(b) Commence an action to foreclose the lien of this Mortgage as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Exercise of the power of sale herein contained and deliver to Mortgagor a written statement of breach, notice of default and election to cause Mortgagor’s interest in the Premises to be sold; or
(d) Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing or guarantying all or any portion of the Obligations, or by law.
Section 4.3 Exercise of Power of Sale. Mortgagee shall have the right to cause the Premises to be sold pursuant to the power of sale contained herein as follows: (i) Mortgagee shall record a notice of default and election to sell in the office of the county recorder of the county in which the Premises is situated, which notice shall identify this Mortgage by stating the date thereof and the date of recording, the name of Mortgagor and Mortgagee, describe the default, and contain an election on the part of Mortgagee to cause the Premises to be sold to satisfy the Obligations; (ii) following the recording of the notice of default, a period of not less than three (3) months (or such longer period as may be required by applicable law) shall elapse, during which period Mortgagor may cure the default by paying all amounts then in arrears (exclusive of any portion of principal that would not then be due but for acceleration) together with all costs and expenses incurred by Mortgagee in enforcing the Obligations, including reasonable attorneys’ fees; (iii) if the default is not cured within such reinstatement period, Mortgagee shall give notice of the time and place of sale by (A) posting a copy of the notice of sale in a conspicuous place on the Premises and in a public place in the county in which the Premises is situated, (B) recording the notice of sale in the office of the county recorder of the county in which the Premises is situated, (C) mailing a copy of the notice of sale by registered or certified mail, return receipt requested, to Mortgagor and to each person who has recorded a request for notice pursuant to applicable law at the address set forth in such recorded request, and (D) publishing the notice of sale once a week for three (3) successive weeks in a newspaper of general circulation in the county in which the Premises is situated, with the sale to occur not less than one-hundred twenty (120) days after mailing of such notice to Mortgagor and not less than twenty (20) days after the date of the third and final publication; (iv) Mortgagee shall sell the Premises (en masse or in separate parcels, as the Mortgagee may determine in its sole discretion) at public auction to the highest bidder for cash, at such place as may be designated in the notice of sale; (v) upon completion of the sale, Mortgagee shall execute and deliver to the purchaser a trustee’s deed conveying title to the Premises so sold without any covenant or warranty, express or implied, which trustee’s deed shall recite the facts showing that the sale was conducted in compliance with all requirements of law and of this Mortgage, and such recitals shall be conclusive proof of the truth and accuracy thereof; (vi) Mortgagee may purchase the Premises or any part thereof at such sale, and in such event may credit against the purchase price all or any
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portion of the Obligations; (vii) Mortgagee shall apply the proceeds of sale in the following order of priority: first, to the costs, fees and expenses of exercising the power of sale, including the payment of Mortgagee’s fees and reasonable attorneys’ fees; second, to all Obligations in such order as Mortgagee shall determine in its sole discretion; and third, the surplus, if any, to the person or persons legally entitled thereto; (viii) any sale made hereunder shall, subject to any applicable right of redemption under Montana law, be a perpetual bar, both in law and equity, against Mortgagor, its successors and assigns, and all persons claiming the Premises or any part thereof by, from, through or under Mortgagor; and (ix) it shall not be obligatory upon the purchaser or purchasers at any such sale to see to the application of the purchase money. If a reconveyance is required, the Mortgagor, its successor or assigns, shall pay the expense thereof. In the event of foreclosure of the lien hereof, whether by power of sale or through a court of competent jurisdiction, there shall be allowed and included as additional Obligations all reasonable expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee including, but not limited to, attorneys’ fees, appraisers’ fees, outlays for documentary and expert evidence, publication costs and costs of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to title as Mortgagee may deem reasonably necessary either to prosecute such foreclosure or to evidence to bidders at any sale the true condition of the title to or the value of the Premises. All reasonable out-of-pocket expenditures and expenses of the nature in this Section mentioned, and such expenses and fees as may be incurred in the protection of said Premises and the maintenance of the lien of this Mortgage, including the fees of any attorney employed by Mortgagee in any litigation or proceeding affecting this Mortgage, the Note or said Premises, including probate and bankruptcy proceedings, or in preparation for the commencement or defense of any proceeding or threatened suit or proceeding, shall be immediately due and payable by Mortgagor with interest thereon at the rate provided for in the Note. To the extent any of the above provisions are inconsistent with applicable law, the above provisions shall be modified to comply therewith.
Section 4.4 Personal Property. It is the express understanding and intent of the parties that as to any personal property interests subject to the Uniform Commercial Code of Montana, Mortgagee, upon an uncured Event of Default, may proceed under such Uniform Commercial Code of Montana or may proceed as to both real and personal property interests in accordance with the provisions of this Mortgage and its rights and remedies in respect to real property, as specifically permitted under the Uniform Commercial Code of Montana, and treat both real and personal property interests as one parcel or package of security.
Section 4.5 Appointment of Receiver. Upon the occurrence of an uncured Event of Default, but only after providing written notice to Mortgagor allowing at least five (5) days to cure such Event of Default, Mortgagee, as a matter of right and without notice to Mortgagor or any one claiming under Mortgagor, and without regard to the then value of the Premises or the interest of Mortgagor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Premises, and Mortgagor hereby irrevocably consents to such appointment and, to the extent permitted by Montana law, waives notice of any application
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therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided herein and shall continue as such and exercise all such powers until the later of the date of confirmation of sale of the Premises or the date of expiration of any redemption period unless such receivership is sooner terminated.
Section 4.6 Remedies Not Exclusive. Mortgagee shall be entitled to enforce payment and performance of any and all of the Obligations and to exercise all rights and powers under the Loan Documents and under the law now or hereafter in effect, notwithstanding some or all of the Obligations may now or hereafter be otherwise secured or guaranteed. Neither the acceptance of this Mortgage nor its enforcement, whether by court action or pursuant to the power of sale or other rights herein contained, shall prejudice or in any manner affect Mortgagee’s right to realize upon or enforce any other security or guaranty now or hereafter held by Mortgagee, it being agreed that Mortgagee, and each of them shall be entitled to enforce this Mortgage and any other security or any guaranty now or hereafter held by Mortgagee in such order and manner as they or either of them may in their absolute discretion determine. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing under the law. Every power or remedy given by any of the Loan Documents or by law to Mortgagee or to which either of them may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Mortgagee and, to the extent permitted by law, either of them may pursue inconsistent remedies. Nothing in this Section shall be construed to waive, shorten, or impair Mortgagor’s statutory redemption rights under Montana law.
Section 4.7 Request for Notice. Mortgagor hereby requests a copy of any notice of default and that any notice of sale hereunder be mailed to it at the address set forth in Section 5.4.
5. MISCELLANEOUS
Section 5.1 Change, Discharge, Termination, or Waiver. No provision of this Mortgage may be changed, discharged, terminated, or waived except in a writing signed by the party against whom enforcement of the change, discharge, termination, or waiver is sought. No failure on the part of Mortgagee to exercise and no delay by Mortgagee in exercising any right or remedy under the Loan Documents or under the law shall operate as a waiver thereof.
Section 5.2 Mortgagor Waiver of Rights. Mortgagor waives, to the extent permitted by law, (a) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Premises, and (b) all rights and remedies that Mortgagor may have or be able to assert by reason of the laws of the State of Montana pertaining to the rights and remedies of sureties. For the avoidance of doubt, Mortgagor does not waive any right of redemption, right to notice, or any other procedural protection afforded under Montana law in connection with judicial foreclosure proceedings. See also Section 5.24 (Equity of
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Redemption; Montana Redemption Rights Preservation) for additional protections regarding Mortgagor’s redemption rights.
Section 5.3 Reconveyance by Mortgagee. Upon written request of Mortgagee stating that all Obligations have been satisfied in full, and upon surrender of this Mortgage and the Note to Mortgagor for cancellation and retention and upon payment by Mortgagor of Mortgagee’s fees, Mortgagee shall reconvey to Mortgagor, or to the person or persons legally entitled thereto, without warranty, any portion of the Premises then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in any reconveyance may be described as “the person or persons legally entitled thereto.”
Section 5.4 Notices. All notices, requests and demands to be made hereunder to the parties hereto shall be in writing and shall be delivered by hand or sent by registered or certified mail, return receipt requested, through the United States Postal Service to the addresses shown below or such other address which the parties may provide to one another in accordance herewith. Such notices, requests and demands, if sent by mail, shall be deemed given two (2) days after deposit in the United States mail, and if delivered by hand, shall be deemed given when delivered. A courtesy copy of each notice given hereunder shall also be delivered via email to such parties who have provided an email address below and shall be given on the same day as the formal notice. Failure to provide an email notice according to the foregoing sentence shall not be a default of this notice provision.
| To Mortgagee: | Silver Bow Mining Corp. |
1401 Idaho Street
Butte, Montana 59701
Attn: Wade Black
Email:
| And: | Dorsey & Whitney LLP |
Attn: Jason K. Brenkert
1400 Wewatta Street
Denver, Colorado 80202
Email:
| To Mortgagor: | Montana Tunnels Mining, Inc. 270 MT Tunnels Rd, Jefferson City, MT 59638 |
Attn: Patrick Imeson
Email:
| With copies to: | Lucosky Brookman LLP | |
101 Wood Avenue South, 5th Floor |
Section 5.5 [RESERVED].
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Section 5.6 Captions and References. The headings at the beginning of each section of this Mortgage are solely for convenience and are not part of this Mortgage. Unless otherwise indicated, each reference in this Mortgage to a section or an exhibit is a reference to the respective section herein or exhibit hereto.
Section 5.7 Invalidity of Certain Provisions. If any provision of this Mortgage is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect. If the lien of this Mortgage is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Premises, the unsecured or partially secured portion of the debt shall be completely paid prior to the payment of the remaining and secured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or fully secured by the lien of this Mortgage.
Section 5.8 Attorneys’ Fees. If any or all of the Obligations are not paid when due or if an Event of Default occurs, Mortgagor agrees to pay all costs of enforcement and collection and preparation therefore (including, without limitation, reasonable attorney’s fees) whether or not any action or proceeding is brought (including, without limitation, all such costs incurred in connection with any bankruptcy, receivership, or other court proceedings (whether at the trial or appellate level)), together with interest therein from the date of demand at the Default Interest Rate.
Section 5.9 Governing Law; Jurisdiction.
(a) THIS MORTGAGE HAS BEEN DELIVERED IN MONTANA, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF MONTANA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES.
(b) Mortgagor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Mortgagee or any affiliate of the Mortgagee in any way relating to this Mortgage or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of Montana sitting in Silver Bow County, and of the United States Judicial District Court of the District of Montana, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such Montana State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Mortgage or in any other Loan Document shall affect any right that the Mortgagee may otherwise have to bring any action or proceeding relating to this Mortgage or any other Loan
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Document against the Mortgagor or any other Loan Party or its properties in the courts of any jurisdiction.
Section 5.10 Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG MORTGAGOR AND MORTGAGEE ARISING OUT OF OR IN ANY WAY RELATED TO THIS MORTGAGE OR ANY OTHER RELATED DOCUMENT OR LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO MORTGAGEE TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
Section 5.11 Joint and Several Obligations. If this Mortgage is signed by more than one party as Mortgagor, all obligations of Mortgagor herein shall be the joint and several obligations of each party executing this Mortgage as Mortgagor.
Section 5.12 Number and Gender. In this Mortgage the singular shall include the plural and the masculine shall include the feminine and neuter gender and vice versa, if the context so requires.
Section 5.13 Counterparts. This document may be executed and acknowledged in counterparts, all of which executed and acknowledged counterparts shall together constitute a single document. Signature and acknowledgment pages may be detached from the counterparts and attached to a single copy of this document to form physically one document, which may be recorded.
Section 5.14 Integration. The Loan Documents contain the complete understanding and agreement of Mortgagor and Mortgagee and supersede all prior representations, warranties, agreements, arrangements, understandings, and negotiations.
Section 5.15 Binding Effect. The Loan Documents will be binding upon, and inure to the benefit of, Mortgagor and Mortgagee and their respective successors and assigns. Mortgagor may not delegate its obligations under the Loan Documents.
Section 5.16 Time of the Essence. Time is of the essence with regard to each provision of the Loan Documents as to which time is a factor.
Section 5.17 Survival. The representations, warranties, and covenants of the Mortgagor and the Loan Documents shall survive the execution and delivery of the Loan Documents and the making of the Loan.
Section 5.18 Representations and Warranties. Mortgagor represents and warrants to Mortgagee that:
| Mortagage, Security Agreement and Fixture Filing | Page 30 of 30 |
(a) it is the lawful owner of the Premises free and clear of all Liens and Encumbrances and holds a fee simple estate in the Premises and Improvements, subject only to the Permitted Exceptions and that Mortgagor has full right, power and authority to convey and mortgage the same and to execute this Mortgage;
(b) Mortgagor’s exact legal name is correctly set forth in the introductory paragraph of this Mortgage;
(c) Mortgagor is an organization of the type and (if not an unregistered entity) is incorporated in or organized under the laws of the state specified in the introductory paragraph of this Mortgage; and
(d) Mortgagor’s organizational identification number, if any, assigned by the state of incorporation or organization is correctly set forth on the first page of this Mortgage
Section 5.19 Covenants.
(a) Tenant Leases. Mortgagor shall not execute any lease or other occupancy agreement with respect to space in the Improvements or with respect to the Premises without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld or delayed. Mortgagee shall have the right to approve or disapprove any amendment to any existing Lease, which consent shall not be unreasonably withheld or delayed. Mortgagee shall approve or disapprove any amendment within ten (10) Business Days of receipt by Mortgagee of the amendment and all other information reasonably deemed necessary by Mortgagee in connection with its approval of the amendment. If Mortgagee fails to approve or disapprove any amendment within such ten (10) Business Day period, the amendment shall be deemed disapproved. Mortgagor shall, within ten (10) days after a request therefor, deliver to Mortgagee an estoppel certificate, in form and substance satisfactory to Mortgagee, from any such tenants under Leases. Mortgagor shall use commercially reasonable efforts to enforce each tenant’s obligations under each Lease.
Section 5.20 Indemnification. To the fullest extent permitted by law, Mortgagor agrees to protect, indemnify, defend and save harmless Mortgagee, its directors, officers, Mortgagor and employees for, from and against any and all liability, expense or damage of any kind or nature and for, from and against any suits, claims or demands, including reasonable legal fees and expenses on account of any matter or thing or action or failure to act by Mortgagee, whether in suit or not, arising out of the Loan Documents or in connection therewith, including, without limitation, any suit, claim or demand arising out of any default which may occur in connection with the Loan and/or the Property. Upon receiving knowledge of any suit, claim or demand asserted by a third party that Mortgagee believes is covered by this indemnity, Mortgagee shall give Mortgagor notice of the matter and an opportunity to defend it, at Mortgagor’s sole cost and expense, with legal counsel satisfactory to Mortgagee. Mortgagee may also require Mortgagor to defend the matter. The obligations on the part of Mortgagor under this Section shall survive the closing of the Loan and the repayment thereof.
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Section 5.21 Payment of Expenses. Mortgagor shall pay all taxes and assessments and all expenses, charges, costs and fees provided for in the Loan Documents or relating to the Loan, including, without limitation, any fees incurred for recording or filing any of the Loan Documents, title insurance premiums and charges, tax service contract fees, fees of any consultants, reasonable fees and expenses of Mortgagee’s counsel, documentation and processing fees, printing and duplicating expenses, air freight charges, escrow fees, costs of surveys, premiums of hazard insurance policies and surety bonds and fees for any appraisal and appraisal review, market or feasibility study required by Mortgagee. Mortgagor hereby authorizes Mortgagee to disburse the proceeds of the Loan to pay such expenses, charges, costs and fees notwithstanding that Mortgagor may not have requested a disbursement of such amount. Mortgagee shall make such disbursements notwithstanding the fact that Mortgagor is in default under the terms of the Loan Documents. Such disbursement shall be added to the outstanding principal balance of the Note. The authorization hereby granted shall be irrevocable, and no further direction or authorization from Mortgagor shall be necessary for Mortgagee to make such disbursements. However, the provision of this Section shall not prevent Mortgagor from paying such expense, charges, costs and fees from its own funds. All such expenses, charges, costs and fees shall be Mortgagor’s obligation regardless of whether or not Mortgagor has requested and met the conditions for a disbursement of the Loan. The obligations on the part of Mortgagor under this Section shall survive the closing of the Loan and the repayment thereof. Mortgagor hereby authorizes Mortgagee, in its discretion, to pay such expenses, charges, costs and fees at any time by an additional disbursement, which will be added to the outstanding balance of the Loan.
Section 5.22 Future Advances. This Mortgage secures the payment of the entire Obligations. The lien of this Mortgage shall be valid as to all indebtedness including future advances, from the time of its filing for record in the recorder’s or registrar’s office of the county in which the Premises is located. The total amount of indebtedness may increase or decrease from time to time, as provided in the Note, and any disbursements which Mortgagee may make under this Mortgage, the Note or any other Loan Documents with respect hereto (e.g., for payment of taxes, insurance premiums or other advances to protect Mortgagee’s liens and security interests, as permitted hereby) shall be additional Obligations. This Mortgage is intended to and shall be valid and have priority over all subsequent liens and encumbrances, including statutory liens, excepting solely taxes and assessments levied on the Premises, to the extent of the maximum amount secured hereby.
Section 5.23 Mortgagee’s Obligations Under Purchase Agreement. Mortgagor and Mortgagee acknowledge that the Obligations secured hereby arise in connection with the transactions contemplated by the Purchase Agreement. Mortgagee agrees that (a) a material breach by Mortgagee of its obligations under the Purchase Agreement shall constitute a defense to enforcement of this Mortgage to the extent provided in Section 4.1; (b) Mortgagee shall not exercise any remedies under this Mortgage (including, without limitation, acceleration, foreclosure, or appointment of a receiver) during any period in which Mortgagee is in material breach of the Purchase Agreement unless and until such breach has been cured or waived; and
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(c) Mortgagor shall not be required to pay any amount otherwise due under the Loan Documents to the extent that such amount represents damages or costs arising from Mortgagee’s own breach of the Purchase Agreement. For the avoidance of doubt, nothing in this Section shall relieve Mortgagor of its obligation to make regularly scheduled payments of principal and interest under the Note during any dispute regarding Mortgagee’s performance under the Purchase Agreement, except to the extent a court of competent jurisdiction has determined that Mortgagee’s breach excuses such payment.
Section 5.24 Equity of Redemption; Montana Redemption Rights Preservation.
(a) Preservation of Redemption Rights: Notwithstanding any other provision of this Mortgage, the Note, or any other Loan Document, no power of sale, acceleration right, remedy, waiver, or other enforcement provision contained in this Mortgage, the Note, or any other Loan Document shall operate to clog, cut off, waive, release, impair, or condition Mortgagor’s equity of redemption or any other nonwaivable redemption right under Montana law. Mortgagor retains all legal and equitable rights to redeem the Premises that exist before any foreclosure sale or other legally effective termination of those rights.
(b) Enforcement Subject to Montana Law: All enforcement remedies under this Mortgage, the Note, or any other Loan Document, including any power of sale, shall be exercised subject to all notice, cure, reinstatement, redemption, and foreclosure requirements under Montana law, the notice and cure periods set forth in Article 4 and Section 5.4, and the procedural requirements of this Mortgage to the extent consistent with Montana law. To the extent any provision of this Mortgage, the Note, or any other Loan Document conflicts with a mandatory Montana statutory requirement governing foreclosure, redemption, or enforcement, the statutory requirement shall control.
(c) Construction: If any provision of this Mortgage, the Note, or any other Loan Document could be construed to waive or restrict Mortgagor’s nonwaivable redemption rights under Montana law, that provision shall be construed, limited, or severed to the minimum extent necessary to preserve those rights and to permit Mortgagee to enforce this Mortgage and the other Loan Documents only by procedures permitted under Montana law. Any waiver of rights contained in the Note or any other Loan Document shall be effective only to the extent permitted by Montana law and shall not be construed to waive any right of redemption, right to notice, or other procedural protection that is nonwaivable under Montana law.
[Signatures on Next Page]
| Mortagage, Security Agreement and Fixture Filing | Page 33 of 30 |
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year first above written.
| “MORTGAGOR” | |||
| MONTANA TUNNELS MINING, INC., | |||
| a Delaware corporation | |||
| By: | /s/ Patrick Imeson | ||
| Name: | Patrick Imeson | ||
| Title: | Chief Executive Officer | ||
| STATE OF CO | ) |
| )ss | |
| County of Denver | ) |
On this 4th day of September, 2026, before me personally appeared Patrick Imeson, the CEO of Montana Tunnels Mining, Inc., whose identity was proven to me on the basis of satisfactory evidence to be the person he claims to be, and acknowledged before me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity or entities upon behalf of which the person acted, executed the instrument.
(seal)
| /s/ Hannah Ferguson | |
| Notary Public |
| Mortgage and Fixture Filing | Signature Page 1 of 1 |
EXHIBIT A
(Legal Description)
All of Montana Tunnels Mining, Inc.’s property interests, including all of its right, title, and interest in and to the following patented mining claims, unpatented mining claims, and other fee lands in Jefferson County, Montana:
PATENTED MINING CLAIMS
| NO. | CLAIM NAME | M.S. NO. |
| 1 | Minah | 286 |
| 2 | E. Minah | 381 |
| 3 | Homestake | 2025 |
| 4 | Iron Dollar | 2027 |
| 5 | General Harris | 2038 |
| 6 | Annie B | 2064 |
| 7 | Black Rock No. 2 | 9184 |
| 8 | D.E.D. | 9184 |
| 9 | Geraldine C. | 9184 |
| 10 | Montana | 9184 |
| 11 | P.Q.C. | 9184 |
| 12 | Black Rock No. 3 | 8940 |
| 13 | San Pedro Millsite, Lot B | 4747 |
| 14 | Leadville | 2038 |
| 15 | Anna | 8940 |
| 16 | Jordan | 9184 |
| 17 | Red Rock | 8939 |
| 18 | San Pedro, Lot A | 4747 |
| 19 | Simmons Placer | 4154 |
| 20 | Placer | 213 |
| 21 | Placer | 243 |
| 22 | Learned | 9183 |
| 23 | Chief Joseph | 8940 |
| 24 | Henrietta | 8940 |
| 25 | Edwards | 8940 |
| 26 | Albert | 8940 |
| 27 | Dewey | 8940 |
| 28 | Catherine | 8940 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 1 of 8 |
| 29 | Walker | 8940 |
| 30 | Tell | 8940 |
| 31 | Bonanza | 8940 |
| 32 | Kathleen | 8940 |
| 33 | Prosper | 8940 |
| 34 | Rosalie | 8940 |
| 35 | F.E.R. | 8940 |
| 36 | Ray | 9184 |
| 37 | Dow | 8940 |
| 38 | Helena | 9184 |
| 39 | Hill Side | 1870 |
| 40 | Missing Link | 9184 |
| 41 | Maggie D. | 8939 |
| 42 | Little Nancy Extension | 8939 |
| 43 | North Pacific, Lot 53B & Mill Site Lot 61 | 474 |
| 44 | North Pacific, Lot 53A | 474 |
| 45 | Pine Ridge | 8940 |
| 46 | Chamberlin | 9184 |
| 47 | Custer (Lot 71A) | 1072 |
| 48 | Custer (Lot 71C) | 1072 |
| 49 | Custer (Lot 71D) | 1072 |
| 50 | Somewhere | 734 |
| 51 | North Atlantic | 1649 |
| 52 | Russell | 2732 |
| 53 | Keystone | 3634 |
| 54 | Leamy No. 2 | 8445 |
| 55 | Last Chance | 10640 |
| 56 | Sure Thing | 10640 |
| 57 | Last Chance | 9193 |
| 58 | Bessie H. | 8939 |
| 59 | Anna Lee | 8865 |
| 60 | H.M.& R. Placer Less 38.81 acres | 2409 |
| 61 | H.M.& R. Placer Lot 3 | 2409 |
| 62 | David Copperfield | 3352A |
| 63 | U.S. | 9641 |
| 64 | Iowa | 2026 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 2 of 8 |
| 65 | Leamy No. 1 | 8444 |
| 66 | Soldier Boy | 9641 |
| 67 | Elk | 8241 |
| 68 | Jockey Boy | 8242 |
| 69 | American Mint (North and South) | 8243 |
| 70 | Song Bird (North and South) | 8244 |
| 71 | Ruby (North and South) | 8245 |
| 72 | Daisy (North and South) | 8246 |
| 73 | Monitor (North and South) | 8247 |
| 74 | Babe (North and South) | 9325 |
| 75 | Nellie (North and South) | 10031 |
| 76 | Basin | 8249 |
| 77 | Mammoth | 8250 |
| 78 | Wickes | 8251 |
| 79 | Covellite | 8252 |
| 80 | Columbia (North and South) | 9080 |
| 81 | Blue Rock | 8248 |
| 82 | May Bird | 8946 |
| 83 | Belle of Belleville | 860 |
| 84 | Schneider | 8289 |
| 85 | Frances | 8290 |
| 86 | Copper Leaf | 8291 |
| 87 | Copper Glance | 9515 |
| 88 | Mueller Fr. | 9515 |
| 89 | Wild Katt | 9515 |
| 90 | Wickes | 10032 |
| 91 | Blizzard | 5456 |
| 92 | Blizzard No. 2 | 10033 |
| 93 | Ariadne | 10738 |
| 94 | Flagstaff | 2122 |
| 95 | Voelker Placer | ME1219 |
| 96 | Highland | 9082 |
| 97 | North Alta | 9082 |
| 98 | Tunnel | 9082 |
| 99 | Mary | 9082 |
| 100 | Spring | 9082 |
| 101 | Houghton | 10032 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 3 of 8 |
| 102 | Alpine | 8854 |
| 103 | Alta Ruby | 8960 |
| 104 | Butte | 8854 |
| 105 | Chalopgeite | 8254 |
| 106 | Colonel Farish | 8940 |
| 107 | Equator | 8256 |
| 108 | Fair Trial | 8854 |
| 109 | Jumper | 8255 |
| 110 | K & H | 7688 |
| 111 | Michigan | 9013 |
| 112 | Spruce Tree | 3926 |
| 113 | Glenbeg No. 1 | 8940 |
| 114 | Glenbeg No. 2 | 8940 |
| 115 | T.F.C. | 8940 |
| 116 | S.R.D. | 9184 |
| 117 | Elkador Extension | 8939 |
| 118 | Elkader | 2028 |
| 119 | Deer | 10032 |
| 120 | Deer Lode Extension | 10032 |
| 121 | Placer | 258 |
| 122 | Little Nancy | 8939 |
| 123 | Black Rock No. 1 | 8940 |
| 124 | Placer | 2409 |
| 125 | Tom Boy | 8253 |
| 126 | Slenes Lode | 7585 |
| 127 | Sinrock Lode | 7584 |
| 128 | Tamarack Jr. | 7583 |
| 129 | Superior Lode | 7582 |
| 130 | Red Rock Lode | 7589 |
| 131 | Fraction Lode | 7590 |
| 132 | Copper King Lode | 7591 |
| 133 | Golden Star Lode | 7588 |
| 134 | Seva Lode | 7587 |
| 135 | Glasgow Lode | 9915 |
| 136 | Grey Eagle Lode | 9915 |
| 137 | Paris Lode | 9915 |
| 138 | Butte Lode | 9915 |
| 139 | John Williams Lode | 9661 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 4 of 8 |
| 140 | Lightning Lode | 9659 |
| 141 | Lincoln Lode | 9660 |
| 142 | Gertie R. Lode | 9081 |
| 143 | North Atlantic | 474A |
| 144 | Helena | 8931 |
UNPATENTED MINING CLAIMS
| NO. | CLAIM NAME | SERIAL NO. | LEGACY SERIAL NO. |
| 1 | AE #1 | MT101754841 | MMC231792 |
| 2 | AE #2 | MT101754842 | MMC231793 |
| 3 | AER-3 | MT101754843 | MMC231794 |
| 4 | AER-4 | MT101754844 | MMC231795 |
| 5 | AER-5 | MT101754845 | MMC231796 |
| 6 | AER-6 | MT101754846 | MMC231797 |
| 7 | AER-7 | MT101756171 | MMC231798 |
| 8 | AER-8 | MT101756172 | MMC231799 |
| 9 | AER-9 | MT101756173 | MMC231800 |
| 10 | ALTA FRACTION #7 | MT101756174 | MMC231803 |
| 11 | F 11R | MT101756175 | MMC231804 |
| 12 | F-12 | MT101756176 | MMC231805 |
| 13 | F-13 | MT101756177 | MMC231806 |
| 14 | F-15 | MT101756178 | MMC231807 |
| 15 | F-16 | MT101756179 | MMC231808 |
| 16 | F-18 | MT101756180 | MMC231810 |
| 17 | F-19 | MT101756181 | MMC231811 |
| 18 | F-22 | MT101756182 | MMC231812 |
| 19 | F-23 | MT101756183 | MMC231813 |
| 20 | F-24 | MT101756184 | MMC231814 |
| 21 | F-25 | MT101756185 | MMC231815 |
| 22 | F-26 | MT101756186 | MMC231816 |
| 23 | F-27 | MT101756187 | MMC231817 |
| 24 | GG-41R | MT101756188 | MMC231818 |
| 25 | GG-42R | MT101756189 | MMC231819 |
| 26 | GG-45 | MT101756190 | MMC231820 |
| 27 | GG-46 | MT101756191 | MMC231821 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 5 of 8 |
| 28 | GG-47 | MT101756192 | MMC231822 |
| 29 | GG-48 | MT101757514 | MMC231823 |
| 30 | GG-49 | MT101757515 | MMC231824 |
| 31 | GG-50 | MT101757516 | MMC231825 |
| 32 | GG-52 | MT101757517 | MMC231826 |
| 33 | GG-52R | MT101757518 | MMC231827 |
| 34 | GG-53R | MT101757519 | MMC231828 |
| 35 | GG-55 | MT101757520 | MMC231829 |
| 36 | GG-113 | MT101757521 | MMC231830 |
| 37 | GM-36 | MT101757522 | MMC231831 |
| 38 | GM-54 | MT101757523 | MMC231832 |
| 39 | KAKI | MT101757524 | MMC231833 |
| 40 | MF-1 | MT101757525 | MMC231834 |
| 41 | TBX-14 | MT101757526 | MMC231835 |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 6 of 8 |
OTHER FEE LANDS
| Township 7 North, Range 4 West, M.P.M. | |
| Section 1: | A tract identified as “Tract A” on C.O.S. 211355, consisting of 12.59 acres, more or less. |
| Lot 4 of the Spring Creek Valley Minor Subdivision, consisting of 23.37 acres, more or less. | |
| Lot 5 of the Spring Creek Valley minor Subdivision, consisting of 40.45 acres, more or less. | |
| The Remainder Tract of the Spring Creek Valley Minor Subdivision, consisting of 103.41 acres, more or less. | |
| Section 4: | Lots 10, 17, 19, 20, 22 – 25, and S½SW¼, less and except (i) mining claims and (ii) a 20-acre tract identified as the “Reynolds Tract Minor Sub” on C.O.S. 177413. |
| A 20-acre tract in the S½ identified as the “Reynolds Tract Minor Sub” on C.O.S. 177413 | |
| Section 5: | Lots 6, 11, 19, 20, 22, SE¼SE¼, SW¼SW¼, and SE¼SW¼, NW¼SW¼ |
| Lots 2 – 4, 13, 15 – 18 and SW ¼ NW ¼, less and except the right of way, containing 259.67 acres, more or less. | |
| Section 8: | Lots 21, 23, 24 – 26, 28 – 33, 35 – 41, 43, and 44 |
| Section 9: | Lots 3, 8, 9, 18, N½NW¼, SW¼NW¼, NW¼NE¼, NW¼SW¼, N½SW¼SW¼, S½S½SW¼SW¼, and N½S½SW¼SW¼ |
| Section 11: | SW¼NE¼, and NW¼SE¼ |
| A tract located in the SE¼SW¼ and S½NE¼SW¼, consisting of 57.41 acres, more or less. | |
| A tract in the S½NE¼SW¼, identified as the “M&B Tract,” consisting of 2.59 acres, more or less. | |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 7 of 8 |
| Those parts of the N½NE¼SW¼ lying west and east of the abandoned railroad right of way. | |
| Section 14: | The NW¼, less and except (i) the Bohemia Lode (MS 9489), (ii) a 2.01-acre tract identified on C.O.S. 126458, and (iii) 2.32-acre tract identified as the “M&B Tract. |
| Section 15: |
A tract comprised of portions of the N½SE¼NE¼, SW¼SE¼NE¼, E½SW¼NE¼, SW¼NE¼NE¼, and E½NE¼NE¼ identified as “Placer MS 1219,” consisting of 73.05 acres, more or less.
A tract located in the N½ identified as the “Abandoned Tract,” consisting of 24.06 acres, more or less. |
|
A tract in the NE¼, consisting of 28.95 acres, more or less.
| |
| Section 16: | NW¼, N½SW¼, and SW¼SW¼ |
| A tract in the SE¼ of Section 16 and SW¼ of Section 15, identified as Lot 1 in C.O.S. 191656, consisting of 6.43 acres, more or less. | |
| A tract located in the E½, consisting of 27.14 acres, more or less. | |
| A tract located in the SW¼NE¼ consisting of 6.72 acres, more or less. | |
| Section 17: | Lots 1 – 17, less and except (i) a tract in the SW¼NE¼ and the SE¼NW¼ consisting of 12.00 acres, more or less, and (ii) a tract described as “Parcel A” on C.O.S. 235107, consisting of 3.20 acres, more or less. |
| A tract described as “Parcel A” on C.O.S. 235107, consisting of 3.20 acres, more or less | |
| Section 20: | NW¼, N½NE¼, and SE¼NE¼ |
| Mortgage, Security Agreement and Fixture Filing | Exhibit A Page 8 of 8 |
EXHIBIT B
(Description of Personal Property)
(a) All personal property (including, without limitation, all goods, supplies, equipment, furniture, furnishings, fixtures, machinery, inventory, and construction materials and software embedded in any of the foregoing) in which Mortgagor now or hereafter acquires an interest or right, which is now or hereafter located on or affixed to the Premises or the Improvements or used or useful in the operation, use, or occupancy thereof or the construction of any Improvements thereon, together with any interest of Mortgagor in and to personal property which is leased or subject to any superior security interest, and all books, records, leases and other agreements, documents, and instruments of whatever kind or character, relating to the Premises, Improvements, or such personal property;
(b) All fees, income, rents, issues, profits, earnings, receipts, royalties, and revenues which, after the date hereof and while any portion of the Obligations remains unpaid or unperformed, may accrue from such personal property or any part thereof or from the Premises, the Improvements or any other part of the Premises, or which may be received or receivable by Mortgagor from any hiring, using, letting, leasing, subhiring, subletting, subleasing, occupancy, operation, or use thereof;
(c) All of Mortgagor’s rights under contracts for the sale of the Premises and Improvements or any portion thereof;
(d) All of Mortgagor’s present and future rights to receive payments of money, services, or property, including, without limitation, rights to all deposits from tenants of the Premises or Improvements: rights to receive capital contributions or subscriptions from Mortgagor’s members, partners or shareholders, amounts payable on account of the sale of membership or partnership interests in Mortgagor or the capital stock of Mortgagor, accounts and other accounts receivable, deposit accounts maintained with Mortgagee and its affiliates, chattel paper (whether tangible or electronic), notes, drafts, contract rights, instruments, general intangibles, all as defined in the Uniform Commercial Code of Montana, as presently or hereafter in effect, and principal, interest and payments due on account of goods sold or leased, services rendered, loans made or credit extended, together with title to or interest in all agreements, documents, and instruments, evidencing, securing or guarantying the same;
(e) All other intangible property (and related software) and rights relating to the Premises, the Improvements, the personal property described in Section (a) above or the operation, occupancy, or use thereof, including, without limitation, all governmental and non-governmental permits, licenses, and approvals relating to construction on or operation, occupancy, or use of the Premises or Improvements, all names under or by which the Premises or Improvements may at any time be operated or known, all rights to carry on business under any such names, or any variant thereof, all trade names and trademarks relating in any way to the
| Mortgage, Security Agreement and Fixture Filing | Exhibit B Page 1 of 3 |
Premises or the Improvements, and all good will and software in any way relating to the Premises or the Improvements;
(f) All as-extracted collateral produced from or allocated to the Premises, including, without limitation, oil, gas, and other hydrocarbons and other minerals;
(g) Mortgagor’s rights under all insurance policies covering the Premises, the Improvements, the Personal Property, and the other parts of the Premises and any and all proceeds, loss payments, and premium refunds payable regarding the same;
(h) All reserves, deferred payments, deposits, refunds, cost savings, and payments of any kind relating to the construction of any Improvements on the Premises;
(i) All water stock relating to the Premises;
(j) All causes of action, claims, compensation, and recoveries for any damage to, destruction of, or condemnation or taking of the Premises, the Improvements, the Personal Property, or any other part of the Premises, or for any conveyance in lieu thereof, whether direct or consequential, or for any damage or injury to the Premises, the Improvements, the Personal Property, or any other part of the Premises, or for any loss or diminution in value of the Premises, the Improvements, the Personal Property, or any other part of the Premises;
(k) All architectural, structural, mechanical, and engineering plans and specifications prepared for construction of Improvements or extraction of minerals or gravel from the Premises and all studies, data, and drawings related thereto; and also all contracts and agreements of the Mortgagor relating to the aforesaid plans and specifications or to the aforesaid studies, data, and drawings or to the construction of Improvements on or extraction of minerals or gravel from the Premises;
(l) All commercial tort claims Mortgagor now has or hereafter acquires relating to the properties, rights, titles, and interests referred to in this Exhibit B or elsewhere in the Mortgage;
(m) All letter of credit rights (whether or not the letter of credit is evidenced by a writing) Mortgagor now has or hereafter acquires relating to the properties, rights, titles and interest referred to in this Mortgage;
(n) All proceeds from sale or disposition of any of the aforesaid collateral and all supporting obligations ancillary thereto or arising in any way in connection therewith; and
(o) All Mortgagor’s rights in proceeds of the loan evidenced by the Note.
| Mortgage, Security Agreement and Fixture Filing | Exhibit B Page 2 of 3 |
As used in this Exhibit B the terms “Obligations”, “Note”, “Premises”, “Premises”, “Improvements”, and “Personal Property” shall have the meanings set forth in the Mortgage to which this Exhibit B is attached.
| Mortgage, Security Agreement and Fixture Filing | Exhibit B Page 3 of 3 |
EXHIBIT C
(Permitted Exceptions)
“Permitted Exceptions” means the following:
1. Sale, transfer, or other disposition of any Personal Property that is consumed or worn out in ordinary usage and that is promptly replaced with similar items of equal or greater value.
2. Liens and Encumbrances being contested in accordance with Section 1.17 of the Mortgage.
3. Impositions being contested in accordance with Section 1.8(d) of this Mortgage.
4. This Mortgage.
| Mortgage, Security Agreement and Fixture Filing | Exhibit C Page 1 of 1 |
Exhibit 10.5
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is dated as of September 4 , 2026 (this “Agreement”), by and among each stockholder of Montana Goldfields, Inc., a Delaware corporation (the “Company”), set forth on Exhibit A hereto (each a “Holder” and collectively the “Holders”), Silver Bow Mining Corp., a British Columbia corporation (“Parent”), and Silver Bow Tunnels Corp., a Montana corporation and a wholly-owned subsidiary of Parent (“SBTC”).
RECITALS
WHEREAS, the Company, Parent, SBTC, and Montana Tunnels Mining, Inc., a Delaware corporation and wholly-owned subsidiary of the Company entered into an asset purchase agreement dated August 21, 2026 (as the same may be amended or supplemented from time to time, the “Purchase Agreement”) providing for, among other things, the purchase by SBTC of certain assets and rights comprising the Montana Tunnels Mine located in Jefferson County, Montana (the “Montana Tunnels Mine”) and the Diamond Hill Mill (the “Diamond Hill Mill”), including all related mineral and real property interests, improvements, tangible personal property, water rights and permits, books and records, marks and other assets as described in the Purchase Agreement (the “Acquisition”);
WHEREAS, as of the date hereof, each Holder Beneficially Owns (as defined below) (i) such number of shares of common stock of the Company (“Company Common Stock”) set forth opposite such Holder’s name on Exhibit A hereto (with respect to each Holder, such shares, together with any shares of Company Common Stock described in Section 2.2, are referred to herein as such Holder’s “Subject Shares”);
WHEREAS, concurrently with the execution and delivery of the Purchase Agreement, and as a condition and an inducement to Parent and SBTC entering into the Purchase Agreement, each Holder is entering into this Agreement with respect to its Subject Shares; and
WHEREAS, Parent and SBTC desire that each Holder agree, and each Holder is willing to agree, subject to the limitations herein, not to Transfer (as defined below) any of its Subject Shares (except as permitted in this Agreement), and to act in a manner so as to facilitate consummation of the Acquisition and the other transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations, warranties and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
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Article I
DEFINITIONS
This Agreement is the “Support Agreement” as defined in the Purchase Agreement. Capitalized terms used but not defined herein shall have the respective meanings set forth in the Purchase Agreement.
“Beneficially Own” or “Beneficial Ownership” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such rule (in each case, irrespective of whether or not such rule is actually applicable in such circumstance). For the avoidance of doubt, Beneficially Own and Beneficial Ownership shall also include record ownership of securities.
“Beneficial Owner” means, in respect of a security, the Person(s) who Beneficially Own(s) such security.
“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act and Regulation 13D-G thereunder.
“Immediate Family” means the spouse of an individual and the grandparents, parents, siblings and children (and children and spouses of any of the foregoing) of the individual or his or her spouse. An adopted child will be treated as a child of his or her adoptive parent or parents (but only if he or she was adopted before he or she reached 21 years of age).
“Permitted Transferee” means, only in a Transfer without consideration, (1) any controlled Affiliate of such Holder which remains such, (2) a partner or member, active or retired, of such Holder or a stockholder of such Holder, (3) the estate of any such Holder or a trust established for the benefit of the descendants or any relatives or spouse of such Holder, (4) a parent corporation or wholly-owned subsidiary of such Holder or a wholly-owned subsidiary of such parent unless and until such transferee ceases to be a parent or wholly-owned subsidiary of the Holder or a wholly-owned subsidiary of such parent, or (5) a member of the Immediate Family of such Holder.
“Transfer” means, in respect of a Holder’s Subject Shares, or any portion thereof, any direct or indirect: (1) offer, sale, lease, assignment, encumbrance, loan, pledge, gift, hedge, short sale, distribution, grant of a security interest, hypothecation, disposition or other similar transfer or disposal (including, for the avoidance of doubt, any deposit, submission or other tendering into any tender or exchange offer), change, limit or entry into or acquisition of any derivative arrangement, by operation of law or otherwise and whether voluntary or involuntary; (2) entry into any option, contract, agreement or other arrangement to do any of the foregoing in clause (1); and (3) entry into any swap or any other agreement, transaction or series of transactions that results in an amount of Subject Shares subject to Article III that is less than the amount of Subject Shares subject to Article III as of the date hereof (including, in the case of each of clauses (1), (2) and (3), through the Transfer of any Person or any interest in any Person).
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Article II
AGREEMENT TO RETAIN SHARES
Section 2.1 Transfer and Encumbrance of Subject Shares.
(a) From the date hereof until the Termination Date (as defined below), each Holder hereby severally, and not jointly or jointly and severally, covenants and agrees that it shall not (i) Transfer any of its Subject Shares, except as permitted by this Agreement, (ii) deposit any of its Subject Shares into a voting trust or enter into a voting agreement or arrangement with respect to any of its Subject Shares or grant any proxy (except as otherwise provided herein) or power of attorney with respect thereto, or (iii) give instructions with respect to the voting of any of its Subject Shares in any manner that is inconsistent or otherwise take any other action with respect to any of its Subject Shares that would in any way restrict, limit or interfere with the performance by such Holder of its obligations hereunder or the transactions contemplated hereby.
(b) Notwithstanding Section 2.1(a), each Holder may Transfer its Subject Shares:
(i) to one or more of its Affiliates or Permitted Transferees who, as a condition to the consummation of such Transfer, executes and delivers to Parent a written agreement, in form and substance reasonably acceptable to Parent, to assume such Holder’s obligations hereunder and to be bound by the terms of this Agreement to the same extent as such Holder is bound hereunder and to make each of the representations and warranties hereunder in respect of such Subject Shares transferred as such Holder shall have made hereunder; or
(ii) with the prior written consent of Parent.
Section 2.2 Additional Purchases; Adjustments. Each Holder hereby severally, and not jointly or jointly and severally, agrees that any Shares and any other shares of capital stock or other equity of the Company that such Holder purchases or otherwise acquires or with respect to which such Holder otherwise acquires voting power after the execution of this Agreement and prior to the Termination Date shall be subject to the terms and conditions of this Agreement to the same extent as if they constituted such Holder’s Subject Shares as of the date hereof. Each Holder hereby severally, and not jointly or jointly and severally, agrees that, in the event of any stock split, stock dividend, acquisition, reorganization, recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Company affecting the Shares, the terms of this Agreement shall apply to resulting securities that are Beneficially Owned by such Holder.
Section 2.3 Unpermitted Transfers; Involuntary Transfers. Any Transfer or attempted Transfer of any Subject Shares in violation of this Article II shall, to the fullest extent permitted by law, be null and void ab initio. If any involuntary Transfer of any of such Holder’s Subject Shares shall occur, the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until the Termination Date.
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Article III
AGREEMENT TO SUPPORT
Section 3.1 Agreement to Support. Each Holder agrees support and take all commercially reasonable actions necessary to facilitate the implementation and consummation of the Acquisition, including, without limitation, (i) taking all commercially reasonable actions to support and complete the Acquisition and all other commercially reasonable actions contemplated in connection therewith and under the Purchase Agreement, and (ii) refraining from taking any actions inconsistent with, and not failing or omitting to take an action that is required by, this Agreement or the Purchase Agreement, including not taking (A) any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company or any of its Subsidiaries contained in the Purchase Agreement or of such Holder contained in this Agreement; (B) any action or agreement that would reasonably be expected to result in any condition to the consummation of the Acquisition set forth in Article VI of the Purchase Agreement not being fulfilled; (C) any other action that could reasonably be expected to impede, interfere with, delay, discourage, postpone or adversely affect any of the transactions contemplated by the Purchase Agreement, including the Acquisition, or this Agreement, inlcuding filing any objection to the 363 Motion (as defined in the Purchase Agreement) or otherwise attempting prevent or delay the issuance of the Final Order (as defined in the Purchase Agreement).
Article IV
ADDITIONAL AGREEMENTS
Section 4.1 Waiver of Appraisal Rights; Litigation. To the fullest extent permitted by applicable law, each Holder severally, and not jointly or jointly and severally, hereby irrevocably and unconditionally waives, and agrees not to exercise or assert, any rights of dissent or appraisal relating to the Acquisition that such Holder may have by virtue of the ownership of any of its Subject Shares or otherwise. Each Holder severally, and not jointly or jointly and severally, further agrees not to commence, join in, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, SBTC or the Company or any of their respective Affiliates or Representatives and each of their successors relating to the negotiation, execution or delivery of this Agreement or the Purchase Agreement or the consummation of the transactions contemplated hereby or thereby, including any claim (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or the Purchase Agreement (including any claim seeking to enjoin or delay the Closing) or (b) alleging a breach of any fiduciary duty of the Company’s board of directors in connection with the negotiation, execution and delivery of this Agreement or the Purchase Agreement or the consummation of the transactions contemplated hereby or thereby, and hereby irrevocably waives any claim or rights whatsoever with respect to any of the foregoing.
Section 4.2 Further Assurances. Each Holder severally, and not jointly or jointly and severally, agrees that from and after the date hereof and until the Termination Date, such Holder shall and shall cause its controlled Affiliates to take no action that would reasonably be likely to adversely affect or delay the ability to perform its respective covenants and agreements under this Agreement.
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Section 4.3 Fiduciary Duties. Each Holder is entering into this Agreement solely in its capacity as the Beneficial Owner of its Subject Shares and nothing herein is intended to or shall limit or affect any actions taken by such Holder or any of such Holder’s designees serving in his or her capacity as a director or officer of the Company (or a Subsidiary of the Company). The taking of any actions (or failures to act) by such Holder or such Holder’s designees serving as a director of the Company (in such capacity as a director) shall not be deemed to constitute a breach of this Agreement.
Article V
REPRESENTATIONS AND WARRANTIES OF HOLDER
Section 5.1 Representations and Warranties. Each Holder hereby severally, and not jointly or jointly and severally, represents and warrants to Parent and SBTC as follows:
(a) Ownership. As of the date hereof, such Holder does not Beneficially Own any other shares of capital stock or other equity of the Company, other than such Holder’s Subject Shares listed opposite such Holder’s name or otherwise disclosed on Exhibit A. Such Holder is the sole record and Beneficial Owner of all of such Holder’s Subject Shares, free and clear of all Liens of every nature whatsoever (including any restriction on the right to vote or otherwise Transfer such Subject Shares), except as provided under this Agreement, as noted on Exhibit A, or pursuant to any applicable restrictions on transfer under the Securities Act and, as to such Subject Shares that are subject to vesting or forfeiture, except as provided in the applicable benefit plans and award agreements of the Company.
(b) Power to Vote and Dispose of Shares. Such Holder has, with respect to its Subject Shares, power to vote, issue instructions with respect to the matters set forth in Article III, agree to all of the matters set forth in this Agreement, take all actions required under this Agreement and Transfer its Subject Shares. Other than this Agreement and other than with respect to the Group of which the Holder is part, (i) there are no agreements or arrangements of any kind, contingent or otherwise, to which such Holder is a party obligating such Holder to Transfer or cause to be Transferred to any Person any of its Subject Shares and (ii) no Person has any contractual or other right or obligation to purchase or otherwise acquire any of its Subject Shares.
(c) Organization; Authority. If such Holder is an entity, such Holder is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. Such Holder has full power and authority and is duly authorized to make, enter into and carry out the terms of this Agreement and to perform its obligations hereunder. If such Holder is an individual, such Holder has all necessary legal capacity, power and authority to make, enter into and carry out the terms of this Agreement and to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by such Holder and (assuming due authorization, execution and delivery by Parent) constitutes a valid and binding agreement of such Holder, enforceable against such Holder in accordance with its terms except to the extent that enforceability may be limited by the Enforceability Limitations; and no other action is necessary to authorize the execution and delivery by such Holder or the performance of such Holder’s obligations hereunder.
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(d) No Violation. The execution, delivery and performance by such Holder of this Agreement will not (i) violate any provision of any law applicable to such Holder or by which any of such Holder’s Subject Shares are bound; (ii) violate any order, judgment or decree applicable to such Holder or any of its Affiliates or by which any of such Holder’s Subject Shares are bound; or (iii) conflict with, or result in a breach or default under, any agreement or instrument to which such Holder or any of its Affiliates is a party or any term or condition of its certificate of formation, limited liability company agreement or comparable organizational documents, as applicable.
(e) Consents and Approvals. Neither the execution and delivery by such Holder of this Agreement, nor the performance of such Holder’s obligations hereunder, require such Holder or any of its Affiliates to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Body or other Person, except such filings and authorizations as may be required under the Exchange Act.
(f) Absence of Litigation. To the knowledge of such Holder, as of the date hereof, there is no Legal Proceeding pending against, or threatened in writing against, such Holder that would reasonably be expected, individually or in the aggregate, to have an adverse effect on such Holder’s ability to satisfy its obligations under this Agreement or to consummate the transactions contemplated hereby or by the Purchase Agreement, including the Acquisition, on a timely basis.
(g) Absence of Other Voting Agreements. None of the Subject Shares of such Holder is subject to any voting trust, proxy or other agreement, arrangement or restriction or other Lien with respect to voting, in each case, that is inconsistent with this Agreement except as contemplated by this Agreement. None of the Subject Shares of such Holder is subject to any pledge agreement pursuant to which such Holder does not retain voting rights with respect to its Subject Shares subject to such pledge agreement at least until the occurrence of an event of default under the related debt instrument.
Article VI
MISCELLANEOUS
Section 6.1 No Solicitation. Each Holder agrees that it will not, and will cause its Affiliates not to, and will use commercially reasonable efforts to cause its and their Representatives not to, directly or indirectly, take any action that would violate Section 5.3 of the Purchase Agreement as if such Holder were deemed to be the Company for purposes of Section 5.3 of the Purchase Agreement.
Section 6.2 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon or arising out of this Agreement may only be brought against, the individual and entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement and not otherwise), no past, present or future director, manager, officer, employee, incorporator, member, partner, equityholder, Affiliate, agent, attorney, advisor, consultant or Representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties,
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covenants, agreements or other obligations or liabilities of or made under this Agreement (whether for indemnification or otherwise).
Section 6.3 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares. All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the applicable Holder, and Parent shall not have any authority to manage, direct, restrict, regulate, govern or administer any of the policies or operations of the Company or exercise any power or authority to direct any Holder in the voting or disposition of any Subject Shares, except as otherwise expressly provided herein.
Section 6.4 Disclosure. Each Holder agrees that it will not, and will cause its controlled Affiliates not to, and will use commercially reasonable efforts to cause its and their Representatives not to, make any public announcement or other communication to a third party regarding this Agreement or the transactions contemplated hereby without the prior written consent of Parent, except (a) to Affiliates and Representatives of such Holder or (b) as may be required by applicable law (provided that, to the extent it is reasonably practicable and permitted by applicable law, reasonable notice of any such disclosure required by applicable law will be provided to Parent, and such Holder will consider in good faith the reasonable comments of Parent with respect to such disclosure and otherwise reasonably cooperate with Parent in obtaining confidential treatment with respect to such disclosure, in each case, at Parent’s sole cost and expense). Each Holder consents to and authorizes the publication and disclosure by the Company and Parent of such Holder’s identity and holding of its Subject Shares, and the terms of this Agreement (including, for avoidance of doubt, the disclosure of this Agreement), in any press release, the Proxy Statement, such filings as may be required under the Exchange Act or the Canadian Securities Laws and any other disclosure document Parent or the Company determines (acting reasonably and in good faith) is required or advisable in connection with the Purchase Agreement, the Acquisition or the transactions contemplated by the Purchase Agreement. Each Holder agrees to, as promptly as reasonably practicable, give the Company and Parent any information with respect to such Holder’s Beneficial Ownership of its Subject Shares as the Company and Parent may reasonably require for the preparation of any such disclosure documents, and such Holder agrees to promptly notify the Company and Parent of any required corrections with respect to any such information supplied by such Holder specifically for use in any such disclosure document, if and to the extent that any such information shall have, to the knowledge of such Holder, become false or misleading in any material respect.
Section 6.5 Termination. This Agreement shall terminate at the earliest of: (i) the valid termination of the Purchase Agreement in accordance with its terms, (ii) the Final Closing, (iii) the Outside Date, or (iv) the mutual written consent of all of the parties hereto (such date, the “Termination Date”); provided, that Section 4.1 and Article VI shall survive the termination of this Agreement. Neither the provisions of this Section 6.5 nor the termination of this Agreement shall relieve (x) any party hereto from any liability of such party to any other party incurred prior to such termination or (y) any party hereto from any liability to any other party arising out of or in connection with a breach of this Agreement. Nothing in the Purchase Agreement shall relieve any Holder from any liability arising out of or in connection with a breach of this Agreement.
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Section 6.6 Amendment. To the extent permitted by applicable law and subject to the other provisions of this Agreement, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of the parties hereto.
Section 6.7 Reliance. Each Holder understands and acknowledges that Parent, SBTC and the Company are entering into the Purchase Agreement in reliance upon such Holder’s execution and delivery of this Agreement.
Section 6.8 Extension; Waiver. At any time and from time to time prior to the Termination Date, any party or parties hereto (it being agreed that any extension or waiver by Parent also shall be an effective extension or waiver by SBTC) may, to the extent permitted by applicable law and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (b) waive any inaccuracies in the representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver (it being agreed that any agreement to an extension or waiver by Parent also shall be an effective extension or waiver by SBTC) shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.
Section 6.9 Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Acquisition is consummated.
Section 6.10 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) one (1) business day after being sent for next business day delivery, fees prepaid, via a reputable international overnight courier service, (b) upon delivery in the case of delivery by hand, (c) if sent by email transmission prior to 6:00 p.m. recipient’s local time, upon transmission (provided that no “bounce back” or similar message of non-delivery is received with respect thereto), or (d) if sent by email transmission after 6:00 p.m. recipient’s local time and no “bounce back” or similar message of non-delivery is received with respect thereto, the business day following the date of transmission; provided that in each case the notice or other communication is sent to the physical address or email address set forth beneath the name of such party below (or to such other physical address or email address as such party shall have specified in a written notice given to the other parties):
(a) If to any Holder, to the address or electronic mail set forth for such Holder on Exhibit A hereto.
(b) If to Parent,SBTC, or the Company, pursuant to Section 10.1 of the Purchase Agreement.
Section 6.11 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation
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arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles or Sections, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” References to “the date hereof” shall mean the date of this Agreement. As used in this Agreement, the “knowledge” of a Holder means the actual knowledge of such Holder, if such Holder is an individual, or any officer of such Holder after due inquiry, if such Holder is an entity. As used herein, (a) “business day” shall have the meaning given to such term in Rule 14d-1(g) under the Exchange Act, and (b) an “Affiliate” means, with respect to any Person, any other Person directly or indirectly, controlling, controlled by, or under common control with, such Person, through one or more intermediaries or otherwise; provided, however, that solely for purposes of this Agreement, notwithstanding anything to the contrary set forth herein, neither the Company nor any of its Subsidiaries shall be deemed to be a Subsidiary or Affiliate of any Holder; provided, further, that, for the avoidance of doubt, any member of a Holder shall be deemed an Affiliate of such Holder; and provided, further, that an Affiliate of a Holder shall include any investment fund, vehicle or holding company of which such Holder or an Affiliate thereof serves as the general partner, managing member or discretionary manager or advisor; and provided, further, that, notwithstanding the foregoing, an Affiliate of a Holder shall not include any portfolio company or other investment of such Holder or any Affiliate of such Holder.
Section 6.12 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission, including by e-mail attachment, shall be effective as delivery of a manually executed counterpart of this Agreement. Notwithstanding the foregoing in this Section 6.12, this Agreement shall not be effective unless and until the Purchase Agreement is executed and delivered by all parties thereto.
Section 6.13 No Partnership, Agency or Joint Venture. This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture, or any like relationship between the parties hereto or a presumption that the parties are in any way acting in concert or as a group with respect to the obligations or the transactions contemplated by this Agreement.
Section 6.14 Entire Agreement. This Agreement (including any exhibits hereto), the Purchase Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein or in the Purchase Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
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Section 6.15 Governing Law. This Agreement and the rights and liabilities of the Parties hereunder shall be governed by and construed in accordance with the Laws of Montana, without giving effect to conflicts of law principles thereof that would require or permit the application of the Laws of a different jurisdiction.
Section 6.16 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void ab initio. Subject to the preceding sentence and except as set forth in Article II, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.
Section 6.17 Specific Performance.
(a) The parties agree that irreparable harm, for which monetary damages, even if available, are not an adequate remedy, will occur in the event that the parties hereto do not perform their obligations in accordance with the specified terms of this Agreement (including any party failing to take such actions as are required of it hereunder in order to consummate this Agreement) or otherwise breach the provisions of this Agreement. The parties acknowledge and agree that (i) the parties shall be entitled, in addition to any other remedy to which they are entitled at law or in equity, to an injunction or injunctions, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 6.15 without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement, and (ii) the right of specific performance is an integral part of the Transactions and without that right, neither Holder nor Parent nor SBTC would have entered into this Agreement.
(b) The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 6.17 shall not be required to provide any bond or other security in connection with any such order or injunction. The parties agree not to assert that a remedy of specific performance is unenforceable, invalid, contrary to applicable Legal Requirements or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties further agree that, (x) by seeking the remedies provided for in this Section 6.17, a party shall not in any respect waive its right to seek any other form of relief that may be available to a party under this Agreement and (y) nothing set forth in this Section 6.17 shall require any party to institute any proceeding for (or limit any party’s right to institute any proceeding for) specific performance under this Section 6.17 prior to, or as a condition to, exercising any termination right under Section 6.5 (and pursuing damages after such termination), nor shall the commencement of any Legal Proceeding by a party pursuant to this Section 6.17 or anything set forth in this Section 6.17 restrict or limit such party’s right to terminate this Agreement in accordance with the terms of Section 6.5 or pursue any other remedies under this Agreement that may be available then or thereafter.
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Section 6.18 Severability. In the event that any term or other provision of this Agreement, or the application thereof, is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible.
Section 6.19 Liability. The rights and obligations of each of the Holders under this Agreement shall be several and not joint. All references to actions to be taken by the Holders, or representations and warranties to be made, under this Agreement refer to actions to be taken or representations and warranties to be made by Holders acting severally and not jointly. Except for any liability for claims, losses, damages, liabilities or other obligations arising out of a Holder’s failure to perform its obligations hereunder, Parent agrees that no Holder (in its capacity as a Holder of its Subject Shares) will be liable for claims, losses, damages, liabilities or other obligations resulting from or relating to the Purchase Agreement, including any breach by the Company of the Purchase Agreement, and that the Company shall not be liable for claims, losses, damages, liabilities or other obligations resulting from or related to any Holder’s failure to perform its obligations hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed or caused this Agreement to be executed in counterparts, all as of the day and year first above written.
| PARENT: | ||
| SILVER BOW MINING CORP. | ||
| By: | /s/ C. Travis Naugle | |
| Name: C. Travis Naugle | ||
| Title: Chief Executive Officer | ||
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed or caused this Agreement to be executed in counterparts, all as of the day and year first above written.
| SBTC: | ||
| SILVER BOW TUNNELS CORP. | ||
| By: | /s/ Douglas Stiles | |
| Name: Douglas Stiles | ||
| Title: President | ||
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed or caused this Agreement to be executed in counterparts, all as of the day and year first above written.
| HOLDER: | ||
| ELKHORN GOLDFIELDS | ||
| By: | /s/ Patrick Imeson | |
| Name: Patrick Imeson | ||
| Title: Chief Executive Officer | ||
| HOLDER: /s/ Patrick Imeson | ||
| Name: Patrick Imeson | ||
EXHIBIT A
| Name and E-mail Address of Holder | Shares of Company Common Stock Beneficially Owned |
Exhibit 10.6
FORM OF
NOTE PURCHASE AGREEMENT
MONTANA GOLDFIELDS, INC.
This Note Purchase Agreement (this “Agreement”) is entered into as of September __, 2026 (the “Effective Date”), by and between Montana Goldfields, Inc., a Delaware corporation (the “Company”), and Silver Bow Mining Corp., a British Columbia Corporation (“Investor”).
RECITALS
WHEREAS, the Company desires to obtain financing through the issuance and sale of secured promissory note to fund operating expenses and the advancement of the Company’s Diamond Hill Mine (as defined below), the Golden Dream Project and certain other projects owned by the Company’s wholly-owned subsidiary Elkhorn Goldfields LLC;
WHEREAS, the Investor desires to purchase secured promissory note from the Company upon the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.
“Aggregate Face Amount” means an aggregate principal face amount of $_______.
“Bad Actor” means any person or any firm or business association of which that Person was a principal or controlling member whose hard rock mining and exploration activities are prohibited in Montana pursuant to Montana Code Annotated Section 82-4-360.
“Business Day” means any day other than Saturday, Sunday, or a day on which commercial banks in New York, New York or Delaware are authorized or required by law to remain closed.
“Closing” has the meaning described in Article XI.
“Diamond Hill Mine” means the Company’s Diamond Hill Mine Project in Broadwater County, Montana.
“Elkhorn Goldfields” means Elkhorn Goldfields LLC.
“Golden Dream Project” means the Company’s Golden Dream Project in Montana.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, security interest, or other similar restriction of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest).
“Maturity Date” has the meaning set forth in Section 3.2.
“MTDEQ” means the Montana Department of Environmental Quality.
“Note” means the Secured Promissory Note issued hereunder in the form attached hereto as Exhibit A.
“Person” means any individual, corporation, company, partnership, association, joint venture, trust, unincorporated association, government or governmental authority.
“Purchase Agreement” means the Asset Purchase Agreement, dated August 21, 2026, by and among the Investor, Silver Bow Tunnels Corp., the Company and Montana Tunnels Mining, Inc. for the purchase of the Montana Tunnels Mine and the Diamond Hill Mine.
“Regulation D” means Regulation D under the Securities Act.
“Securities” means the Note.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Agreement” means the amended and restated security and pledge agreement dated September 10, 2026, by and between the Company and the Investor.
“Settlement CVRs” means final closing contingent value rights to be issued by the Lender to the Company at the final closing under the Purchase Agreement.
“Transaction Documents” means this Agreement, the Note, the Security Agreement and any and all other agreements that will be entered into by the parties at the Closing in connection with the transactions contemplated by this Agreement.
“United States” means the “United States” as defined in Regulation S under the Securities Act;
“U.S. Investor” means an Investor that means any Investor that (i) is a person in the United States or that is a U.S. Person; (ii) is purchasing for the account or benefit of a U.S. Person or person in the United States, (iii) receives or received an offer of the securities of the Company while in the United States; or (iv) is in the United States at the time such purchaser’s buy order was made or this Subscription Agreement was executed or delivered, excluding, however, any discretionary account (other than an estate or trust) held for the benefit or account of a non-U.S. Person by a professional fiduciary organized, incorporated, or (if an individual) resident in the United States;
“U.S. Person” means a “U.S. person” as defined in Regulation S under the Securities Act.
ARTICLE II - PURCHASE AND SALE OF NOTE
2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, at the applicable Closing, the Investor agrees to purchase from the Company, and the Company agrees to sell and issue to the Investor, the Note having the Aggregate Face Amount for payment of the Purchase Price pursuant to Section 2.2 hereof.
2.2 Purchase Price. The purchase price for the Note shall be funded through the Investor paying to the Company (or its designated creditors directly) $________ in cash (the “Purchase Price”).
ARTICLE III - TERMS OF THE NOTE
3.1 Form of Note. The Note shall be substantially in the form attached hereto as Exhibit A and incorporated herein by reference.
3.2 Maturity. The Note shall mature on March __, 2027 (the “Maturity Date”).
3.3 Interest. The Note shall bear an interest of eight percent (8%) per annum, compounding annually, payable in (i) Settlement CVRs or (ii) if no Settlement CVRs are issued and outstanding at Maturity, in cash.
3.4 Security. The Note shall be secured by a first-priority senior security interest in the Settlement CVRs, if and when issued, and the Company’s membership interests of Elkhorn Goldfields, Inc., pursuant to a security and pledge agreement, subject to such security interest, and such other security agreements, instruments and documents as may be necessary to create, perfect and maintain such security interest (collectively, the “Security Documents”).
ARTICLE IV – PAYMENT IN CVRS
4.1 Payment in CVRs. The principal amount of the Note shall be payable by the Company surrendering to the Investor for cancellation _________ Settlement CVRs.
4.2 Payment in Cash. In the event the Settlement CVRs are not issued and outstanding at the Maturity Date, the Note shall be payable in cash.
4.3 No Prepayment in Cash. The Company may not prepay the Note in cash.
4.4 Acceleration or Conversion Upon Change of Control. In the event of any merger, acquisition or other transaction resulting in a Change of Control (as defined in the Note) in which the Company is not the surviving entity, the Investor may elect to require the Aggregate Face Amount of the Note, together with any interest thereon and other amounts then due and payable thereunder, to become immediately due and payable through the surrender of CVRs or through payment in cash upon the closing of such Change of Control.
ARTICLE V - USE OF PROCEEDS
5.1 Permitted Uses. The Company shall use the proceeds from the sale of the Note solely for (i) the payment of those debts set forth on Schedule A hereto, and (ii) if and only if the Company has received all necessary permits and paid all necessary bonds for such properties to be in good standing with the State of Montana and the none of the Company or its principals are Bad Actors at the time any work is being conducted on such properties, the advancement of the Diamond Hill Mine and the Golden Dream Project.
5.2 Prohibited Uses. Except as set forth in Schedule A, the Company shall not use the proceeds to give credit or make advances to any officers, directors, employees, or Affiliates of the Company. Under no circumstances will the Company use any of the proceeds from the purchase of the Note to fund any litigation with the State of Montana, including the MTDEQ, or any county of the State of Montana or the federal government of the United States or agency thereof.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.1 Company Representations. The Company hereby represents and warrants to each Investor that:
(a) Organization and Corporate Power. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder.
(b) Authorization. The execution, delivery, and performance of this Agreement and the issuance of the Securities have been duly authorized by all necessary corporate action on the part of the Company.
(c) Valid Issuance. The Note, when issued in accordance with this Agreement, will be validly issued and free from all liens, claims, and encumbrances.
(d) No Conflicts. The execution and delivery of this Agreement and the performance of the Company’s obligations hereunder will not conflict with or result in a breach of the Company’s certificate of incorporation or bylaws, or any agreement to which the Company is a party.
(e) Enforceability. Each of the Transaction Documents executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.
6.2 Investor Representations. The Investor hereby represents and warrants to the Company that:
(a) Accredited Investor Status. If the Investor is a U.S. Investor, the Investor is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D.
(b) Investment Intent. The Investor is acquiring the Note for investment purposes only and not with a view to distribution thereof. The Investor understands that the Note has not been registered under the Securities Act or the applicable securities laws of any state of the United States, is a “restricted securities” under Rule 144 under the Securities Act, and may not be offered, sold or transferred except in compliance with registration under the Securities Act or an applicable exemption therefrom and in accordance with the applicable securities laws of any state of the United States.
(c) Sophistication. The Investor has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the investment in the Note. The Investor is capable of bearing the economic risk of the investment and can afford to hold the Note for an indefinite period and can afford the complete loss of the investment.
(d) No General Solicitation. The Investor’s decision to invest was not the result of any form of general solicitation or advertising, and the Investor had a pre-existing relationship with the Company or was introduced to this investment opportunity through means that did not constitute general solicitation under the Securities Act.
(e) Access to Information. The Investor has had access to all information regarding the Company and this investment that the Investor considers necessary or appropriate for making an informed investment decision. The Investor has had the opportunity to ask questions of the Company’s management and has received satisfactory answers to all such questions.
(f) Independent Investigation. The Investor has conducted its own independent investigation and analysis of the Company and this investment opportunity and has not relied upon any representations or warranties of the Company other than those expressly set forth in this Agreement.
(g) Legal and Tax Advice. The Investor has been advised to consult, and has consulted to the extent deemed appropriate by such Investor, with the Investor’s own attorney, accountant, and other advisors with respect to legal, tax, and other consequences of this investment.
ARTICLE VII - COVENANTS
7.1 Security Interest. The Company shall, and shall cause each applicable subsidiary to, execute and deliver the Security Agreement and take all actions reasonably necessary to grant, create, perfect, maintain and protect the first-priority senior security interest contemplated thereby, including the execution and filing of any financing statements, deeds of trust, pledge agreements, guaranties and other instruments necessary or appropriate to evidence, perfect or maintain such security interest.
7.2 Notice Requirements. The Company shall provide Investor with five (5) days’ written notice of intention to satisfy the Note, whether via prepayment, at maturity, or in default.
ARTICLE VIII - EVENTS OF DEFAULT
8.1 Events of Default. The following shall constitute “Events of Default” under this Agreement and the Note:
(a) failure by the Company to pay any amount due under the Note when due and payable if not cured within five (5) Business Days;
(b) failure by the Company to use best efforts to, within one hundred and twenty (120) days of the date of this Agreement, bring and maintain the Diamond Hill Mine or Golden Dream Projects in good standing with the State of Montana, the Bureau of Land Management or Jefferson County, Montana, including any failure to maintain in good standing any material mineral rights relating thereto or to maintain any material permit or bond necessary for the ownership, development or operation thereof;
(c) failure by the Company to remove its Bad Actor status of itself and/or any of its principals within ninety (90) days of the date of this Agreement;
(d) the occurrence of any default under, redemption of or acceleration prior to maturity of any indebtedness of the Company or any of its subsidiaries in an aggregate principal amount of at least $100,000;
(e) the Company or any of its subsidiaries (i) becomes insolvent, (ii) makes a general assignment for the benefit of its creditors, (iii) commences a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law, or (iv) commences any other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts;
(f) any involuntary bankruptcy, insolvency, reorganization, liquidation or other proceeding for the relief of debtors is commenced against the Company or any of its subsidiaries and such proceeding is not dismissed or discharged within forty-five (45) days after its commencement;
(g) a court of competent jurisdiction enters any decree, order, judgment or similar document in respect of the Company or any of its subsidiaries granting relief in any voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law;
(h) a receiver, trustee, custodian, liquidator or similar official is appointed for the Company or any of its subsidiaries or for all or any material portion of its respective assets;
(i) one or more final judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company or any of its subsidiaries and remain unbonded, undischarged or unstayed for a period of thirty (30) days following the entry thereof;
(j) failure by the Company or any of its subsidiaries to pay when due any indebtedness or other debt in excess of $100,000 owing to any third party, subject to any applicable grace or cure period;
(k) any representation or warranty made by the Company or any of its subsidiaries in this Agreement, any Note or any other definitive document entered into in connection with the issuance or purchase of the Note proves to have been materially false or misleading when made;
(l) failure by the Company or any of its subsidiaries to perform or comply with any material covenant or agreement contained in this Agreement, any Note or any other definitive document entered into in connection with the issuance or purchase of the Note, which failure, if capable of cure, continues for thirty (30) days after written notice thereof to the Company;
(m) any material damage to, or loss, theft or destruction of, any Collateral that is material to the business of the Company or any of its subsidiaries, to the extent such damage, loss, theft or destruction is not reimbursed by insurance;
(n) any event of default occurs under any other indebtedness of the Company or any of its subsidiaries; or
(o) the Company dissolves or liquidates, or takes any corporate action to authorize its dissolution or liquidation, other than as expressly permitted under this Agreement.
8.2 Remedies. Upon the occurrence of an Event of Default, the Aggregate Face Amount of the Note shall increase by fifteen percent (15%) and all Note shall immediately become due and payable.
ARTICLE IX - AMENDMENTS AND WAIVERS
9.1 Amendments to Note. Any amendment to the Note shall require the written consent of the Company and the Investor.
9.2 Other Amendments. This Agreement may be amended only by written agreement signed by the Company and the Investor.
ARTICLE X – CONDITIONS TO CLOSING
10.1 Conditions to Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Investor at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Investor with prior written notice thereof:
| (i) | The Investor shall have paid the Purchase Price at the Closing by wire transfer of immediately available funds. |
| (iii) | The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made and as of the Closing Date as though |
originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing Date.
10.2 Conditions to the Investor’s Obligation to Buy. The obligation of the Investor hereunder to purchase its Note at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:
| (i) | The Company shall have duly executed and delivered to the Investor the Note in the Aggregate Face Amount. |
| (ii) | The Company shall have delivered to such Investor a certificate evidencing the formation and good standing of the Company in the State of Delaware as of a date within ten (10) days of the Closing Date. |
| (iii) | The Company shall have delivered to the Investor a certificate executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions as adopted by the Company’s board of directors in a form reasonably acceptable to the Investor authorizing the issuance of the Note and (ii) the certificate of incorporation of the Company, each as in effect at the Closing. |
| (v) | Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Investor shall have received a certificate, duly executed by an officer of the Company, dated as of the Closing Date, to the foregoing effect. |
ARTICLE XI – CLOSING
The purchase and sale of the Note shall occur promptly following satisfaction or waiver of the conditions in Article X. Closing shall occur by electronic exchange of sigantures to the Transaction Documents.
ARTICLE XII - MISCELLANEOUS
12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles.
12.2 Confidentiality. The terms and conditions of this Agreement are confidential and shall not be disclosed except to the parties hereto and their respective legal advisors; provided, however, that the Investor may disclose this Agreement in accordance with applicable law, including, without limitation the requirements of the Securities Act or the Exchange Act or in connection with the filing of any registration statement.
12.3 Legal Fees. Each party shall bear its own legal fees and expenses incurred in connection with the negotiation, preparation, execution and consummation of the transactions contemplated by this Agreement.
12.4 [Reserved]
12.5 Tax Consequences. All tax consequences in connection with the Note shall be borne by the Investor.
12.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
12.7 Severability. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
12.8 Entire Agreement. This Agreement, together with the Transaction Documents, including the Note and Exhibits hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof.
12.9 No Third-Party Beneficiaries. Except as expressly set forth in this Agreement, this Agreement is intended solely for the benefit of the parties hereto and their respective permitted successors and assigns, and nothing herein, express or implied, shall give or be construed to give to any person or entity, other than the parties hereto, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| Silver Bow Mining Corp. | ||
| By: | /s/ C. Travis Naugle | |
| Name: C. Travis Naugle Title: Chief Executive Officer | ||
| Montana Goldfields, Inc. | ||
| By: | /s/ Tom Brodmerkel | |
| Name: Tom Brodmerkel Title: President | ||
EXHIBIT A
(See attached)
SCHEDULE A
[Accounts Payable]
Exhibit 10.7
EXHIBIT A
TO
NOTE PURCHASE AGREEMENT
SECURED PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE.
SECURED PROMISSORY NOTE
$3,000,000.00 |
September 4, 2026 |
FOR VALUE RECEIVED, Montana Goldfields, Inc. (the “Company”), hereby promises to pay to the order of Silver Bow Mining Corp. (including any future holder of this Note, the “Lender” together with the Company, the “Parties”), the principal amount of Three Million Dollars ($3,000,000.00) upon the terms and subject to the conditions set forth herein (this “Note”). This Note is issued pursuant to that certain Note Purchase Agreement, dated as of September 4, 2026, by and between the Company and the Lender (the “Purchase Agreement”), and is secured pursuant to that certain security and pledge agreement between the Company and the Lender of even date herewith (the “Security Agreement”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Purchase Agreement.
1. Payments. The principal amount of this Note shall be due and payable in full on the Maturity Date (as defined herein). The principal amount of this Note shall be payable either (i) by the Company surrendering to the Lender for cancellation 693,333 final closing contingent value rights to be issued by the Lender to the Company at the final closing under the Purchase Agreement (the “Settlement CVRs”) or (ii) if the final closing under the Purchase Agreement has not occurred and the Settlement CVRs have not been issued at the Maturity Date, by payment in cash.
2. Maturity. The maturity date shall be March 4, 2027 (the “Maturity Date”). All payments shall be made in lawful money of the United States at such place as the Lender may designate in writing.
3. Interest. This Note bears interest at a rate of eight percent (8%) per annum, compounded annually. Accrued and unpaid interest shall be payable on the Maturity Date. If an Event of Default (as defined below) occurs and is ongoing, this note shall bear interest at a rate of ten percent (10%) per annum.
4. [Reserved]
5. Prepayment. The Company may prepay this Note, in whole or in part, at any time prior to the Maturity Date, without premium or penalty, upon at least five (5) Business Days’ prior written notice to the Lender by surrending the Settlement CVRs. The Company may not pre-pay this Note in cash.
6. Event of Default. The “Events of Default” applicable to this Note shall be those set forth in Section 8.1 of the Purchase Agreement. Upon the occurrence of an Event of Default, the Face Amount of this Note shall increase by fifteen percent (15%), and this Note shall immediately become due and payable, in each case as provided in and subject to Section 8.2 of the Purchase Agreement. The rights and remedies provided upon an Event of Default shall be in addition to all other rights and remedies available under the Purchase Agreement, the Security Documents and applicable law, all of which shall be cumulative.
7. Security Interest. Payment of all amounts due or to become due under this Note and all other obligations of the Company under the Note are secured by a first-priority security interest in the Collateral described in the Security Agreement.
8. Change of Control. A “Change of Control” means any merger, acquisition or other transaction or series of related transactions as a result of which the Company is not the surviving entity. Upon the occurrence of a Change of Control, the Lender may, in accordance with Section 4.3 of the Purchase Agreement, elect to require the Face Amount, together with all other amounts then due and payable under this Note, to be paid either through immediate surrender of Settlement CVRs, if issued and outstanding, or in cash upon the closing of such Change of Control.
9. Notices. All notices provided for in this Note shall be in writing and deemed to be duly given upon (a) personal delivery, (b) four (4) Business Days after deposit in the United States mail, certified or registered, postage prepaid, (c) one (1) Business Day after deposit with a reputable, national overnight courier service for next business day delivery with all charges prepaid, or (d) confirmed fax transmission or email to an email address provided by Lender. Other than as expressly required herein, the Company waives presentment and demand for payment, protest, notice of protest, and notice of dishonor. Notices shall be sent to the Parties at the following addresses (or to such other address or electronic mail address as a party may designate by notice given in accordance with this Section):
If to Company:
Montana Goldfields, Inc.
Attn: Patrick W.M. Imeson
Address: 1610 Wynkoop Street, Suite 400
Denver, CO 80202
If to Lender:
Silver Bow Mining Corp.
Attn: C. Travis Naugle
Address: 1401 Idaho Street
Butte, Montana 59701
| 2 |
10. Governing Law. This Note, and any disputes arising under this Note, will be governed by and construed in accordance with the laws of the State of Delaware, without regard to provisions of Delaware law concerning conflicts of laws.
11. Savings Clause. If any provision of this Note is determined to be invalid, illegal or unenforceable, such provision shall be deemed modified to the minimum extent necessary to make it valid and enforceable or, if such modification is not possible, deemed deleted, without affecting the validity or enforceability of the remaining provisions of this Note.
12. Transfer; Successors and Assigns. This Note is in registered form within the meaning of 26 C.F.R. Section 1.871-14(c)(1)(i) for United States federal income and withholding tax purposes. Except as set forth below, this Note may be transferred only in compliance with any applicable laws and upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form reasonably satisfactory to the Company. Notwithstanding the foregoing, the Lender may not sell, transfer, assign, pledge or hypothecate this Note, in whole or in part, without the prior written consent of the Company, which consent may be granted or withheld in the Company’s sole discretion; provided, that no such consent shall be required for a transfer or assignment to an Affiliate of the Lender. Upon such transfer, this Note shall be reissued to and registered in the name of the transferee, or a new Note representing the then outstanding principal amount shall be issued and registered in the name of the transferee.
13. Waiver and Amendment. Notwithstanding anything to the contrary herein, amendments and waivers with respect to this Note shall be effected in the manner set forth in Article IX of the Purchase Agreement, and any such amendment or waiver approved in accordance therewith (including approval by holders of fifty percent (50%) plus $1.00 of the outstanding Face Amount of all applicable notes) shall be binding on the Lender hereof.
14. Collection Costs. In the event of any action, arbitration or other proceeding to enforce or interpret this Note or any of the Loan Documents, the prevailing party shall be entitled to recover from the non-prevailing party, on demand, its reasonable and documented costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys’ fees and expenses, court costs, costs of collection, costs of protecting, preserving or enforcing the Collateral, costs incurred in any bankruptcy, insolvency or restructuring proceeding, and all costs incurred on appeal or in any post-judgment proceedings.
[Remainder of Page Intentionally Left Blank]
| 3 |
The Parties have entered into this Secured Promissory Note as of the date first above written.
| Montana Goldfields, Inc. | ||
| By: | /s/ Tom Brodmerkel | |
| Name: Tom Brodmerkel Title: President | ||
Acknowledgement
| Silver Bow Mining Corp. | ||
| By: | /s/ C. Travis Naugle | |
| Name: C. Travis Naugle Title: Chief Executive Officer | ||
Exhibit 10.8
EXHIBIT A
TO
NOTE PURCHASE AGREEMENT
SECURED PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE.
SECURED PROMISSORY NOTE
$2,000,000.00 |
September 10, 2026 |
FOR VALUE RECEIVED, Montana Goldfields, Inc. (the “Company”), hereby promises to pay to the order of Silver Bow Mining Corp. (including any future holder of this Note, the “Lender” together with the Company, the “Parties”), the principal amount of Two Million Dollars ($2,000,000.00) upon the terms and subject to the conditions set forth herein (this “Note”). This Note is issued pursuant to that certain Note Purchase Agreement, dated as of September 10, 2026, by and between the Company and the Lender (the “Purchase Agreement”), and is secured pursuant to that certain security and pledge agreement between the Company and the Lender of even date herewith (the “Security Agreement”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Purchase Agreement.
1. Payments. The principal amount of this Note shall be due and payable in full on the Maturity Date (as defined herein). The principal amount of this Note shall be payable either (i) by the Company surrendering to the Lender for cancellation 462,222 final closing contingent value rights to be issued by the Lender to the Company at the final closing under the Purchase Agreement (the “Settlement CVRs”) or (ii) if the final closing under the Purchase Agreement has not occurred and the Settlement CVRs have not been issued at the Maturity Date, by payment in cash.
2. Maturity. The maturity date shall be March 10, 2027 (the “Maturity Date”). All payments shall be made in lawful money of the United States at such place as the Lender may designate in writing.
3. Interest. This Note bears interest at a rate of eight percent (8%) per annum, compounded annually. Accrued and unpaid interest shall be payable on the Maturity Date. If an Event of Default (as defined below) occurs and is ongoing, this note shall bear interest at a rate of ten percent (10%) per annum.
4. [Reserved]
5. Prepayment. The Company may prepay this Note, in whole or in part, at any time prior to the Maturity Date, without premium or penalty, upon at least five (5) Business Days’ prior written notice to the Lender by surrending the Settlement CVRs. The Company may not pre-pay this Note in cash.
6. Event of Default. The “Events of Default” applicable to this Note shall be those set forth in Section 8.1 of the Purchase Agreement. Upon the occurrence of an Event of Default, the Face Amount of this Note shall increase by fifteen percent (15%), and this Note shall immediately become due and payable, in each case as provided in and subject to Section 8.2 of the Purchase Agreement. The rights and remedies provided upon an Event of Default shall be in addition to all other rights and remedies available under the Purchase Agreement, the Security Documents and applicable law, all of which shall be cumulative.
7. Security Interest. Payment of all amounts due or to become due under this Note and all other obligations of the Company under the Note are secured by a first-priority security interest in the Collateral described in the Security Agreement.
8. Change of Control. A “Change of Control” means any merger, acquisition or other transaction or series of related transactions as a result of which the Company is not the surviving entity. Upon the occurrence of a Change of Control, the Lender may, in accordance with Section 4.3 of the Purchase Agreement, elect to require the Face Amount, together with all other amounts then due and payable under this Note, to be paid either through immediate surrender of Settlement CVRs, if issued and outstanding, or in cash upon the closing of such Change of Control.
9. Notices. All notices provided for in this Note shall be in writing and deemed to be duly given upon (a) personal delivery, (b) four (4) Business Days after deposit in the United States mail, certified or registered, postage prepaid, (c) one (1) Business Day after deposit with a reputable, national overnight courier service for next business day delivery with all charges prepaid, or (d) confirmed fax transmission or email to an email address provided by Lender. Other than as expressly required herein, the Company waives presentment and demand for payment, protest, notice of protest, and notice of dishonor. Notices shall be sent to the Parties at the following addresses (or to such other address or electronic mail address as a party may designate by notice given in accordance with this Section):
If to Company:
Montana Goldfields, Inc.
Attn: Patrick W.M. Imeson
Address: 1610 Wynkoop Street, Suite 400
Denver, CO 80202
If to Lender:
Silver Bow Mining Corp.
Attn: C. Travis Naugle
Address: 1401 Idaho Street
Butte, Montana 59701
| 2 |
10. Governing Law. This Note, and any disputes arising under this Note, will be governed by and construed in accordance with the laws of the State of Delaware, without regard to provisions of Delaware law concerning conflicts of laws.
11. Savings Clause. If any provision of this Note is determined to be invalid, illegal or unenforceable, such provision shall be deemed modified to the minimum extent necessary to make it valid and enforceable or, if such modification is not possible, deemed deleted, without affecting the validity or enforceability of the remaining provisions of this Note.
12. Transfer; Successors and Assigns. This Note is in registered form within the meaning of 26 C.F.R. Section 1.871-14(c)(1)(i) for United States federal income and withholding tax purposes. Except as set forth below, this Note may be transferred only in compliance with any applicable laws and upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form reasonably satisfactory to the Company. Notwithstanding the foregoing, the Lender may not sell, transfer, assign, pledge or hypothecate this Note, in whole or in part, without the prior written consent of the Company, which consent may be granted or withheld in the Company’s sole discretion; provided, that no such consent shall be required for a transfer or assignment to an Affiliate of the Lender. Upon such transfer, this Note shall be reissued to and registered in the name of the transferee, or a new Note representing the then outstanding principal amount shall be issued and registered in the name of the transferee.
13. Waiver and Amendment. Notwithstanding anything to the contrary herein, amendments and waivers with respect to this Note shall be effected in the manner set forth in Article IX of the Purchase Agreement, and any such amendment or waiver approved in accordance therewith (including approval by holders of fifty percent (50%) plus $1.00 of the outstanding Face Amount of all applicable notes) shall be binding on the Lender hereof.
14. Collection Costs. In the event of any action, arbitration or other proceeding to enforce or interpret this Note or any of the Loan Documents, the prevailing party shall be entitled to recover from the non-prevailing party, on demand, its reasonable and documented costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys’ fees and expenses, court costs, costs of collection, costs of protecting, preserving or enforcing the Collateral, costs incurred in any bankruptcy, insolvency or restructuring proceeding, and all costs incurred on appeal or in any post-judgment proceedings.
[Remainder of Page Intentionally Left Blank]
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The Parties have entered into this Secured Promissory Note as of the date first above written.
| Montana Goldfields, Inc. | ||
| By: | /s/ Tom Brodmerkel | |
| Name: Tom Brodmerkel Title: President | ||
Acknowledgement
| Silver Bow Mining Corp. | ||
| By: | /s/ C. Travis Naugle | |
| Name: C. Travis Naugle Title: Chief Executive Officer | ||
Exhibit 10.9
AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT
THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (as amended, restated, supplemented, or otherwise modified, this “Agreement”) is made and entered as of September 10, 2026, by MONTANA GOLDFIELDS, INC. (“Pledgor”), for the benefit of SILVER BOW MINING CORP. (“Lender”). Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Notes (as defined below).
WITNESSETH:
WHEREAS, Pledgor and Lender are parties to those certain Secured Promissory Notes dated as of September 4, 2026 in the principal amount of $3,000,000.00 and dated as of September 10, 2026 (the “Notes”);
WHEREAS, Pledgor and Lender are parties to those Note Purchase Agreements, dated September 4, 2026 and September 10, 2026, respectively (the “Purchase Agreements”), which contemplates, among other things, that the Notes will be secured by a first-priority pledge of rights to certain Settlement CVRs (as defined herein) and the equity interests of Pledgor’s subsidiary, Elkhorn Goldfields, Inc. (“Elkhorn”);
WHEREAS, the parties previously entered into this Agreement on September 4, 2026 in relation to the issuance of Note dated September 4, 2026 and hereby desire to amend and restate this Agreement to include the Note dated September 10, 2026, such Notes to be treated pari passu with each other;
WHEREAS, to secure the prompt payment and performance of all obligations of Pledgor under the Notes and this Agreement, Pledgor agrees to grant to Lender a first-priority security interest in the Settlement CVRs and the equity interests identified on Schedule I.
NOW, THEREFORE, for and in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
A. PLEDGE OF COLLATERAL
1. Pledge. Pledgor hereby grants to Lender a continuing first-priority security interest in the following collateral, existing as of the date hereof (collectively, the “Collateral”):
| (i) | upon issuance to the Pledgor, 1,155,555 final closing contingent value rights to be issued by the Lender to the Company at the final closing under that certain asset purchase agreement dated August 21, 2026 (the “Purchase Agreement”) by and among the Lender and its wholly-owned subsidiary, Silver Bow Tunnels Corp. and the Company and its wholly-owned subsidiary Montana Tunnels Mining, Inc. (the “Settlement CVRs”); |
| (ii) | one hundred percent (100%) of the issued and outstanding equity interests of each subsidiary of Pledgor listed on Schedule I, together with any additional equity |
interests in such subsidiaries acquired by Pledgor after the date hereof (collectively, the “Pledged Interests”), including, without limitation, the equity interests listed on Schedule I attached hereto, in each case whether or not evidenced or represented by any stock or unit certificate, certificated security or other instrument and any and all certificates, if any, representing the Pledged Interests, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Interests;
| (iii) | all voting rights, management rights, conversion and registration rights and rights of recovery for violations of applicable laws and other rights incidental to the ownership of any of the foregoing, whether arising under the organizational documents of any subsidiary or otherwise; and |
| (iv) | any and all proceeds and products of the foregoing. |
Pledgor from time to time shall execute all such documents, and take all such other actions as Lender may reasonably request from time to time to perfect, confirm and/or evidence the security interest granted hereby as a perfected security interest (including without limitation, assigning and delivering to Lender stock certificates, along with stock powers duly executed in blank with respect to the Collateral that are certificated securities and executing control agreements or taking such other actions as Lender may reasonably request with respect to any uncertificated Pledged Interests to perfect or maintain the perfection of Lender’s security interest therein). Pledgor authorizes Lender to file such UCC financing statements, amendments, and continuation statements covering the Collateral and containing such collateral descriptions as are reasonably necessary to perfect or to maintain the perfection of Lender’s security interest. Pledgor agrees to pay all taxes, fees, costs and expenses (including reasonable and documented attorneys’ fees and expenses) incurred by Lender in connection with the preparation, filing or recordation thereof. Schedule I reflects each subsidiary of Pledgor and the Pledged Interests owned by Pledgor therein as of the date hereof. Within ten (10) days of acquiring any Pledged Interests, Pledgor shall deliver to Lender an updated Schedule I reflecting such acquisition; provided, however, that the failure of Pledgor to so update or deliver to Lender an updated Schedule I shall not in any way affect Lender’s rights in and to such Pledged Interests and other Collateral in accordance with this Agreement.
2. Voting; Distributions.
a. Voting. So long as no Event of Default shall have occurred and be continuing, Pledgor shall have the sole right to exercise any voting and consensual rights with respect to the Collateral on all matters, and to grant any consents and exercise all other rights as owner or holder of the Collateral. Upon the occurrence and during the continuance of an Event of Default and following five (5) business days’ prior written notice to Pledgor, Lender shall be entitled, in addition to any other rights herein contained, to exercise, in Lender’s judgment, any voting and consensual rights with respect to the Collateral on all matters and to grant any consents and exercise all other rights as owner or holder of the Collateral.
Upon Lender’s written request, Pledgor shall execute and deliver to Lender irrevocable proxies with respect to the Collateral in form satisfactory to Lender, but no such additional proxy
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shall be necessary for Lender to exercise the voting rights described above. Lender shall not have any duty to exercise any of the foregoing rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. By written notice to Pledgor, Lender may relinquish, either partially or completely, in accordance with any terms or conditions Lender may set forth in such notice, any or all voting rights Lender may acquire pursuant to this Section A.2.
THIS AGREEMENT SHALL CONSTITUTE AN IRREVOCABLE PROXY, COUPLED WITH AN INTEREST, EXERCISABLE BY LENDER IN ACCORDANCE WITH THIS AGREEMENT.
b. Distributions. So long as no Event of Default shall have occurred and be continuing, Pledgor shall have the sole right to receive all dividends and other distributions arising from the Collateral. Upon the occurrence and during the continuance of an Event of Default, (i) Pledgor’s right to receive such dividends and other distributions shall terminate upon five (5) business days’ prior written notice to Pledgor, unless and until reinstated in writing by Lender, and (ii) Lender shall be entitled, in addition to any other rights contained herein, to receive all dividends and other distributions arising from the Collateral. Any portion of the Collateral received by Pledgor in violation of this Agreement shall remain subject to Lender’s security interest and lien hereunder, shall be immediately delivered to Lender in the same form as received, except for any necessary endorsements, and, pending such delivery, shall be held in trust for Lender by Pledgor and kept separate from Pledgor’s other assets.
3. Representations; Covenants. Pledgor represents, warrants and covenants to Lender as follows:
a. Pledgor is the legal and beneficial owner of, has good and marketable title to, and has full right and authority to pledge and assign the Collateral, free and clear of all liens except for the security interest granted to Lender pursuant to this Agreement.
b. Pledgor owns one hundred percent (100%) of the issued and outstanding equity interests listed on Schedule I hereof. Upon issuance to the Pledgor, the Pledgor willl own one hundred (100%) of the Settlement CVRs.
c. Pledgor shall keep the Collateral free from any liens other than the security interest granted pursuant to this Agreement and shall pay and discharge when due all taxes, levies and other charges upon the Collateral except for such taxes as are being disputed in good faith by appropriate proceedings. Pledgor shall defend the Collateral against all claims and legal proceedings of third parties that could adversely affect Lender’s security interest therein.
d. Pledgor’s legal name (as set forth in its organizational documents) is Montana Goldfields, Inc. Pledgor has delivered to Lender a true, correct and complete copy of its organizational documents.
e. In relation to the Settlement CVRs, upon the issuance thereof, the Pledgor hereby agrees that Lender may either (i) withhold the issuance of Final Closing CVRs under the Purchase Agreement in an amount equal to the Settlement CVRs, which withholding will be deemed payment of the CVRs by the Pledgor in settlement of the Notes in full or (ii), if the Final Closing CVRs are issued pursuant to the Purchase Agreement, direct the CVR Agent (as defined in the
| 3 |
Purchase Agreement) to distribute the Settlement CVRs directly to the Lender in payment for the Notes and Pledgor hereby undertakes to execute such documents as may be required to effect such distribution to the Lender.
f. The execution, delivery and performance of this Agreement have been duly authorized by all necessary organizational action of Pledgor and do not violate Pledgor’s organizational documents or any applicable law, judgment, order or material agreement binding upon Pledgor.
4. Action Upon an Event of Default. In addition to its rights and remedies provided hereunder, whenever an Event of Default, as determined in accordance with the terms of the Notes, shall have occurred and be continuing, Lender shall have all rights and remedies of a secured party upon default under the applicable Uniform Commercial Code or other applicable law. Notwithstanding the foregoing, Lender shall exercise all remedies hereunder in a commercially reasonable manner. Without limiting the foregoing, Lender shall have the right, at any time and from time to time following the occurrence and during the continuance of an Event of Default, to sell, resell, assign and deliver, in Lender’s discretion, all or any of the Collateral, in one or more transactions at the same or different times, and any right, title, interest, claim and/or demand therein or right of redemption thereof, on any securities exchange on which the Collateral or any of it may be listed or at public or private sale, for cash or upon credit for future delivery, and in connection therewith Lender may grant options, subject in all respects to any rights of redemption that may not be waived under applicable law. If any of the Collateral is sold by Lender upon credit for future delivery, Lender shall not be liable for any failure of the purchaser to purchase or pay for the same and, in the event of any such failure, Lender may resell such Collateral. In no event shall Pledgor be credited with any part of the proceeds of sale of any Collateral until cash payment of such sale has actually been received by Lender.
5. Sale of Collateral. Lender shall give Pledgor at least twenty (20) days prior written notice of the time and place of any sale or other disposition to be made pursuant to Section A.4 above. Lender shall not be obligated to make any sale of Collateral if Lender shall determine not to do so, regardless of the fact that notice of sale may have been given. Upon each private sale of Collateral of a type customarily sold in a recognized market and upon each public sale, Lender or any holder of the Notes may purchase all or any of the Collateral being sold, free from any equity or right of redemption, subject to any rights that may not be waived under applicable law, and may make payments (by endorsement without recourse) on the Notes, in lieu of cash, to the extent of the amount then due thereon, which Pledgor hereby agrees to accept.
6. Private Sale. Pledgor recognizes that Lender may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, as now or hereafter in effect, or in applicable Blue Sky or other state securities laws, as now or hereafter in effect, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor agrees that private sales so made may be at prices and other terms less favorable than if such Collateral were sold at public sales, and that Lender has no obligation to delay sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral to register such Collateral for public sale under such applicable securities laws. Pledgor acknowledges that a private sale conducted under the circumstances described above may be
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commercially reasonable notwithstanding that the sale could result in a lower price than a public sale.
7. Cumulative Remedies. The remedies provided herein in favor of Lender shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of Lender under the Loan Documents (as defined in the Notes) or existing at law or in equity.
8. Power of Attorney to Execute. Upon and during the continuance of an Event of Default, Lender shall have the right, for and in the name, place and stead of Pledgor, to execute such endorsements, assignments or other documents or instruments, including instruments or agreements exercising its voting and consensual rights hereunder and instruments of conveyance or transfer with respect to all or any of the Collateral as may be reasonably necessary in order to assure its rights hereunder. Without limiting the generality of the foregoing, upon and during the continuance of an Event of Default, Lender shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to Pledgor representing any interest, dividend or other distribution payable in respect of the Collateral that Lender is entitled to receive hereunder or any part thereof and to give full discharge for the same. Such rights shall be subject to the limitations and restrictions set forth in this Agreement. This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of Pledgor’s obligations under the Loan Documents (as defined in the Notes) remain outstanding.
9. Application of Proceeds. All cash proceeds received by Lender from any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by Lender against all or any part of the amounts due under the Note in the following order:
(a) First, to expenses payable by Pledgor pursuant to the Loan Documents (as defined in the Notes);
(b) Second, on account of all principal of the Notes then due or owing pari passu; and
(c) Third, to any other amounts under the Notes or the other Loan Documents (as defined in the Notes) then due or owing.
Any surplus of such cash or cash proceeds held by Lender and remaining after the payment, satisfaction or extinguishment of the Note and the payment or satisfaction of all other obligations under the Loan Documents (as defined in the Notes) shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus, and Pledgor shall be liable for any deficiency.
10. Indemnity and Expenses. Pledgor hereby agrees to indemnify and hold harmless Lender from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from Lender’s gross negligence or willful misconduct. Upon demand, Pledgor will pay, or cause to be paid, to Lender the amount of any and all reasonable expenses, including but not limited to reasonable fees and disbursements of its counsel and of any experts and agents, which Lender may incur in connection with the administration of this Agreement, the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of
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the Collateral, the exercise or enforcement of any of the rights of Lender hereunder, and the failure by Pledgor to perform or observe any of the provisions hereof.
11. No Duty on Lender. The powers conferred on Lender hereunder are solely to protect Lender’s interest in the Collateral and shall not impose any duty to exercise any such powers. Except for the safe custody of any Collateral in Lender’s possession and the accounting for monies actually received by Lender hereunder, Lender shall not have any duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Nothing contained in this Agreement shall be construed or interpreted to transfer to Lender any obligations of a shareholder or member of any issuer of the Pledged Interests, or cause Lender to be deemed a shareholder or member of any such issuer prior to Lender’s express exercise of its rights to become a shareholder or member. To the extent permitted by applicable law, Pledgor waives all claims, damages and demands against Lender arising out of the lawful sale or disposition of the Collateral in accordance with the terms hereof.
B. MISCELLANEOUS
1. Term. The pledge made by Pledgor hereunder shall serve as security for the performance of all the covenants and conditions of Pledgor under the Notes and the other Loan Documents (as defined in the Notes) until Pledgor has satisfied or discharged its obligations under the Loan Documents (as defined in the Notes).
2. Further Assurances. Pledgor shall do, make, execute and deliver all such additional and further acts, things, deeds, assurances, instruments and documents as Lender may reasonably request to perfect, preserve and protect Lender’s rights hereunder or in any of the Collateral, including, without limitation, placing legends on certificates representing the Collateral or on the books and records pertaining to the Collateral stating that Lender has a security interest therein and/or executing one or more control agreements.
3. Performance or Termination of Obligations. Upon repayment in full or other satisfaction or extinguishment of the Notes in accordance with its terms and the satisfaction of all other obligations under the Loan Documents (as defined in the Notes), other than contingent obligations for which no claim has been asserted, the security interest granted herein shall automatically terminate. Lender shall, at the expense of Lender, return any certificates and stock powers then held by Lender and execute such releases, UCC termination statements and other instruments as Pledgor may reasonably request to evidence such termination.
4. Notices. All notices, requests, demands, consents, approvals and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given: (a) upon personal delivery; (b) one (1) business day after deposit with a nationally recognized overnight courier service, postage prepaid; (c) three (3) business days after deposit in the United States mail, certified or registered mail, postage prepaid, return receipt requested; or (d) upon transmission by electronic mail, provided that no automated notice of non-delivery or similar transmission error is received by the sender. Notices shall be sent to the parties at the following addresses (or to such other address or electronic mail address as a party may designate by notice given in accordance with this Section):
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If to Pledgor:
Montana Goldfields, Inc.
Attn: Tom Brodmerkel
Address: 1610 Wynkoop Street, Suite 400
Denver, CO 80202
If to Lender:
Silver Bow Mining Corp.
Attn: C. Travis Naugle
Address: 1401 Idaho Street
Butte, Montana 59701
5. Governing Law. This Agreement, its construction and the determination of any rights, duties or remedies of the parties arising out of or relating to this Agreement, shall be governed by and construed under and in accordance with the laws of the State of Delaware without respect to any conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
6. Binding Effect. This Agreement shall bind and inure to the benefit of Pledgor and Lender and their legal representatives, successors and permitted assigns.
7. Entire Agreement. This Agreement, together with the Notes and the Purchase Agreements constitutes the entire agreement of the parties with respect to the subject matter of this Agreement. This Agreement may be modified, amended or terminated only by a written agreement executed by Pledgor and Lender.
8. Assignment. This Agreement shall not be assigned by Pledgor without the written consent of Lender. Lender may assign its rights hereunder with prior written notice to Pledgor; provided that no such assignment shall increase the obligations of Pledgor hereunder. This Agreement shall be binding on, and inure to the benefit of, the parties to it and their respective legal representatives, successors and permitted assigns.
9. Rights and Waivers. No failure or delay on the part of Lender in exercising any right, power or privilege under this Agreement or any applicable law shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver or modification of any right, power or privilege of Lender or of any obligation of Pledgor shall be effective unless such waiver or modification is in writing, and signed by Lender and then only to the extent set forth therein. A waiver by Lender of any right, power, or privilege hereunder on any one occasion shall not be construed as a bar to, or waiver of, the exercise of any such right, power or privilege which Lender otherwise would have on any subsequent occasion.
10. Counterparts; Facsimile. This Agreement may be executed in any number of counterparts (including by facsimile, portable document format (PDF) or other electronic transmission) and by different parties hereto on separate counterparts, each of which, when so
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executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.
[Signatures on following page]
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IN WITNESS WHEREOF, Pledgor has executed this Agreement UNDER SEAL effective the day and year first above written.
| Silver Bow Mining Corp. | ||
| By: | /s/ C. Travis Naugle | |
| Name: C. Travis Naugle Title: Chief Executive Officer | ||
| Montana Goldfields, Inc. | ||
| By: | /s/ Tom Brodmerkel | |
| Name: Tom Brodmerkel Title: President | ||
[Signature Page to and the Security and Pledge Agreement]
Schedule I
Pledged Interests
|
Subsidiary |
Pledgor |
Percentage of Issuer Owned by Pledgor | Percentage of Issuer Owned to be Pledged by Pledgor |
| Elkhorn Goldfields LLC | Montana Goldfields, Inc. | 100% | 100% |