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DEED OF TRUST
<br />TO SECURE FINANCIAL WARRANTY
<br />THIS DEED OF TRUST, made this °f !Sw day of October, 2002, between
<br />CLIMAX MOLYBDENUM COMPANY as Grantor, whose address is P.O. Box 68,
<br />Empire, Colorado 80438, and the Public Trustee of Grand County in trust for the benefit
<br />of the State of Colorado, Mined Land Reclamation Board.
<br />WITNESSETH: Grantor, to secure its financial warranty bearing even date
<br />herewith, for the principal sum of Four Million Nine Hundred Thirty Five Thousand
<br />Dollars ($4,935,000) payable to the order of the State of Colorado, Mined Land
<br />Reclamation Board, the beneficiary herein, whose address is 215 Centennial Building,
<br />1313 Sherman Street, Denver, Colorado 80203, and to secure additional financial
<br />warranties hereafter executed by Grantor to said Public Trustee for the use and benefit of
<br />said beneficiary, does hereby grant and convey unto said Public Trustee the following
<br />specifically described decreed water rights situated in the County of Grand, State of
<br />Colorado to wit:
<br />The Henderson Mill Skylark Ranch Water Rights, which are more
<br />fully described in Exhibit A, attached hereto and incorporated herein.
<br />TO HAVE AND TO HOLD the same, together with all appurtenances, in trust
<br />nevertheless, that in case of default in the payment of said Financial Warranty or any of
<br />said Financial Warranties, or any part thereof, or interest thereon, or in the performance
<br />of any covenant or condition set forth in any such bond or hereinafter set forth, then upon
<br />the beneficiary (bondholder) filing Notice of Election and Demand for Sale, said Public
<br />Trustee, after advertising notice of said sale weekly, for not less than four (4) weeks in
<br />some newspaper of general circulation in said county, shall sell said property in the
<br />manner provided by law in effect at the time of filing said Notice and demand at public
<br />auction for cash, at any proper place designated in the Notice of Sale. Out of the
<br />proceeds of said sale, said Trustee shall retain or pay first all fees, charges and costs and
<br />all monies advanced for taxes; insurance and assessments, or on any prior encumbrance,
<br />with interest thereon, and pay the principal and any other amounts due on any or all of
<br />such Financial Warranties as may then be in default, rendering the overplus (if any) unto
<br />the Grantor; and after the expiration of the time of redemption, said Trustee shall execute
<br />and deliver to the purchaser a deed to the property sold. The beneficiary may purchase
<br />said property, or any part thereof, at such sale.
<br />The Grantor covenants that, at the time of delivery of these presents, Grantor is
<br />seized of said property in fee simple, and that said property is free of encumbrances,
<br />except liens for general taxes for the current year, reservations, restrictions, easements,
<br />and special assessments of record, and that Grantor will keep all buildings fully insured
<br />for fire and extended coverage, and will pay all taxes and assessments against said
<br />property and amounts due on any prior encumbrance, the beneficiary may pay the same
<br />and all amounts so paid shall become additional indebtedness due hereunder, and, in case
<br />of foreclosure, Grantor will pay beneficiary's reasonable attorney's fees.
<br />(FSPT /DRAFT /10/3/2002 04:00 PM /CFB DEED OF TRUST HENDERSON RECLAMATION BOND (83837):1)
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