Filed by Automated Filing Services Inc. (604) 609-0244 - Nord Resources Corporation - Exhibit 4.1






AMENDED AND RESTATED 
SECURED PROMISSORY NOTE

	U.S. $4,900,000 	May 31, 2006 


          FOR
  VALUE RECEIVED, the undersigned NORD RESOURCES CORPORATION, a company
  organized under the laws of Delaware (the “Company” or “Borrower”),
  promises to pay to the order of NEDBANK LIMITED, a limited liability
  company organized under the laws of the Republic of South Africa (“Holder”),
  the principal sum of $4,900,000.00, with simple interest accruing daily from
  the above-referenced date until paid, at a rate of ten percent (10%) per annum.
  Interest shall be paid monthly in cash on the first day of each month commencing
  June 1, 2006. Notwithstanding the foregoing, upon the occurrence of a Default
  and during the continuance of a Default, the principal balance then outstanding
  shall accrue interest at a rate of thirteen percent (13%) per annum. 

          This
  Promissory Note (the “Note”) is being issued to Holder in connection
  with a bridge loan (the “Loan”) provided to the Company by Holder.

          The
  following is a statement of the rights of Holder and the conditions to which
  this Note is subject, and to which Holder, by acceptance of this Note, agrees:

          1.
  Maturity Date. The principal balance hereof, and accrued but unpaid interest
  thereon, shall be due and payable on the earlier of: (a) August 15, 2006; or
  (b) the closing of a registered equity offering by the Company which raises
  not less than U.S. $20,000,000.00.

          2.
  Loss of Note. Upon receipt by the Company of evidence satisfactory to
  it of the loss, theft, destruction or mutilation of this Note, and (in the case
  of loss, theft or destruction) of reasonably satisfactory indemnification, and
  upon surrender and cancellation of this Note, if mutilated, the Company will
  execute and deliver a new Note of like tenor and date. Any such new Note executed
  and delivered shall constitute an additional contractual obligation on the part
  of the Company, whether or not this Note so lost, stolen, destroyed, or mutilated
  shall be at any time enforceable by anyone.

          3.
  Default.

                    (a)
  Holder may declare the entire unpaid principal and accrued interest on the Note
  immediately due and payable, by providing written notice to the Company, if
  any of the following events shall occur (each such event being a “Default”):

	 	(1) 	
      the Company shall fail to pay the principal and accrued
      but unpaid interest of the Note on any date such items are due, provided
      however, the Company shall have a period of three (3) Business Days from
      any such date within which cure a Default on an interest
  payment;








	 	(2) 	
      any representation or warranty made by the Company to
      Holder herein or in any other document, instrument or agreement executed
      by the Company in connection with the Loan (as amended or extended from
      time to time and in effect, each, a “Loan Document,” and collectively,
      with the Note, the “Loan Documents”) shall fail to be true and correct in
      any material respect (provided that the Company shall have a period of
      five (5) Business Days from the date the Company receives written notice
      thereof from the Holder within which to cure such Default(s));

	 	 	 
	 	(3) 	
      the Company shall fail to observe or perform any of the
      covenants, agreements or obligations (excluding the Company’s obligation
      to pay principal and interest as provided herein) contained in the Note or
      any other Loan Document or any other agreement with Holder in any material
      respect (provided that the Company shall have a period of five (5)
      Business Days from the date the Company receives written notice thereof
      from the Holder within which to cure such Default(s));

	 	 	 
	 	(4) 	
      the Company shall institute proceedings to be adjudicated
      bankrupt or insolvent, or the consent by the Company to the institution of
      bankruptcy or insolvency proceedings against it under the Bankruptcy Act,
      or any other applicable federal or state insolvency law, or the consent by
      the Company, or acquiescence in, the filing of any such petition or in the
      appointment of a receiver, liquidator, assignee, trustee, or other similar
      official of the Company, or of any substantial part or its property, or
      the making by the Company of an assignment for the benefit of creditors,
      or the admission by the Company in writing of its inability to pay its
      debts generally as they become due;

	 	 	 
	 	(5) 	
      within sixty (60) days after the commencement of
      proceedings against the Company seeking any bankruptcy, insolvency,
      liquidation, dissolution or similar relief under any present or future
      statute, law or regulation, such action shall not have been dismissed or
      all orders or proceedings thereunder affecting the operations or the
      business of the Company stayed, or the stay of any such order or
      proceedings shall thereafter be set aside, or, within thirty (30) days
      after the appointment without the consent or acquiescence of the Company
      of any trustee, receiver or liquidator of the Company over of all or any
      substantial part of the properties of the Company, such appointment shall
      have not been vacated;

	 	 	 
	 	(6) 	
      the Company shall dissolve or take steps toward
      dissolution;

	 	 	 
	 	(7) 	
      final judgments which exceed an aggregate of $100,000
      shall be rendered against the Company or its subsidiaries and shall not
      have been paid, discharged or vacated within forty-five (45) days after
      entry or filing of such judgments;








	 	(8) 	
      any event of default (as such term is defined under any
      applicable underlying agreement) of any of the Company’s indebtedness in
      excess of $75,000 in the aggregate shall occur or any failure of the
      Company to pay any such indebtedness when due shall occur; and

	 	 	 
	 	(9) 	
      the Deed of Trust (as hereinafter defined) shall for any
      reason (other than pursuant to the terms thereof or by reason of any
      action taken by the Holder and not with the knowledge of the Borrower or
      within its power to control) cease to create a valid and perfected (to the
      extent required thereby or by this Agreement) first priority lien in the
      Johnson Camp Collateral (as hereinafter defined), or the Company asserts
      such failure, provided however, the Company shall have a period of
      ten (10) Business Days within which to cure this deficiency and perfect
      the Holder’s first priority lien in the Johnson Camp
  Collateral.



                    (b)
  Remedies Upon Default. Upon the occurrence, and at any time during the
  continuance of, any Default, Holder, upon notice in writing to the Company,
  may declare all unpaid principal of the Note and the interest thereon to be
  immediately due and payable and the same shall become immediately due and payable
  upon such declaration and Holder may pursue any remedy available to Holder at
  law or in equity; provided, however, that in the event of any
  Default under clauses (4) or (5) above, all unpaid principal hereof and interest
  hereunder shall automatically become immediately due and payable, without the
  need for declaration, presentment, demand, protest, or other notice of any kind.

          4.
  Mandatory Repurchase of Notes. As soon as possible, and in any event
  within five (5) Business Days after the occurrence of a Mandatory Repurchase
  Event (as defined below), the Company shall furnish to Holder written notice
  setting forth in reasonable detail the facts and circumstances underlying such
  Mandatory Repurchase Event. The occurrence of any such Mandatory Repurchase
  Event shall constitute an irrevocable offer by the Company to purchase all of
  the Notes held by Holder, at 101% of the principal amount thereof, on a date
  to be specified by the Company, which date shall be not less than thirty (30)
  days nor more than ninety (90) days after the occurrence of such Mandatory Repurchase
  Event, together with all accrued and unpaid interest on the amount so purchased
  through the date of purchase. Following receipt of any offer to prepay the Notes
  hereunder, Holder shall advise the Company, by written notice, within ten (10)
  days after receipt of such offer, as to whether it desires to sell all, but
  not less than all of the Notes held by it (in integral multiples of $500,000),
  specifying the principal amount of the Notes to be sold by it. If Holder accepts
  such offer but does not specify an amount it wishes to receive, it will be deemed
  to have elected to sell all of the Notes held by it.

          5.
  Mandatory Repurchase Event. “Mandatory Repurchase Event” shall
  mean at any time prior to or after a public offering (i) any person together
  with all affiliates and associates of such person, shall become the beneficial
  owner, directly or indirectly, of securities of the Company representing 51%
  or more of the combined voting power of the Company’s then outstanding
  securities having the right to vote in an election of the Company’s Board
  of Directors; or (ii) 









persons who constitute the Company’s Board of Directors as of the date hereof cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of
the Company’s Board of Directors; or (iii) the Board of Directors and the stockholders of the Company (if required) shall approve (a) any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly, shares representing in the aggregate at least 51% or more of the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation, if any), (b) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company, (c) any plan or proposal for the liquidation or dissolution of the Company, or (iv) the Company terminates the services of Salman Partners without completing an offering of the Company’s capital
stock.

           6.
  Prepayment.

                     (a)
  Optional Prepayment. The Company may, upon ten (10) days prior written
  notice to Holder, prepay this Note in whole or in part, but in no event less
  than $250,000 for each occurrence of a prepayment, at any time without premium
  or penalty (other than for such premium as is contemplated in Section 4 hereof
  in connection with a mandatory repurchase of this Note); provided, however,
  that the Company shall reimburse Holder for any premiums, penalties or other
  costs incurred by Holder on account of the Company’s prepayment of this
  Note.

                     (b)
  Mandatory Prepayment. For so long as this Note shall be outstanding,
  the Company agrees to apply all funds received by the Company on any of its
  future borrowings or offerings of equity, including without limitation any financings,
  debt offerings, offerings of its equity or debt securities, against the outstanding
  balance due under this Note, except for proceeds of (i) short term unsecured
  working capital facilities but not in excess of $1,000,000 in the aggregate
  at any one time, and (ii) purchase money security interest financings used for
  the acquisition of equipment to be used at the Johnson Camp Mine but not to
  exceed $250,000 in the aggregate at any one time.

           7.
  Notices to Holder. So long as this Note shall be outstanding, (i) if
  the Company shall pay any dividend or make any distribution upon the Common
  Stock or (ii) if the Company shall offer to the holders of Common Stock for
  subscription or purchase by them any share of any class of Capital Stock or
  any other rights or (iii) if any capital reorganization of the Company, reclassification
  of the Capital Stock of the Company, consolidation or merger of the Company
  with or into another corporation, sale, lease or transfer of all or substantially
  all of the property and assets of the Company to another corporation, or voluntary
  or involuntary dissolution, liquidation or winding up of the Company shall be
  effected, then in any such case, the Company shall cause to be mailed by certified
  mail to Holder, at least fifteen (15) days prior the date specified in (x) or
  (y) below, as the case may be, a notice containing a brief description of the
  proposed action and stating the date on which (x) a record is to be taken for
  the purpose of such dividend, distribution or rights, or (y) such reclassification,
  reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation
  or winding up is to take place and the date, if any is to be fixed, as of which
  the holders 











of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. The Company shall also promptly deliver a
notice to Holder describing any Default of which it has become aware.

           8.
  Gross Up. All payments under this Note by Borrower will be made without
  any deduction or withholding for or on account of any tax or other withholding
  or deduction unless such tax, deduction or withholding is required by any applicable
  law then in effect (a “Required Tax, Deduction or Withholding”).
  If Borrower is so required to deduct or withhold any Required Tax, Deduction
  or Withholding, then Borrower will promptly notify Holder of such requirement
  and: 

                    (a)
  pay to the relevant authorities the full amount of the Required Tax, Deduction
  or Withholding (including the full amount required to be deducted or withheld
  from any additional amount paid by the Borrower to Holder under this Section
  8) promptly upon the earlier of determining that the Required Tax Deduction
  or Withholding is required or receiving notice that such amount has been assessed
  against Holder; 

                    (b)
  promptly forward to Holder an official receipt (or a certified copy), or other
  documentation reasonably acceptable to Holder evidencing such payment to such
  authorities; and 

                    (c)
  pay to Holder, in addition to the payment to which Holder is otherwise entitled
  under this Note, such additional amount as is necessary to ensure that the net
  amount actually received by Holder will equal the full amount Holder would have
  received had no such Required Tax, Deduction or Withholding been required.

           9.
  Costs. The Company agrees to reimburse Holder for any reasonable legal
  fees or other costs associated with this Note or any of the other Loan Documents,
  but in no event more than Twenty Thousand Dollars ($20,000).

           10.
  Representations and Warranties. The reports referenced in Schedule 1
  hereto were true and correct in all material respects as of their respective
  dates, there has been no material adverse change in any of the information in
  the Company’s current report on Form 8-K, filed with the SEC on May 11,
  2006 or in the Company’s quarterly report on form 10-QSB for the quarter
  ended March 31, 2006, filed with the SEC on May 15, 2006 and since November
  8, 2005 there has been no material adverse change in the financial condition,
  results of operations, assets, liabilities or business of the Company which,
  in the aggregate, has had a material adverse effect on the Company’s business.

           11.
  Covenants. The Company hereby agrees to observe and fully perform each
  of the covenants set forth on Schedule 2 hereto.

           12.
  Conditions Precedent. Prior to the extension of the funds contemplated
  to be advanced herein, unless waived in writing in advance by Holder, the Company
  shall have delivered to Holder the following documents, in form and substance
  satisfactory to Holder, and performed the following undertakings to the satisfaction
  of Holder:





                     (a)
  this Note;

                     (b)
  an amendment to the deed of trust, assignment of rents, security agreement and
  fixture filing relating to the so-called Johnson Camp Mine, reflecting the terms
  of this Note; 

                     (c)
  an officer’s certificate of the Company with respect to incumbency and
  resolutions authorizing the execution and delivery of the Note and the other
  Loan Documents;

                     (d)
  a legal opinion of DeConcini McDonald Yetwin & Lacy, P.C., counsel to the
  Company, in a form similar to the legal opinion given by such firm in connection
  with the Original Note;

                     (e)
  a memorandum summarizing the sources and uses of the proceeds of this Note;

                     (f)
  the Amendment to Subordination Agreement among Ronald A. Hirsch and Stephen
  D. Seymour and the Company;

                     (g)
  payment of a closing fee to Auramet Trading, LLC in an amount equal to $40,000;

                     (h)
  warrants for the purchase of 250,000 shares of the Company’s common stock
  issued in favor of Auramet Trading, LLC; 

                     (i)
  an amendment to the Policy of Title Insurance issued by First American Title
  Insurance Company in favor of Nedbank Limited, Policy No. NCS-195098A-PHX6,
  increasing the amount of insurance to $4,900,000; and

                     (j)
  such other documents or certificates, and completion of such other matters,
  as the parties may mutually deem necessary or appropriate in good faith.

           13.
  Miscellaneous.

                     (a)
  Waiver and Amendment. Any provision of this Note may be waived, amended
  or modified only upon the written consent of the Company and Holder.

                     (b)
  Restriction on Transfer. This Note may only be transferred in compliance
  with applicable state and federal laws. All rights and obligations of the Company
  and Holder shall be binding upon and benefit the successors, assigns, heirs,
  and administrators of the parties.

                     (c)
  No Assignment. This Note may be transferred by the Holder, provided that,
  unless a Default has occurred and is continuing, the Holder shall be obliged
  to give the Company at least fifteen (15) Business Days’ prior written
  notice of its intention to transfer this Note. The 






Company may not transfer or assign all or any part of this Note
without the prior written consent of Holder.

                    (d)
  Governing Law. This Note shall be governed by the laws of the State of
  New York.

                    (e)
  Severability. If any of the provisions of this Note is held invalid,
  such invalidity shall not affect the other provisions hereof that can be given
  effect without the invalid provision, and to this end the provisions of this
  Note are intended to be and shall be deemed severable.

                    (f)
  Indemnification. The Company agrees to hold harmless, defend and indemnify
  Holder, its officers, employees, agents and representatives (each, an “Indemnified
  Party”) from and against any liability, loss, cost, expense, damage
  claim or cause of action due to or arising out of or in connection with this
  Note or any other Loan Document in any way, directly or indirectly. The indemnification
  provided for in the immediately preceding sentence shall not apply to liabilities,
  losses, costs, expenses, damage, claims or causes of action which may arise
  as the result of the willful misconduct or gross negligence of the Holder.

                    (g)
  Notices. All notices and other communications given to or made upon any
  party hereto in connection with this Note shall, except as otherwise expressly
  herein provided, be in writing (including telecopy, telefaxed or telegraphic
  communication) and mailed via certified mail, telefaxed, telegraphed or delivered
  to the respective parties, as follows:

	 	To the Company: 
	 	  
	 	               
         Nord Resources Corporation 
	 	               
         P.O. Box 384 
	 	               
         Dragoon, AZ 85609 
	 	               
         Attn: President 
	 	               
         Telecopier: (520) 586-7020 
	 	  
	 	With a copy (which shall not constitute notice) to: 
	 	  
	 	               
         Lang Michener LLP 
	 	                   1500
      Royal Centre P. O. Box 11117 
	 	               
         1055 West Georgia Street 
	 	               
         Vancouver, British Columbia V6E 4N7 
	 	               
         Attn: John D. Morrison, Esq. 
	 	  
	 	To Holder 
	 	  
	 	               
         Nedbank Limited 
	 	               
         1st Floor, Old Mutual Place 
	 	               
         2 Lambeth Hill 







	 	               
         London EC4V 4GG 
	 	               
         Attn: Kevin Ryder 
	 	               
         Telecopier: 020-7002-3404 
	 	  
	 	And a copy (which shall not constitute notice) to: 
	 	  
	 	               
         Fennemore Craig, P.C. 
	 	               
         3003 North Central Avenue, Suite 2600 
	 	               
         Phoenix, Arizona 85012 
	 	               
         Attn: Sarah A. Strunk, Esq. 
	 	               
         Telecopier: (602) 916-5327 


Or in accordance with any subsequent written direction from the
recipient party to the sending party delivered in accordance with this Section
13(g). All such notices and other communications shall, except as otherwise
expressly herein provided, be effective upon (i) delivery if delivered by hand;
(ii) the third (3rd) Business Day after the date sent, in the case of
certified mail; (iii) receipt, in the case of telecopy, or (iv) upon delivery to
the telegraph company, charges prepaid, in the case of telegraph.

                    (h)
  Definitions. The following terms shall have the meanings set forth below.

                    “Business
  Day” means any day that is not a Saturday, Sunday, or other day on
  which banks in the State of New York are authorized or required to close. 

                    “Common
  Stock” means the issued and outstanding common stock, par value $.01
  per share, of the Company.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]




IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed by its officer, thereunto duly authorized as of this 31st
day of May, 2006.

	 	NORD RESOURCES CORPORATION
  
	 	  	  
	 	  	  
	 	By: 	/s/John T. Perry 
	 	Name: 	John
      Perry 
	 	Its: 	Sr VP
      & CFO 






SCHEDULE 1
EDGAR FILINGS REFERENCED FOR THE
PURPOSES OF SECTION 10 OF 
THE AMENDED AND RESTATED PROMISSORY NOTE

Nord Resources Corporation’s annual report on Form 10-KSB for
the year ended December 31, 2004, filed with the SEC on January 17, 2006.

Nord Resources Corporation’s current report on Form 8-K, filed
with the SEC on January 20, 2006.

Nord Resources Corporation’s quarterly report on Form 10-QSB
for the quarter ended March 31, 2005, filed with the SEC on February 3,
2006.

Nord Resources Corporation’s quarterly report on Form 10-QSB
for the quarter ended June 30, 2005, filed with the SEC on February 3, 2006.

Nord Resources Corporation’s quarterly report on Form 10-QSB
for the quarter ended September 30, 2005, filed with the SEC on February 3,
2006.

Nord Resources Corporation’s current report on Form 8-K dated
February 15, 2006, filed with the SEC on February 16, 2006.

Nord Resources Corporation’s annual report on Form 10-KSB for
the year ended December 31, 2005, filed with the SEC on March 28, 2006.

Nord Resources Corporation’s current report on Form 8-K, filed
with the SEC on May 11, 2006.

Nord Resources Corporation’s quarterly report on Form 10-QSB
for the quarter ended March 31, 2006, filed with the SEC on May 15, 2006.

Amendment no. 1 to Nord Resources Corporation’s preliminary
proxy statement on Schedule 14A, filed with the SEC on March 27, 2006.




SCHEDULE 2 
COVENANTS

          The
  Company covenants and agrees that for so long as the Note is outstanding or
  any amounts remain due and payable to Holder hereunder or under any other Loan
  Document, it shall observe and abide by each of the covenants and agreements
  contained in this Schedule 2, unless consented to in writing in advance
  by Holder or otherwise permitted hereunder.

          1.1
  Indebtedness. Other than the Indebtedness described in the documents
  referred to in Schedule I, the Company will not create, incur, assume, or suffer
  to exist, any Indebtedness, except: (a) this Note (as the same may be extended,
  increased, renewed or refunded from time to time by mutual agreement of the
  parties); (b) accounts payable to trade creditors and current operating expenses;
  or (c) Indebtedness that is subordinated in favor of the Holder.

          1.2
  Liens. Without the prior written consent of Holder, which consent may
  be given or denied at Holder’s sole discretion, other than Permitted Liens
  (as defined below), the Company will not (i) create or incur or suffer to be
  created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
  restriction or other security interest of any kind (each of the foregoing, a
  “Lien”) upon any of the Property, or upon the income or profits
  therefrom, except as otherwise permitted herein, transfer any of such Property
  or the income or profits therefrom for the performance of any other obligation
  in priority to payment of its general creditors; or (iii) acquire, or agree
  or have an option to acquire, any Property upon conditional sale or other title
  retention or purchase money security agreement, device or arrangement. For purposes
  of this Note, the term “Permitted Liens” means, collectively,
  (a) Liens existing on the date of this Note and disclosed to Holder in Appendix
  I to the secured promissory note dated November 8, 2005 by the Company in
  favour of the Holder (the “Original Note”) and Liens arising pursuant
  to this Note and the other Loan Documents; (b) Liens for taxes, fees, levies,
  duties or other governmental charges of any kind, either not yet due or being
  contested in good faith and with respect to which adequate reserves or other
  appropriate provisions are being maintained in accordance with generally accepted
  accounting principles, provided the same have no priority over any of Holder’s
  security interests; (c) Liens for landlords, common carriers, warehousemen,
  mechanics, materialmen, laborers, employees, suppliers or similar Liens arising
  by operation of law for amounts that are owed but not yet delinquent, provided
  such Liens do not, in the aggregate, materially detract from the value of the
  assets of the Company and its subsidiaries or materially impair the use thereof
  in the operation of the Company’s or its subsidiaries’ business, in
  each case, taken as a whole, (d) Liens not to exceed $100,000 in the aggregate
  in any fiscal year incurred solely for the purpose of financing the acquisition
  of goods or equipment acquired by the Company or any subsidiary in the ordinary
  course of business, (e) in the case of real property, any matters, restrictions,
  covenants, conditions, limitations, rights, rights of way, encumbrances, encroachments,
  reservations, easements, agreements and other matters of record, such state
  of facts of which an accurate survey of the property would reveal, which in
  the aggregate, are not material in amount, and which do not, in the aggregate,
  materially detract from the value of any such real property or materially interfere
  with the ordinary conduct of the Company’s business (Appendix I to the
  Original Note sets forth such matters of which the Company is currently aware),
  (f) notifications under the Uniform Commercial Code (as then in 









effect in the State of New York) pertaining to operating leases or installment sales contracts entered into in the ordinary course of business not to exceed $100,000 in the aggregate in any fiscal year (Appendix I to the Original Note sets forth
such leases or installment contracts existing as of the date thereof), and (g) any other Liens arising from or related to immaterial indebtedness or capital leases of the Company or any subsidiary, not to exceed $25,000 in the aggregate in any
fiscal year. 

           1.3
  Restrictions on Investments. Without Holder’s prior written consent,
  which consent may be given or denied at Holder’s sole discretion, the Company
  will not, and will not permit any of its subsidiaries to make or permit to exist
  or to remain outstanding any Investment except Investments disclosed in the
  documents referred to in Schedule I and Investments in: (a) cash equivalents;
  (b) short term indebtedness guaranteed by the United States government with
  a maturity not exceeding 6 months; (c) inventory purchased in the ordinary course
  of business; and (d) Investments consisting of loans and advances to employees
  for travel and other similar expenses in the ordinary course of business not
  to exceed $10,000 in the aggregate at any time outstanding.

           1.4
  Distributions; Restricted Payments. Without Holder’s prior written
  consent, which consent may be given or denied at Holder’s sole discretion,
  the Company will not (i) declare, pay or make any Distribution on shares of
  its Capital Stock or apply any of its funds or Property to the purchase, redemption
  or other retirement of any shares of its Capital Stock, or of any options to
  purchase or acquire any Capital Stock of the Company or any of its subsidiaries,
  except that so long as no Default shall have occurred immediately before or
  after giving effect to such proposed Distribution any subsidiary may pay cash
  dividends to the Company; (ii) make any redemption, prepayment (whether mandatory
  or optional), defeasance, repurchase or other type of prepayment in respect
  of any Indebtedness (other than in respect of this Note); or (iii) set aside
  any funds for any of the foregoing.

           1.5
  Merger, Consolidation and Disposition of Assets.

                     1.5.1
  Mergers and Acquisitions. Without Holder’s prior written consent,
  which consent may be given or denied at Holder’s sole discretion, the Company
  will not become a party to any merger or consolidation, or agree to or effect
  any asset acquisition or stock acquisition except for (a) the merger or consolidation
  of one or more of the subsidiaries of the Company with and into the Company,
  provided that no changes are made to the articles of incorporation or bylaws
  of the Company in connection with such merger or consolidation or (b) any merger
  or consolidation or asset acquisition or stock acquisition which results in
  the acquisition of any business division or operation that is in the Company’s
  current lines of business and that does not result in a change of control of
  the Company or any subsidiary (for purposes hereof, the term “change of
  control” shall be deemed to mean a Mandatory Repurchase Event), provided
  that (i) notwithstanding anything herein to the contrary, only Capital Stock
  of the Company or a subsidiary of the Company may be used to affect any such
  transaction, (ii) the value of the Capital Stock issued in connection with any
  such merger, consolidation or acquisition is not more than the fair market value
  of the stock or assets being acquired (as determined in the reasonable and good
  faith judgment of the Company’s Board of Directors or, if thereafter 











requested by Holder, at the Company’s sole expense, by a third-party evaluator reasonably acceptable to Holder and having experience in the valuation of assets and businesses in the mining industry generally), and (iii) in the event that any
such acquisition is made by any subsidiary of the Company, each such subsidiary executes (i) a guaranty guaranteeing the full and punctual payment in full of all Indebtedness under the Note and any other Loan Documents, (ii) in the case of a stock
acquisition, a pledge in favor of Holder of the capital stock or equity acquired by such subsidiary, and (iii) a joinder to the Security Agreement, granting Holder a security interest in the assets acquired by such subsidiary as a result of any such
merger, consolidation or acquisition.

                     1.5.2
  Disposition of Property. Without Holder’s prior written consent,
  which consent may be given or denied at Holder’s sole discretion, the Company
  will not sell, lease or otherwise dispose of any of the Property, including
  any disposition of the Property as part of a sale and leaseback transaction,
  to or in favor of any Person, except for sales of inventory made in the ordinary
  course (including, without limitation, pursuant to any installment, output requirement,
  offtake or similar agreement with respect to the sale of future production in
  the ordinary course) to the extent that all net proceeds of any such sale, lease
  or disposition are applied to permanently reduce the Note in inverse order of
  maturity.

           1.6
  Compliance with Environmental Laws. The Company will not, and will not
  permit any of its subsidiaries to, (i) use any of the Property or any portion
  thereof for the handling, processing, storage, generation, manufacture, treatment,
  production, refining or disposal of hazardous substances, other than in compliance
  with environmental laws, except where the failure of such compliance would not
  be reasonably likely to have a material adverse effect upon the financial, business,
  legal condition or prospects of the Company and its subsidiaries, taken as a
  whole (a “Material Adverse Effect”), (ii) cause or permit to be located
  on any of the Property any underground tank, surface impoundment, lagoons, pits,
  sumps, or underground storage receptacle for hazardous substances in any manner
  that would violate any environmental law in any material respects or bring such
  Property in violation of any environmental law in any material respects, (iii)
  generate any hazardous substances on any of the Property in any manner that
  would violate any environmental law or bring such Property in violation of any
  environmental law, (iv) conduct any activity at any of the Property or use any
  of the Property in any manner so as to cause a release or threatened release
  of hazardous substances on, upon or into the Property, or (v) otherwise conduct
  any activity at any of the Property or use any of the Property in any manner
  that would violate any environmental law or bring such Property in violation
  of any environmental law in any material respects, in each case except where
  such violation would not be reasonably likely to have a Material Adverse Effect.

           1.7
  Business Activities. Without the prior written consent of Holder, which
  consent may be given or denied at Holder’s sole discretion, the Company
  will not cease engaging in its business or engage directly or indirectly (whether
  through subsidiaries or otherwise) in any type of business other than the businesses
  presently or currently planned to be conducted by them and in related lines
  of businesses.

           1.8
  Transactions with Affiliates. Without the prior written consent of Holder,
  which 











consent may be given or denied at Holder’s sole discretion, other than the transactions disclosed in the documents referred to in Schedule I and settlement agreements to be entered into between the Company and Ronald A. Hirsch, Steven D.
Seymour and TMD Acquisition Corporation and other than in the Company’s ordinary course of business, the Company will not engage in any transaction with any affiliate (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such affiliate or, to the knowledge of the
Company, any person in which any such affiliate has a substantial interest or is an officer, director, partner, member or trustee on terms more favorable to such Person than would have been obtainable on an arm’s-length basis in the ordinary
course of business.  Notwithstanding the provisions of this Section 1.8 to the contrary, the Company shall not, other than in connection with any transaction or agreement which is permitted hereunder, (A) enter into or consummate any
transaction or agreement pursuant to which it becomes a party to any mortgage, note, indenture or guarantee evidencing any Indebtedness of any of its affiliates or otherwise to become responsible or liable, as a guarantor, surety or otherwise,
pursuant to an agreement for any Indebtedness of any such affiliate, or (B) make any payment to any of its affiliates in excess of $10,000 without the prior written consent of Holder.

           1.9
  Conflicting Agreements. Without the prior written consent of Holder,
  which consent may be given or denied at Holder’s sole discretion, the Company
  will not enter into any amendment or other modification to any currently existing
  contractual obligation, which by its terms materially impairs the ability of
  the Company to (a) pay the principal of or interest on the Note, or (b) fully
  satisfy all of its obligations hereunder. 

           1.10
  Fiscal Year 2004 and Quarterly Financial Statements. Within thirty (30)
  days following the end of each fiscal quarter while this Note is outstanding,
  the Company shall deliver to Holder unaudited quarterly financial statements
  substantially prepared in accordance with GAAP, except for normal recurring
  year-end adjustments.

           1.11
  Monthly Operating Reports. As soon as practicable following the end of
  each month while this Note is outstanding, the Company shall deliver to Holder
  a copy of the Company’s monthly operating reports and such other reports
  as Holder may reasonably request.

           1.12
  Notification as to Certain Events. The Company shall notify Holder if
  the Company becomes aware of any events that may result in a Material Adverse
  Effect with respect to the Property or the Company’s ability to perform
  its obligations under the Note. 

           1.13
  Payment of Accrued Compensation. The Company will not, and will not permit
  any of its subsidiaries to, pay in cash any of the Indebtedness disclosed in
  Appendix I, Exceptions to Covenants and Agreement Set Forth in Schedule 2, Section
  1.1 (2) of the Original Note.

           1.14
  Maintenance of Required Approvals and Consents; Compliance with Laws.
  The Company will take all action necessary to maintain all approvals and consents
  necessary with 











respect to the operation of its business and the maintenance of the Property. The Company shall comply in all material respects with all applicable laws with respect to the operation of its business and the maintenance of the Property.

           1.15
  Certain Definitions. As used herein, the following terms shall have the
  following meanings (such meanings to be equally applicable to both the singular
  and plural forms of the terms defined).

           “Capital
  Stock” shall mean any and all shares, interests, participations or
  other equivalents (however, designated) of capital stock of a corporation, any
  and all equivalent ownership interests in a Person (other than a corporation)
  including, without limitation, membership interests in a limited liability company
  and any and all warrants, rights or options to purchase any of the foregoing.

           “Distribution”
  shall mean (i) the declaration or payment of any dividend on or in respect of
  any shares of any class of Capital Stock of the Company or any subsidiary, other
  than dividends payable solely in shares of common stock of the Company or such
  subsidiary; (ii) the purchase, redemption, or other retirement of any shares
  of any class of Capital Stock of the Company, directly or indirectly through
  a subsidiary of the Company or otherwise; (iii) the return of capital by the
  Company or any subsidiary to its stockholders as such; or (iv) any other distribution
  on or in respect of any shares of any class of Capital Stock of the Company
  or any subsidiary.

           “Governmental
  Authority” means any national or federal government, any state, regional,
  local or other political subdivision thereof with jurisdiction and any person
  with jurisdiction exercising executive, legislative, judicial, regulatory or
  administrative functions of or pertaining to government. 

           “Indebtedness”
  shall mean, without limitation, (i) incurrence of debt arising from the lending
  of money by any Person to the Company or any of its subsidiaries; (ii) incurrence
  of debt, whether or not in any such case arising from the lending by any Person
  of money to the Company or any of its subsidiaries, (A) which is represented
  by notes payable or drafts accepted that evidence extensions of credit, (B)
  which constitutes obligations evidenced by bonds, debentures, notes or similar
  instruments, (C) upon which interest charges are customarily paid (other than
  accounts payable) or that was issued or assumed as full or partial payment for
  Property, or (D) to the extent not covered by the foregoing clauses (A) through
  (C), pursuant to any merger, consolidation or acquisition by the Company or
  any Subsidiary; (iii) incurrence of debt that constitutes a capitalized lease
  obligation in excess of $50,000; (iv) reimbursement obligations with respect
  to letters of credit or guaranties of letters of credit; and (v) Indebtedness
  of the Company or any of its subsidiaries under any guaranty of obligations
  that would constitute Indebtedness under clauses (i) through (iii) hereof, if
  owed directly by the Company or any of its subsidiaries.

           “Investments”
  shall mean all expenditures made and all liabilities incurred (contingently
  or otherwise) for the acquisition of capital stock or Indebtedness of, or for
  loans, advances, 











capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under Indebtedness), or obligations of, any Person.

           “Person”
  shall mean any individual, corporation, partnership, limited liability company,
  trust, unincorporated association, business, or other legal entity, and any
  government or any Governmental Authority.

           “Property”
  shall mean the Trust Property (as such term is defined in the [Deed of Trust]).