Contract analysis

ARTICLE I — DEFINITIONS AND INTERPRETATION

Section 1.01 — Definitions As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Indenture. "Act of Required Holders" means any direction, instruction, consent, request, or other action given or taken by holders of a majority in aggregate principal amount of the Notes then outstand

Section 1.02 — Interpretation (a) Terms defined in the Indenture and not otherwise defined herein shall have the meanings given to such terms in the Indenture. In the event that a term is defined both in this Agreement and in the Indenture, the definition set forth in this Agreement shall control for purposes of this Agreement. (b) All references herein to Articles, Sections, Exhibits, and Schedules shall be deemed t

Section 1.03 — Rules of Construction (a) References to any agreement, instrument, or document herein shall be deemed to include all amendments, supplements, modifications, restatements, renewals, extensions, and replacements thereof, except where the context expressly provides otherwise. (b) All dollar amounts referenced in this Agreement are denominated in United States dollars unless otherwise expressly specified.

ARTICLE II — APPOINTMENT AND AUTHORIZATION OF COLLATERAL AGENT

Section 2.01 — Appointment (a) Each Grantor hereby irrevocably appoints and designates Northern Dominion Trust Company as Collateral Agent under this Agreement and each of the Security Documents, to act as agent for the Secured Parties in connection with the holding, administration, maintenance, perfection, and enforcement of the Liens on the Collateral created pursuant to the Security Documents. The Collateral Agent

Section 2.02 — Authorization The Collateral Agent is hereby authorized, empowered, and directed to take the following actions on behalf of the Secured Parties, in each case in accordance with the terms and conditions of this Agreement and the Security Documents: (a) Execute, deliver, and perform the Security Documents on behalf of the Secured Parties, and take such further actions as may be necessary or desirable to

Section 2.03 — Scope of Duties (a) The Collateral Agent shall act only in accordance with the express terms and provisions of this Agreement and the Security Documents. The Collateral Agent shall have no duties or obligations except those expressly set forth herein and in the Security Documents and shall not be deemed to be a fiduciary with respect to any Secured Party or any Grantor, except to the extent expressly p

Section 3.01 — Description of Collateral The Collateral that secures the Obligations consists of all assets described in, and subject to the Liens created under, the Security Documents, as follows: (a) U.S. Collateral. The U.S. Security Agreement creates a security interest in substantially all of the assets of Torchlight U.S. Holdings, Inc., whether now owned or hereafter acquired, including, without limitation: all

Section 3.02 — Priority of Liens (a) The security interests created under the Security Documents are intended to constitute valid, enforceable, and perfected first-priority Liens on the Collateral, subject only to Permitted Liens as defined in the Indenture. The Collateral Agent shall use commercially reasonable efforts, consistent with the terms of this Agreement and the Security Documents, to maintain the first-pri

Section 3.03 — After-Acquired Collateral (a) The Liens created under the Security Documents extend to, and automatically attach to, all after-acquired property of the Grantors that constitutes Collateral under the Security Documents, without any further action, filing, or agreement, to the fullest extent permitted by applicable law and the terms of the Security Documents. Notwithstanding the foregoing, the Grantors s

Section 3.04 — Perfection (a) The Collateral Agent is responsible for maintaining the perfection of the security interests in the Collateral through the following means, as applicable: (i) UCC Financing Statements. The Collateral Agent shall cause to be filed, and shall timely maintain, UCC-1 financing statements (and any amendments or continuations thereof) with the Secretary of State of the State of Delaware, namin

ARTICLE IV — DUTIES AND OBLIGATIONS OF THE COLLATERAL AGENT

Section 4.01 — Standard of Care (a) The Collateral Agent shall exercise the same degree of care in the performance of its duties and obligations under this Agreement and the Security Documents as a prudent person would exercise under similar circumstances, taking into account the nature and extent of the Collateral, the Obligations secured thereby, and the customary practices of institutional collateral agents. (b) T

Section 4.02 — Administrative Duties The Collateral Agent shall have the following administrative duties and responsibilities under this Agreement: (a) Safekeeping. The Collateral Agent shall safekeep all items of Collateral that are delivered to it or held in its possession in accordance with this Agreement and the Security Documents, including certificated securities, promissory notes, and instruments. The Collater

Section 4.03 — Duties Upon Default (a) Upon receipt of written notice from the Trustee (or from any holder of the Notes, to the extent permitted under the Indenture) that an Event of Default under the Indenture has occurred and is continuing, the Collateral Agent shall: (i) Act in accordance with the written instructions of the Trustee (acting at the written direction of the Required Holders) with respect to the exer

Section 4.04 — No Duty to Investigate (a) The Collateral Agent shall have no obligation to independently verify the existence, value, condition, quality, quantity, or marketability of any item of Collateral, or the title of any Grantor thereto. The Collateral Agent shall not be responsible for any loss in value of the Collateral, whether resulting from market conditions, depreciation, deterioration, obsolescence, cha

Section 4.05 — Reliance (a) The Collateral Agent may rely, and shall be protected in acting or refraining from acting, upon any notice, certificate, instrument, opinion, direction, request, consent, order, or other document or communication that the Collateral Agent believes in good faith to be genuine and to have been signed, sent, or presented by the proper party or parties. The Collateral Agent shall not be obliga

ARTICLE V — APPLICATION OF PROCEEDS

Section 5.01 — Order of Application All amounts received by the Collateral Agent in connection with the enforcement, foreclosure, or realization upon the Collateral (including all cash Proceeds, non-cash Proceeds converted to cash, and insurance proceeds related to the Collateral), net of any costs and expenses of sale or disposition, shall be applied by the Collateral Agent in the following order of priority: First,

Section 5.02 — Insufficient Proceeds In the event that the Proceeds of the Collateral realized upon enforcement, foreclosure, or other realization are insufficient to pay in full all of the Obligations and all other amounts described in Section 5.01, the Secured Parties shall retain all of their rights to pursue deficiency claims against the Grantors, whether arising under the Notes, the Indenture, the Guarantees, or

Section 5.03 — Currency of Payment (a) All distributions made by the Collateral Agent pursuant to this Article V shall be made in United States dollars. (b) To the extent that Proceeds of the Collateral are received by the Collateral Agent in Canadian dollars or in any currency other than United States dollars, the Collateral Agent shall convert such amounts to United States dollars at the prevailing spot exchange ra

ARTICLE VI — RELEASE OF COLLATERAL AND LIENS

Section 6.01 — Release Upon Payment in Full (a) Upon the irrevocable payment in full (in immediately available funds) of all Obligations, including all outstanding principal of the Notes ($300,000,000 aggregate principal amount, or such lesser amount as may be outstanding at such time), all accrued and unpaid interest, premium (if any), and all other fees, costs, expenses, and other amounts due under the Notes, the I

Section 6.02 — Release Upon Asset Sale (a) The Collateral Agent shall release its Liens on any item of Collateral that is the subject of a Permitted Asset Sale (as defined in the Indenture), provided that the following conditions are satisfied: (i) The Issuer delivers to the Collateral Agent and the Trustee an Officer's Certificate, in form and substance reasonably satisfactory to the Collateral Agent, certifying tha

Section 6.03 — Release Upon Defeasance or Redemption (a) The Collateral Agent shall release all of its Liens on the Collateral upon the legal defeasance or covenant defeasance of the Notes in accordance with Article VIII of the Indenture, or upon the redemption of all outstanding Notes in accordance with the optional redemption provisions set forth in the Indenture, in each case upon receipt of written confirmation f

Section 6.04 — Partial Release for Permitted Liens The Collateral Agent shall release, subordinate, or otherwise accommodate its Liens on the Collateral to the extent necessary to permit Permitted Liens as defined in the Indenture, upon receipt of: (a) An Officer's Certificate from the Issuer certifying that the Lien in question constitutes a Permitted Lien under the Indenture, identifying with specificity the provis

ARTICLE VII — RESIGNATION, REMOVAL, AND SUCCESSION OF COLLATERAL AGENT

Section 7.01 — Resignation (a) Northern Dominion Trust Company may resign as Collateral Agent at any time by giving not less than sixty (60) days' prior written notice of such resignation to the Issuer and the Trustee. Such resignation shall specify the proposed effective date thereof, which date shall be not earlier than sixty (60) days after the date of such notice. (b) Notwithstanding the foregoing, no resignation

Section 7.02 — Removal (a) The Collateral Agent may be removed by the Trustee (acting at the written direction of holders of a majority in aggregate principal amount of the outstanding Notes) at any time, with or without cause, by giving not less than sixty (60) days' prior written notice to the Collateral Agent and the Issuer. Such notice shall specify the effective date of removal, which date shall be not earlier t

Section 7.03 — Appointment of Successor (a) Upon the resignation or removal of the Collateral Agent, the Trustee (acting at the written direction of the Required Holders) shall promptly appoint a successor Collateral Agent that meets the qualification requirements set forth in Section 7.01(c). The appointment of a successor Collateral Agent shall be effective upon the acceptance of such appointment by the successor.

Section 7.04 — Merger or Consolidation of Collateral Agent Any corporation or other entity into which Northern Dominion Trust Company may be merged or converted, or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion, or consolidation to which Northern Dominion Trust Company shall be a party, or any corporation or other entity that succeeds to all or substantial

ARTICLE VIII — REPRESENTATIONS AND WARRANTIES OF THE GRANTORS Each Grantor hereby represents and warrants to the Collateral Agent and each other Secured Party as follows:

Section 8.01 — Organization and Good Standing (a) Torchlight Mining Corp. is a corporation duly incorporated, validly existing, and in good standing under the Canada Business Corporations Act. Its headquarters are located at 2200 – 400 Burrard Street, Vancouver, BC V6C 3A6, Canada. Its registered office is located at 1600 – 925 West Georgia Street, Vancouver, BC V6C 3L2, Canada. It is duly qualified or licensed to do

Section 8.02 — Authorization Each Grantor has full corporate power and authority to execute, deliver, and perform its obligations under this Agreement and each of the Security Documents to which it is a party. The execution, delivery, and performance of this Agreement and each applicable Security Document by each Grantor has been duly authorized by all necessary corporate action on the part of such Grantor, including

Section 8.03 — Enforceability This Agreement and each of the Security Documents to which each Grantor is a party constitute the legal, valid, and binding obligations of such Grantor, enforceable against such Grantor in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar laws of general applicability relating to or affecting

Section 8.04 — Title to Collateral (a) Each Grantor has good and marketable title to its respective Collateral, free and clear of all Liens other than Permitted Liens as defined in the Indenture. No Person other than such Grantor has any ownership interest in, or any right, title, or claim to, such Collateral, except for the Liens in favor of the Collateral Agent created by the Security Documents and any Permitted Li

Section 8.05 — No Conflicts The execution, delivery, and performance by each Grantor of this Agreement and the Security Documents to which it is a party do not and will not: (a) violate, conflict with, or result in a breach of any provision of the articles of incorporation, by-laws, or other organizational documents of such Grantor; (b) violate any applicable law, rule, regulation, order, writ, judgment, injunction,

ARTICLE IX — COVENANTS OF THE GRANTORS Each Grantor hereby covenants and agrees with the Collateral Agent and each other Secured Party as follows:

Section 9.01 — Further Assurances Each Grantor shall, at its own cost and expense, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, all such further documents, instruments, agreements, financing statements, amendments, continuations, renewals, and other assurances as the Collateral Agent may from time to time reasonably request in order to: (a) perfect, maintain, protect, and p

Section 9.02 — Maintenance of Collateral (a)