Exhibit
10.1


LOAN
AGREEMENT


THIS AGREEMENT dated as of the 21st day of December, 2006


AMONG:


VISTA
GOLD CORP., a Yukon company having its head office at
Suite 5 – 7961 Shaffer Parkway, Littleton, Colorado, U.S.A., 80127


(the “Lender”)


AND:


LUZON
MINERALS LTD., a British Columbia company having its head
office at Suite 202 - 837 West Hastings Street, Vancouver, British Columbia,
V6C 3N6


(the “Borrower”)


WHEREAS
the Borrower has requested that the Lender lend to the Borrower the sum of
U.S.$200,000 by way of a 90 day term loan (the “Loan Facility”), and the Lender has agreed to make the Loan
Facility available to the Borrower on the terms and conditions set out in this
Agreement.


AND
WHEREAS the Borrower and the Lender entered into an agreement dated December 11,
2003, as amended, (such agreement as amended, supplemented or replaced from
time to time, the “Amayapampa Project
Agreement”) which sets out the terms on which the Lender has agreed
to sell the Borrower, and the Borrower has agreed to purchase, the Lender’s
interest in the Amayapampa Gold Project (the “Project”).


AND
WHEREAS the Borrower and Republic Gold Limited (“RAU”) intend to enter into a business combination agreement in
substantially the same form as contemplated by the press release of the Borrower
dated November 21, 2006, pursuant to which the Borrower would acquire RAU’s
interest in certain mineral properties for shares of the Borrower (the “Combination”).


NOW THEREFORE THIS AGREEMENT
WITNESSES that in consideration of the mutual covenants and agreements set
forth in this Agreement and other good and valuable consideration (the receipt
and sufficiency of which is hereby acknowledged), the parties agree as follows:


1.                             THE LOAN


1.1                          Amount
-  The Lender shall make available to the
Borrower the principal amount of U.S.$200,000 (the “Principal”).










 



1.2                          Interest
Rate - Interest (the “Interest”)
shall accrue and be paid at the rate of 12% per annum, payable as provided in
Section 2.1 below, on the Principal or such amount thereof as may be
outstanding from time to time, on interest not paid when due and on all other
amounts payable by the Borrower to the Lender under this Agreement or the
Security (as defined herein).  All such
Principal, Interest and other amounts payable hereunder are referred to collectively
as the “Loan”.


1.3                          Legal
Fees - The Borrower shall be responsible for the Lender’s legal fees
and disbursements in connection with the Loan Facility and the documentation
required therefore. Notwithstanding the foregoing, the maximum amount of legal
fees and disbursements that the Borrower will be responsible for is
U.S.$10,000.  In the event the Borrower
does not pay the Lender’s legal fees and disbursements, the Lender may pay such
fees and disbursements on behalf of the Borrower.  Any amounts advanced on behalf of the
Borrower by the Lender under this Section 1.2 will be added to the Principal
Amount.


1.4                          Purpose
- The Principal shall be used by the Borrower to pay down debts already
incurred and ongoing expenses in connection with the Project and the Lipichi
project, as set out in Schedule “A” to this Agreement, which is incorporated
into and forms a part of this Agreement. 
Maria Esther Jitton, a representative of the Lender, shall supervise the
payment of the Principal on the debts of the Borrower.


2.                             REPAYMENT


2.1                          Interest
- Interest shall be calculated in accordance with Section 1.2 above.  The Borrower shall pay all accrued Interest
on the last day of each and every month during the term of the Loan commencing
January 31, 2007.


2.2                          Principal - The Principal shall be
repaid to the Lender by the Borrower on the 90th day after the date on which the Principal, or
any portion thereof, is first advanced to the Borrower or such earlier date in
the event that the Lender makes demand for full payment in accordance with
Section 6.3.


2.3                          Prepayment - The Borrower may prepay
the whole or any part of the Principal or any Interest accrued thereon upon
14 days prior written notice to the Lender, and such prepayment will be
applied against the outstanding balance of the Principal.


3.                             SECURITY


3.1                          General
Security Agreement - The Loan shall be secured by a General Security
Agreement (“GSA”) in favour of the
Lender, creating a security interest in all personal property of the Borrower
and a floating charge on all other property of the Borrower, which security
interest and floating charge shall rank prior in priority to any other security
interests or charge given by the Borrower in or on its personal property or
other property, except as provided in Schedule “B” hereof, which is
incorporated into and forms a part of this Agreement.



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3.2                          Supporting Documents - The Borrower shall provide all
customary supporting documents, including certificates, resolutions and
opinions, with respect to the documents contemplated by Section 3.1 as the
Lender shall reasonably require.


3.3                          Discharge
- The Lender will execute and deliver, or cause to be executed and delivered,
all instruments necessary to discharge the Security (as defined below) upon
full repayment of the Loan.


4.                             CONDITIONS
PRECEDENT


4.1                          Conditions
Precedent to Advance  - The obligation of the Lender to advance the
Principal to the Borrower is subject to the following, it being understood that
these conditions precedent are for the exclusive benefit of the Lender:


(a)           the Borrower shall have
executed and delivered this Agreement to the Lender;


(b)           the Borrower shall have
executed and delivered a direction to pay the Principal to Maria Esther Jitton;


(c)           the Borrower shall have
executed and delivered, or have caused to be executed and delivered, to the
Lender the security documents described in Sections 3.1 (collectively, the
“Security”) and all Security shall
have been registered in all necessary and appropriate places;


(d)           RAU shall have agreed
to provide to the Borrower, by loan or otherwise, sufficient funds to pay
urgent current debts of the Borrower, such funds to be at least CDN$168,000,
and the Borrower shall provide to the Lender evidence that at least CDN$100,000
has been provided to the Borrower;


(e)           the Borrower shall have
caused to be delivered to the Lender a certified copy of a resolution of its
directors approving the form and authorizing execution of this Agreement and
the Security;


(f)            the Borrower shall have
caused to be delivered to the Lender an opinion of the Borrower’s counsel
addressed to the Lender and its counsel, in form and content acceptable to the
Lender acting reasonably;


(g)           the Borrower shall have
provided to the Lender a certified copy of the Borrower’s Notice of Articles
and Articles; and


(h)           the Borrower shall have
delivered to the Lender such other information and documents as the Lender may
reasonably request.


5.                             COVENANTS
OF BORROWER


5.1                          Performance - The Borrower covenants with the Lender that it will duly perform and
observe each and all of its covenants and agreements set forth in this
Agreement, the Amayapampa Project Agreement and the Security.



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5.2                          Corporate Existence - The Borrower will maintain its corporate
existence, will carry on and conduct its business in a proper business-like manner
and in accordance with good business practice, will comply with all applicable
laws (including environmental laws), will pay all taxes when due, and will keep
or cause to be kept proper books of account in accordance with generally
accepted accounting principles consistently applied.


5.3                          Application to TSX Venture Exchange - The Borrower will use commercially reasonable
efforts to obtain approval of the TSX Venture Exchange of this Agreement and
the issuance and listing of the Shares issuable upon the conversion of the
Loan, or any portion thereof, as soon as practicable after the date hereof.


5.4                          Listing and Reporting Issuer Status – The Borrower will use commercially reasonable
efforts to maintain the listing of the Shares on the TSX Venture Exchange and
the Borrower will use
commercially reasonable efforts to maintain its status as a reporting issuer
under applicable securities legislation in the Provinces of British Columbia
and Alberta.


5.5                          Repayment - The Borrower shall pay Principal and
Interest when due.


5.6                          Negative Covenants – The Borrower will not, without the prior
written consent of the Lender:


(a)           declare or pay any dividends or repurchase any
shares in its capital;


(b)           repay to any shareholder of the Borrower any
amounts owing to such shareholders under any shareholder loans;


(c)           amalgamate or merge with any other party, other
than as part of the Combination;


(d)           sell or transfer any assets having an aggregate
value in excess of U.S.$10,000;


(e)           guarantee, endorse or otherwise become liable for
the obligations of any other party, other than as part of the Combination;


(f)            pay any bonus to any of its directors, officers
or employees;


(g)            create any security under Section 427 of the
Bank Act (Canada);


(h)           borrow any monies and/or grant any security which
would rank in priority to the Security, except as provided in Schedule “C”
hereof, which is incorporated into and forms a part of this Agreement; or


(i)            grant, assume, create or suffer to exist any
security interest, mortgage, charge or the encumbrance of the Amayapampa
Project Agreement or the Project.


5.7                          Reporting Covenants - The Borrower will submit to the Lender:


(a)           within 20 days of each month end,
management-prepared income statement, month-end balance sheet and sales and
other monthly reports; and


(b)           such other information as the Lender may
reasonably request from time to time.



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6.                             DEFAULT


6.1                          Events
of Default - Any one or more of the following shall constitute an event
of default (“Event of Default”)
for the purposes of this Agreement:


(a)           Failure to Pay Principal or Interest -
The failure by the Borrower to pay either Interest or Principal when due;


(b)           Breach of Covenant - The failure of the
Borrower to comply with any covenant in or obligation under this Agreement or
the Security;


(c)           Bankruptcy - The making by the Borrower
of a proposal or a general assignment for the benefit of its creditors or if
the Borrower petitions or applies to any court or tribunal for the appointment
of a trustee or receiver for itself or any substantial part of its assets, or
commits an act of bankruptcy or insolvency, or commences any proceedings under
any bankruptcy, arrangement, insolvency, readjustment of debt, or similar
statute of any jurisdiction, whether now or hereafter in effect, or any such proceedings
are commenced by any other person and the Borrower, as the case may be, by any
action or non-action indicate their approval thereof, consent thereto or
acquiescence therein, or an order is entered appointing any such trustee or
approving the petitions in any such proceedings, or if the Borrower
acknowledges its insolvency in any manner whatsoever;


(d)           Additional Funding – The failure of the
Borrower to obtain U.S.$200,000 (from RAU or any other source) by January 15,
2007 for the purpose of paying ongoing expenditures of the Borrower;


(e)           Obligations under Letter Agreement with the Lender
– The failure of the Borrower, without the prior written consent of the Lender,
to either (i) complete all of the conditions set out in the letter agreement
between the Lender and the Borrower dated December 5, 2006, which forms part of
the Amayapampa Project Agreement, or (ii) pay the Lender U.S.$2.6 million on or
before January 30, 2007;


(f)            Impairment of Loan / Danger to Charged Property or
Assets - If the Lender believes in good faith, or has
commercially reasonable grounds to believe that the prospect of repayment of
the Loan is or is about to be impaired or the charged property and assets are
or are about to be placed in jeopardy;


(g)           Material Adverse Change - The
occurrence of any material adverse change in the Borrower, its business or its
financial prospects, as determined by the Lender, acting reasonably;


(h)           Appointment of Receiver - The
appointment of a receiver, receiver-manager or receiver and manager of the
Borrower or of any material part of the properties or assets of the Borrower;
and


(i)            Alteration of Corporate Structure - The
disposition by the Borrower of all or
substantially all of its property or undertaking or the amalgamation or merger
of the Borrower with any other corporation or corporate reorganization of the
Borrower, 



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other than as part of the Combination, without the prior written
consent of the Lender.


6.2                          Effect
of Event of Default on the Amayapampa Project Agreement - An Event of Default will be a breach of the
Amayapampa Project Agreement that will give the Lender the right to terminate
the Amayapampa Project Agreement upon at least 15 business days prior written
notice to the Borrower.


6.3                          Consequences
of Default - After any of the Events of Default has occurred and at any
time thereafter, provided that the Borrower has not theretofore remedied or
caused to be remedied all outstanding Events of Default, the Lender may, in its
discretion, by notice to the Borrower, declare this Agreement to be in
default.  At any time thereafter, while
the Borrower shall not have remedied all outstanding Events of Default, the
Lender may, in its discretion, exercise one or any of the following remedies:


(a)           declare the outstanding
balance of the Loan and all liabilities of the Borrower hereunder to be
immediately due and payable and such moneys and liabilities shall forthwith
become due and payable without presentment, demand, protest or other notice of
any kind to the Borrower, all of which are hereby expressly waived;


(b)           subject to and upon
compliance with the conversion procedure set forth in Schedule “D”, which is
incorporated into and forms a part of this Agreement, exercise its right to
convert the Loan, or any portion thereof, into common shares in the capital of
the Borrower (the “Shares”) at the
Current Market Price (as defined in Schedule “D”) of the Shares; and


(c)           exercise any or all of
its remedies under the Security.


7.                             MISCELLANEOUS


7.1                          Notices
- All notices, demands and payments required or permitted to be given under
this Agreement shall be in writing and may be delivered personally, by courier
or may be forwarded by first class prepaid registered mail to the addresses set
forth on page one or at such other addresses as may from time to time be
notified in writing by the parties to this Agreement.  Any notice delivered personally or by courier
shall be deemed to have been given and received at the time of delivery.  Any notice forwarded by first class prepaid
registered mail shall be deemed to have been given and received on the
expiration of 72 hours after it is posted provided that if there shall be
between the time of mailing and the actual receipt of the notice a mail strike,
slowdown or other labour dispute which might affect the delivery of such notice
by the mails, then such notice shall only be effective if actually received.



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7.2                          No
Set-Off - The obligation of the Borrower to make all payments hereunder
shall be absolute and unconditional and shall not be effected by any
circumstance, including without limitation any set-off, compensation,
counterclaim, defence or other right which the Borrower may have against the
Lender relating to the transactions contemplated under this Agreement or
otherwise.


7.3                          Amendments
- Neither this Agreement nor any provision hereof may be amended or modified
except by agreement in writing.  No
provision of this Agreement may be waived or released except by instrument in
writing signed by the party against whom enforcement of such waiver or release
is sought.


7.4                          Further
Assurances - Each of the parties shall execute such further and other
documents and instruments and do such further and other things as may be
necessary to implement and carry out the intent of this Agreement.


7.5                          Governing
Law - This Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia which shall be deemed to be
the proper law of this Agreement.


7.6                          Severability
- If any provision of this Agreement is wholly or partially invalid, this Agreement
shall be interpreted as if the invalid provision had not been a part of this
Agreement.


7.7                          Headings
- The headings appearing in this Agreement have been inserted for convenience
of reference only and in no way define, limit or enlarge the scope or meaning
of this Agreement or any provision in this Agreement.


7.8                          Time
- Time is of the essence of this Agreement.


7.9                          Enurement
- This Agreement shall enure to the benefit of and be binding upon the parties
to this Agreement and their respective successors and assigns.


7.10                        Counterparts
– This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same document.



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7.11                        Facsimile
– This Agreement may be executed and delivered by facsimile transmission and
when so delivered this Agreement shall be deemed to be an original executed and
delivered agreement and binding upon the parties for all purposes as if
originally executed and delivered.


IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.


	
  VISTA GOLD CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LUZON
  MINERALS LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  	
   

  



 



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Schedule “A”


Required
Urgently:


	
  VENDOR

  	
   

  	
  AMOUNT 

  OWED

  	
   

  
	
  ALS BOLIVIA LTD
  (NET TO PAY)

  	
   

  	
  4,133.91

  	
   

  
	
  LAB SISSY,
  CHEMICAL ANALYSIS

  	
   

  	
  1,800.00

  	
   

  
	
  MEDIUM MINERS
  ASSOCIATION (6 MONTHS & EXTRA PAYMENT)

  	
   

  	
  1,890.00

  	
   

  
	
  STEPHAN VON
  BORRIES (TRANSLATOR)

  	
   

  	
  380.00

  	
   

  
	
  CARLOS MURIEL,
  ENVIRONMENTAL LICENSE CONSULTANT AMAYAPAMPA

  	
   

  	
  1,500.00

  	
   

  
	
  CARLOS PRIETO V.
  (NET FROM JULY TO NOV)

  	
   

  	
  3,500.00

  	
   

  
	
  GUILLERMO
  CORDERO (MAY NET)

  	
   

  	
  1,500.00

  	
   

  
	
  HERBERT CHAVEZ
  (NET FROM JULY TO NOV)

  	
   

  	
  10,000.00

  	
   

  
	
  JUAN CABRERA
  (NET FROM JULY TO NOV)

  	
   

  	
  15,500.00

  	
   

  
	
  DR. GUSTAVO
  MIRANDA (NET FROM AUGUST TO NOV)

  	
   

  	
  2,700.00

  	
   

  
	
  WILFREDO CAMACHO
  (NOVEMBER)

  	
   

  	
  500.00

  	
   

  
	
  MARIA ESTHER
  JITTON (NET FROM JULY TO NOV)

  	
   

  	
  14,000.00

  	
   

  
	
  LIPICHI PAYABLES
  TO NOVEMBER

  	
   

  	
  13,000.00

  	
   

  
	
  TAXES (NET TO
  PAY)

  	
   

  	
  3,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  73,403.91

  	
   

  



 


Required in December 2006


	
  VENDOR

  	
   

  	
  AMOUNT 

  OWED

  	
   

  
	
  LIPICHI FIELD
  SUPPLIES AND TRAVEL DECEMBER

  	
   

  	
  20,000.00

  	
   

  
	
  LIPICHI SALARY
  DEC AND CHRISTMAS BONUS

  	
   

  	
  13,000.00

  	
   

  
	
  CHRISTMAS GIFTS
  TO LIPICHI WORKERS

  	
   

  	
  1,300.00

  	
   

  
	
  MARIA ESTHER
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  6,800.00

  	
   

  
	
  JUAN CABRERA
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  7,400.00

  	
   

  
	
  WILLY CHAMBY
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  5,258.00

  	
   

  
	
  HERBERT CHAVEZ
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  5,600.00

  	
   

  
	
  GUSTAVO MIRANDA
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  2,000.00

  	
   

  
	
  CARLOS PRIETO
  DECEMBER AND CHRISTMAS BONUS

  	
   

  	
  2,000.00

  	
   

  
	
  TRAVEL AND
  OTHERS AMAYAPAMPA

  	
   

  	
  2,000.00

  	
   

  
	
  TAXES FROM FIELD
  SUPPLIES AND OTHERS

  	
   

  	
  2,000.00

  	
   

  
	
  TAXES FROM
  PENDING FEES TO NOVEMBER

  	
   

  	
  7,500.00

  	
   

  
	
  TAXES FROM
  DECEMBER FEES AND CHRISTMAS BONUS

  	
   

  	
  3,700.00

  	
   

  
	
  ALBERTO MONDACA,
  ELECTRICAL ENGINEERING CONSULTANT AMAYAPAMPA

  	
   

  	
  2,000.00

  	
   

  
	
  S. ALFARO,
  OFFICE ASSISTANT FEES JAN TO SEPT & CHR. BONUS

  	
   

  	
  2,000.00

  	
   

  
	
  MARIA ESTHER
  JITTON (NET FROM JANUARY TO MAY 2006)

  	
   

  	
  15,000.00

  	
   

  
	
  A. PINTO,
  ADMINISTRATOR OF THE CAMP, FEES FROM JAN TO DEC 2006

  	
   

  	
  12,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  109,558.00

  	
   

  



 



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Required
January 2007 Onwards:


	
  VENDOR

  	
   

  	
  AMOUNT 

  OWED

  	
   

  
	
  MONTHLY EXPENSES
  FOR LUZON`S ADMINISTRATION SUPPLIES AND OFFICE RENTAL

  	
   

  	
  12,000.00

  	
   

  
	
  NEW CONCESSIONS
  TO BE FILED

  	
   

  	
  15,600.00

  	
   

  
	
  TOTAL

  	
   

  	
  27,600.00

  	
   

  



 



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Schedule “B”


Security
interest registered under the Personal
Property Security Act (British Columbia) in the name of Republic
Gold Limited, Control Number B6784429, Base Registration Number 471428C.



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Schedule “C”


1.             Additional funding of
at least CDN$68,000 from RAU as described in Subsection 4.1(d) of this
Agreement; and


2.             Additional funding of
U.S.$200,000 from RAU as contemplated in Subsection 6.1(d) of this Agreement.



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Schedule “D”


Conversion Right


1.             Current Market Price – the Current
Market Price means an amount equal to the volume weighted average trading price
per share (or, if no trades occur on any day, the mean between the closing bid
and asked quotations on such day) of the Shares on the TSX Venture Exchange for
the 20 trading days prior to the date notice of the exercise of the conversion
right is given, or if the Shares are not listed on the TSX Venture Exchange on
the date such notice is given, on such stock exchange on which the Shares are
listed as may be selected for such purpose by the directors of the Borrower or,
if the Shares are not listed on any stock exchange, a price determined by the
directors of the Borrower and approved by an independent, qualified investment
dealer who is a member of the Toronto Stock Exchange and who is selected by the
Lender for that purpose.


2.                             Conversion Procedure. 
In order to exercise the conversion privilege, the Lender
must provide written notice to the Borrower stating (i) that the Lender elects
to convert the Loan, or any portion thereof, to Shares, and (ii) the name or
names (with addresses) in which the certificates for the Shares issuable on
such conversion will be issued.


The
Lender may only require the Borrower to issue Shares to a person or persons
other than the Lender upon a conversion of the Loan, or any portion thereof, if
such issuance is permitted under applicable securities legislation.  If any of the Shares to be issued hereunder
are to be issued to a person or persons other than the Lender such request will
be accompanied by payment to the Borrower of any tax which may be payable by
reason of the transfer and if requested by the Borrower, a legal opinion
acceptable to the Borrower acting reasonably stating that such issuance is
permitted under applicable securities legislation.


The
written notice of conversion of the Loan, or any portion thereof, to the
Borrower will be deemed to constitute a contract between the Lender and the
Borrower whereby: (i) the Lender subscribes for the number of Shares which it
will be entitled to receive on such conversion; (ii) the Lender releases the
Borrower from all liability thereon or from all liability with respect to that
portion of the Loan thereof to be converted, as the case may be; and (iii) the
Borrower agrees that the conversion of the Loan, or any portion thereof so
converted, constitutes full payment of the subscription price for the Shares
issuable upon such conversion.


As promptly as is practicable
after the delivery of the written notice of conversion the Borrower will issue
or cause to be issued and deliver or cause to be delivered to the Lender, or on
its written order, a certificate or certificates in the name or names of the
person or persons specified in accordance with this Section 2 of this Schedule
for the number of Shares deliverable
upon the conversion of the Loan, or any portion thereof.  This
conversion will be deemed to have been effected immediately prior to the close
of business on the date of delivery of the written notice of conversion and at
such time the rights of the Lender to be paid the Loan, or any portion
thereof so converted, will cease and the
person or persons in whose name or names any certificates for the Shares
will be deliverable upon such conversion
will be deemed to have become on such date the holder or holders of record of
the Shares represented thereby;
provided, however, that no such surrender on any date when the share transfer
registers for the Shares are closed
will be effective to constitute the person or persons entitled to receive the Shares
upon such conversion as the holder or 



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holders of record of such Shares on such date, but such surrender will be
effective to constitute the person or persons entitled to receive such Shares
as the holder or holders of record thereof
for all purposes on the next succeeding day on which such share transfer
registers are open.


3.                             No Fractional Shares.  Notwithstanding
anything herein contained, the Borrower will not be required to issue
fractional Shares upon the
conversion of the Loan, in whole or
in part.  If the number of Shares upon
conversion of the Loan, or any portion thereof, is not a whole number, then the number of such Shares will be rounded
down to the nearest whole number.


4.                             Adjustment of the Conversion Price. 
The Conversion Price will
be subject to adjustment from time to time as follows:


(a)           If and whenever at any time after the date hereof
the outstanding Shares are subdivided, redivided or changed into a greater, or
reduced, combined or consolidated into a lesser, number of shares or
reclassified into different shares, the Lender prior to the effective date of
such subdivision, redivision, change, reduction, combination, consolidation or
reclassification will be entitled to receive and will accept, upon the exercise
of such right at any time on such effective date or thereafter, in lieu of the
number of Shares to which it was theretofor entitled upon conversion at the
Conversion Price, the aggregate number of shares of the Borrower that the
Lender would have been entitled to receive as a result of such subdivision,
redivision, change, reduction, combination, consolidation or reclassification
if, on the effective date thereof, the Lender had been the registered holder of
the number of Shares to which it was theretofor entitled upon conversion.


(b)           If and whenever at any time after the date hereof
the Borrower issues additional Shares (or securities convertible into Shares)
to the holders of all of its outstanding Shares by way of a stock dividend or
other distribution, other than a stock dividend to holders of Shares who
exercise an option to receive in the ordinary course equivalent dividends in
Shares in lieu of receiving cash dividends, the Conversion Price will be
adjusted immediately after the record date for such stock dividend or other
distribution by multiplying the Conversion Price in effect on such record date
by a fraction of which the numerator will be the total number of Shares
outstanding on the record date and of which the denominator will be the total
number of Shares outstanding on the record date plus the number of additional
Shares which will result from the stock dividend or other distribution
(assuming for this purpose that all Shares issuable upon the exercise of the
conversion rights of the securities convertible into Shares had been
issued).  Any dividend or distribution on
the Shares of the Borrower in Shares will be deemed to have been issued or made
immediately prior to the time of the record date for such dividend or
distribution for the purposes of calculating the number of outstanding Shares
under Subsection (c) below.


(c)           If and whenever at any time after the date hereof
the Borrower makes a distribution to all holders of its Shares of:


(i)            shares of any class not included in the
definition of Shares;


(ii)           evidences of its indebtedness; or



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(iii)          assets (excluding cash dividends or
distributions, and dividends or distributions referred to in
Subsection (b) above and stock dividends to holders of Shares who exercise
an option to receive in the ordinary course equivalent dividends in Shares in
lieu of receiving cash dividends);


then in each such case the
Conversion Price will be adjusted immediately after the record date for the
making of such distribution so that it will equal the price determined by
multiplying the Conversion Price in effect on such record date by a fraction,
of which the numerator will be the total number of Shares outstanding on such
record date multiplied by the Current Market Price on such record date, less
the fair market value (as determined by the board of directors of the Borrower,
whose determination will be conclusive) of said shares or evidences of
indebtedness or assets or options, rights or warrants so distributed, and of
which the denominator will be the total number of Shares outstanding on such
record date multiplied by such Current Market Price.  Shares owned by or held for the account of
the Borrower will be deemed not to be outstanding for the purpose of any such
computation.  Such adjustment will be
made successively as of any such record date. 
To the extent that such distribution is not so made, the Conversion
Price will be readjusted to the Conversion Price which would then be in effect
based upon the said shares, evidences of indebtedness or assets actually
distributed.


(d)           In any case in which this Schedule will require
that an adjustment will become effective immediately after a record date for an
event, the Borrower may defer until the occurrence of such event issuing to the
Lender, if the Loan is converted in
whole or in part after such record date and before the occurrence of such
event, the additional Shares issuable upon such conversion by reason of the
adjustment required by such event over and above the Shares issuable upon such
conversion before giving effect to such adjustment; provided, however, that the
Borrower will deliver to the Lender an appropriate instrument evidencing the
Lender’s rights to receive such additional Shares, upon the occurrence of the
event requiring such adjustment.


(e)           No adjustment in the Conversion Price will be
required unless such adjustment would require an increase or decrease of at
least one percent in such price; provided, however, that any adjustments which
by reason of this Subsection (e) are not required to be made will be
carried forward and taken into account in any subsequent adjustment.


5.                             Certificate as to
Adjustment.  The Borrower will from time to time immediately
after the occurrence of any event which requires an adjustment in the
Conversion Price as provided in this Schedule, deliver an officer’s certificate
to the Lender specifying the nature of the event requiring the adjustment and
the amount of the adjustment thereby necessitated and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based, and specifying the Conversion Price after adjustment.



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