Filed by sedaredgar.com - Nord Resources Corporation - Exhibit 10.67






Execution Version 

	 
	
       

       

       

	SECOND AMENDED AND RESTATED CREDIT AGREEMENT 
	 
	 
	dated as of March 31, 2009 
	 
	 
	by and among 
	 
	 
	NORD RESOURCES CORPORATION 
	as Borrower, 
	 
	 
	and 
	 
	 
	COCHISE AGGREGATES AND MATERIALS, INC. 
	as Guarantor, 
	 
	  
	 
	THE LENDERS FROM TIME TO TIME PARTY HERETO 
	as Lenders 
	 
	and 
	 
	 
	NEDBANK LIMITED, 
	as Administrative Agent 
	 
	 ______________________________________
	 
	
      NEDBANK LIMITED, 

	
      as Sole Lead Arranger 

       

       

	 






TABLE OF CONTENTS 

	 	 	 	  	Page 
	 	 	 	  	  
	ARTICLE I. 	DEFINITIONS 	1 
	 	 	 	 	 
	 	Section 1.1. 	Defined Terms 	1 
	 	 	 	 	 
	 	Section 1.2. 	Terms Generally 	17 
	 	 	 	 	 
	 	Section 1.3. 	Accounting Terms; GAAP 	17 
	 	 	 	 	 
	ARTICLE II. 	THE TERM LOANS 	17 
	 	 	 	 	 
	 	Section 2.1. 	Term Loans 	17 
	 	 	 	 	 
	 	Section 2.2. 	Borrowings 	18 
	 	 	 	 	 
	 	Section 2.3. 	Requests for Borrowings 	18 
	 	 	 	 	 
	 	Section 2.4. 	Funding of Borrowings 	18 
	 	 	 	 	 
	 	Section 2.5. 	Termination and Reduction of Term Loan Commitments 	19 
	 	 	 	 	 
	 	Section 2.6. 	Repayment of Term Loans 	19 
	 	 	 	 	 
	 	Section 2.7. 	Evidence of Debt 	19 
	 	 	 	 	 
	 	Section 2.8. 	Optional Prepayments of Term Loans 	20 
	 	 	 	 	 
	 	Section 2.9. 	Mandatory Prepayments 	21 
	 	 	 	 	 
	 	Section 2.10. 	Fees 	22 
	 	 	 	 	 
	 	Section 2.11. 	Interest 	23 
	 	 	 	 	 
	 	Section 2.12. 	Alternate Rate of Interest 	24 
	 	 	 	 	 
	 	Section 2.13. 	Increased Costs 	24 
	 	 	 	 	 
	 	Section 2.14. 	Break Funding Payments 	25 
	 	 	 	 	 
	 	Section 2.15. 	Taxes 	26 
	 	 	 	 	 
	 	Section 2.16. 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs
      	27 
	 	 	 	 	 
	 	Section 2.17. 	Mitigation Obligations 	28 
	 	 	 	 	 
	ARTICLE III. 	REPRESENTATIONS AND WARRANTIES 	30 
	 	 	 	 	 
	 	Section 3.1. 	Status and Power 	30 
	 	 	 	 	 
	 	Section 3.2. 	Authorization; Enforceability 	30 
	 	 	 	 	 
	 	Section 3.3. 	No Conflicts 	30 
	 	 	 	 	 
	 	Section 3.4. 	Financial Statements 	30 
	 	 	 	 	 
	 	Section 3.5. 	Intentionally Omitted 	31 
	 	 	 	 	 
	 	Section 3.6. 	Litigation, etc 	31 
	 	 	 	 	 
	 	Section 3.7. 	Title to Assets 	31 


i 




TABLE OF CONTENTS 
(continued)


	 	 	 	  	Page 
	 	 	 	  	  
	 	Section 3.8.  	Conduct of Business 	31 
	 	 	 	 	 
	 	Section 3.9.  	Labor and Employment Matters 	31 
	 	 	 	 	 
	 	Section 3.10.  	No Default 	31 
	 	 	 	 	 
	 	Section 3.11.  	Tax Returns and Taxes 	32 
	 	 	 	 	 
	 	Section 3.12.  	Withholding and Other Taxes 	32 
	 	 	 	 	 
	 	Section 3.13.  	Material Contracts 	32 
	 	 	 	 	 
	 	Section 3.14.  	Compliance with Environmental Laws 	32 
	 	 	 	 	 
	 	Section 3.15.  	Solvency 	32 
	 	 	 	 	 
	 	Section 3.16.  	Locations of Tangible Assets 	32 
	 	 	 	 	 
	 	Section 3.17.  	Consents and Approvals for the Project 	33 
	 	 	 	 	 
	 	Section 3.18.  	Consents and Approvals for the Security 	33 
	 	 	 	 	 
	 	Section 3.19.  	Intentionally Omitted 	33 
	 	 	 	 	 
	 	Section 3.20.  	Subsidiaries 	33 
	 	 	 	 	 
	 	Section 3.21.  	Mining Properties 	33 
	 	 	 	 	 
	 	Section 3.22.  	Feasibility Study 	33 
	 	 	 	 	 
	 	Section 3.23.  	Financial Model, Construction Schedule and Capital Spending
      Plan 	34 
	 	 	 	 	 
	 	Section 3.24.  	Project Information 	34 
	 	 	 	 	 
	 	Section 3.25.  	Intellectual Property 	34 
	 	 	 	 	 
	 	Section 3.26.  	Liens 	34 
	 	 	 	 	 
	 	Section 3.27.  	Insurance 	34 
	 	 	 	 	 
	 	Section 3.28.  	Ranking 	35 
	 	 	 	 	 
	 ARTICLE IV. 	 CONDITIONS 	35 
	 	 	 	 	 
	 	Section 4.1.  	Closing Date 	35 
	 	 	 	 	 
	 	Section 4.2.  	Additional Conditions 	37 
	 	 	 	 	 
	 ARTICLE V. 	 AFFIRMATIVE COVENANTS 	38 
	 	 	 	 	 
	 	Section 5.1.  	Financial Statements and Reporting 	38 
	 	 	 	 	 
	 	Section 5.2.  	Notices of Material Events 	40 
	 	 	 	 	 
	 	Section 5.3.  	Existence; Conduct of Business 	41 
	 	 	 	 	 
	 	Section 5.4.  	Payment of Obligations 	41 


ii 




TABLE OF CONTENTS 
(continued)


	 	 	 		Page 
	 	 	 		  
	 	Section 5.5. 	Maintenance of Properties; Insurance 	41 
	 	 	 	 	 
	 	Section 5.6. 	Books and Records; Inspection Rights 	41 
	 	 	 	 	 
	 	Section 5.7. 	Compliance with Laws 	41 
	 	 	 	 	 
	 	Section 5.8. 	Use of Proceeds 	41 
	 	 	 	 	 
	 	Section 5.9. 	Project; Construction; Etc 	42 
	 	 	 	 	 
	 	Section 5.10. 	Updated Financial Model 	42 
	 	 	 	 	 
	 	Section 5.11. 	Further Assurances 	43 
	 	 	 	 	 
	 	Section 5.12. 	Forward Sale Price Protection Program 	43 
	 	 	 	 	 
	ARTICLE VI. 	NEGATIVE COVENANTS 	43 
	 	 	 	 	 
	 	Section 6.1. 	Indebtedness 	43 
	 	 	 	 	 
	 	Section 6.2. 	Liens 	43 
	 	 	 	 	 
	 	Section 6.3. 	Fundamental Changes; Dispositions; Subsidiaries; Etc 	44 
	 	 	 	 	 
	 	Section 6.4. 	Investments, Loans, Advances, Guarantees and Acquisitions
      	44 
	 	 	 	 	 
	 	Section 6.5. 	Hedging Agreements 	44 
	 	 	 	 	 
	 	Section 6.6. 	Restricted Payments 	45 
	 	 	 	 	 
	 	Section 6.7. 	Transactions with Affiliates 	45 
	 	 	 	 	 
	 	Section 6.8. 	Restrictive Agreements 	45 
	 	 	 	 	 
	 	Section 6.9. 	Material Contracts 	45 
	 	 	 	 	 
	 	Section 6.10. 	Financial Covenants 	45 
	 	 	 	 	 
	ARTICLE VII. 	EVENTS OF DEFAULT	46 
	 	 	 	 	 
	ARTICLE VIII. 	THE ADMINISTRATIVE AGENT 	48 
	 	 	 	 	 
	ARTICLE IX. 	GUARANTY 	50 
	 	 	 	 	 
	 	Section 9.1. 	Guaranty 	50 
	 	 	 	 	 
	 	Section 9.2. 	Guaranty Absolute 	50 
	 	 	 	 	 
	 	Section 9.3. 	Waiver 	51 
	 	 	 	 	 
	 	Section 9.4. 	Continuing Guaranty; Assignments 	51 
	 	 	 	 	 
	 	Section 9.5. 	Subrogation 	52 
	 	 	 	 	 
	 	Section 9.6. 	Maximum Obligations 	52 
	 	 	 	 	 
	ARTICLE X. 	MISCELLANEOUS 	52 
	 	 	 	 	 
	 	Section 10.1. 	Notices 	52 


iii 




TABLE OF CONTENTS 
(continued)


		 		  	Page 
		 		  	  
		Section 10.2. 	Waivers; Amendments 	53 
	 	 	 	 	 
		Section 10.3. 	Expenses; Indemnity; Damage Waiver 	54 
	 	 	 	 	 
		Section 10.4. 	Successors and Assigns 	55 
	 	 	 	 	 
		Section 10.5. 	Survival 	58 
	 	 	 	 	 
		Section 10.6. 	Counterparts; Integration; Effectiveness 	58 
	 	 	 	 	 
		Section 10.7. 	Severability 	59 
	 	 	 	 	 
		Section 10.8. 	Right of Setoff 	59 
	 	 	 	 	 
		Section 10.9. 	Governing Law; Jurisdiction; Consent to Service of Process
      	59 
	 	 	 	 	 
		Section 10.10. 	WAIVER OF JURY TRIAL 	60 
	 	 	 	 	 
		Section 10.11. 	Headings 	60 
	 	 	 	 	 
		Section 10.12. 	Confidentiality 	60 
	 	 	 	 	 
		Section 10.13. 	Interest Rate Limitation 	61 
	 	 	 	 	 
		Section 10.14. 	Know Your Customer Requirements 	61 
	 	 	 	 	 
		Section 10.15. 	Consent Relating to Existing Copper Hedging Agreements 	62 
	 	 		 	 
		Section 10.16. 	Provisions Relating to B Term Loan 	62 
	 	 		 	 
	ARTICLE XI. 	CONDITIONS PRECEDENT TO SECOND AMENDMENT AND RESTATEMENT
      	62 


iv 





	SCHEDULES: 
	 
	Schedule 1.1 -- Material Contracts 
	Schedule 2.1 -- Term Loan Commitments 
	Schedule 6.2 -- Existing Liens 
	Disclosure Schedule 



 

	EXHIBITS: 
	  
	Exhibit A -- Form of
      Assignment and Assumption 
	Exhibit B -- Form of Term Loan Borrowing Request 
	Exhibit C -- Form of Collateral Account
      Agreement 
	Exhibit D -- Form of Deed of Trust 
	Exhibit E -- Form of Excess Cash Flow
      Certificate 
	Exhibit F -- Form of Account Charge







SECOND AMENDED AND RESTATED CREDIT AGREEMENT


          THIS
SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as
of March 31, 2009, among NORD RESOURCES CORPORATION, a Delaware corporation (the
“Borrower”), and COCHISE AGGREGATES AND MATERIALS, INC., a Nevada
corporation (“Cochise”, a “Guarantor”), the lenders from time to
time party hereto (each a “Lender” and collectively, the
“Lenders”), and NEDBANK LIMITED, as administrative agent (in such
capacity, the “Administrative Agent”) and as sole lead arranger (in such
capacity, the “Sole Lead Arranger”). 

          WHEREAS
the Borrower, the Guarantor, the Lenders and the Administrative Agent entered
into certain Credit Agreement dated June 17, 2007 to provide to the Borrower a
term loan facility to assist in financing the construction, start-up, and
operation of mining and metal operations at the Johnson Camp Mine, a copper mine
and production facility located 65 miles east of Tuscon, Arizona in Cochise
County (the “Original Agreement”); 

          WHEREAS,
the Original Agreement was Amended and Restated (the “First Amended
and Restated Credit Agreement” on June 30, 2008; 

          
WHEREAS, the Borrower has requested that the First Amended and Restated
Agreement be further amended and restated by this Agreement; and 

          WHEREAS,
subject to the conditions set forth herein (including, without limitation, those
conditions set forth in Article 11 hereof) the parties have agreed to cause the
First Amended and Restated Credit Agreement to be amended and restated as set
forth herein. 

          NOW
THEREFORE, in consideration of the foregoing recitals, the mutual agreements
contained herein and for other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto agree as
follows: 

ARTICLE I. 
DEFINITIONS 

          SECTION
1.1. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below: 

               “A
Term Loan” has the meaning set forth in Section 2.1. For the avoidance of
doubt, only A Term Loans shall exist immediately following the Second Amendment
and Restatement Date, provided that the A Term Loans may be re-tranched
into A Term Loans and B Term Loans if a Term Loan Conversion Event shall
occur.

               “Account
Charge” means an English law governed charge instrument substantially in the
form of Exhibit F. 

               “Administrative
Agent” means Nedbank Limited, in its capacity as administrative agent for
the Lenders hereunder. 




               “Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. 

              
“Agreement” has the meaning set forth in the recitals hereto. 

               “Applicable
Law” means all public laws, statutes, ordinances, decrees, judgments, codes,
standards, acts, orders, by-laws, rules, regulations, Approvals, permits and
requirements of any Governmental Authority, in each case having the force of law
and which now or hereafter may be lawfully applicable to and enforceable against
any Loan Party or its property or any part thereof. 

              
“Applicable Margin” means:

                         
(a)      for the A Term Loans, 6.06% per annum,
provided that such amount (x) shall be reduced by 1.75% after the
Deferred Payment Trigger Event, and (y) shall be reduced by an additional 0.50%
after Completion; and 

                        
(b)      for the B Term Loans (if any), 5.00% per
annum. 

               “Applicable
Percentage” means, with respect to any Lender, the percentage of the total
Term Loan Commitments represented by such Lender’s Term Loan Commitment. If the
Term Loan Commitments have terminated or expired, the Applicable Percentages
shall be determined based upon the Term Loan Commitments most recently in
effect, giving effect to any assignments. 

               “Approvals”
means each and every approval, order in council, authorization, license, permit,
consent, filing and registration by or with any Governmental Authority or other
Person which are required by Applicable Law and necessary to authorize or permit
the development and operation of the Project and the execution, delivery,
performance, validity and enforceability of the Loan Documents or the Material
Contracts. 

               “Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by
Section 10.4), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent. 

               “Availability
Period” means the period from and including the Closing Date to but
excluding the earlier of (a) the date of termination of the Term Loan
Commitments, and (b) the first Principal Payment Date. 

               “B
Term Loan” has the meaning set forth in Section 10.16. For the avoidance of
doubt, only A Term Loans shall exist immediately following the Second Amendment
and Restatement Date, provided that the A Term Loans may be re-tranched
into A Term Loans and B Term Loans if a Term Loan Conversion Event shall occur.


               “Board”
means the Board of Governors of the Federal Reserve System of the United States
of America. 

- 2 - 




              
“Borrower” has the meaning set forth in the recitals hereto. 

              
“Borrower Public Documents” means all registration statements,
prospectuses, forms, reports, schedules, statements and other documents
(including any amendments or supplements thereto) filed by the Borrower with:
(a) the SEC under the United States Securities Act of 1933, as amended, or the
United States Securities Exchange Act of 1934, as amended, and any rules,
regulations or other instruments promulgated thereunder; or (b) the Canadian
Securities Regulators under the Securities Act (Ontario) or the Securities Act
(British Columbia), and any rules, regulations or other instruments promulgated
thereunder. 

              
“Borrowing” means a borrowing of Term Loans. 

               “Business
Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain
closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market. 

               “CADS”
means, for a particular period, (a) gross revenues for such period (for any
future period, calculated (i) using the actual hedged price for future hedged
production and (ii) the unhedged price for unhedged production, with the
unhedged price being the Historic Six Month Average Spot Price at such time)
less (b) the sum of (i) the aggregate of Project Development Costs for such
period, (ii) cash Tax Expenses for such period, and (iii) cash Operating Costs
for such period, and (c) adjusted for changes in Working Capital over such
period (plus any increases and minus any decreases). 

               “Canadian
Securities Regulators” means either or both of the Ontario Securities
Commission and the British Columbia Securities Commission, as the context
requires. 

               “Capital
Expenditures” means, for a particular period, the aggregate of all
expenditures by the Borrower during such period that, in accordance with GAAP,
are classified as capital expenditures. 

               “Capital
Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP. 

               “Casualty
Event” means, with respect to any Property of any Person, any loss of or
damage to, or any condemnation or other taking of, such Property for which such
Person receives insurance proceeds, or proceeds of a condemnation award or other
compensation. 

               “Change
of Control” means (a) Cochise shall cease to be a direct wholly-owned
subsidiary of the Borrower; or (b) the Administrative Agent, for the benefit of
the Lenders, shall cease to have a perfected security interest in Equity
Interests of Cochise representing 100% of the aggregate equity value represented
by the issued and outstanding Equity Interests in Cochise. 

- 3 - 




               “Change
in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.13(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement. 

               “Closing
Date” means the second Business Day after which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 10.2) . 

              
“Cochise” has the meaning in the recitals hereto.

              
“Code” means the Internal Revenue Code of 1986, as amended from time to
time. 

               “Collateral”
means a collective reference to all real and personal property with respect to
which Liens have been granted in favor of the Administrative Agent pursuant to
and in accordance with the Security Documents. 

               “Collateral
Account Agreement” means the Collateral Account Agreement in the form
attached as Exhibit C hereto. 

               “Collateral
Accounts” shall have the meaning set forth in the Collateral Account
Agreement. 

               “Completion”
means the earlier to occur of the date upon which the Borrower has delivered the
Completion Certificates to the Administrative Agent, duly executed by the
Borrower, and verified by the Independent Technical Consultant, and such
certificates shall have been accepted by the Administrative Agent. 

               “Completion
Certificates” shall mean, collectively, the forms of certificates relating
to Completion which shall be in a form satisfactory to the Borrower, the
Administrative Agent, and the Independent Technical Consultant. 

              
“Completion Date” means the date upon which Completion occurs.

               “Consent
Agreements” means, collectively, the agreements so named, entered into or to
be entered into between the Lenders, the Administrative Agent, the Borrower and
each of the counterparties to each Material Contract with a value in excess of
$1,000,000 (as determined by the Administrative Agent in consultation with the
Borrower) pursuant to which, inter alia, such counterparties consent to the
Security and grant to the Lenders or their nominee certain “step-in” rights.


               “Construction
Schedule and Capital Spending Plan” means the Borrower’s construction
schedule and capital spending plan, dated June 20, 2007, as the same may be
modified by the Borrower and approved by the Required Lenders. 

- 4 - 




               “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling”
and “Controlled” have meanings correlative thereto. 

               “Debt
Issuance” means the issuance of any Indebtedness by any Loan Party other
than the issuance of any Indebtedness permitted under Section 6.1.

               “Debt
Service Charges” means, for a particular period, the sum of all scheduled
principal payments made or required to have been made by the Borrower hereunder
with respect to Term Loans during such period and interest on such Term Loans
paid or required to have been paid by the Borrower during such period. 

               “Debt
Service Coverage Ratio” means, (a) with respect to a particular Historical
Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt Service
Charges for such Test Period (as determined with respect to the financial
statements most recently delivered pursuant to Section 5.1(a) and (b) hereof);
and (b) with respect to a particular Future Test Period, the ratio of (i) CADS
for such Test Period to (ii) Debt Service Charges for such Test Period (as
determined with respect to the Financial Model then in effect).

               “Debt
Service Reserve Account” has the meaning set forth in the Collateral Account
Agreement. 

               “Deed
of Trust’ means the Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing in the form of Exhibit D, hereto. 

               “Default”
means any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default. 

               “Deferred
Payments” means payments on the A Term Loan made pursuant to Section 2.8(b)
or Section 2.9(e) in an aggregate amount equal to the sum of (a) $3,607,085
plus (b) the Deferred Payment Notional Amount. For purposes of this definition,
“Deferred Payment Notional Amount” shall mean an amount equal to a
notional amount of interest on the amount in clause (a) of the preceding
sentence calculated at a rate of 5.98% per annum from and including March 31,
2009 to but excluding the earlier of Completion and the Deferred Payment Trigger
Date, and (assuming Completion occurs first) 5.48% per annum from and including
Completion to but excluding the Deferred Payment Trigger Date and (ii) such
notional amount of interest otherwise calculated in a manner consistent with
this Agreement, including with respect to the capitalization of interest in
Section 2.11(c) . For the avoidance of doubt, the calculation provided for in
the previous sentence is not additional interest required to be paid by the
Borrower, but is a calculation of the amount of prepayments required to be made
by the Borrower in order for the Deferred Payment Trigger Event to occur.

               “Deferred
Payment Trigger Event” means the Deferred Payments shall have been made with
respect to the A Term Loan. 

               “Disclosure
Schedule” means the disclosure schedule that has been prepared by the
Borrower, delivered by the Borrower to the Lender, and dated the date of this
Agreement, which 

- 5 - 




shall be deemed to include each Borrower Public Document
available on EDGAR or SEDAR and filed prior to the date of this Agreement if the
relevance of such disclosure is reasonably apparent on its face. 

               “Disposition”
or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith, other than the Permitted Royalty Sale. 

              
“dollars” or “$” refers to lawful money of the United States of
America. 

               “EBIT”
means, for a particular period, Net Income for such period plus, to the extent
deducted in determining such Net Income and without duplication, the aggregate
of the (a) Interest Expenses for such period, and (b) Tax Expenses for such
period, determined in each case in accordance with GAAP. 

               “EDGAR”
means the Electronic Data-Gathering, Analysis, and Retrieval system of the SEC,
accessible on the Internet at www.sec.gov. 

               “Environmental
Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters. 

               “Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing. 

               “Environmental
Plan” means the Compliance Order dated September 7, 2002 issued by the
Arizona Department of Environmental Quality, as the same may be modified,
replaced, or superceded (including, without limitation, by the appropriate
Aquifer Protection Permit). 

               “Equity
Interests” means shares of equity interest, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest. 

               “Equity
Issuance” means any issuance by the Borrower to any Person (other than a
Loan Party) of shares of its Equity Interests. 

              
“ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time. 

- 6 - 




               “ERISA
Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b)
or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414 of the Code.


               “ERISA
Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an event
for which the 30-day notice period is waived); (b) the existence with respect to
any Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (c) the filing
pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA. 

              
“Event of Default” has the meaning assigned to such term in Article VII.


               “Excluded
Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.17(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.15(a) . 

               “Excess
Cash Flow” means, at any particular time and from time to time, the amount
identified in the Excess Cash Flow Certificate.

               “Excess
Cash Flow Certificate” means a certificate of a Financial Officer of the
Borrower substantially in the form of Exhibit E hereto. 

- 7 - 




               “Existing
Bridge Loan Facility” means the loan evidenced by the $4,900,000 Amended and
Restated Secured Promissory Note dated May 31, 2006 between the Borrower and
Nedbank Limited, as the same may be amended and modified from time to time. 

               “Existing
Copper Hedge Counterparty” means the copper hedge provider under any
Existing Copper Hedging Agreement. 

               “Existing
Copper Hedging Agreements” means the Hedge Agreements currently in place
that hedge the price of copper. 

               “Feasibility
Study” means the Feasibility Study, dated October, 2005, prepared by
Winters, Dorsey and Company LLC, as supplemented by the Johnson Camp Mine
Project Feasibility and Technical Report, dated September, 2007, prepared by
Bikerman Engineering & Technology Associated, Inc.

               “Fee
Letter” means the fee letter dated June 27, 2007 between the Borrower and
Nedbank Limited, as the same may be amended, modified, supplemented or replaced
from time to time. 

               “Financial
Model” means the financial model delivered pursuant to Section 11.2(b), as
the same may be modified from time to time in accordance with Section 5.10. 

               “Financial
Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower. 

               “Foreign
Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction. 

               “Forward
Sale Price Protection Program” means a hedging program with respect to a
specified percentage of copper output from the Project which shall be entered
into prior to the Closing Date (with such adjustments consistent with Section
5.12) and which shall be in form and substance satisfactory to the Borrower and
the Administrative Agent. 

               “Future
Test Periods” means with respect to any Test Date, the period of four
consecutive fiscal quarters ending on each of the next four succeeding Test
Dates.

               “GAAP”
means generally accepted accounting principles in the United States of America.


               “Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government. 

               “Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any 

- 8 - 




Indebtedness or other obligation of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. 

              
“Guarantor” means Cochise. 

               “Hazardous
Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.


               “Hedging
Agreement” means any present or future swap, hedging, foreign exchange or
cash management agreement or other derivative transaction entered into by any
Loan Party which constitutes any copper or commodity hedging transaction, spot
or forward foreign exchange transaction, interest rate swap transaction,
currency swap transaction, forward rate transaction, rate cap transaction, rate
floor transaction, rate collar transaction, and any other exchange or rate
protection transaction, any combination of such transactions or any option with
respect to any such transaction entered into by any Loan Party. 

               “Historic
Six Month Average Spot Price” means, for any day, the average of the closing
spot price for copper on New York Comex for each Business Day over the six-month
period ending on such day.

               “Historical
Test Period” means the period of four consecutive fiscal quarters of the
Borrower ending on a Test Date; provided, that for purposes of
calculating the Debt Service Coverage Ratio and Interest Coverage Ratio for each
of the first three applicable Test Dates after Completion, the amount of each of
CADS, Debt Service Charges, EBIT and Interest Expense for purposes of such
calculations shall be determined as follows: (a) for the first Test Date, such
amounts shall equal the amounts for the most recently ended fiscal quarter
multiplied by 4, (b) for the second Test Date, such amounts shall equal the
amount for the two most recently ended fiscal quarters multiplied by 2; and (c)
for the third Test Date, such amounts shall equal the amount for the three most
recently ended fiscal quarters multiplied by 3/4. 

               “Indebtedness”
of any Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase 

- 9 - 




price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers’ acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. 

              
“Indemnified Taxes” means Taxes other than Excluded Taxes. 

               “Independent
Technical Consultant” means the technical engineering consultant as the
Administrative Agent, in consultation with the Borrower, may engage from time to
time to monitor the Borrower’s construction under and compliance with the
Construction Schedule and Capital Spending Plan, certify the passage of the
Completion tests and otherwise carry out the responsibilities of the Independent
Technical Consultant under the Loan Documents. 

               “Intellectual
Property” shall mean all issued patents and patent applications, industrial
design registrations, trade-marks, registrations and applications therefor,
trade-names and styles, logos, copyright registrations and applications
therefor, all of the foregoing owned by or licensed to the Loan Parties or any
of them and used in or necessary to the operation of the Project. 

               “Interest
Coverage Ratio” means (a) with respect to a particular Historical Test
Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense for
such Test Period (as determined with respect to the financial statements most
recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with
respect to a particular Future Test Period, the ratio of (i) EBIT for such Test
Period to (ii) Interest Expense for such Test Period (as determined with respect
to the Financial Model then in effect); provided that any such
calculation shall be effected without regard to the effect of any non-cash
expense associated with the $23 million equity financing. 

               “Interest
Expense” means, for any particular period, the aggregate amount which would
be classified on the income statement of the Borrower for such period as
interest expenses (whether expensed or capitalized or in respect of synthetic
lease obligations), all as determined in accordance with GAAP. 

               “Interest
Payment Date” means the last Business Day of each of March, June, September
and December in each year. 

               “Interest
Period” means, with respect to any Borrowing, (a) the period from and
including the date of such Borrowing to but excluding the first Interest Payment
Date occurring after such Borrowing, and (b) thereafter, the period from and
including the first Interest Payment Date for such Borrowing, to but excluding
the next Interest Payment Date. 

- 10 - 




              
“Lenders” has the meaning set forth in the recitals hereto.

               “LIBOR
Rate” means the rate of interest per annum, calculated on the basis of a
year of 360 days, determined by the Administrative Agent for a particular
Interest Period (a) at 11:00 a.m. (London time) on the second Business Day prior
to the commencement of such Interest Period that appears as such on the Reuters
Page LIBOR01, or (b) if, for any reason, such rate does not appear on such
Reuters Page, the rate of interest per annum (rounded upwards if necessary to
the nearest whole multiple of 1/16%) determined by the Administrative Agent as
being the rate of interest at which the Administrative Agent, in accordance with
its normal practices, would be prepared to offer to leading banks in the London
interbank market for delivery on the first day of each relevant Interest Period
for a period equal to the relevant Interest Period based on the number of days
comprised therein, deposits in U.S. dollars of comparable amounts to the amount
of the Term Loan, to be outstanding during the Interest Period, at or about
11:00 am (London time) on the second Business Day prior to the commencement of
such Interest Period. 

               “Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities. 

              
“Loan Documents” means this Agreement, the Security Documents, and the
Fee Letter.

              
“Loan Party” means each of the Borrower and the Guarantor. 

              
“Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Project or any Loan Party, (b) the ability of any Loan Party to perform any
of its obligations under this Agreement or (c) the rights of or benefits
available to the Lenders under the Loan Documents. 

              
“Material Contracts” means the material contracts set forth on Schedule
1.1, and any other contract which, in the event of a breach, could reasonably be
expected to result in a Material Adverse Effect, as determined by the
Administrative Agent in consultation with the Borrower. 

              
“Material Indebtedness” means Indebtedness (other than the Term Loans),
or obligations in respect of one or more Hedging Agreements, of any one or more
of any Loan Party in an aggregate principal amount exceeding $200,000. For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations of any Loan Party in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Loan Party would be required to pay if such Hedging Agreement were
terminated at such time. 

                “Mining
Properties” means the real property pledged to the Administrative Agent for
the benefit of the Lenders pursuant to the Security Documents. 

- 11 - 




              
“Moody’s” means Moody’s Investors Service, Inc. 

               “Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.


              
“Net Cash Proceeds” means: 

                              (a)     
with respect to any Disposition, the excess, if any, of (i) the sum of cash and
cash equivalents received in connection with such Disposition less (ii)
the sum of (x) the out-of-pocket expenses incurred by the Borrower in connection
with such Disposition and (y) taxes reasonably estimated to be actually payable
in connection therewith; 

                              (b)     
with respect to any Casualty Event, the excess, if any, of (i) the sum of
insurance proceeds or other condemnation award received (other than any amounts
received in connection with business interruption insurance) in connection with
such Casualty Event less (ii) the sum of any reasonable expenses incurred
in connection therewith; and 

                              (c)     
with respect to any Debt Issuance, the excess, if any, of (i) all cash received
in connection with such Debt Issuance less (ii) the sum of all reasonable
expenses by the Borrower incurred in connection therewith. 

               “Net
Income” means, for a particular period, the aggregate amount which would be
classified on the income statement of the Borrower for such period as net
income, determined in accordance with GAAP; provided that Net Income shall be
inclusive of extraordinary, unusual and non-recurring items to the extent
received or paid in cash and exclusive of extraordinary, unusual and
non-recurring items to the extent not received or paid in cash. 

               “Obligations”
means all indebtedness, obligations and liabilities, present or future, absolute
or contingent, matured or not, at any time owing by a Loan Party to a Lender or
the Administrative Agent under or in connection with the Loan Documents or any
Hedging Agreement. 

               “Operating
Costs” means, for any period, the sum, computed without duplication, of all
consolidated costs and expenses (including, without limitation, costs relating
to corporate overhead, salaries, insurance, board expenses, legal expenses,
deferred salaries, expenses in connection with letters of credit, and royalty
payments) paid directly or indirectly by the Borrower during such period (or, in
the case of any future period, projected to be paid or payable during such
period) in connection with the operation, maintenance and administration of the
Project. 

               “Other
Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement. 

              
“Participant” has the meaning set forth in Section 10.4. 

- 12 - 




               “PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions. 

              
“Permitted Investments” means: 

                         (a)     
direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from the
date of acquisition thereof; 

                         (b)     
investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s; 

                         (c)     
investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; 

                         (d)     
fully collateralized repurchase agreements with a term of not more than 30 days
for securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above; 

                         (e)     
money market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are
rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at
least $5,000,000,000; and 

                        
(f)      any deposits of the type described in clause
(d) of “Permitted Liens”. 

              
“Permitted Liens” means Liens: 

                        
(a)      imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.4; 

                        
(b)      carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or are being contested in compliance with Section 5.4; 

                        
(c)      pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment
insurance and other social security laws or regulations; 

                        
(d)      deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds, letters of credit and other obligations of a like nature, in
each case in the ordinary course of business; 

- 13 - 




                   
(e)      judgment liens in respect of judgments that do
not constitute an Event of Default under clause (k) of Article VII; and 

                   
(f)      easements, zoning restrictions, rights-of-way
and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or interfere with
the ordinary conduct of business of the Borrower; 

provided that the term “Permitted Liens” shall not
include any Lien securing Indebtedness. 

              
“Permitted Royalty Sale” has the meaning set forth in Section 11.1(f) .


               “Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity. 

               “Plan”
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. 

               “Principal
Payment Dates” means the last Business Day of March, June, September, and
December in each year, starting with the last Business Day of September 2009 and
ending on the last Business Day of March 2013. 

              
“Proceeds Account” has the meaning set forth in the Collateral Account
Agreement. 

               
“Project” means the construction, startup and operation by the Borrower
of the Johnson Camp Mine, a copper mine and production facility located 65 miles
east of Tucson, Arizona, as described in the Feasibility Study and as augmented
by the Construction Schedule and Capital Spending Plan and Financial Model. 

               “Project
Development Costs” means amounts (other than Operating Expenses) spent
pursuant to Material Contracts and the Construction Schedule and Capital
Spending Plan. 

              
“Register” has the meaning set forth in Section 10.4. 

              “Related
Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates. 

              “Required Lenders” means, at any time, Lenders having Term Loans and
unused Term Loan Commitments representing more than 50% of the sum of the total
Term Loans and unused Term Loan Commitments at such time. 

              
“Restricted Payment” means (a) any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Borrower, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on 

- 14 - 




account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests in the Borrower or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower, and (b) any other expenditures not constituting Project Development
Costs or Operating Costs, including, without limitation, any amounts expended
with respect to (x) exploration at the Coyote Springs site in an amount in
excess of $1,500,000 during the Availability Period, and (y) exploration at the
Mimbres site in an amount in excess of $100,000 during the Availability Period.


              
“S&P” means Standard & Poor’s. 

              
“SEC” means the United States Securities and Exchange Commission. 

              
“Second Amendment and Restatement Date” has the meaning set forth in
Section 11.1. 

              
“Secured Parties” means the Administrative Agent and the Lenders.

              
“Security” means the collateral security constituted by the Security
Documents. 

               “Security
Documents” means the Deed of Trust, the Collateral Account Agreement, the
Account Charge, the Consent Agreements and such other security documents and
instruments, including without limitation Uniform Commercial Code financing
statements, as may be executed and/or delivered by the Loan Parties pursuant to
the terms hereunder or any collateral document which, in each case, shall be
deemed executed and delivered for the benefit of the Administrative Agent and
the Lenders. 

               “SEDAR”
means the System for Electronic Document Analysis and Retrieval of the Canadian
Securities Administrators (including the Canadian Securities Regulators),
accessible on the Internet at www.sedar.com. 

               “Solvent”
and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and (e)
such Person is able to pay its debts and liabilities, contingent obligations and
other commitments as they mature in the ordinary course of business. The amount
of contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that can be reasonably be expected to become an actual or matured
liability. 

               “Start-up
of Commercial Production” means the earliest date on which the Borrower has
produced at least three million pounds of saleable copper cathodes from newly
mined ore. 

               “subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of 

- 15 - 




which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. 

               “Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority. 

               “Term
Loans” has the meaning set forth in Section 2.1, and (a) after the Second
Amendment and Restatement Date shall consist of the A Term Loans, and (b) after
a Term Loan Conversion Event, shall consist of the A Term Loans and the B Term
Loans. For the avoidance of doubt, only A Term Loans shall exist immediately
following the Second Amendment and Restatement Date, provided that the A
Term Loans may be re-tranched into A Term Loans and B Term Loans if a Term Loan
Conversion Event shall occur. 

               “Term
Loan Borrowing Request” means a borrowing request substantially in the form
of Exhibit B. 

               “Term
Loan Commitment” means the commitment of such Lender to make Term Loans
hereunder, as such amount may be reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.4. The initial amount
of each Lender’s Term Loan Commitment is set forth on Schedule 2.1, or in the
assignment and assumption pursuant to which such Lender shall have assumed its
Term Loan Commitment, as applicable. The initial aggregate amount of the Term
Loan Commitment is $25,000,000, which amount may be reduced by the Borrower in
accordance with Section 2.5(b) .

              
“Term Loan Conversion Event” has the meaning set forth in Section 10.16.


               “Test
Date” means the last day of December, March, June, and September of each
year, commencing from the date on which Completion occurs or the first such date
at least 12 months after the first drawdown, whichever is earlier, until the
final Principal Payment Date. 

               “Transactions”
means (a) the execution, delivery and performance by the Loan Parties of (i) the
Loan Documents, the Borrowing and the use of the proceeds thereof, and (ii) the
Material Contracts, and (b) the development of the Project by the Borrower. 

               “Withdrawal
Liability” means liability to a Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA. 

               “Working
Capital” means, at any particular time, (a) the amount which would be
classified on the balance sheet of the Borrower at such time as current assets,
minus (b) the amount which would be classified on the balance sheet of
the Borrower at such time as current 

- 16 - 




liabilities (other than the current portion of long-term debt),
in each case determined in accordance with GAAP. 

          SECTION
1.2. Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights. 

          SECTION
1.3. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. 

ARTICLE II. 
THE TERM LOANS 

          SECTION
2.1. Term Loans.

                        
(a)      Subject to the terms and conditions set forth
herein, each Lender agrees to make available to the Borrower during the
Availability Period, loans (“Term Loans”) in an aggregate principal
amount that will not result in a Lender exceeding such Lender’s Term Loan
Commitment. The Term Loan is not revolving in nature, and any portion thereof
that is repaid or prepaid cannot be reborrowed. Borrowings may occur from time
to time but not more frequently than once per calendar month.

                         (b)     
On the Second Amendment and Restatement Date the Term Loans under the Second
Amended and Restated Credit Agreement shall be deemed to be Term Loans 

- 17 - 




hereunder, and such Term Loans shall be deemed to satisfy such
Lender’s obligation under the preceding paragraph. Such Term Loans shall be
referred to as the “A Term Loans” under this Agreement. The A Term Loans may,
upon the occurrence of a Term Loan Conversion Event, be separated into two
separate tranches (the “A Term Loan” and the “B Term Loan”), as provided for in
Section 10.16.

          SECTION
2.2. Borrowings.

                         (a)     
Each Term Loan shall be made as part of a Borrowing consisting of Term Loans
made by the Lenders ratably in accordance with their respective Term Loan
Commitments. The failure of any Lender to make any Term Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder;
provided that the Term Loan Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Term Loans as
required. 

                         (b)     
Each Lender at its option may make any Term Loan by causing any branch or
Affiliate of such Lender to make such Term Loan; provided that any
exercise of such option shall not affect the obligation of such Lender hereunder
to make such Term Loan or the obligation of the Borrower to repay such Term Loan
in accordance with the terms of this Agreement; and provided
further that any such Lender shall in any event be subject to Section
2.17. 

                         (c)     
Each Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $2,500,000. 

          SECTION
2.3. Requests for Borrowings. To request a Borrowing, the Borrower shall
provide a Term Loan Borrowing Request to the Administrative Agent not later than
11:00 a.m., New York City time, two Business Days prior to the date of the
proposed Borrowing. Promptly following receipt of a Term Loan Borrowing Request
in accordance with this Section, the Administrative Agent shall advise each
Lender of the details thereof and of the amount of such Lender’s Term Loan to be
made as part of the requested Borrowing. 

          SECTION
2.4. Funding of Borrowings.

                         (a)     
Each Lender shall make each Term Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by 12:00 noon, New
York City time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders. The Administrative
Agent will make such Term Loans available to the Borrower by promptly crediting
the amounts so received to the Proceeds Account. 

                         (b)     
Unless the Administrative Agent shall have received notice from a Lender prior
to the proposed date of any Borrowing that such Lender will not make available
to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and 

- 18 - 




the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation or (ii) in the
case of the Borrower, the interest rate applicable to such Borrowing. If
such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Term Loan included in such Borrowing. 

          SECTION
2.5. Termination and Reduction of Term Loan Commitments.

                         (a)     
Unless previously terminated, the Term Loan Commitments shall terminate on the
last day of the Availability Period. 

                         (b)     
The Borrower may at any time terminate, or from time to time reduce, the Term
Loan Commitments; provided that each reduction of the Term Loan
Commitments shall be in an amount that is an integral multiple of $100,000 and
not less than $1,000,000. 

          SECTION
2.6. Repayment of Term Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender: 

                        
(a)      the then unpaid principal amount of the A Term
Loan in 15 (fifteen) equal installments on each Principal Payment Date; and 

                         (b)     
the then unpaid principal amount of the B Term Loan (if any) on the final
Principal Payment Date, provided that if the Deferred Payment Trigger
Event has occurred, then the B Term Loan shall be payable in equal installments
on each of the Principal Payment Dates remaining for the A Term Loan (after
giving effect to the payment of the Deferred Amounts).

For the avoidance of doubt and by way of illustration (x) if
the B Term Loan was outstanding and the Deferred Payment Trigger Event occurred
prior to the first Principal Payment Date, then the B Term Loan would be
amortized over the first 13 (thirteen) Principal Payment Dates, since the last
two installments of the A Term Loan (defined as the “Deferred Payments”) shall
have already been paid, and (y) if the Deferred Payment Trigger Event occurs
after the first Principal Payment Date but prior to the second Principal Payment
Date, then the B Term Loan would be amortized over the next 12 (twelve)
Principal Payment Dates.

          SECTION
2.7. Evidence of Debt.

                         (a)     
Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Term Loan made by such Lender, including the amounts of principal and
interest payable to such Lender hereunder. 

                         (b)     
The Administrative Agent shall maintain accounts in which it shall record (i)
the amount of each Term Loan made hereunder and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from 

- 19 - 




the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of the
Lenders and each Lender’s share thereof. 

                         (c)     
The entries made in the accounts maintained pursuant to paragraph (a) or (b) of
this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of
any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Term Loans in accordance with the terms of this Agreement. 

                         (d)     
Any Lender may request that Term Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. Thereafter, the Term Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.4) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).


          SECTION
2.8. Optional Prepayments of Term Loans. The Borrower shall have the
right at any time and from time to time to prepay any Term Loan in whole or in
part, provided that: 

                        
(a)      the Borrower shall notify the Administrative
Agent in writing of any prepayment hereunder not later than 11:00 a.m., New York
City time, at least five Business Days before the date of prepayment; each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Term Loan or portion thereof to be prepaid; promptly
following receipt of any such notice, the Administrative Agent shall advise the
Lenders of the contents thereof;

                        
(b)      each prepayment shall be applied (i)
first, to the Deferred Payments until such payments have been paid in
full, (ii) second to installments of the B Term Loan (if any) in inverse
order of maturity until paid in full, and (iii) third, to installments of
the A Term Loan in inverse order of maturity until paid in full; prepayments
shall be accompanied by accrued interest to the extent required by Section 2.11
and any break funding payments required by Section 2.14; 

                        
(c)      the Debt Service Reserve Account is fully
funded; 

                        
(d)      the Borrower shall be in compliance with the
financial covenants set forth in Section 6.10 after giving effect to any such
prepayment (calculated on a proforma basis with respect to the Historical Test
Period and Future Test Period for the Test Date most recently ended); and 

                        
(e)      so long as such prepayment is made with the
proceeds of internally generated funds (and not a refinancing) then no
prepayment penalty shall apply; provided that a prepayment penalty in an
amount set forth on the following schedule shall apply with respect to any
prepayment made with proceeds of other than internally generated funds: 

- 20 - 






  	Period 

        
	Percentage of Principal Amount Prepaid 

        

	Closing Date through but excluding the second anniversary
      of the Closing Date 	3.5% 
	Second anniversary date of the Closing Date to but
      excluding the third anniversary of the Closing Date 	2.5% 
	Third anniversary date of the Closing Date to but excluding
      the fourth anniversary of the Closing Date 	1.5% 
	From and after the fourth anniversary of the Closing Date
    	1.0% 



          SECTION
2.9. Mandatory Prepayments.

                         (a)     
Excess Cash Flow. After the termination of the Availability Period, on
each date of delivery of financial statements as required by Sections 5.01(a)
and (b), the Borrower shall deliver to the Administrative Agent an Excess Cash
Flow Certificate for the fiscal quarter most recently ended and shall
simultaneously prepay outstanding Term Loans in the aggregate principal amount
equal to the amount of 80% of Excess Cash Flow indicated on such certificate,
provided that, after the Deferred Payment Trigger Event, the Borrower shall be
thereafter obliged to prepay outstanding Term Loans in the aggregate principal
amount equal to 40% of Excess Cash Flow as indicated on such certificate. The
Administrative Agent shall notify the Borrower, within 10 Business Days after
receipt of such certificate, whether it validates and approves such certificate,
and, if it does not validate and approve the certificate, advise the Borrower of
the amount of the Excess Cash Flow as calculated by the Administrative Agent. In
the absence of manifest error on the part of the Administrative Agent, the
Borrower shall adjust the amount to be paid by it on the following Principal
Payment Date by the amount necessary to take account of the discrepancy in such
the certificate, as certified by the Administrative Agent. Any such prepayment
shall be applied in accordance with clause (e) hereof. 

                         
(b)      Dispositions. The Borrower shall prepay
the Term Loans in an amount equal to 100% of the Net Cash Proceeds of any
Disposition or series of Dispositions by any Loan Party or any Subsidiary of a
Loan Party pursuant to Section 6.3(a)(iii) generating Net Cash Proceeds in
excess of $250,000 in the aggregate after the Closing Date. Each such prepayment


- 21 - 




shall be due promptly upon receipt by the such Person of such
Net Cash Proceeds and shall be applied as set forth in clause (e) below.
Notwithstanding the foregoing, the Borrower shall not be required to apply any
such proceeds in accordance with clause (e) to the extent that the Borrower
advises the Administrative Agent at the time of the relevant Disposition that
the Borrower intends to use the Net Cash Proceeds thereof to finance one or more
Operating Costs or Project Development Costs permitted by this Agreement, and
such Net Cash Proceeds are in fact so applied (or contractually committed to be
applied) to such expenditures within 180 days of such Disposition (it being
understood that Net Cash Proceeds shall be deemed to be utilized in the same
order in which they are received. Any such Net Cash Proceeds which are not
applied (or contractually committed to be applied) within such 180 day period as
required by the immediately preceding sentence shall forthwith be applied in
accordance with clause (e). Notwithstanding the foregoing, the Borrower shall
not be required to prepay any proceeds realized form the sale of any
Dispositions generated from the sale of assets exclusively related to the Coyote
Springs or Mimbres sites. In addition, the Borrower agrees that the sale of any
drilling equipment no longer used in the business of the Borrower shall be
considered to be Disposition under Section 6.3(a)(iii) .

                        
(c)      Casualty Events. The Borrower shall
prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds
received by any Loan Party or any Subsidiary of a Loan Party in connection with
any Casualty Event or series of Casualty Events generating Net Cash Proceeds in
excess of $1,000,000 in the aggregate for any fiscal year. Each such prepayment
shall be due promptly upon receipt by such Person of such Net Cash Proceeds and
shall be applied as set forth in clause (e) below. Notwithstanding the
foregoing, the Borrower shall not be required to apply any such proceeds in
accordance with clause (e) to the extent that the Company advises the
Administrative Agent at the time of the relevant Casualty Event that it intends
to use Net Cash Proceeds thereof to finance the replacement or repair of such
affected property, and such Net Cash Proceeds are in fact so applied (or
contractually committed to be applied) to such affected Property within 360 days
of receipt thereof (it being understood that Net Cash Proceeds shall be deemed
to be utilized in the same order in which they are received). Any such Net Cash
Proceeds which are not applied (or contractually committed to be applied) within
such 360 day period as required by the immediately preceding sentence shall
forthwith be applied as set forth in clause (e) below. 

                        
(d)      Debt Issuances. The Borrower shall
prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds
received by the Borrower or any Subsidiary in connection with any Debt Issuance.
Each such prepayment shall be due promptly upon receipt by such Person of such
Net Cash Proceeds and shall be applied as set forth in clause (e) below. 

                        
(e)      Application. Any such prepayment shall
be applied (i) first, to the Deferred Payments until such payments have
been paid in full, (ii) second to installments of the B Term Loan (if
any) in inverse order of maturity until paid in full, and (iii) third, to
installments of the A Term Loan in inverse order of maturity until paid in full.


          SECTION
2.10. Fees.

                         (a)     
The Borrower agrees to pay to the Administrative Agent for the account of each
Lender a facility fee, which shall accrue at 0.250% per annum on the daily
amount of the 

- 22 - 




unused Term Loan Commitment of such Lender during the
Availability Period, subject to the last sentence hereof. Accrued facility fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Term Loan Commitments
terminate, commencing on the first such date to occur after the date hereof. All
facility fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). Such fees shall be payable on an amount of unused
commitments for each day equal to the amount of unused Commitments set forth in
the table below minus the amount of Term Loans outstanding on such
day:


  	Period 

        
	Amount of 

        unused 
Commitments 
	From the Closing Date through the last day of September,
      2007 	$ 3,000,000 
	October 2007 	7,500,000 
	November 2007 	12,500,000 
	December 2007 	16,000,000 
	January 2008 	20,500,000 
	February 2008 	22,000,000 
	March 2008 	23,000,000 
	April 2008 through the end of the Availability Period 	25,000,000




For purposes of illustration, (a) if Term Loans in an amount in
excess of $9,000,000 were outstanding on September 15, 2007, no such fee would
be payable on such day, and (b) if Term Loans in an amount of $2,000,000 were
outstanding on September 15, 2007, such fee would be payable in respect of
$1,000,000 in unused Term Loan Commitments on such day.

                         (b)     
All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, in the case of
facility fees and participation fees, to the Lenders. Fees paid shall not be
refundable under any circumstances. 

- 23 - 




          SECTION
2.11. Interest.

                              (a)     
The aggregate principal amount of all outstanding A Term Loans and B Term Loans
(if any) shall bear interest from the date such Term Loan is made until the date
the principal of such Term Loan is repaid at an annual rate equal the LIBOR Rate
for the Interest Period in effect for such Term Loan plus the Applicable Margin
for such A Term Loan or B Term Loan, respectively. 

                              (b)     
Notwithstanding the foregoing, upon any Event of Default, all principal amounts
hereunder shall bear interest, after as well as before judgment, at a rate per
annum equal to 3% plus the rate otherwise applicable to such Term Loan as
provided in the preceding paragraph of this Section. 

                              (c)     
Accrued interest on each Term Loan shall be payable in arrears on each Interest
Payment Date; provided that (i) interest accrued pursuant to paragraph
(b) of this Section shall be payable on demand, and (ii) in the event of any
prepayment of any Term Loan, accrued interest on the principal amount prepaid
shall be payable on the date of such prepayment. Notwithstanding the foregoing,
(x) for each Interest Payment Date prior to the first Principal Payment Date,
any interest payable with respect to the A Term Loans on such Interest Payment
Date shall be capitalized and shall increase the unpaid principal amount of the
A Term Loans, and (y) for each Interest Payment Date prior to the Deferred
Payment Trigger Event, any interest payable with respect to the B Term Loans on
such Interest Payment Date shall be capitalized and shall increase the unpaid
principal amount of the B Term Loans. 

                              (d)     
The applicable LIBOR Rate shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error. 

          SECTION
2.12. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for any Term Loan: 

                              (a)     
the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for such Interest Period; or 

                              (b)     
the Administrative Agent is advised by the Required Lenders that the LIBOR Rate
for such Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Term Loans (or its Term Loan)
included in such Borrowing for such Interest Period; 

then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist, (i)
no borrowing request shall be effective, and (ii) the Borrower and the Lenders
shall enter into negotiations in good faith with a view to establish a
satisfactory alternative basis for computing interest on the Term Loans. 

          SECTION
2.13. Increased Costs.

- 24 - 




                        
(a)      If any Change in Law shall: 

                         (i)     
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender; or 

                         (ii)     
impose on any Lender or the London interbank market any other condition
affecting this Agreement or Term Loans made by such Lender; 

and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Term Loan (or of maintaining
its obligation to make Term Loans) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender, such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered. 

                         (b)     
If any Lender determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s
capital or on the capital of such Lender’s holding company, if any, as a
consequence of this Agreement or the Term Loans made by, such Lender to a level
below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s or holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Lender’s holding company for any such reduction suffered. 

                         (c)     
A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender,
as the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof. 

                         (d)     
Failure or delay on the part of any Lender to demand compensation pursuant to
this Section shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.


          SECTION
2.14. Break Funding Payments. In the event of (a) the payment of any
principal of any Term Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
failure to borrow any Term Loan on the date specified in any notice delivered
pursuant hereto, then, in each such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. Such loss,
cost or expense to any Lender shall be deemed to include an amount determined by
such 

- 25 - 




Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Term Loan had such
event not occurred, at the LIBOR Rate that would have been applicable to such
Term Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
for the period that would have been the Interest Period for such Term Loan),
over (ii) the amount of interest which would accrue on such principal amount for
such period at the interest rate which such Lender would bid were it to bid, at
the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate on demand. 

          SECTION
2.15. Taxes.

                         (a)     
Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of any present and future tax liability
and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law. 

                         (b)     
In addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law. 

                         (c)     
The Borrower shall indemnify the Administrative Agent and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Administrative Agent or such Lender, as the case may
be, on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error. 

                         (d)     
As soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent. 

- 26 - 




                         (e)     
Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate. 

                         (f)    
If the Administrative Agent or a Lender determines, in its sole discretion, that
it has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.15 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person. 

          SECTION
2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

                         (a)     
The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest or fees, or of amounts payable under Section
2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made into account number 2000193000423 maintained by the
Administrative Agent with Wachovia Bank, N.A. located in New York, New York,
except that payments pursuant to Sections 2.13, 2.14, 2.15 and 10.3 shall be
made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars. 

                         (b)     
If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal then due hereunder, 

- 27 - 




ratably among the parties entitled thereto in accordance with
the amounts of principal then due to such parties. 

                         (c)     
If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Term Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Term Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Term Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Term Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Term Loans to any
assignee or participant, other than to the Loan Parties or any Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation. 

                         (d)     
Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation. 

                         (e)     
If any Lender shall fail to make any payment required to be made by it pursuant
to Section 2.4(a), 2.16(d) or 10.3(c) , then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid. 

          SECTION
2.17. Mitigation Obligations. If any Lender requests compensation under
Section 2.13, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.15, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking 

- 28 - 




its Term Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment. 

ARTICLE III. 
REPRESENTATIONS AND
WARRANTIES 

          Each
Loan Party represents and warrants to the Lenders that: 

          SECTION
3.1. Status and Power. The Borrower is a corporation duly incorporated
and validly existing under the laws of the State of Delaware. The Guarantor is a
corporation duly incorporated and validly existing under the laws of the State
of Nevada. Each Loan Party is duly qualified, registered or licensed in all
jurisdictions where such qualification, registration or licensing is required
except where the lack of such qualification, registration or licensing could not
reasonably be expected to have a Material Adverse Effect. Each Loan Party has
all requisite corporate capacity, power and authority to own, hold under license
or lease its properties, to carry on its business as now conducted and to
otherwise enter into, and carry out the Transactions. None of the Loan
Parties nor any of their property has any immunity from jurisdiction of any
court or from any legal process (whether through service, notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise). 

          SECTION
3.2. Authorization; Enforceability. All necessary action,
corporate or otherwise, has been taken to authorize the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is a party.
Each Loan Party has duly executed and delivered the Loan Documents to which it
is a party. The Loan Documents to which each Loan Party is a party are legal,
valid and binding obligations of such Loan Party, enforceable against such Loan
Party by the other parties thereto in accordance with their respective terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance and other similar laws of general application limiting the
enforcement of creditors’ rights generally and the fact that the courts may deny
the granting or enforcement of equitable remedies. 

          SECTION
3.3. No Conflicts. The execution, delivery and performance by each Loan
Party of the Loan Documents and Material Contracts to which it is a party, and
the consummation of the transactions contemplated herein and therein (i) do not
conflict with, result in any breach or violation of, or constitute a default
under the terms, conditions or provisions of (A) the articles of incorporation
or by-laws (or comparable constituting documents) of, or any shareholder
agreement relating to, any Loan Party or (B) any law, regulation, judgment,
decree or order binding on or applicable to any Loan Party or to which its
property is subject or any agreement, lease, license, permit or other instrument
to which any Loan Party is a party or is otherwise bound or by which any Loan
Party benefits or to which any of its property is subject except, in each case,
to the extent that such conflict does not and could not reasonably be expected
to have a Material Adverse Effect and (ii) do not require the consent or
approval of any 

- 29 - 




Governmental Authority or any other Person which has not been
obtained and provided to the Administrative Agent. 

          SECTION
3.4. Financial Statements. The Borrower’s unaudited consolidated
financial statements (consisting of a balance sheet, statement of operations,
statement of changes in shareholder’s deficit, and statement of cash flows) for
the quarter ended September 30, 2008, were prepared in accordance with GAAP
consistently applied (except that certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have
been omitted or condensed and subject to normal and recurring year-end
adjustments which will not be individually or in the aggregate material) in
accordance with past practice and no Material Adverse Change has occurred since
such date. Such financial statements fairly present the financial condition of
the Borrower as at the date thereof and the financial statements fairly present
the results of operations, cash flow and income of the Borrower during the
fiscal period covered thereby. 

          SECTION
3.5. Intentionally Omitted. 

          SECTION
3.6. Litigation, etc. Except as described in Section 3.6 of the
Disclosure Schedule, there are no actions, suits, investigations, claims or
proceedings which have been commenced or, to the knowledge of any Loan Party,
have been threatened in writing against or affecting any Loan Party before any
Governmental Authority which contest any of the transactions contemplated in any
of the Loan Documents or Material Contracts. There are no actions, suits,
investigations, claims or proceedings which have been commenced or, to the
knowledge of any Loan Party, have been threatened in writing against or
affecting any Loan Party before any Governmental Authority which could
reasonably be expected to have a Material Adverse Effect. 

          SECTION
3.7. Title to Assets. Except as described in Section 3.7 of the
Disclosure Schedule, each Loan Party has a good and marketable title to all of
its property and assets which constitute Collateral, free from any Liens other
than the Permitted Liens, and no Person has any agreement or right to acquire
any of the Collateral except as permitted hereunder. 

          SECTION
3.8. Conduct of Business. No Loan Party is in violation of any mortgage,
franchise, license, certificate of approval, permit, judgment, decree, order,
statute, rule or regulation relating in any way to itself or to the operation of
its business or to its property or assets in a manner which could reasonably be
expected to have a Material Adverse Effect. Except as set forth in Section 3.8
of the Disclosure Schedule, each Loan Party has all licenses, certificates of
approval, permits, registrations, approvals and consents which are required to
own its properties and assets and to operate its businesses where they are
currently being operated, other than any such items the absence of which could
not reasonably be expected to have a Material Adverse Effect. 

          SECTION
3.9. Labor and Employment Matters. Except as described in Section 3.9 of
the Disclosure Schedule, there are no material employment agreements
covering management of the Borrower and there are no collective bargaining
agreements or other labor agreements covering any employees of the Borrower.
Hours worked by and payment made to employees of the Borrower have not been in
violation of any Applicable Law dealing with such matters. All 

- 30 - 




payments due and payable from the Borrower on account of
employee health and welfare insurance have been paid or accrued as a liability
on the books of the Borrower. 

          SECTION
3.10. No Default. No Default or Event of Default exists or would result
from the incurring by any Loan Party of its respective Obligations. No Loan
Party is in default under or with respect to any Material Contract or any other
contractual obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect.


          SECTION
3.11. Tax Returns and Taxes. Except as described in Section 3.11
of the Disclosure Schedule, each Loan Party has filed all tax returns and
tax reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books. 

          SECTION
3.12. Withholding and Other Taxes. Assuming the Loans are funded by bank
branches in London or the United States, no income, stamp or other taxes or
levies, imposts, deductions, fees, duties, compulsory loans, withholdings or
other charges of any nature whatsoever are or will be, under Applicable Law as
in effect on the date hereof, imposed, assessed, levied or collected by the
United States or any political subdivision or taxing authority thereof or
therein on or in respect of principal, interest or fees payable to the Lenders
or the Administrative Agent hereunder or under any other Loan Document, except,
as of the date hereof, tax payable on net income under the laws of the United
States or any State thereof. To the extent this representation is repeated or
deemed repeated pursuant to this Agreement or other Loan Documents, this
representation shall continue to be true and correct if the Borrower discloses
in writing to the Administrative Agent any change as to this representation.

          SECTION
3.13. Material Contracts. The copies of each Material Contract and of any
amendments thereto provided or to be provided by the Loan Parties to the
Administrative Agent are, or when delivered will be, true and complete copies of
such agreements and documents and no consent or other further action is required
for the effectiveness and enforceability of any of such agreements heretofore
provided and each such agreement is, or when executed and delivered will be, in
full force and effect and enforceable by the relevant Loan Party, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws of general application limiting the enforcement of creditors’ rights
generally and the fact that the courts may deny the granting or enforcement of
equitable remedies. 

          SECTION
3.14. Compliance with Environmental Laws. Except as described in Section
3.14 of the Disclosure Schedule, as of the date hereof, the operations
and properties of the Borrower are in compliance with applicable Environmental
Laws, except where (a) appropriate remedial action acceptable to the Borrower
and the applicable Governmental Authority is (or is in the process of) being
taken or (b) failure to so comply, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Borrower has
designed the Project in compliance in all material respects with applicable
Environmental Laws and the 

- 31 - 




Administrative Agent and the Lenders are fully indemnified by
the Loan Parties against any future liabilities arising under any applicable
Environmental Laws. 

          SECTION
3.15. Solvency. After giving effect to the transactions contemplated by
this agreement and the other Loan Documents (including the receipt of equity
proceeds as contemplated by Section 4.1(m) and receipt of proceeds from the
Permitted Royalty Sale), and before and after giving effect to each Term Loan,
each Loan Party is, and the Loan Parties on a consolidated basis are, Solvent.


          SECTION
3.16. Locations of Tangible Assets. The addresses of all locations
of the inventory, equipment and other tangible assets of the Borrower comprising
part of the Collateral (other than inventory in transit) are as set out in
Section 3.16 of the Disclosure Schedule. With respect to inventory located at a
public warehouse, the Borrower has not issued a negotiable document of title
with respect thereto. 

          SECTION
3.17. Consents and Approvals for the Project. Except as set forth in
Section 3.17 of the Disclosure Schedule, all Approvals and all concessions,
mining rights, water rights, easements, mining and civil usufructs, surface
rights, rights of way, property rights and other consents between the Borrower
and third parties necessary for the development, construction and operation of
the Project and all licenses or other rights to use technology have been
obtained, are in full force and effect and are sufficient to permit (a) the
development and construction of the Project in all material respects as
contemplated by the Construction Schedule and Capital Spending Plan and the
Feasibility Study, (b) the operation of the Project in all material respects as
contemplated by the Feasibility Study and (c) the execution, delivery and
performance by any Loan Party of its obligations under the Material Contracts,
in each case other than those which (i) are not now necessary and which are
expected to be obtained in the ordinary course of business by the time they are
necessary or (ii) the failure to have or to obtain will not now and could not
reasonably be expected to have a Material Adverse Effect. 

          SECTION
3.18. Consents and Approvals for the Security. No consents,
approvals, acknowledgements, undertakings, non-disturbance agreements,
directions or other documents or instruments which have not already been
provided to the Administrative Agent are required to be entered into by any
Person (a) to make effective the Security created or intended to be created by
the Loan Parties in favor of the Administrative Agent pursuant to the Security
Documents, (b) to ensure the perfection and the intended priority of such
Security other than financing statements and other registrations made in
connection with such Security or (c) to implement the transactions contemplated
by the Loan Documents. 

          SECTION
  3.19. Intentionally Omitted.

          SECTION
3.20. Subsidiaries. The Borrower has no Subsidiaries, other than Cochise.


          SECTION
3.21. Mining Properties. The Mining Properties have been validly granted
to and registered in the name of the Borrower, are owned by the Borrower and are
in full force and effect and in good standing. Except as set forth in Section
3.7 of the Disclosure Schedule, no Person other than the Borrower and, to the
extent provided in the Security Documents, the Administrative Agent, has any
right, title or interest in, to or under the Mining Properties or in 

- 32 - 




the property and rights encompassed thereby other than
Permitted Liens. Taken as a whole, the Mining Properties are sufficient in
duration, scope, content and effect to permit the Borrower to conduct all
activities contemplated in the Feasibility Study to be conducted by it over the
time periods specified therein.

          SECTION
3.22. Feasibility Study. As of the date hereof, the Feasibility Study (as
augmented by the Construction Schedule and Capital Spending Plan and the
Financial Model) does not, taken as a whole, include any untrue statement of a
material fact or omit a material fact necessary to make the information therein
not misleading. As of the date hereof, the Borrower believes that, taken as a
whole, except for the assumptions relating to metal prices to the extent such
prices are not hedged, interest rates, exchange rates and the rate of inflation
(which assumptions reflect solely a choice of a reasonable manner of calculation
and presentation), (a) the Feasibility Study (as augmented by the Construction
Schedule and Capital Spending Plan and Financial Model), taken as a whole, is
fair and reasonable in light of the Borrower’s expectations as of the date
hereof with respect to the Project, (b) the assessment of reserves of the
Project contained in the Feasibility Study (as augmented by the Construction
Schedule and Capital Spending Plan and Financial Model) is fair and reasonable,
and (c) the cash flow calculations contained in the Feasibility Study (as
augmented by the Construction Schedule and Capital Spending Plan and Financial
Model) are based on assumptions which, at the date hereof, are fair and
reasonable in light of the Borrower’s expectations with respect to the Project.


          SECTION
3.23. Financial Model, Construction Schedule and Capital Spending Plan.
The Borrower believes that, except for the assumptions relating to metal prices
to the extent such prices are not hedged, interest rates, exchange rates and the
rate of inflation (which assumptions reflect solely a choice of a reasonable
manner of calculation and presentation), (a) the Construction Schedule and
Capital Spending Plan, and the Financial Model, taken as a whole, are fair and
reasonable in light of the Borrower’s expectations and information as of the
date hereof with respect to the Project and (b) taken as a whole, the cash flow
calculations contained in the Financial Model are based on assumptions which, at
the date hereof, are fair and reasonable in light of the Borrower’s expectations
and information with respect to the Project. 

          SECTION
3.24. Project Information. Except as otherwise expressly provided herein,
the information provided by or on behalf of the Loan Parties in writing to the
Administrative Agent (except to the extent such information relates to Persons
other than the Loan Parties) but excluding metal prices to the extent such
prices are not hedged, interest rates, exchange rates and the rate of inflation
(which assumptions reflect solely a choice of a reasonable manner of calculation
and presentation), taken as a whole, does not contain any untrue statement of
material fact (or omit any material fact or circumstance necessary in order to
make the information contained therein not misleading) known to the Borrower at
the time of execution of this Agreement.

          SECTION
3.25. Intellectual Property. The Borrower owns or is licensed or
otherwise has the right to use all Intellectual Property that is used in the
operation of its business without conflict with the rights of any other Person
(other than any Intellectual Property the absence of which or any such conflict
with respect to which could not reasonably be expected to have a Material
Adverse Effect). The Borrower has not received any notice of any claim of
infringement or similar claim or proceeding relating to any of the Intellectual
Property which if 

- 33 - 




determined against the Borrower could reasonably be expected to
have a Material Adverse Effect.

          SECTION
3.26. Liens. Subject to the requisite registrations of the Security
Documents or filings thereof, the Liens granted to the Administrative Agent
pursuant to the Security Documents are fully perfected first priority Liens in
and to the Collateral, subject only to Permitted Liens. 

          SECTION
3.27. Insurance. All insurance required to be maintained pursuant to
Section 5.5 is in full force and effect. 

          SECTION
3.28. Ranking. The Term Loans shall rank at least pari passu with
all other unsecured indebtedness of the Loan Parties, except for those which are
preferred by provisions of applicable statutory law.

ARTICLE IV. 
CONDITIONS 

          SECTION
4.1. Closing Date. The obligations of the Lenders to make Term Loans
hereunder shall not become effective until the second Business Day after the
date on which each of the following conditions is satisfied in a manner
satisfactory to the Administrative Agent (or waived in accordance with Section
10.2): 

                         (a)     
The Administrative Agent shall have received executed versions of each of the
Loan Documents from each of the parties thereto, including the Borrower. 

                         (b)     
Each of the Material Contracts set forth on clause (A) of Schedule 1.1 shall be
in form and substance reasonably satisfactory to the Administrative Agent and
shall have been executed by each of the parties thereto and delivered to the
Administrative Agent. Each of the Consent Agreements shall be in form and
substance satisfactory to the Administrative Agent and shall have been executed
by each of the parties thereto and delivered to the Administrative Agent.

                         (c)     
The Administrative Agent and the Borrower shall have agreed on (i) the Financial
Model, the Construction Schedule and Capital Spending Plan, and the
Environmental Plan and (ii) the operating budgets (which shall include an
operating budget for contract mining or lease payments for mining equipment),
copies of which shall have been delivered to the Administrative Agent (it being
understood that the initial budgets shall be included as part of the Financial
Model). 

                         (d)     
Evidence that the Existing Bridge Loan Facility has been repaid in full and all
Liens securing the obligations thereunder have been released. 

                         (e)     
Evidence that the Forward Sale Price Protection Program has been implemented.


                        
(f)      The Independent Technical Consultant shall
have been appointed. 

- 34 - 




                         (g)     
The Administrative Agent and the Borrower shall have agreed on the forms of
Completion Certificates and the tests for Completion for purposes thereof. 

                         (h)     
The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Closing
Date) of (i) Ballard Spahr Andrews & Ingersoll LLP, Arizona counsel for the
Borrower, and (ii) Bingham McCutchen LLP, New York counsel to the Administrative
Agent, covering such matters relating to the Loan Parties, this Agreement or the
Transactions as the Administrative Agent shall reasonably request. 

                         (i)     
The Administrative Agent shall have received such documents and certificates as
the Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Loan Parties, the authorization
of the Transactions and any other legal matters relating to the Borrower and the
Guarantor, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel, including, but not
limited to: 

                         (i)     
a copy of the certificate of incorporation and by-laws or other founding
documentation of each of the Borrower and the Guarantor; 

                         (ii)     
a copy of the resolutions of the board of directors or other appropriate
decision making body of each of the Borrower and the Guarantor authorizing the
conclusion and execution of each of the Loan Documents; and 

                         (iii)     
specimen signatures of each of the authorized officers of the Borrower for the
purposes of implementation of the Loan Documents. 

                        
(j)      The Administrative Agent shall have received:


                         (i)     
evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with evidence that the
Administrative Agent has been named as “additional insured” and “loss payee”
under each policy of insurance; 

                         (ii)     
evidence that the Borrower has obtained all Approvals necessary to commence
implementation of the Construction Schedule and Capital Spending Plan; 

                         (iii)     
to the extent relevant, searches of Uniform Commercial Code or other similar
records or filings in the jurisdiction of formation of the Borrower, the
jurisdiction of the chief executive office of the Borrower and each jurisdiction
where any Collateral is located or where a filing would need to be made in order
to perfect the Administrative Agent’s security interest in the Collateral,
copies of the financing statements on file in such jurisdictions and evidence
that no Liens exist other than Liens permitted by Section 6.2; 

                         (iv)     
all certificates evidencing all certificated equity interests pledged to the
Administrative Agent pursuant to the Security Documents, together with duly
executed in blank, undated stock powers attached thereto; 

- 35 - 




                         (v)     
in the case of any real property Collateral, a title insurance policy together
with proof of payment of all fees and premiums for such policy, from the
applicable title insurance Loan Party and in amounts satisfactory to the
Administrative Agent, insuring the interest of the Administrative Agent as
mortgagee; 

                         (vi)     
all applicable “Know Your Customer” client identification documentation; 

                         (vii)     
in the case of any personal property Collateral located at a premises leased the
Borrower, such estoppel letters, consents and waivers from the landlords on such
real property as may be required by the Administrative Agent; and 

                         (viii)     
the Collateral Accounts shall have been established with a bank acceptable to
the Administrative Agent and the Collateral Account Agreement shall have been
executed by such bank and the Lenders, the Administrative Agent and the Borrower
and delivered to the Administrative Agent. 

                         (k)     
The Lenders shall have completed a due diligence investigation of the Project,
the Borrower and its subsidiaries in scope, and with results, satisfactory to
the Lenders, and shall have been given such access to the management records,
books of account, contract and properties of Borrower and its subsidiaries and
shall have received such financial, business and other information regarding the
Project and each of the foregoing Persons and their businesses as they shall
have reasonably requested.

                         (l)     
The Administrative Agent shall have received certification that there does not
exist (i) any order, decree, judgment, ruling or injunction which restrains the
consummation of the Loan Documents in the manner contemplated hereby, and (ii)
any pending or threatened action, suit, investigation or proceeding which is
reasonably likely to be adversely determined and, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. 

                         (m)     
The Borrower shall have received additional equity proceeds in an amount not
less than $23,000,000 on terms acceptable to the Administrative Agent. 

                         (n)     
The Administrative Agent shall have received a certificate, dated the Closing
Date and signed by a Financial Officer, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.2. 

                         (o)     
The Administrative Agent shall have received all fees, costs and expenses and
other amounts due and payable on or prior to the Closing Date in connection with
the Transaction, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder. 

The Administrative Agent shall notify the Borrower and the
Lenders of the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Term Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New
York City time, on September 30, 2007 (and, in the event such conditions are not
so satisfied or waived, the Term Loan Commitments shall terminate at such time).


- 36 - 




          SECTION
4.2. Additional Conditions. The obligation of each Lender to make a Term
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions: 

                         (a)     
The representations and warranties of the Borrower set forth in this Agreement
shall be true and correct on and as of the date of such Borrowing. 

                         (b)     
At the time of and immediately after giving effect to such Borrowing no Default
shall have occurred and be continuing. 

Each Borrowing shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section. 

ARTICLE V. 
AFFIRMATIVE COVENANTS 

          Until
the Term Loan Commitments have expired or been terminated and the principal of
and interest on each Term Loan and all fees payable hereunder shall have been
paid in full, the Loan Parties covenant and agree with the Lenders that: 

          SECTION
5.1. Financial Statements and Reporting. The Borrower, will furnish the
Administrative Agent and each Lender with the following documents, statements
and reports (by email and in pdf format): 

                         (a)     
Annual Financial Statements. Within 90 days after the end of each fiscal
year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth, in the case of statements of operations and
cash flows, in comparative form the figures for the previous fiscal year, all
reported on by Mayer Hoffman McCann P.C. or other independent public accountants
of recognized national standing to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated subsidiaries in
accordance with GAAP consistently applied. 

                         (b)     
Quarterly and Semi-Annual Financial Statements. For the first 3 years
after the Closing Date, 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, and after such 3 year period,
within 45 days after the end of each fiscal half year, the Borrower shall
deliver its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal quarter
or half year, as applicable and the then elapsed portion of the fiscal year,
setting forth, in the case of statements of operations and cash flows, in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated subsidiaries in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes. 

                         (c)     
Quarterly Financial Projections. As soon as available, but in any event
at least 30 days prior to the close of each fiscal quarter of the Borrower, a
quarterly projection with respect to the operations of the Borrower for the next
four fiscal quarters. Such projections shall 

- 37 - 




be certified by the Financial Officer of the Borrower to the
effect that such projections have been prepared on the basis of sound financial
planning practice and that such Financial Officer has no reason to believe that
they are misleading in any material respect based upon the knowledge and
information available at the time of creation, update, and/or certification.


                         (d)     
Certificate of Compliance. Concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a Financial Officer
of the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 6.10 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section 3.4
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate. 

                         (e)     
Certificate of Accounting Firm. Concurrently with any delivery of
financial statements under clause (a) above, a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements of
any Default (which certificate may be limited to the extent required by
accounting rules or guidelines). 

                         (f)     
Construction Progress Reports. As soon as available, but in no event more
than 20 days after the end of each calendar month prior to Completion, a summary
of construction of the Project during such month in a form agreed to by the
Borrower and the Administrative Agent, describing (i) physical progress and
expenditure during such month, (ii) cumulative expenditure through the end of
such month, (iii) variations of such progress and expenditure from that set
forth in the Construction Schedule and Capital Spending Plan, (iv) the
Borrower’s then current estimates of total Project Development Costs and of the
date of Start-up of Commercial Production and the Completion Date and (v) any
fact or occurrence of which the Borrower is aware that (x) may reasonably be
expected to increase the aggregate Project Development Costs above those in the
Construction Schedule and Capital Spending Plan, delay Start-up of Commercial
Production or the Completion Date beyond the then-currently estimated dates
therefor or have a Material Adverse Effect on the performance of the Project
when completed or (y) may reasonably be expected to render unreasonable or
inappropriate any material assumption on which the Financial Model or the
Construction Schedule and Capital Spending Plan was based, and the anticipated
manner and timing of actions proposed to be taken by the Borrower in reaction to
any such fact or occurrence. 

                         (g)     
Operating Reports. As soon as available but in no event more than 20 days
after the end of each fiscal quarter after the earlier of the date of Completion
or Start-up of Commercial Production, a summary of such month’s or such fiscal
quarter’s operations and a summary of the fiscal year-to-date operations in a
form agreed to by the Borrower and the Administrative Agent, in each case
compared to the budgets and forecasts delivered pursuant to clause (h) above,
including information in reasonable detail concerning (i) Project production and
shipment of Project production during such period and variations from the
related projections for such period reflected in the Financial Model, (ii) the
Borrower’s inventory of product at the end of such period, (iii) revenues
generated during such period from the sale of product, (iv) Operating Costs
during such period as compared to the Financial Model, (v) costs 

- 38 - 




constituting Capital Expenditures during such period as
compared to the Construction Schedule and Capital Spending Plan, (vi) the
Borrower’s most recent cash planning forecast covering at least the next
following month or fiscal quarter, as the case may be, and (vii) any material
developments during such period in Project operation, including material
technical problems, discovery of any material defects in the physical facilities
of the Project, material interruptions to operation or material labor
difficulties. 

                         (h)     
Budget. As soon as available, but in any event at least 30 days prior to
the close of each fiscal year of the Borrower, the Borrower’s budget and
operating plan for the following fiscal year, such budget to be in a form
reasonably satisfactory to the Administrative Agent. 

                         (i)     
Environmental Compliance. Any material update of the Environmental Plan
within 30 days after such update is available. The Borrower shall promptly, but
in no event later than 5 Business Days after the Borrower obtains knowledge
thereof, deliver written notice to the Administrative Agent (for delivery to
each Lender) of the occurrence of (i) any material environmental accident or
spill affecting the Borrower or the Project, (ii) any other condition, event or
circumstance that results in non-compliance by the Borrower or the Project with
any applicable Environmental Law in any material respect and (iii) any other
material condition, event or circumstance which is listed as a reportable event
under the Environmental Plan then in effect. In addition, the Borrower shall,
upon the request of the Administrative Agent, but in any event no more
frequently than annually (unless an Event of Default shall have occurred and be
continuing) provide a report to the Administrative Agent with regard to the
Borrower’s compliance with applicable Environmental Laws in a form as reasonably
agreed between the Borrower and the Administrative Agent.

                         (j)     
Insurance Certification. As soon as available, but in no event more than
30 days after the end of each fiscal year of the Borrower, a certification by
the Borrower’s insurance broker confirming insurance coverage and payment of
premiums.

                         (k)     
Other Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request. 

Any delivery required to be delivered by clauses (a) and (b) of
this Section by the Borrower shall be deemed to be delivered to the
Administrative Agent and the Lender upon the filing of such items with the
Securities and Exchange Commission or other applicable securities commission,
provided that such items are readily available for public viewing.

          SECTION
5.2. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:


                        
(a)      the occurrence of any Default; 

                         (b)     
the filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Borrower or any
Affiliate 

- 39 - 




thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect; 

                         (c)     
the occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding $250,000;
and 

                         (d)     
any other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect. 

Each notice delivered under this Section shall be accompanied
by a statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto. 

          SECTION
5.3. Existence; Conduct of Business. The Borrower will do or cause to be
done all things reasonably necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business. 

          SECTION
5.4. Payment of Obligations. Each Loan Party shall pay its obligations,
including Tax liabilities, that, if not paid, could result in a Material Adverse
Effect before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) such Loan Party has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect. 

          SECTION
5.5. Maintenance of Properties; Insurance. Each Loan Party will (a) keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such
amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations. 

          SECTION
5.6. Books and Records; Inspection Rights. Each Loan Party will keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. Each Loan Party will permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested. 

          SECTION
5.7. Compliance with Laws. Each Loan Party will comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. 

- 40 - 




          SECTION
5.8. Use of Proceeds. The proceeds of the Term Loans will be used only
for the purposes of (a) repayment of Existing Bridge Loan Facility (to the
extent remaining unpaid) and (b) costs and expenses in connection with
redevelopment of the Project. No part of the proceeds of the Term Loans will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board of Governors of the Federal Reserve
System, including Regulations T, U and X.

          SECTION
5.9. Project; Construction; Etc. 

                        
(a)      The Borrower shall not change in any material
respect the purpose or scope of the Project from that set forth in the
Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan) unless approved in writing by the Required Lenders. The physical
facilities to be constructed and owned by the Borrower shall be substantially
the same as those described in the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan) and shall be constructed
pursuant to and substantially in accordance with the Construction Schedule and
Capital Spending Plan. 

                        
(b)      The Borrower shall enforce against the other
parties to the Material Contracts any rights (including warranty rights) under
the Material Contracts, except to the extent non-enforcement thereof could not
reasonably be expected to have a Material Adverse Effect. 

          SECTION
5.10. Updated Financial Model.

                        
(a)      On or prior to the date of delivery of
financial statements provided for in Sections 5.1(a) and (b), the Borrower shall
deliver to the Administrative Agent an updated Financial Model. Each updated
Financial Model shall (i) be in substantially the form of, and contain the same
type of data, projections, forecasts, calculations, assumptions and other
information as, the Financial Model delivered pursuant to Section 11.2(b), but
shall be updated to include actual financial results and other current financial
information (including with respect to the price for unhedged copper production)
and (ii) provide an explanation of any deviation in the amount attributed to any
line item specified in such Financial Model where such deviation is 10% or more
of the amount attributed to the same line item in the prior Financial Model
unless such deviation has been explained and incorporated into a prior Financial
Model; and (iii) include such other information as the Administrative Agent may
reasonably request. 

                        
(b)       The Administrative Agent shall have 10
days from the date of receipt of an updated Financial Model to accept or reject
such updated Financial Model. In the event that the Administrative Agent accepts
such updated Financial Model, it shall become the current Financial Model. The
Administrative Agent shall promptly review such updated Financial Model, and if
the Administrative Agent does not accept such updated Financial Model, it shall
promptly notify the Borrower thereof, the Borrower shall, within 10 Business
Days and after consultation with the Administrative Agent as to the reasons
therefor, submit an appropriately revised Financial Model. Following such
resubmission, the process shall be repeated until the Financial Model has been
accepted by the Administrative Agent. To the extent that a fiscal quarter
commences without a Financial Model having been approved in accordance with this


- 41 - 




Section 5.10, the previously approved Financial Model shall
remain in effect until a revised Financial Model shall have been approved. 

          SECTION
5.11. Further Assurances. Each Loan Party will, and will cause each of
its Subsidiaries to, cooperate with the Lenders and the Administrative Agent and
execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Loan Documents. If
the Borrower enters into any Material Contract after the Closing Date, it shall
provide a Consent Agreement to such Material Contract in a form reasonably
acceptable to the Administrative Agent (if such Material Contract has a value in
excess of $1,000,000, as determined by the Administrative Agent in consultation
with the Borrower).

          SECTION
5.12. Forward Sale Price Protection Program. In the event that the
average forward copper price for the period from October 1, 2010 through
December 31, 2011 exceeds $2.00/lb, the Borrower shall implement additional
copper price Hedging Agreements on terms satisfactory to the Administrative
Agent in order to replace any copper price Hedging Agreements terminated
pursuant to Sections 10.15, 10.16 or otherwise.

ARTICLE VI. 
NEGATIVE COVENANTS


          Until
the Term Loan Commitments have expired or terminated and the principal of and
interest on each Term Loan and all fees payable hereunder have been paid in
full, the Borrower covenants and agrees with the Lenders that: 

          SECTION
6.1. Indebtedness. The Loan Parties will not create, incur, assume or
permit to exist any Indebtedness, except: 

                        
(a)     Indebtedness created hereunder;

                        
(b)      Indebtedness in respect of capital leases and
purchase money obligations for fixed or Capital Assets within the limitations
set forth in Section 6.2(d); provided, that the aggregate amount of all
such Indebtedness at any one time outstanding shall not exceed $250,000; and


                         (c)     
Indebtedness in respect of letters of credit issued in connection with
obligations arising under Material Contracts or other vendor accounts payable in
the ordinary course of business.

          SECTION
6.2. Liens. The Loan Parties will not create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except

                        
(a)      Permitted Liens;

- 42 - 




                        
(b)      Liens as of the Closing Date and set forth on
Schedule 6.2 (provided that the aggregate amount of Indebtedness or other
obligations secured by such Liens does not exceed $1,000,000);

                        
(c)      the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing);

                        
(d)      Liens securing Indebtedness permitted under
Section 6.1(b); provided that (i) such Liens do not at any time encumber
any property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;
and 

                        
(e)      Liens resulting from the Permitted Royalty
Sale. 

          SECTION
6.3. Fundamental Changes; Dispositions; Subsidiaries; Etc.

                        
(a)      The Borrower will not merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, or make any Disposition,
provided that the Borrower may make Dispositions

                        
(i)      of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of business,

                        
(ii)      of inventory in the ordinary course of
business, and

                        
(iii)      of Property which results in an aggregate
amount of proceeds not to exceed $250,000 from and after the Closing Date,
provided that the Net Cash Proceeds of any such Dispositions pursuant to
this clause (iii) are applied in accordance with Section 2.9(b) . 

                        
(b)      The Borrower will not engage in any business
or exploration other than the development of the Project or, in accordance with
the terms of this Agreement, the Coyote Springs or Mimbres sites. 

          SECTION
6.4. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not purchase, hold or acquire any Equity Interest, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person (other than Cochise), or
purchase or otherwise acquire any assets of any other Person constituting a
business unit, except (a) Permitted Investments, (b) investments in Coyote
Springs and the Mimbres sites, in accordance with the terms of this Agreement,
(c) and other investment in an amount not to exceed $20,000. 

          SECTION
6.5. Hedging Agreements. The Loan Parties will not enter into any Hedging
Agreement with respect to copper, except the Forward Sale Price Protection
Program. 

- 43 - 




          SECTION
6.6. Restricted Payments. The Borrower will not declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment except that

                        
(a)      the Borrower may make Restricted Payments so
long as (i) Completion shall have occurred, (ii) immediately after making such
payment, the Debt Service Coverage Ratio for any Historical Test Period or
Future Test Period shall not be less than 1.8:1.00, (iii) the Debt Service
Reserve Account is fully funded, (iv) the Borrower shall be in compliance with
all financial covenants on a proforma basis after giving effect to such
Restricted Payment or expenditure (calculated on a proforma basis with respect
to the Historical Test Period most recently ended and Future Test Period from
such date), and (v) no Default or Event of Default exist or shall occur after
giving effect to such Restricted Payment;

                         (b)     
the Borrower may make Restricted Payments relating to exploration expenditures
at the Mimbres and Coyote Springs sites, so long as (i) Completion shall have
occurred, (ii) immediately after making such payment, the Debt Service Coverage
Ratio for any Historical Test Period or Future Test Period shall not be less
than 1.3:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the
Borrower shall be in compliance with all financial covenants on a proforma basis
after giving effect to such Restricted Payment or expenditure (calculated on a
proforma basis with respect to the Historical Test Period most recently ended
and Future Test Period from such date), (v) no Default or Event of Default exist
or shall occur after giving effect to such Restricted Payment, (vi) the maximum
amount of all such expenditures made pursuant to this clause (b) relating to the
Mimbres site shall not exceed $2,750,000, and (vii) the maximum amount of all
such expenditures relating to the Coyote Springs site made pursuant to this
clause (b) shall not exceed $2,100,000 in the aggregate; and

                         (c)     
the Borrower may make Restricted Payments constituting “Liquidity Incentive
Payments” in connection with and as defined under the $23 million equity
financing documentation as such documentation is in effect on the date hereof,
provided that such amounts do not exceed $2,760,000 in the aggregate. 

          SECTION
6.7. Transactions with Affiliates. The Borrower will not sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the
Borrower than could be obtained on an arm’s-length basis from unrelated third
parties, and (b) any Restricted Payment permitted by Section 6.6. 

          SECTION
6.8. Restrictive Agreements. The Borrower will not enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon the ability of the Borrower to create, incur or
permit to exist any Lien upon any of its property or assets; provided
that the foregoing shall not apply to restrictions and conditions imposed by law
or by this Agreement. 

          SECTION
6.9. Material Contracts; Royalty Arrangements.  The Borrower shall not amend, modify or waive any material provision of any Material Contract or royalty arrangement in any way adverse to the Lenders.

          SECTION
6.10. Financial Covenants.

- 44 - 




                        
(a)      Starting with the last day of the first full
fiscal quarter after Completion, the Borrower will not permit the Debt Service
Coverage Ratio for any Historical Test Period or any Future Test Period to be
less than 1.5 to 1.00. 

                        
(b)      Starting with the last day of the first full
fiscal quarter after Completion, the Borrower will not permit the Interest
Coverage Ratio for any Historical Test Period or any Future Test Period to be
less than 2.0 to 1.00. 

                         (c)     
The Borrower will not permit the ratio of (i) Indebtedness of the type described
in clauses (a), (b), and (c) of the definition thereof, to (ii) Shareholders
Equity to exceed 1.3 to 1.00 at any time. For purposes of this clause (c),
“Shareholders Equity” means, as of the date of determination, all items which
would be included under “shareholders equity” on a consolidated balance sheet of
the Borrower and its Subsidiaries in accordance with GAAP, provided that
such amount shall be without regard to the accumulated deficit as of March 31,
2007.

ARTICLE VII.
 EVENTS OF DEFAULT 

          If any
of the following events (“Events of Default”) shall occur: 

                         (a)     
the Borrower shall fail to pay any principal of the Term Loans when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise; 

                         (b)     
the Borrower shall fail to pay any interest on the Term Loans or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five Business Days;


                         (c)     
any representation or warranty made or deemed made by or on behalf of any Loan
Party in or in connection with this Agreement or any amendment or modification
hereof or waiver hereunder, or in any report, certificate, financial statement
or other document furnished pursuant to or in connection with this Agreement or
any amendment or modification hereof or waiver hereunder, shall prove to have
been incorrect in any material respect when made or deemed made; provided
that any such representation or warranty, if capable of being cured, may be
cured by the Borrower within a ten day period; 

                         (d)     
the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.2, 5.3 (with respect to the Borrower’s
existence) or 5.8 or in Article VI; provided that any Default under
Sections 6.10 (a) or (b) with respect to a calculation of any Future Test Period
(but not any Historical Test Period) shall only be an “Event of Default”
hereunder upon a vote thereof by the Required Lenders; 

                         (e)     
the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article) or any other Loan Document, and such failure shall
continue unremedied for a period of 

- 45 - 




20 days after notice thereof from the Administrative Agent to
the Borrower (which notice will be given at the request of any Lender); 

                         (f)     
any event or condition occurs that results in any Material Indebtedness becoming
due prior to its scheduled maturity or that enables or permits (with or without
the giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
or any Loan Party shall default with respect to its obligations under any
royalty arrangements; 

                         (g)     
an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of
either Loan Party or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party or
for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 90 days or an order or decree approving
or ordering any of the foregoing shall be entered; 

                         (h)     
a Loan Party shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (g) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for a Loan Party or for
a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; 

                         (i)     
a Loan Party shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due; 

                         (j)     
one or more judgments for the payment of money in an aggregate amount in excess
of $100,000 shall be rendered against a Loan Party and the same shall remain
undischarged for a period of 45 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of a Loan Party to enforce any such
judgment;

                         (k)     
an ERISA Event shall have occurred that, in the opinion of Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Borrower in an amount
exceeding $250,000 from and after the Closing Date;

                         (l)     
Completion shall not occur on or prior to the 25 month anniversary of the
Closing Date; or 

                        
(m)      any Change of Control shall occur; 

- 46 - 




then, and in every such event (other than an event with respect
to the Borrower described in clause (g) or (h) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Term Loan Commitments, and thereupon the Term Loan Commitments
shall terminate immediately, and (ii) declare the Term Loans then outstanding to
be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Term Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (g) or (h) of this Article, the Term
Loan Commitments shall automatically terminate and the principal of the Term
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower. 

ARTICLE VIII. 
THE ADMINISTRATIVE AGENT


          Each
of the Lenders hereby irrevocably appoints the Administrative Agent as its agent
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof, together with such actions and powers as are reasonably incidental
thereto. 

          The
bank serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Loan Parties or other Affiliate thereof as if it were
not the Administrative Agent hereunder. 

          The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Administrative Agent is required
to exercise in writing as directed by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
10.2) or in the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall be 

- 47 - 




deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent. 

          The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts. 

          The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the Term Loan provided for
herein as well as activities as Administrative Agent. 

          Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 10.3 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in 

- 48 - 




respect of any actions taken or omitted to be taken by any of
them while it was acting as Administrative Agent. 

          Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder. 

ARTICLE IX. 

  GUARANTY

          SECTION
9.1. Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to each of the Lenders the punctual payment, performance in full and
observance when due, whether at stated maturity, by acceleration or otherwise,
of the Borrower’s Obligations (the “Guaranteed Obligations”) now or
hereafter existing under any Loan Document, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any bankruptcy proceeding of the Borrower, whether or not constituting an
allowed claim in such bankruptcy proceeding), fees, commissions, expense
reimbursements, indemnifications or otherwise, and agrees to pay any and all
costs, fees and expenses (including reasonable counsel fees and expenses)
incurred by the Administrative Agent and the Lenders in enforcing any rights
under the guaranty set forth in this Article IX, as they become due from time to
time in accordance with the express provisions of the Loan Documents. The
Administrative Agent shall be entitled to enforce this Guarantee for its own
benefit and the ratable benefit of the Lenders and each Lender shall be entitled
to enforce this Guarantee for its own benefit through the Administrative Agent
in respect of the Guaranteed Obligations owing to it but without duplication.
Without limiting the generality of the foregoing, Guarantor’s liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by the Borrower to the Administrative Agent and the Lenders under
any Loan Document but for the fact that they are unenforceable or not allowable
due to the existence of an bankruptcy proceeding involving the Borrower. 

          SECTION
9.2. Guaranty Absolute. Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
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
Administrative Agent or the Lenders with respect thereto. The obligations of
Guarantor under this Article IX are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against Guarantor
to enforce such obligations, irrespective of whether any action is brought
against the Borrower or whether the Borrower is joined in any such action or
actions. The liability of Guarantor under this Article IX constitutes a primary
obligation, and not a contract of surety, and shall be irrevocable, absolute and
unconditional irrespective of, and Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following: 

- 49 - 




                         (a)     
any lack of validity or enforceability of any Loan Document or any agreement or
instrument relating thereto; 

                         (b)     
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 Loan Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower or otherwise 

                         (c)     
any taking, exchange, release, subordination or non-perfection of any of the
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;


                         (d)     
any change, restructuring or termination of the corporate structure or existence
of any of the Loan Parties; or 

                         (e)     
except for payment in full of the Guaranteed Obligations, any other circumstance
(including, without limitation, any statute of limitations) or any existence of
or reliance on any representation by the Administrative Agent or the Lenders
that might otherwise constitute a defense available to, or a discharge of, any
of the Loan Parties or any other guarantor or surety. 

This Article IX 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
Administrative Agent or the Lenders or any other Person upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise (and whether as a
result of any demand, settlement, litigation or otherwise), all as though such
payment had not been made. 

          SECTION
9.3. Waiver. Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Article IX and any requirement that the Administrative
Agent or the Lenders exhaust any right or take any action against any of the
Loan Parties or any other Person or any Collateral. 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 9.3 is
knowingly made in contemplation of such benefits. Guarantor hereby waives any
right to revoke this Article IX, and acknowledges that this Article IX is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future. 

          SECTION
9.4. Continuing Guaranty; Assignments. This Article IX is a
continuing guaranty and shall (a) remain in full force and effect until payment
in full of the Guaranteed Obligations, (b) be binding upon Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Administrative Agent and the Lenders and their successors, pledgees, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any
Lender may pledge, assign or otherwise transfer all or any portion of its rights
and obligations under this agreement (including, without limitation, all or any
portion of its Term Loan Commitment and its Term Loans) to any other Person, and
such other Person shall 

- 50 - 




thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise. 

          SECTION
9.5. Subrogation. Guarantor shall not exercise any rights that it
may now or hereafter acquire against the Borrower or any other guarantor that
arise from the existence, payment, performance or enforcement of Guarantor’s
obligations under this Article IX, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or the
Lenders against any of the Loan Parties 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 of the Loan Parties 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 payment in full of the Guaranteed Obligations; provided, that Guarantor
shall not have any rights hereunder against the Borrower if all or any portion
of the Guaranteed Obligations shall have been satisfied with proceeds from the
exercise of remedies in respect of the Equity Interest of the Borrower pursuant
to any Security Document. In addition, unless and until payment in full of the
Guaranteed Obligations, any indebtedness of the Borrower now or hereafter held
by Guarantor is subordinated in right of payment to the Guaranteed Obligations,
and any such indebtedness collected or received by Guarantor after an Event of
Default has occurred and is continuing but prior to payment in full of the
Guaranteed Obligations, shall be held in trust for Administrative Agent on
behalf of the Administrative Agent and the Lenders and shall forthwith be paid
over to Administrative Agent for the benefit of itself and the Lenders to be
credited and applied against the Guaranteed Obligations. If any amount shall be
paid to Guarantor in violation of the immediately preceding two sentences, such
amount shall be held in trust for the benefit of the Administrative Agent and
the Lenders and shall forthwith be paid to Administrative Agent for the benefit
of the Administrative Agent and the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Article IX,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Security for any Guaranteed Obligations or other amounts payable
under this Article IX thereafter arising. Upon payment in full of the Guaranteed
Obligations, the Administrative Agent and the Lenders 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 Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by Guarantor. 

          SECTION
9.6. Maximum Obligations. Notwithstanding any provision herein
contained to the contrary, Guarantor’s liability with respect to the Obligations
shall be limited to an amount not to exceed, as of any date of determination,
the amount that could be claimed by the Administrative Agent and the Lenders
from Guarantor without rendering such claim voidable or avoidable under Section
548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law. 

ARTICLE X. 
MISCELLANEOUS 

          SECTION
10.1. Notices. 

- 51 - 




                         (a)     
Except in the case of notices and other communications expressly permitted to be
given by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows: 

                         (i)     
if to the Borrower, to it at 1 West Wetmore, Suite 203, Tucson, AZ 85705,
Attention of Chief Financial Officer (Telecopy No. 520-292-0268); 

                         (ii)     
if to the Administrative Agent, to Nedbank Limited, London Branch, 1st Floor,
Old Mutual Place, 2 Lambeth Hill, London EC4V 4GG, Attention: The Head: Mining
and Resources (Telecopy No. 44-707-002-3408), with a copy to Nedbank Limited,
135 Rivonia Road, Sandown 2057, Republic of South Africa, Attention: The Head:
Investment Banking; 

                         (iii)     
if to any other Lender, to it at its address (or telecopy number) as indicted to
the Administrative Agent. 

                         (b)     
Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. 

                         (c)     
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.


          SECTION
10.2. Waivers; Amendments.

                         (a)     
No failure or delay by the Administrative Agent or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Term Loan shall not be construed as a waiver of any Default, regardless of
whether the Administrative Agent or any Lender may have had notice or knowledge
of such Default at the time. 

- 52 - 




                         (b)     
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Term Loan Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
the Term Loans or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of the Term
Loans, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Term Loan Commitment, without the written consent of each
Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, or (v) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent hereunder without the prior
written consent of the Administrative Agent. 

          SECTION
10.3. Expenses; Indemnity; Damage Waiver.

                         (a)     
The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of any advisor or counsel for the Administrative Agent or any
Lender (provided that the Borrower shall not be required to pay for more
than one counsel to the Administrative Agent and the Lenders, other than special
local counsel), in connection with the syndication of the Term Loans provided
for herein (which in any event shall be conducted in accordance with Section
10.4(b)), the due diligence, preparation, negotiation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and the other Loan Documents and (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any advisor or counsel for the Administrative Agent or any
Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section, or in
connection with the Term Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of the
Term Loans. 

                         (b)     
The Borrower shall indemnify the Administrative Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Term Loan or the use of the
proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property 

- 53 - 




owned or operated by the Loan Parties, or any Environmental
Liability related in any way to the Loan Parties, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.


                         (c)     
To the extent that the Borrower fails to pay any amount required to be paid by
it to the Administrative Agent under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such. 

                         (d)     
To the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions
or any Term Loan or the use of the proceeds thereof. 

                         (e)     
All amounts due under this Section shall be payable promptly after written
demand therefor. 

          SECTION
10.4. Successors and Assigns.

                         (a)     
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.


                         (b)     
(i)      Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Term Loan Commitment and the Term Loans at the time owing to it)
with the prior written consent (such consent not to be unreasonably withheld)
of: 

                         (A)     
the Borrower, provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, or, if an 

- 54 - 




Event of Default has occurred and is
continuing, any other assignee; provided that any such assignment to an
Affiliate shall in all cases be subject to Section 2.17; 

                         (B)     
the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of any Term Loan Commitment to an
assignee that is a Lender with a Term Loan Commitment immediately prior to
giving effect to such assignment; and 

                         (ii)     
Assignments shall be subject to the following additional conditions: 

                         (A)     
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender’s Term Loan
Commitment or Term Loans, the amount of the Term Loan Commitment or Term Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Borrower and the Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing; 

                         (B)     
  each partial assignment shall be made as an assignment of a proportionate part
  of all the assigning Lender’s rights and obligations under this Agreement,
  provided that this clause shall not be construed to prohibit the assignment
  of a proportionate part of all the assigning Lender’s rights and obligations
  in respect of one type of Term Loan Commitment or Term Loans;

                         (C)     
the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and 

                         (D)     
the assignee, if it shall not be a Lender, shall designate to the Administrative
Agent one or more Credit Contacts to whom all syndicate-level information (which
may contain material non-public information about the Loan Parties and their
related parties or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.


                         (iii)     
Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of
this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this 

- 55 - 




Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and
10.3) . Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 10.4 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section. 

                         (iv)     
The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Term Loan Commitment of, and principal amount of the Term
Loan Commitment or Term Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice. 

                         (v)     
Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it
pursuant to Section 2.5(c), 2.6(d) or (e), 2.7(b), 2.16(d) or 10.3(c), the
Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph. 

                         (i)     
Any Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Term Loan
Commitment and the Term Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver 

- 56 - 




described in the first proviso to
Section 10.2(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.8 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender. 

                         (ii)     
A Participant shall not be entitled to receive any greater payment under Section
2.13 or 2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 2.17 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender. 

                         (c)     
Any Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including without limitation any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto. 

          SECTION
10.5. Survival. All covenants, agreements, representations and warranties
made by the Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Term Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on the Term Loans or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Term Loan Commitments have not expired or terminated.
The provisions of Sections 2.13, 2.14, 2.15 and 10.3 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Term Loans and the
Term Loan Commitments or the termination of this Agreement or any provision
hereof. 

          SECTION
10.6. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject


- 57 - 




matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement. 

          SECTION
10.7. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. 

          SECTION
10.8. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement or any Hedging Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such Hedging Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have. 

          SECTION
10.9. Governing Law; Jurisdiction; Consent to Service of Process.

                         (a)     
This Agreement shall be construed in accordance with and governed by the law of
the State of New York. 

                         (b)     
The Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action 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 Agreement shall affect any
right that the Administrative Agent or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction. 

                         (c)     
The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter 

- 58 - 




have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court. 

                         (d)     
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 10.1. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law. 

          SECTION
10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 

          SECTION
10.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement. 

          SECTION
10.12. Confidentiality.

                         (a)     
Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, “Information” means all information received
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a


- 59 - 




nonconfidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. 

                         (b)     
EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 10.12(a)
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS. 

                         (c)     
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED
PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO
THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED A CREDIT
CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.


          SECTION
10.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to the Term Loans,
together with all fees, charges and other amounts which are treated as interest
on the Term Loans under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Term Loan in accordance with applicable law, the rate of interest payable in
respect of such Term Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Term
Loan but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Term Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon to the
date of repayment, shall have been received by such Lender. 

          SECTION
10.14. Know Your Customer Requirements. Each Lender that is subject to
“know-your-customer” requirements of any Governmental Authority, hereby notifies
the Borrower that pursuant to such requirements, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the 

- 60 - 




Borrower and other information that will allow such Lender to
identify the Borrower in accordance with such requirements. 

          SECTION
10.15. Consent Relating to Existing Copper Hedging Agreements. The
Borrower confirms that all of its rights under the Existing Copper Hedging
Agreements have been pledged, pursuant to the Security Documents, for the
benefit of the Administrative Agent and the Lenders, in order to secure amounts
owing under the Credit Agreement. The Borrower expressly agrees that if any
Event of Default shall occur and be continuing, the Administrative Agent, on
behalf of itself and the Lenders, may exercise any and all rights of the
Borrower under the Existing Copper Hedging Agreements, including, without
limitation the giving of notice to the Hedge Counterparty to terminate any
Existing Copper Hedging Agreements (to the extent required in order to pay the
outstanding Obligations in full) and to pay any amount then due and owing to the
Borrower under such Existing Copper Hedging Agreements directly to the
Administrative Agent to be applied in payment of the obligations under the
Credit Agreement.

          SECTION
10.16. Provisions Relating to B Term Loan. The Borrower agrees that if at
any time the Borrower would receive in excess of $2,200,000 (net of costs, fees
and expenses associated therewith) in proceeds from the termination of certain
copper price Hedging Agreements maturing from October 1, 2010 onwards, then it
shall terminate such Hedging Agreements in a manner satisfactory to the
Administrative Agent (a “Term Loan Conversion Event”), and the
following events shall occur: 

                        
(a)      Deposit to Debt Service Reserve
Account. The Borrower shall deposit $2,200,000 in Hedging Agreement proceeds
into the Debt Service Reserve Account. The balance of such proceeds, if any,
shall be deposited into the Proceeds Account. 

                         
(b)      Conversion of A Term Loan. The A Term
Loans shall automatically be separated into two separate tranches, the first
such tranche in an aggregate principal amount outstanding equal to the existing
A Term Loans minus the aggregate principal amount of the B Term Loans,
and the second such tranche in an aggregate principal amount outstanding equal
to $2,200,000 (such tranche, the “B Term Loans”). The amortization
payment required on each Principal Payment Date with respect to the A Term Loan
(prior to the Term Loan Conversion Event) shall be reduced pro-rata with respect
to each Principal Payment Date, and such amount shall be constitute the B Term
Loan.

                         
(c)      Further Assurances. Notwithstanding the
automatic nature of the conversion of the A Term Loan provided for in clause
(b), each party hereto agrees to execute such further instruments and documents
as the Administrative Agent shall reasonably request in order to effect the
conversion provided for above.

ARTICLE XI. 
CONDITIONS PRECEDENT TO SECOND
AMENDMENT AND RESTATEMENT 

          SECTION
11.1. Conditions Precedent to Amendment and Restatement. The amendment
and restatement of the First Amended and Restated Credit Agreement provided for
herein shall occur on the first such date (the “Second Amendment and
Restatement Date”) on which each of the following conditions are satisfied
in a manner satisfactory to the Administrative Agent: 

- 61 - 




                         (a)     
Execution of Documents. The Administrative Agent shall have received
executed versions of each of this Agreement, the Amended and Restated Collateral
Account Control Agreement and the Account Charge from each of the parties
thereto, including the Borrower. 

                         (b)     
Legal Opinions. The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Second Amendment and Restatement Date) of Ballard Spahr Andrews &
Ingersoll LLP, Arizona counsel for the Borrower, covering such matters relating
to this Agreement as the Administrative Agent shall reasonably request. 

                         (c)     
Corporate Authority. The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
the Loan Parties, the authorization of this Agreement and the other documents
executed in connection therewith, and any other legal matters relating to this
Agreement, all in form and substance satisfactory to the Administrative Agent
and its counsel. 

                         (d)     
Debt Service Reserve Account. The Debt Service Reserve Account shall have
been established with Nedbank Limited, London Branch, and all necessary
amendments to the Collateral Account Control Agreement and related documents and
instruments shall have been executed in connection therewith. 

                         (e)     
Certifications. The Administrative Agent shall have received and
officer’s certificate representing that (i) no order, decree, judgment, ruling,
threatened action, suit, investigation or proceeding exists which is reasonably
likely to be adversely determined and, if adversely determined, could reasonably
be expected to have a Material Adverse Effect, (ii) after giving effect to this
Agreement, no Default shall have occurred and be continuing and (iii) the
representations contained herein are true and correct as of the Second Amendment
and Restatement Date. 

                         (f)     
Royalty Payments. The Borrower shall have received proceeds of at least
$4,950,000  from the
sale of a 2.5% royalty to IRC Nevada, Inc. on terms and conditions reasonably
satisfactory to the Administrative Agent (the “Permitted Royalty Sale”)
and such amount shall have been paid to the Proceeds Account. 

                         (g)     
Fees and Expenses. The Administrative Agent shall have received all fees,
costs and expenses and other amounts due and payable on or prior to the Second
Amendment and Restatement Date, including (i) those amounts payable to Nedbank
Limited pursuant to the fee letter of even date herewith between the Borrower
and Nedbank Limited, and (ii) reimbursement of all reasonable disbursements of
Nedbank Limited in connection with the preparation, negotiation and
implementation of this Agreement (including, without limitation, traveling
expenses and legal costs). 

- 62 - 




                        
(h)      Other Documentation. The Administrative
Agent shall have received such other documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to this
Agreement and the other documents executed in connection therewith. 

          SECTION 11.2.  Post-Closing Covenants Relating to Second Amendment and Restatement.  The Borrower covenants and agrees that it shall use its best efforts to work with the Administrative Agent in order to complete a new and updated Financial Model in a form satisfactory to the Administrative Agent on or prior to April 15, 2009. 

[Signature Pages Follow]

- 63 - 




          IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written. 

NORD RESOURCES CORPORATION 


By: /s/ Wayne M. Morrison                      

Name: Wayne M. Morrison

Title: Vice-President, Secretary and Chief Financial Officer

COCHISE AGGREGATES AND MATERIALS, INC.


 

By: /s/ John T. Perry                                  

Name: John T. Perry

Title: Treasurer

[signature page to Second Amended and Restated Credit
Agreement] 




NEDBANK LIMITED, 

     as Administrative Agent 

By: /s/ K.C. Ryder                                   

   Name: K.C. Ryder

  Title: Director: Investment Banking

By: /s/ S.V. Orton                                   

   Name: S.V. Orton

  Title: Authorized Officer

NEDBANK LIMITED, London Branch, 

       as Lender 

By: /s/ K.C. Ryder                                   

   Name: K.C. Ryder

  Title: Director: Investment Banking

By: /s/ S.V. Orton                                   

   Name: S.V. Orton

  Title: Authorized Officer

[signature page to Second Amended and Restated Credit
  Agreement] 




EXHIBIT A 
to Amended and

Restated Credit 
Agreement 

ASSIGNMENT AND ASSUMPTION 

          This
Assignment and Assumption (the “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of
Assignee] (the “Assignee”). Capitalized terms used but not defined
herein shall have the meanings given to them in the Amended and Restated
Credit Agreement identified below (as amended, the “Amended and
Restated Credit Agreement”), receipt of a copy of which is
hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full. 

          For an
agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Amended and Restated Credit Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Amended and
Restated Credit Agreement and any other documents or instruments delivered
pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of the
Assignor under the Term Loan and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Amended and Restated Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale
and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor. 

	1. 	Assignor:        
      __________________________________________
	 	 
	2. 	Assignee:        
      __________________________________________
	  	                          
      [and is an Affiliate of [identify Lender]1 ]
  
	 	 
	3. 	Borrower: Nord Resources Corporation
  


_________________________________________
1       
   Select as applicable. 






	4. 	
      Administrative Agent:     
      Nedbank Limited, as the administrative agent under the Amended and
      Restated Credit Agreement 

	  	
       

	5. 	
      Amended and $25,000,000 Second Amended and Restated
      Credit Agreement dated as of March __, 2009 among Restated Credit Nord
      Resources Corporation, a Delaware corporation (the Agreement :
      “Borrower”), the guarantor party thereto, the lenders party thereto (the
      “Lenders”), Nedbank Limited, as Administrative Agent, and the other agents
      parties thereto. 

	  	
       

	6. 	
      Assigned Interest: 






	Aggregate Amount of 
Term Loan 
Commitment / Term
      
Loans for all Lenders 	Amount of Term Loan 
Commitment / Term
      
Loans Assigned 
	Percentage of 
Assigned Term Loan
      
Commitment / Term 
Loans 2 
	$ 	$ 	 
                         
                       % 
	$ 	$ 	 
                         
                       % 
	$ 	$ 	 
                         
                       %
  



        
 Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.] 

          The
Assignee agrees to deliver to the Administrative Agent a designation of one or
more Credit Contacts to whom all syndicate-level information (which may contain
material non-public information about the Loan Parties and their Related Parties
or their respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and
applicable laws, including Federal and state securities laws. 

          The
terms set forth in this Assignment and Assumption are hereby agreed to: 

ASSIGNOR 
[NAME OF ASSIGNOR] 

 

By:
__________________________________________
Title: 

ASSIGNEE 
[NAME OF ASSIGNEE]


 

_____________________________________
2          
Set forth, to at least 9 decimals, as a percentage of the Term Loan Commitment /
Term Loans of all Lenders thereunder. 

Exhibit A - Assignment and Assumption
2 




By:
__________________________________________
Title: 

[Consented to and]3 Accepted: 

NEDBANK LIMITED, as 
Administrative Agent 

 

By: __________________________________________
Title: 

 

 

 

____________________________________________
3          
To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement. 

Exhibit A - Assignment and Assumption 
3 




ANNEX 1 

STANDARD TERMS AND CONDITIONS FOR 
ASSIGNMENT
AND ASSUMPTION 

          1.        
Representations and Warranties. 

          1.1.     
Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Amended and Restated Credit Agreement or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Loan Parties, any of their Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance
by the Loan Parties, any of their Affiliates or any other Person of any of their
respective obligations under any Loan Document. 

          1.2.     
Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Amended and Restated Credit Agreement,
(ii) it satisfies the requirements, if any, specified in the Amended and
Restated Credit Agreement that are required to be satisfied by it in order to
acquire the Assigned Interest and become a Lender, (iii) from and after the
Effective Date, it shall be bound by the provisions of the Amended and Restated
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Amended and Restated Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 5.1
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Amended and Restated
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender. 

          2.    
    Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the 




Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date. 

          3.     
  General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York. 

2