**SUBORDINATED
      SECURED NON RESCOURSE PROMISSORY NOTE**




$841,828
              April
                  24, 2008


FOR
      VALUE
      RECEIVED, **THE
      BLACKHAWK FUND, a Nevada corporation** with an
      address of 1802 N. Carson Street, Suite 212, Carson City, Nevada 88701 (the
      “Borrower”), promise(s) to pay to the order of **PALOMAR
      ENTERPRISES, INC.** , **a
      Nevada corporation** (together with any successor holder or holders of this Note, the “Lender”) at
      its office at 120 Birmingham Drive, Suite 120-C, Cardiff, CA 92007, or such
      other place as Lender may designate, the principal sum of **EIGHT
      HUNDRED FORTY ONE THOUSAND EIGHT HUNDRED TWENTY EIGHT** Dollars
      ($841,828), or so much thereof as shall be advanced hereunder, together with
      interest thereon, as hereinafter set forth.





The
      outstanding principal balance of this Note, together with any accrued interest
      and other charges as may be due hereunder, shall be paid on October 24, 2008
      (the “Maturity Date”).





In
      the
      event that any payment due hereunder is not paid when due or upon a default
      under the deed of trust securing this Note (the “Deed of Trust”) or under any
      other instrument executed by Borrower in connection with the loan evidenced
      by
      this Note (together with this Note and the Deed of Trust, the “Loan Documents”)
      which default is not cured within the applicable grace period, if any, Lender,
      at its option, may declare immediately due and payable the entire outstanding
      balance of principal and interest, together with all other charges which Lender
      may be entitled.





The
      full
      amount of this Note is secured by the Deed of Trust, and is subject to all
      of
      the terms and provisions of the Deed of Trust. The Lender’s recovery against the
      undersigned for failure to pay any amount owing hereunder when due shall be
      limited solely to the property that is subject to the Deed of Trust. Lender
      agrees that neither Borrower nor any stockholders, officers, or directors of
      Borrower shall be personally liable or have any personal liability in any other
      respect for any amounts due hereunder or under the other Loan Documents,
      including, without limitation, for any deficiency which may arise upon a
      foreclosure of the Deed of Trust or the liquidation of other collateral given
      to
      secure this Note; provided that this provision shall not diminish in any way
      the
      powers of Lender to foreclose the Deed of Trust.





Any
      notice required or permitted to be delivered hereunder shall be in writing
      and
      shall be deemed to be delivered on the earlier of (i) the date received, or
      (ii)
      the date of delivery, refusal, or non-delivery indicated on the return receipt,
      if deposited in a United States Postal Service depository, postage prepaid,
      sent
      registered or certified mail, return receipt requested, addressed to the party
      to receive the same at the address of such party set forth at the beginning
      of
      this Note, or at such other address as may be designated in a notice delivered
      or mailed as herein provided.










Lender
      agrees that the indebtedness evidenced by this Note is hereby expressly
      subordinated in right of payment to the prior payment in full of all the
      Company's Senior Indebtedness (as hereinafter defined). For purposes of this
      Note, “Senior Indebtedness” shall mean the principal of and unpaid interest on
      indebtedness relating to those certain properties set forth on Exhibit
      A attached
      hereto, including indebtedness owed to banks, insurance companies or other
      financial institutions regularly engaged in the business of lending money.





Lender
      agrees to pay all charges (including attorney’s fees) of Lender in connection
      with the collection and/or enforcement of this Note or any other Loan Document
      or in protecting or preserving the security for this Note, whether or not suit
      is brought against Borrower.





The
      failure of Lender at any time to exercise any option or right hereunder shall
      not constitute a waiver of Lender’s right to exercise such option or right at
      any other time.





Borrower
      and all endorsers and guarantors of this Note hereby jointly and severally
      waive
      presentment, demand, notice, protest and all other suretyship defenses generally
      and agree that (i) any renewal, extension or postponement of the time of payment
      or any other indulgence, (ii) any modification, supplement or alteration of
      any
      of the Borrower’s obligations undertaken in connection with this Note or any of
      the other Loan Documents, or (iii) any substitution, exchange or release of
      collateral or the addition or release of any person or entity primarily or
      secondarily liable, may be effected without notice to Borrower or any endorser
      or guarantor or Borrower’s obligations, and without releasing Borrower or such
      endorser or guarantor from any liability hereunder.





This
      Note
      shall be governed by, construed, and enforced in accordance with the laws of
      the
      State of California. If any provision of this Note is held to be invalid or
      unenforceable by a court of competent jurisdiction, the other provisions of
      this
      Note shall remain in full force and effect. If the payment of any interest
      due
      hereunder would subject Lender to any penalty under applicable law, then the
      payments due hereunder shall be automatically reduced to what they would be
      at
      the highest rate authorized under applicable law.





This
      Note
      is secured by a deed of trust and assignment of rents of real estate located
      at
      San Diego County, California, and recorded with San Diego County.





This
      Note
      shall have the effect of an instrument under seal.


Witness:
              Borrower:THE
                  BLACKHAWK FUND/s/
                  Marc A. Indeglia
              By:/s/
                  Steven BonenbergerMarc
                  A. Indeglia
              Name:
                  Steven BonenbergerTitle:
                  Pres + CEO









Exhibit
      A





All
      that
      certain real property located in the County of San Diego, State of California
      described below:




A
      CONDOMINIUM COMPOSED OF:




PARCEL
      NO. 1:




UNIT
      NO.
      117 AS SHOWN AND DESCRIBED IN THE CONDOMINIUM PLAN; TRAMONTO, PHASE 2 (“PLAN”),
      WHICH PLAN WAS RECORDED ON OCTOBER 7, 1996, AS INSTRUMENT NO. 1996-0508542,
      IN
      THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.




PARCEL
      NO. 2:




AN
      UNDIVIDED 1/28 TH FEE
      SIMPLE INTEREST AS A TENANT IN COMMON IN AND TO ALL OF THE REAL PROPERTY
      COMPRISING THE COMMON AREA (AS DEFINED IN THE SUPPLEMENTAL DECLARATION REFERRED
      TO ABOVE AS DEPICTED ON THE PLAN) OF LOTS 8, 9, 10 AND 17 OF CARLSBAD TRACT
      90-09 (A), AVIARA AREA 5, UNIT 2, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO,
      STATE OF CALIFORNIA, ACCORDING TO MAP FILED ON SEPTEMBER 16, 1996 AS MAP NO.
      13360, IN THE OFFICE OF THE SAN DIEGO COUNTY RECORDER.




PARCEL
      NO. 3:




NON-EXCLUSIVE
      EASEMENTS FOR ACCESS, INGRESS, EGRESS, USE, ENJOYMENT, DRAINAGE, ENCROACHMENT,
      SUPPORT, MAINTENANCE, REPAIRS, AND FOR OTHER PURPOSES, ALL AS DESCRIBED IN
      THE
      PROJECT DECLARATION AND SUPPLEMENTAL DECLARATION.




PARCEL
      NO. 4:




A
      NON-EXCLUSIVE EASEMENTS, IF APPLICABLE, FOR THE BENEFIT OF THE PRESENT AND
      FUTURE OWNERS OF PARCELS NO. 1 AND 2 ABOVE FOR ACCESS, MAINTENANCE AND DRAINAGE
      OVER, ON, ALONG AND ACROSS AN AREA OF THE ACCESS UNIT ADJACENT TO PARCEL NO.
      1
      AS SHOWN AND DELINEATED IN THE PROJECT DECLARATION AND THE SUPPLEMENTAL
      DECLARATION AND MORE FULLY DESCRIBED THEREIN.







Exhibit
      A (page 2)




PARCEL
      NO. 5:




A
      NON-EXCLUSIVE EASEMENT, IF APPLICABLE, FOR THE BENEFIT OF THE PRESENT AND FUTURE
      OWNERS OF PARCELS NO. 1 AND 2 ABOVE FOR INGRESS, EGRESS, AND DRIVEWAY PURPOSE
      OVER, ON, ALONG AND ACROSS AN AREA OF THE DRIVEWAY ACCESS EASEMENT AREA ADJACENT
      TO PARCEL NO. 1 AS SHOWN AND DELINEATED IN THE PROJECT DECLARATION AND THE
      SUPPLEMENTAL DECLARATION AND MORE FULLY DESCRIBED THEREIN.




EXCEPTING
      FROM PARCELS 1 THROUGH 5, ALL PREVIOUSLY UNRESERVED MINERALS, OIL, GAS,
      PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER IN OR UNDER
      OR
      WHICH MAY BE PRODUCED FOR SUCH LOT(S) WHICH UNDERLIES A PLANE PARALLEL TO AND
      500 FEET BELOW THE PRESENT SURFACE OF SUCH LOT(S) FOR THE PURPOSE OF PROSPECTING
      FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SUCH
      MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM
      SUCH
      LOT(S) BY MEANS OF MINES, WELLS, DERRICKS OR OTHER EQUIPMENT FROM SURFACE
      LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE
      ABOVE-DESCRIBED LOT(S), IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS,
      OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE,
      SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OR ANY PORTION THEREOF ABOVE
      SUCH
      PLANE PARELLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF SUCH LOT(S) FOR
      ANY
      PURPOSE WHATSOEVER.




Assessor’s
      Parcel No.: 215-770-14-20




B.
      Two
      parcels of property set forth below:




PARCEL
      1:




THE
      NORTHEASTERLY 50 FEET OF LOT 12 IN BLOCK 2 OF STRAND TRACT ADDITION, IN THE
      CITY
      OF OCEANSIDE, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF
      NO. 936, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
      DECEMBER 8, 1904.




PARCEL
      2:




AN
      EASEMENT FOR ROAD PURPOSES OVER THE WESTERLY 30 FEET OF THE EASTERLY 80 FEET
      OF
      LOTS 1 TO 12, INCLUSIVE, IN SAID BLOCK 2, TO BE USED JOINTLY BY GRANTOR AND
      GRANTEES HEREIN.




EXCEPTING
      FROM SAID LAND THAT PORTION THEREOF, IF ANY, HERETOFORE OR NOW LYING BELOW
      THE
      MEAN HIGH TIDE LINE OF THE PACIFIC OCEAN.




Assessor’s
      Parcel No.: 143-170-13-00