Unassociated Document


    
      

      

    

    INVESTMENT
AGREEMENT

    


    dated as
of July 14, 2010

    


    between

    


    DESERT
HAWK GOLD CORP.

    


    and

    


    DMRJ
GROUP I, LLC,

    as
Investor

     

    
      

      

    

    Desert Hawk Investment Agreement

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    TABLE OF
CONTENTS

     

    
      
        
          
            	
                    ARTICLE I.
      DEFINITIONS AND ACCOUNTING TERMS

                  	
                    1

                  
	 
      	 
      
	
                    SECTION 1.01.
      Certain Defined Terms

                  	
                    1

                  
	
                    SECTION 1.02.
      Computation of Time Periods; Other Definitional Provisions

                  	
                    14

                  
	
                    SECTION 1.03.
      Accounting Terms

                  	
                    14

                  
	 
      	 
      
	
                    ARTICLE II.
      AMOUNTS AND TERMS OF THE TERM LOAN ADVANCES; ISSUANCE OF SHARES OF SERIES
      A PREFERRED STOCK

                  	
                    15

                  
	 
      	 
      
	
                    SECTION 2.01.
      The Term Loans Advances

                  	
                    15

                  
	
                    SECTION 2.02.
      Making the Term Loan Advances

                  	
                    16

                  
	
                    SECTION
      2.03.
      Interest

                  	
                    16

                  
	
                    SECTION 2.04.
      Repayment of Term Loan Advances on Maturity Date

                  	
                    17

                  
	
                    SECTION 2.05.
      Prepayment of Term Loan Advances

                  	
                    18

                  
	
                    SECTION 2.06.
      Payments; Pro Rata Allocation; and Computations

                  	
                    19

                  
	
                    SECTION
      2.07.
      Taxes

                  	
                    20

                  
	
                    SECTION 2.08.
      Company Has No Right to Terminate Commitment

                  	
                    22

                  
	
                    SECTION 2.09.
      Use of Proceeds

                  	
                    22

                  
	
                    SECTION 2.10.
      Evidence of Debt; Registered Notes

                  	
                    23

                  
	
                    SECTION 2.11.
      Issuance of Series A Preferred Stock to the Investor

                  	
                    24

                  
	 
      	 
      
	
                    ARTICLE III.
      CONDITIONS OF LENDING

                  	
                    26

                  
	 
      	 
      
	
                    SECTION 3.01.
      Conditions Precedent to Initial Borrowing

                  	
                    26

                  
	
                    SECTION 3.02.
      Conditions Precedent to Each Borrowing

                  	
                    31

                  
	 
      	 
      
	
                    ARTICLE IV.
      REPRESENTATIONS AND WARRANTIES

                  	
                    32

                  
	 
      	 
      
	
                    SECTION 4.01.
      Representations and Warranties of the Company

                  	
                    32

                  
	 
      	 
      
	
                    ARTICLE V.
      AFFIRMATIVE COVENANTS

                  	
                    42

                  
	 
      	 
      
	
                    SECTION 5.01.
      Existence; Businesses and Properties

                  	
                    42

                  
	
                    SECTION
      5.02.
      Insurance

                  	
                    42

                  
	
                    SECTION
      5.03.
      Taxes

                  	
                    43

                  
	
                    SECTION 5.04.
      Financial Statements, Reports, etc

                  	
                    44

                  
	
                    SECTION 5.05.
      Litigation and Other Notices

                  	
                    45

                  
	
                    SECTION 5.06.
      Compliance with Laws

                  	
                    46

                  
	
                    SECTION 5.07.
      Maintaining Records; Access to Properties and Inspections

                  	
                    46

                  
	
                    SECTION 5.08.
      Use of Proceeds

                  	
                    46

                  
	
                    SECTION 5.09.
      Compliance with Environmental Law

                  	
                    46

                  
	
                    SECTION 5.10.
      Further Assurances Relating to Collateral

                  	
                    46

                  
	
                    SECTION 5.11.
      Fiscal Year; Accounting

                  	
                    48

                  
	
                    SECTION 5.12.
      Performance of Mining Leases

                  	
                    48

                  


          

        

      

    

    


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                    SECTION 5.13.
      General Further Assurances

                  	
                    48

                  
	 
      	 
      
	
                    ARTICLE VI.
      NEGATIVE COVENANTS

                  	
                    49

                  
	 
      	 
      
	
                    SECTION
      6.01.
      Indebtedness

                  	
                    49

                  
	
                    SECTION
      6.02.
      Liens

                  	
                    49

                  
	
                    SECTION 6.03.
      Sale and Lease-Back Transactions

                  	
                    52

                  
	
                    SECTION 6.04.
      Investments, Loans and Advances

                  	
                    52

                  
	
                    SECTION 6.05.
      Mergers, Consolidations, Sales of Assets and Acquisitions

                  	
                    53

                  
	
                    SECTION 6.06.
      Dividends and Distributions

                  	
                    54

                  
	
                    SECTION 6.07.
      Transactions with Affiliates

                  	
                    54

                  
	
                    SECTION 6.08.
      Business of the Company

                  	
                    54

                  
	
                    SECTION 6.09.
      Limitation on Modifications of Constitutive Documents; etc

                  	
                    54

                  
	
                    SECTION 6.10.
      Capital Expenditures

                  	
                    54

                  
	
                    SECTION 6.11.
      Lease Obligations

                  	
                    54

                  
	
                    SECTION 6.12.
      Limitations on Modifications to Certain Indebtedness

                  	
                    55

                  
	
                    SECTION 6.13.
      Swap Agreements

                  	
                    55

                  
	
                    SECTION 6.14.
      Accounting Changes

                  	
                    55

                  
	
                    SECTION 6.15.
      Formation of Additional Subsidiaries; Activities and Assets of the
      Subsidiaries

                  	
                    55

                  
	
                    SECTION 6.16.
      No Modification of Principal Lease Agreements or Material
      Contracts

                  	
                    55

                  
	 
      	 
      
	
                    ARTICLE VII.
      EVENTS OF DEFAULT

                  	
                    55

                  
	 
      	 
      
	
                    SECTION 7.01.
      Events of Default

                  	
                    55

                  
	 
      	 
      
	
                    ARTICLE VIII.
      [INTENTIONALLY DELETED]

                  	
                    58

                  
	 
      	 
      
	
                    ARTICLE IX.
      MISCELLANEOUS

                  	
                    58

                  
	 
      	 
      
	
                    SECTION 9.01.
      Amendments, Etc.

                  	
                    58

                  
	
                    SECTION 9.02.
      Notices, Etc.

                  	
                    58

                  
	
                    SECTION 9.03.
      No Waiver; Remedies

                  	
                    60

                  
	
                    SECTION 9.04.
      Costs and Expenses

                  	
                    60

                  
	
                    SECTION 9.05.
      Right of Set-off

                  	
                    61

                  
	
                    SECTION 9.06.
      Binding Effect

                  	
                    61

                  
	
                    SECTION 9.07.
      Assignments and Participations

                  	
                    61

                  
	
                    SECTION 9.08.
      Execution in Counterparts

                  	
                    63

                  
	
                    SECTION 9.09.
      Interest Rate Limitation

                  	
                    63

                  
	
                    SECTION 9.10.
      Jurisdiction, Etc.

                  	
                    63

                  
	
                    SECTION 9.11.
      Governing Law

                  	
                    64

                  
	
                    SECTION 9.12.
      Entire Agreement

                  	
                    64

                  
	
                    SECTION 9.13.
      WAIVER OF JURY TRIAL

                  	
                    64

                  
	
                    SECTION 9.14.
      Confidential Information

                  	
                    65

                  


          

        

      

    

    


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                  SCHEDULES

                	 
      	 
      
	 
      	 
      	 
      
	
                  Schedule
      I

                	
                  -

                	
                  Portion
      of Leased Real Property Comprising the Cactus
Properties

                
	
                  Schedule
      II

                	
                  -

                	
                  Portion
      of Leased Real Property Comprising the Kiewit
Properties

                
	
                  Schedule
      III

                	
                  -

                	
                  Portion
      of Leased Real Property Comprising the Yellowhammer
    Properties

                
	
                  Schedule
      IV

                	
                  -

                	
                  Excluded
      Property

                
	
                  Schedule
      4.01(a)

                	
                  -

                	
                  Capital
      Stock of Company

                
	
                  Schedule
      4.01(b)

                	
                  -

                	
                  Capitalization
      of Blue Fin

                
	
                  Schedule
      4.01(d)

                	
                  -

                	
                  Authorizations,
      Approvals, Actions, Notices and Filings

                
	
                  Schedule
      4.01(f)

                	
                  -

                	
                  Disclosed
      Litigation; Violations

                
	
                  Schedule
      4.01(h)

                	
                  -

                	
                  Mining
      Permits

                
	
                  Schedule
      4.01(i)(A)

                	
                  -

                	
                  Yellowhammer
      Pro Forma Production and Financial Projections

                
	
                  Schedule
      4.01(i)(B)

                	
                  -

                	
                  Kiewit
      Pro Forma Production and Financial Projections

                
	
                  Schedule
      4.01(m)

                	
                  -

                	
                  Environmental
      Matters

                
	
                  Schedule
      4.01(q)(iii)

                	
                  -

                	
                  Other
      Real Property Interests

                
	
                  Schedule
      4.01(q)(iv)

                	
                  -

                	
                  Prior
      Mining Activities

                
	
                  Schedule
      4.01(t)

                	
                  -

                	
                  Investments

                
	
                  Schedule
      6.01(a)

                	
                  -

                	
                  Indebtedness

                
	
                  Schedule
      6.02(a)

                	
                  -

                	
                  Liens

                
	
                  Schedule
      6.10

                	
                  -

                	
                  Equipment

                


        

      

    

    


    
      
        
          	
                  EXHIBITS

                	 
      	 
      
	 
      	 
      	 
      
	
                  Exhibit
      A

                	
                  -

                	
                  Form
      of Note

                
	
                  Exhibit
      B

                	
                  -

                	
                  Form
      of Borrowing Notice

                


        

      

    

    


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    INVESTMENT
AGREEMENT

     

    INVESTMENT
AGREEMENT, dated as of July 14, 2010, between DESERT HAWK GOLD CORP., a
Nevada corporation (the “Company”),
and DMRJ GROUP I, LLC, a Delaware limited liability company (the “Investor”).

     

    PRELIMINARY
STATEMENT:

     

    The
Company has requested the Investor to make available to the Company a senior
secured term loan credit facility of up to $6,500,000 to pay transaction fees
and expenses in connection herewith and to provide capital to the Company for
the conduct of the Mining Activities at the Cactus Mill and on the Yellowhammer
Properties and the Kiewit Properties.  The Investor has indicated its
willingness to lend such amount upon and subject to the terms and conditions set
forth herein provided the Transaction Parties grant to the Investor a first
priority lien on and security interest in and to all of the assets, rights,
interests and properties of the Transaction Parties.

     

    NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the parties hereto hereby agree as
follows:

     

    ARTICLE
I.

     

    DEFINITIONS
AND ACCOUNTING TERMS

     

    SECTION 1.01. Certain Defined
Terms.  As used in this Agreement, 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):

     

    “Active Mining
Duties” means, with respect to an unpatented mining claim, such
exploration and/or production of such unpatented mining claim (including
discovery and other validation work) as is required under applicable law to
maintain a valid right to such claim to the exclusion of the rights to such
claim of any other Person.

     

    “Additional
Mortgage” has the meaning specified in Section
5.10(b)(i).

     

    “Affiliate”
means, as to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such
Person.  For purposes of this definition, the term “control”
(including the terms “controlling”, “controlled by” and “under common control
with”) of a Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, contract, voting trust or
otherwise.  Unless the context otherwise clearly requires, any
reference to an “Affiliate”
is a reference to an Affiliate of the Company.

     

    “After Acquired
Properties” has the meaning specified in Section
5.10(b).

    


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    “Agreement”
means this Investment Agreement, as amended, together with all schedules and
exhibits hereto.

     

    “Assignment and
Acceptance” has the meaning specified in Section
9.07(a).

     

    “Base
Interest” has the meaning specified in Section
2.03(a)(i).

     

    “Blue Fin”
means Blue Fin Capital, Inc., a Utah corporation and wholly-owned subsidiary of
the Company.

     

    “Borrowing”
means a borrowing of a Term Loan Advance made by the Investor pursuant to Section
2.02.

     

    “Borrowing
Notice” has the meaning specified in Section
2.02.

     

    “Business
Day” means a day of the year on which banks are not required or
authorized by law to close in New York City.

     

    “Cactus
Mill” means the ore milling facility and related plant and equipment
located, or to be located, on the Cactus Properties as sufficient to engage in
the milling and processing of ore thereon.

     

    “Cactus
Properties” means that portion of the Leased Real Property covered by the
Principal Lease Agreements to the extent set forth in Schedule I
hereto.

     

    “Capital
Expenditures” means, for any Person for any period, the sum of, without
duplication, all expenditures made, directly or indirectly, by such Person or
any of its Subsidiaries during such period for equipment, fixed assets, real
property or improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance with GAAP,
reflected as additions to property, plant or equipment on a Consolidated balance
sheet of such Person or have a useful life of more than one year.

     

    “Capital
Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability on its balance sheet in accordance with
GAAP.

     

    “Capital Lease
Obligation” means, with respect to any Person and a Capital Lease, the
amount of the obligation of such Person as the lessee under such Capital Lease
which would, in accordance with GAAP, appear as a liability on a balance sheet
of such Person.

     

    “Capital
Stock” shall
mean, with respect to any Person, any and all shares, units representing
interests, participations, rights in or other equivalents (however designated)
of such Person’s capital stock, including, (a) with respect to
partnerships, partnership interests (whether general or limited) and any other
interest or participation that confers upon a Person the right to receive a
share of the profits and losses of, or distributions of assets of, such
partnership, (b) with respect to limited liability companies, member
interests, and (c) with respect to any Person, any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable for
or convertible into such capital stock.

    


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    “Cash
Equivalents” means any of the following, to the extent owned by a
Transaction Party free and clear of all Liens and, unless otherwise specified
below, having a maturity of not greater than one (1) year from the date of
acquisition thereof:

     

    (a)           United
States Governmental Securities maturing within one year from the date of
acquisition;

     

    (b)           demand
deposits, time deposits, certificates of deposit, banker’s acceptances,
overnight bank deposits or other bank instruments maturing within one year from
the date of acquisition thereof, issued by any bank or trust company that is
organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits of $500.0 million and whose long-term
unsecured debt or whose parent holding company’s long-term unsecured debt, is
rated “AA-“ or better by S&P, “Aa3” or better by Moody’s or an equivalent
rating by any other credit rating agency of recognized national
standing;

     

    (c)           with
the prior consent of the Investor, repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in clause (a)
above entered into with a bank meeting the qualifications described in clause
(b) above, provided in all cases such repurchase agreement qualifies as a
“properly executed” repurchase agreement (as such term is used in the adopting
release of the Federal Deposit Insurance Corporation rule entitled “Processing
of Deposit Accounts in the Event of an Insured Depository Institution Failure”,
12 CFR § 360.8;

     

    (d)           obligations
of any state of the United States of America, or any municipality of any such
state, in each case rated “AA” or better by S&P, “Aa2” or better by Moody’s
or an equivalent rating by any other credit rating agency of recognized national
standing; provided that
such obligations mature within one year from the date of acquisition thereof;
and

     

    (e)           commercial
paper maturing in 270 days or less from the date of issuance which, at the time
of acquisition by a Transaction Party is rated A-l or better by S&P or P1 or
better by Moody’s or an equivalent rating by any other credit rating agency of
recognized national standing.

     

    “CERCLIS”
means the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection
Agency.

     

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    “Change in
Control” means the occurrence of any of the
following:  (i) any Desert Hawk Specified Investor (together with
his or her spouse and his and her direct lineal descendants) shall cease to
legally and beneficially own at least 80% of the aggregate number of shares of
Capital Stock of the Company legally and beneficially owned by such Desert Hawk
Specified Investor (together with his or her spouse and his or her direct lineal
descendants) on the date of this Agreement, (ii) if Rick Havenstrite, John
Ryan, Robert Jorgensen and, if a director of the Company, Eric Moe shall cease
to constitute a majority of the members of the Board of Directors of the Company
unless, upon the occurrence of the removal, death or resignation of the director
that shall have resulted in such occurrence, the Investor shall have, in its
sole discretion, approved in writing of the new director replacing such removed,
deceased or resigning director, or (iii) if any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended, but other than, individually or collectively, any of
the Desert Hawk Specified Investors) becomes the beneficial owner, as defined in
Rule 13d-3 promulgated under such Act, of 50% or more of the voting power of the
outstanding Capital Stock of the Company entitled to vote generally in the
election of directors.

     

    “Charges”
has the meaning specified in Section
9.09.

     

    “Clifton
Lease” means that certain Amended and Restated Lease and Sublease
Agreement, effective as of July 24, 2009, by and among Clifton Mining Company
and Woodman Mining Company, as lessors, and the Company, as lessee, which
agreement amends and restates in its entirety that certain Mining Venture
Agreement, effective as of July 24, 2009, by and among such parties, as
amended.

     

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

     

    “Collateral”
means all the collateral that is pledged or encumbered under any Security
Document.

     

    “Collateral
Security Agreement” means that certain Security Agreement dated the
Effective Date between the Transaction Parties, on the one hand, and the
Investor, on the other, together with each other collateral security agreement
or collateral security agreement supplement delivered from time to time pursuant
to Section
5.10(b), in each case as amended.

     

    “Commitment”
means $6,500,000.

     

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

     

    “Company”
has the meaning specified in the recital of parties to this
Agreement.

     

    “Company’s
Account” means such account as the Company shall specify in writing, and
be acceptable, to the Investor.

     

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    “Confidential
Information” means any information disclosed, either directly or
indirectly, in writing, orally (to the extent provided by the proviso hereof) or
by inspection of tangible objects (including, without limitation, documents,
prototypes, samples, plant and equipment), which is designated as
“Confidential,” “Proprietary” or some similar designation; provided, however, that information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within a
reasonable time (not to exceed ten (10) Business Days) after the initial
disclosure.  Confidential Information may also include information
disclosed to a disclosing party by third parties.  Confidential
Information shall also include the fact that discussions between the parties
with respect to a possible transaction have and are taking
place.  Confidential Information shall not, however, include any
information which (i) was publicly known and made generally available in
the public domain prior to the time of disclosure by the disclosing party;
(ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving
party at the time of disclosure by the disclosing party as shown by the
receiving party’s files and records immediately prior to the time of disclosure;
(iv) is obtained by the receiving party from a third party without a breach
of such third party’s obligations of confidentiality; (v) is independently
developed by the receiving party without use of or reference to the disclosing
party’s Confidential Information, as shown by documents and other competent
evidence in the receiving party’s possession; or (vi) is required by law to
be disclosed by the receiving party, provided that the receiving party gives the
disclosing party prompt written notice of such requirement prior to such
disclosure and, at the cost and expense of the disclosing party, assistance in
obtaining an order protecting the information from public
disclosure.

     

    “Consolidated”
refers to the consolidation of accounts in accordance with GAAP.

     

    “Constitutive
Documents” means, with respect to any Person, the certificate of
incorporation or registration or formation (including, if applicable,
certificate of change of name), articles of incorporation or association,
memorandum of association, charter, bylaws, partnership agreement, trust
agreement, limited liability company operating or members agreement, or one or
more similar agreements, instruments or documents constituting the organization
or formation of such Person.

     

    “Core
Properties” means the properties and mining claims listed on Schedules I,
II and III hereof.

     

    “Default”
means any Event of Default or any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.

     

    “Default
Interest” has the meaning specified in Section
2.03(b).

     

    “Deposit Account
Control Agreement” has the meaning specified in Section
3.01(a)(vii).

     

    “Desert Hawk
Specified Investors” means any of Eric Moe, Rick Havenstrite and Robert
Jorgensen.

    


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    “Disclosed
Litigation” has the meaning specified in Section
3.01(c).

     

    “Effective
Date” means the first date on which the conditions set forth in Article III
shall have been satisfied.

     

    “Eligible
Assignee” has the meaning specified in Section
9.07(a).

     

    “Environmental
Action” means any action, suit, demand, demand letter, claim, notice of
non-compliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law, any Environmental Permit or Hazardous Material or
arising from alleged injury or threat to health, safety or the environment,
including, without limitation, (a) by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
and (b) by any governmental or regulatory authority or third party for
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.

     

    “Environmental
Law” means any Federal, state, local or foreign statute, law, ordinance,
rule, regulation, code, order, writ, judgment, injunction, decree or judicial or
agency interpretation, policy or guidance relating to pollution or protection of
the environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.

     

    “Environmental
Permit” means any permit, approval, identification number, license or
other authorization, as amended, required under any Environmental
Law.

     

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

     

    “ERISA
Affiliate” means any trade or business (whether or not incorporated)
that, together with the Company or any Subsidiary thereof, 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.

     

    “Event of
Default” has the meaning specified in Section
7.01.

     

    “Excluded
Property” means any Owned Real Property or Leased Real Property as to
which, and only for so long as the Investor shall have consented in writing (the
“Excluded
Property Consent”), the Company, upon its written request, shall not be
required to grant a security interest therein to the Investor pursuant to a
Mortgage as collateral security for the Obligations; provided that such Real
Property shall cease to constitute “Excluded Property” if at anytime thereafter
the Investor shall have given written notice to the Company revoking the
Excluded Property Consent (an “Excluded Property
Revocation Notice”); and, provided, further, that
the office leases listed on Schedule IV hereof,
if any, shall be deemed to constitute Excluded Property as of the Effective Date
and thereafter until such time, if at all, such property shall be designated a
Required Property pursuant to Section 5.10(b)
hereof.

    


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    “Excluded Property
Consent” has the meaning specified in the definition of Excluded
Property.

     

    “Excluded Property
Revocation Notice” has the meaning specified in the definition of
Excluded Property.

     

    “GAAP” has
the meaning specified in Section
1.03.

     

    “Governmental
Authority” means any federal, state, local or foreign court or
governmental agency, administration, authority, instrumentality, commission,
department, board, bureau or regulatory or legislative body.

     

    “Governmental
Authorization” means any authorization, approval, consent, franchise,
license, covenant, order, ruling, permit, certification, exemption notice,
declaration or similar right, undertaking or other action of, to or by, or any
filing, qualification or registration with, any Governmental
Authority.

     

    “Guarantee”
or “Guaranty”
and, with correlative meaning, “Guaranteed”
means, with respect to any Person, any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any Indebtedness of any
other Person in any manner, whether directly or indirectly, including (without
limitation), any Lien on the assets of such Person securing any Indebtedness,
and obligations incurred through an agreement, contingent or otherwise, by such
Person:

     

    (a)           to
purchase such Indebtedness or any property constituting security
therefor;

     

    (b)           to
advance or supply funds (i) for the purchase or payment of such
Indebtedness, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness;

     

    (c)           to
lease properties or to purchase properties or services primarily for the purpose
of assuring the owner of such Indebtedness of the ability of any other Person to
make payment of the Indebtedness; or

     

    (d)           otherwise
to assure the owner of such Indebtedness against loss in respect
thereof.

     

    In any
computation of the Indebtedness of the obligor under any Guarantee, the
Indebtedness that is the subject of such Guarantee shall be assumed to be a
direct obligation of such obligor.  The amount of any Guarantee shall
be equal to the outstanding amount of the Indebtedness guaranteed, or such
lesser amount to which the maximum exposure of such Person shall have been
specifically limited.

    


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    “Hazardous
Materials” means any material or substance (i) the presence and
amount of which is limited or regulated under any applicable Environmental Laws;
(ii) that is included in the definition of a “hazardous waste,” “hazardous
substance,” “hazardous material,” “extremely hazardous waste,” “restricted
hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant” or words
of similar import under any Environmental Law; (iii) that is toxic,
explosive, corrosive, flammable, ignitable, infections, radioactive, reactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated under any
Environmental Laws; (iv) that contains gasoline, diesel fuel or other
petroleum hydrocarbons in reportable quantities under any Environmental Laws; or
(v) that contains PCBs, asbestos or urea formaldehyde foam
insulation.

     

    “Improvements”
has the meaning specified in the Mortgages.

     

    “Indebtedness”
means, with respect to any Person, without duplication:

     

    (a)           all
its liabilities for borrowed money;

     

    (b)           all
its liabilities evidenced by bonds, debentures, notes or similar
instruments;

     

    (c)           all
its Capital Lease Obligations;

     

    (d)           all
liabilities under conditional sale or other title retention agreements relating
to property or assets purchased by such Person;

     

    (e)           all
liabilities of such Person issued or assumed as the deferred purchase price of
property or services (other than current trade liabilities and current
intercompany liabilities incurred in the ordinary course of business and
maturing within 365 days after the incurrence thereof);

     

    (f)           all
liabilities of other Persons secured by any Lien on property owned or acquired
by such Persons, whether or not the liabilities secured thereby have been
assumed or is limited in recourse, but limited to the fair market value of such
property;

     

    (g)           all
payments that such Person would have to make in the event of an early
termination, on the date Indebtedness of such Person is being determined, in
respect of outstanding Swap Agreements;

     

    (h)           all
liabilities (contingent or otherwise) of such Person in respect of letters of
credit, surety bonds or other instruments serving a similar function issued or
accepted for the account of such Person or as to which such Person has a
reimbursement obligation, including letters of credit or surety bonds issued to
support such Person’s obligations under workmen’s compensation, unemployment
insurance, reclamation laws or mining activities or under base or precious
metals or minerals sales contracts;

    


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    (i)       
    the principal component of all liabilities of such
Person in respect of bankers’ acceptances; and

     

    (j)        
   all Guarantees by such Person of any of the liabilities of the
type described in paragraphs (a) through (i) above of any other
Person.

     

    “Indemnified
Party” has the meaning specified in Section
9.04(b).

     

    “Information”
has the meaning specified in Section
4.01(j).

     

    “Initial
Borrowing” shall mean the initial Borrowing of Term Loan Advances under
this Agreement.

     

    “Investment”
has the meaning specified in Section
6.04.

     

    “Investor”
has the meaning specified in the recital of parties to this
Agreement.

     

    “Investor Payment
Account” means such account as the Investor shall specify in writing to
Company.

     

    "Kiewit
Advance" means a Term Loan Advance that has been borrowed to finance the
Kiewit Mining Activities.

     

    “Kiewit
Milestones” has the meaning specified in Section
3.02(d).

     

    “Kiewit Mining
Activities” means the conduct of Mining Activities on the Kiewit
Properties and the milling and processing of the ore and other minerals produced
therefrom at the Cactus Mill, as contemplated by the Kiewit Pro Forma
Statement.

     

    "Kiewit Pro Forma
Statement" has the meaning specified in Section
4.01(i).

     

    “Kiewit
Properties” means that portion of the Leased Real Property covered by the
Principal Lease Agreements to the extent set forth in Schedule II
hereto.

     

    “Leased Real
Property” means any Real Property as to or in which any Transaction Party
shall have a leasehold interest, license interest, or other right of use or
access (but not a fee ownership interest).

     

    “Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
hypothecation, pledge, encumbrance, charge or security interest in or on 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.

     

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    “Material Adverse
Change” or “Material Adverse
Effect” shall mean the existence of any events or conditions that,
individually or in the aggregate, have had or are reasonably likely to have
(a) a materially adverse effect on the business or operations of the
Company, or on the properties, assets or financial condition of the Company and
Blue Fin, taken as a whole, or (b) a material impairment of the validity or
enforceability of, or a material impairment of the material rights, remedies or
benefits available to the Investor under, any Transaction Document.

     

    “Maturity
Date” means July 13, 2012.

     

    “Maximum
Rate” has the meaning specified in Section
9.09.

     

    “Mining
Activities” means (i) the permitting, exploration, development,
preparation for removal and recovery, (ii)  the construction or
installation of any mill, plant or other equipment or improvements for mining,
extracting, producing, handling, milling or other processing, and (iii) the
transportation and sale, in each case of clauses (i), (ii) and (iii), of any
ores, minerals and mineral resources, together with any related permitting,
remediation and reclamation activities in connection with any of the
foregoing.

     

    “Mining
Laws” means any and all applicable federal, state, local and foreign
statutes, laws, regulations, guidance, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions or common law causes of action relating to mining
operations and activities, including the Mine Safety and Health Act, as amended,
and its state and local counterparts or equivalents.

     

    “Mining
Lease” means a lease, license or other use agreement which provides a
Transaction Party the real property and water rights, other interests or rights
(including exploration or production rights) in land, including copper, gold,
tungsten, silver, mining and surface rights, easements, rights of way and
options, and rights to timber and other natural resources necessary to recover
copper, gold, tungsten, silver or other minerals from any Real Property held by
such Transaction Party (i) that relates to, or is part of, the conduct by
the Company of the Mining Activities or (ii) otherwise held by such
Transaction Party and constitutes (or is required hereunder to constitute) a
Mortgaged Property.  Leases which provide such Transaction Party the
right to construct and operate a processing plant or related facilities on the
surface of the Real Property shall also be deemed a Mining Lease.

     

    “Mining
Permits” means any and all permits, licenses, registrations,
notifications, exemptions and any other authorization (including surface or
underground mining permits and water or air discharge permits or other
Environmental Permits), as amended, required under any applicable Mining
Law.

     

    “Moeller Trust
Lease” means that certain Amended and Restated Lease Agreement, effective
as of July 24, 2009, by and between Jeneane C. Moeller as Trustee of the
Jeneane C. Moeller Family Trust, as lessor, and the Company, as lessee, which
agreement amends and restates in its entirety that certain Mining Venture
Agreement, effective as of July 24, 2009, by and between such parties, as
amended.

    


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    “Monthly
Interest” has the meaning specified in Section
2.03(a)(i).

     

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

     

    “Mortgaged
Properties” shall mean all Owned Real Property and Leased Real Property
that shall be subject to a Mortgage.

     

    “Mortgages”
shall mean the mortgages (including leasehold mortgages), deeds of trust
(including leasehold deeds of trust), assignments of leases and rents and other
security documents delivered to the Investor from time to time, in such form or
forms as the Investor shall reasonably require, as such agreement shall be
amended, for the purpose of granting to the Investor, a security interest in or
Lien on any Owned Real Property or any Leased Real Property, including any such
Real Property owned or leased on the Effective Date or acquired after the
Effective Date.

     

    “Note” has
the meaning specified in Section
2.10(c)(i).

     

    “Note
Agreement” means that certain Loan Agreement, dated as of
November 18, 2009, entered into by the Company and the lenders who are
parties thereto, as amended by Amendment No. 1 thereto dated on or before the
date hereof, pursuant to which the Company, among other things, issued and sold
fifteen percent (15%) convertible promissory notes in the aggregate original
principal amount equal to $600,000.

     

    “Note Agreement
Promissory Notes” means the convertible promissory notes originally
issued to the holders thereof pursuant to the Note Agreement, as such promissory
notes have been amended and restated on or before the date hereof.

     

    “NPL” means
the National Priorities List maintained in accordance with the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. §§9601 et seq,
as amended from time to time.

     

    “Obligations”
means, as of any date of determination, the aggregate unpaid principal amount of
all outstanding Term Loan Advances, together with all unpaid interest (including
all Base Interest, Payment Date Interest and Default Interest) accrued thereon
and all other amounts owing to the Investor hereunder or under any other
Transaction Document.

     

    “Other
Taxes” has the meaning specified in Section
2.07(b).

     

    “Owned Real
Property” means any Real Property as to or in which the Company or any
Subsidiary thereof shall have a fee or ownership interest.

     

    “Payment Date
Interest” has the meaning specified in Section
2.03(a)(ii).

    


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    “Perfection
Certificate”
means any perfection certificate in form and substance acceptable to the
Investor, duly authorized and executed by the Transaction Parties and covering
such matters relating to the organization of the Transaction Parties and the
ownership of their assets and properties as shall be required by the Investor in
connection with the perfection, recordation and registration of the
Collateral.

     

    “Permitted
Encumbrances”
mean, with respect to each Mortgaged Property (including any After
Acquired Property or Required Property that shall become a Mortgaged Property
pursuant to Section
5.10(c)), those Liens and other encumbrances permitted by paragraphs (b),
(c), (d), (g), (h), (j), (k) and (n) of Section
6.02.

     

    “Person” means an individual,
partnership, corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof.

     

    “Pledge
Agreement” means that certain Pledge Agreement dated the Effective Date
between the Company, on the one hand, and the Investor, on the other, as
amended.

     

    “Prepaid
Interest” has the meaning specified in Section
2.03(a)(i).

     

    “Principal Lease
Agreements” means, collectively, the Clifton Lease and the Moeller Trust
Lease.

     

    “Pro Forma
Production and Financial Projections” has the meaning specified in Section
4.01(i).

     

    “Real
Property” means, collectively, all right, title and interest of a
Transaction Party (including, without limitation, any leasehold or mineral
estate) in and to any and all parcels of real property owned, held or operated
by such Transaction Party, whether in fee title or by lease, license or other
use agreement, together with, in each case, all Improvements and appurtenant
fixtures (including, without limitation, all processing facilities and load-out
and other transportation facilities), equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof.

     

    “Registration
Rights Agreement” means that certain Registration Rights Agreement, dated
the Effective Date, by and among the Company and the Investor, as
amended.

     

    “Required
Property” has the meaning specified in Section
5.10(b).

     

    “S&P”
means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.

     

    “Sale and
Lease-Back Transaction” has the meaning specified in Section
6.03.

    


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    “Securities
Act” means the Securities Act of 1933, as amended from time to
time.

     

    “Security
Documents” means the Collateral Security Agreement, the Pledge Agreement,
the Mortgages, the Deposit Account Control Agreement, any lockbox agreement and
each other document or instrument that is entered into in favor of the Investor
as collateral security for or in guaranty of the Obligations.

     

    “Series A
Preferred Stock” means the Series A Preferred Stock of the Company, par
value $0.01 per share, having such powers, preferences and rights as are
specified in the Company’s certificate of incorporation or any amendment
thereto.

     

    “Series A
Shares” has the meaning specified in Section
2.11(a).

     

    “SITLA”
means the School and Institutional Trust Lands Administration of the State of
Utah.

     

    “SITLA
Consent” means the consent of  the SITLA as necessary in
connection with the (i) subleasing of the Utah Subleases and
(ii) pledge and assignment of the Company's interests in such Utah
Subleases to the Investor pursuant to the applicable Security Documents as
collateral security for the Obligations.

     

    “Subordination
Agreement” has the meaning specified in Section
3.01(b).

     

    “Subsidiary”
means, with respect to any Person, any corporation, limited liability company,
partnership, joint venture, association, trust or other entity of which (or in
which) more than fifty percent (50%) of (a) the issued and outstanding
Capital Stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time Capital Stock
of any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b) the interests in the
capital or profits of such partnership, limited liability company, joint venture
or association with ordinary voting power to elect a majority of the board of
directors (or persons performing similar functions) of such partnership, limited
liability company, joint venture or association, or (c) the beneficial
interests in such trust or other entity with ordinary voting power to elect a
majority of the board of trustees (or persons performing similar functions) of
such trust or other entity, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its Subsidiaries,
or by one or more of such Person’s other Subsidiaries.

     

    “Swap
Agreement” shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.

     

    “Taxes” has
the meaning specified in Section
2.07(a).

     

    “Term Loan
Advance” has the meaning specified in Section
2.01.

    


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    “Transaction
Documents” means, collectively, this Agreement, the Note, the Security
Documents and the Registration Rights Agreement.

     

    “Transaction
Parties” means the Company and Blue Fin.

     

    “Transactions”
means the borrowing of the Tem Loan Advances and the pledge of collateral
therefor, together with the issuance of the Series A Shares, all as contemplated
by the Transaction Documents.

     

    “UCC” shall
mean the Uniform Commercial Code as in effect in the States of New York and
Utah.

     

    “Utah
Subleases” means the State of Utah mineral leases subleased to the
Company under the Clifton Lease.

     

    "Yellowhammer
Advance" means a Term Loan Advance that has been borrowed to finance the
Yellowhammer Mining Activities.

     

    “Yellowhammer
Milestones” has the meaning specified in Section
3.02(c).

     

    “Yellowhammer
Mining Activities” means the conduct of Mining Activities on the
Yellowhammer Properties and the milling and processing of the ore and other
minerals produced therefrom at the Cactus Mill, as contemplated by the
Yellowhammer Pro Forma Statement.

     

    "Yellowhammer Pro
Forma Statement" has the meaning specified in Section
4.01(i).

     

    “Yellowhammer
Properties” means that portion of the Leased Real Property covered by the
Principal Lease Agreements to the extent set forth in Schedule III
hereto.

     

    SECTION 1.02. Computation of Time Periods;
Other Definitional Provisions.  In this Agreement and the other
Transaction Documents in the computation of periods of time from a specified
date to a later specified date, the word “from”
means “from and including” and the words “to” and
“until”
each mean “to but excluding”.  References in the Transaction Documents
to any agreement or contract “as
amended” shall mean and be a reference to such agreement or contract as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its terms.  The words “include,”
“includes”
and including shall be deemed to be followed by the words “without
limitation” or words of similar import, and all references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles, Sections, Exhibits and Schedules of this Agreement, unless the context
shall otherwise require.

     

    SECTION 1.03. Accounting
Terms.  All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
in effect from time to time (“GAAP”).

    


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    ARTICLE
II.

     

    AMOUNTS
AND TERMS OF THE TERM LOAN ADVANCES; ISSUANCE OF

     

    SHARES
OF SERIES A PREFERRED STOCK

     

    SECTION 2.01. The Term Loans
Advances.  The Investor shall, on the terms and conditions set
forth in this Agreement, make advances (each, a “Term Loan
Advance” and all such advances, collectively, the “Term Loan
Advances”) to the Company from time to time on any Business Day during
the period from the Effective Date until ninety (90) calendar days (or such
lesser number as the Investor shall determine in its sole and absolute
discretion) prior to the Maturity Date; provided that (i) the
aggregate principal amount of all Term Loan Advances made hereunder shall not
exceed the Commitment, (ii) each Term Loan Advance shall be in
the  principal amount of $500,000 or an integral multiple of $50,000
in excess thereof (except with respect to the portion of any Term Loan Advance
that shall relate to Prepaid Interest), (iii) no more than $2,500,000 in
aggregate principal amount of Term Loan Advances (plus such additional amount of
any such Term Loan Advance as shall be requested in a Borrowing as shall be
necessary, on the date of such Borrowing, to pay in full all Prepaid Interest
then due and payable pursuant to Section 2.03(a)(i))
shall be available hereunder to be used for the Yellowhammer Mining Activities,
it being understood and agreed that such Yellowhammer Advances shall, subject to
the terms and conditions contained herein, be drawn only in accordance with the
draw down schedule (as to amount and timing) that is described opposite the row
entitled “Net Loan Draws-PP” set forth in the Yellowhammer Pro Forma Statement,
and (iv) no more than $2,750,000 in aggregate principal amount of the Term
Loan Advances (plus such additional amount of any such Term Loan Advance as
shall be necessary, on the date of the Borrowing thereof, to pay in full all
Prepaid Interest then due and payable pursuant to Section 2.03(a)(i))
shall be available hereunder to be used for the Kiewit Mining Activities, it
being understood and agreed that such Kiewit Advances shall, subject to the
terms and conditions contained herein, be drawn only in accordance with the draw
down schedule that is described opposite the row entitled “Net Loan Draws-PP”
set forth in the Kiewit Pro Forma Statement.  The Company may not
re-borrow any Term Loan Advance after such Term Loan Advance has been prepaid or
repaid.  For purposes of illustrating the Term Loan Advance borrowing
and "Net Loan Draw" mechanics of this Agreement, the following is an example of
such illustration:  assuming that the Company requests a Term Loan
Advance that, after giving effect to the payment of the Prepaid Interest, will
provide to the Company a net advance of $500,000, (i) the principal amount
of the requested Term Loan Advance outstanding hereunder after giving effect to
such Borrowing shall be $588,235.30 and (ii) the Company shall receive by
wire transfer $500,000 in immediately available funds on the date of such
Borrowing (after taking into account the payment of Prepaid
Interest).

    


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    SECTION 2.02. Making the Term Loan
Advances.  Each Borrowing shall be made on request, given not
later than 12:00 noon (New York City time) at least seven (7) Business
Days prior to the date of the proposed Borrowing, by the Company to the
Investor.  Each such request by the Company for a Borrowing (a “Borrowing
Notice”) shall be by telephone, confirmed immediately in writing (which
may be by electronic means), or by telecopier or other electronic means, in
substantially the form of Exhibit B hereto,
specifying therein (i) the requested date of the Borrowing, which shall be
a Business Day, (ii) the requested amount of the Term Loan Advance
requested by such Borrowing (net of the Prepaid Interest due and owing on such
Borrowing), together with the total principal amount of the Term Loan Advance
after taking into account the Prepaid Interest due thereon, (iii) the
requested aggregate principal amount of all Term Loan Advances previously
borrowed by the Company from the Investor (regardless of whether any such Term
Loan Advance has been prepaid or repaid, in whole or in part), (iv) whether
such Term Loan Advance shall constitute a Yellowhammer Advance or a Kiewit
Advance and the uses for the proceeds of such Borrowing, (v) in the case of
a Yellowhammer Advance, whether the Yellowhammer Milestones have been satisfied
in full by the Company, to the extent the satisfaction of such Yellowhammer
Milestones is a condition precedent to the Borrowing of such Yellowhammer
Advance, and (vi) in the case of a Kiewit Advance, whether the Kiewit Milestones
have been satisfied in full by the Company.  Upon fulfillment of the
applicable conditions set forth in Article III, the
Investor will make the funds requested in the Borrowing Notice, net of the
Prepaid Interest then due and owing to the Investor pursuant to Section 2.03(a)(i),
available to the Company no later than 12:00 p.m. (New York City time) on the
date of such Borrowing as set forth in the Borrowing Notice, by delivering such
funds (in immediately available funds) to the Company’s Account.  Each
Borrowing Notice shall be irrevocable and binding on the Company.

     

    SECTION
2.03. Interest.

     

    (a)         Regular
Interest.  The Company shall pay interest on the principal
amount of each Term Loan Advance in three (3) separate
components:  the first component shall consist of prepaid interest,
the second component shall consist of monthly interest (to the extent required
by clause (i) of this Section 2.03(a)), and
the third component shall consist of interest payable upon the repayment or
prepayment of principal, in whole or in part, of any Term Loan Advance, as
follows:

     

    (i)           Base Interest; Prepaid and
Monthly.  Each Term Loan Advance shall accrue interest at the
rate of fifteen percent (15%) per annum from the date of the Borrowing of such
Term Loan Advance until the principal amount of such Term Loan Advance shall
have been paid in full (the ”Base
Interest”); provided, however, that on the date of the Borrowing of any
Term Loan Advance, the Company shall prepay in full to the Investor an amount of
Base Interest that would accrue on such Term Loan Advance for a period of one
(1) year (or, if the Borrowing Date of such Term Loan Advance shall be a date
that shall be within one (1) year from the Maturity Date, an amount of interest
that would accrue on such Term Loan Advance for such lesser period of time),
regardless of whether such Term Loan Advance shall be prepaid (or is intended or
scheduled to be prepaid) prior to the expiration of such one (1) year period (or
lesser period of time) (such Base Interest so prepaid, the “Prepaid
Interest”).  The Company agrees that all Base Interest so paid
by the Company shall be non-refundable and irrevocable, regardless of any
prepayment or repayment of any Term Loan Advance on any date occurring prior to
the expiration of the one (1) year period (or lesser period of
time).  For the avoidance of doubt, the Investor and the Company
acknowledge and agree that following the expiration of such one (1) year period
(or lesser period of time) as to which the Base Interest shall relate, Base
Interest shall continue to accrue on the unpaid principal amount of such Term
Loan Advance until paid in full, and such Base Interest shall become due and
payable monthly in arrears on the last Business Day of each calendar month until
the unpaid principal amount of such Term Loan Advance is paid in full (such Base
Interest so payable on a monthly basis, the “Monthly
Interest”).  On the date of the Borrowing of any Term Loan
Advance, the Investor shall advise the Company of the amount of Prepaid Interest
accrued (or deemed accrued) on such Term Loan Advance in accordance with the
provisions of this Section 2.03(a)(i),
and the Investor shall deduct from the Term Loan Advance to be delivered to the
Company the full amount of the Prepaid Interest due and owing on such Term Loan
Advance on the date of the Borrowing thereof.

    


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    (ii)           Interest Due on Repayment or
Prepayment.  Upon the repayment or prepayment, in whole or in
part, of the unpaid principal amount of any Term Loan Advance (whether on the
Maturity Date, on an optional or mandatory prepayment date, upon acceleration or
otherwise), such principal repayment or prepayment shall be accompanied by an
additional amount equal to the product of (x) twenty percent (20%) and
(y) the amount of principal then being repaid or prepaid (the “Payment Date
Interest”), and such Payment Date Interest shall represent the amount of
interest then due and owing on the amount of such principal then being repaid or
prepaid, as the case may be.  For the avoidance of doubt, the Payment
Date Interest shall not be computed based on the number of days the Term Loan
Advance in respect thereof shall remain outstanding.  In addition, on
the date of repayment or prepayment, as the case may be, of any Term Loan
Advance, the Company shall also pay all Monthly Interest, if any shall then be
accrued and unpaid as provided in clause (i) of this Section
2.03(a).

     

    (b)         Default
Interest.  Upon the occurrence and during the continuance of an
Event of Default, and in addition to all other interest payable hereunder, the
Company shall pay interest (“Default
Interest”) on (i) the unpaid principal amount of each Term Loan
Advance owing to the Investor, payable on demand from the date such amount shall
be due until such amount shall be paid in full, at a rate per annum equal at all
times to twenty-five percent (25%), and (ii) to the fullest extent
permitted by applicable law, the amount of any interest (including all Payment
Date Interest and any Monthly Interest), fee or other amount payable under the
Transaction Documents that is not paid when due, from the date such amount shall
be due until such amount shall be paid in full, payable on demand, at a rate per
annum equal at all times to twenty-five percent (25%) per annum; provided, however, that
following the acceleration of the Term Loan Advances, or the giving of notice by
the Investor to accelerate the Term Loan Advances, pursuant to Section 7.01, Default
Interest shall accrue and be payable hereunder.

     

    SECTION 2.04. Repayment of Term Loan
Advances on Maturity Date.  The Company shall repay on the
Maturity Date to the Investor the aggregate unpaid principal amount of all Term
Loan Advances then outstanding, together with all Payment Date Interest and any
Monthly Interest due thereon pursuant to Section 2.03(a) and
all other amounts then due and owing hereunder and under any other Transaction
Document.

    


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    SECTION 2.05. Prepayment of Term Loan
Advances.

     

    (a)          Optional
Prepayments.  The Company may, after giving at least five (5)
Business Day’s prior notice to the Investor, stating the proposed prepayment
date and aggregate principal amount of the prepayment, prepay (and, if such
notice shall have been given, the Company shall prepay to the Investor, on the
date specified in such notice as the date of prepayment) the outstanding
aggregate principal amount of the Term Loan Advances in whole or in part and
based on the inverse order in which the Term Loan Advances shall have been made
hereunder, together with the Payment Date Interest and any Monthly Interest
due pursuant to Section 2.03(a) on
the aggregate principal amount so prepaid; provided, however, that each
partial prepayment shall be a minimum principal amount of $100,000 or an
integral multiple of $50,000 in excess thereof.

     

    (b)          Mandatory
Prepayments.

     

    (i)           For
each month listed in Table 1 below, in the case of the Yellowhammer Advances,
and Table 2 below, in the case of the Kiewit Advances, the Company shall prepay
the aggregate principal amount of the Yellowhammer Advances and the Kiewit
Advances then outstanding, together with the Payment Date Interest and any
Monthly Interest due and payable pursuant to Section 2.03(a) on
the aggregate principal amount so prepaid, by paying to the Investor an amount
equal to the amount set forth opposite such applicable month for such
Yellowhammer Advances or Kiewit Advances, as the case may be:

     

    Table 1 – Yellowhammer
Advances Repayment Schedule

    


    
      
        
          
            
              
                
                  
                    	
                            Date

                          	 	
                            Yellowhammer Advances

                            Repayment Amount

                          	 
	
                            Feb-2011

                          	 	$	511,616	 
	
                            Mar-2011

                          	 	$	1,011,616	 
	
                            Apr-2011

                          	 	$	818,316	 
	
                            May-2011

                          	 	$	795,704	 
	
                            Jun-2011

                          	 	$	139,604	 
	
                            Jul-2011

                          	 	$	139,604	 
	
                            Aug-2011

                          	 	$	112,954	 
	
                            Sep-2011

                          	 	$	0	 
	 
      	 	
                            (or
      if higher, the aggregate unpaid principal of and accrued interest on all
      Yellowhammer Advances)

                          	 


                  

                

              

            

          

        

      

    

     

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    Table 2 – Kiewit Advances
Repayment Schedule

     

    
      
        
          
            
              	
                      The number of months following month in

                      which initial Kiewit Advance is Borrowed

                    	 	
                      Kiewit Advances

                      Repayment Amount

                    	 
	
                      Month
      7

                    	 	$	825,934	 
	
                      Month
      8

                    	 	$	825,934	 
	
                      Month
      9

                    	 	$	825,934	 
	
                      Month
      10

                    	 	$	825,934	 
	
                      Month
      11

                    	 	$	578,618	 
	
                      Month
      12

                    	 	$	0	 
	 
      	 	
                      (or
      if higher, the aggregate unpaid principal of and accrued interest on all
      Kiewit Advances)

                    	 


            

          

        

      

    

     

    (ii)           Each
mandatory prepayment of a Yellowhammer Advance or a Kiewit Advance as required
by clause (i) of this Section 2.05(b) shall
be paid by the Company to the Investor not later than five (5) Business Days
following the end of the calendar month as to which such prepayment
relates.  Prepayments of the Yellowhammer Advances or Kiewit Advances
made pursuant to clause (i) above shall be applied by the Investor first to pay all Payment Date
Interest and, if any, Monthly Interest then due on the Yellowhammer Advances or
Kiewit Advances, as applicable, then being repaid until such Payment Date
Interest and Monthly Interest shall have been paid in full, and second to prepay the unpaid
principal amount of the Yellowhammer Advances or Kiewit Advances, as applicable,
until such Yellowhammer Advances or Kiewit Advances, as applicable, are paid in
full.  Prepayments of principal shall be applied to the Yellowhammer
Advances or Kiewit Advances, as the case may be, in the inverse order in which
such advances were made hereunder.

     

    SECTION 2.06. Payments; Pro Rata
Allocation; and Computations.

     

    (a)           The
Company shall make each payment required to be made by it hereunder or under the
Note, irrespective of any right of counterclaim, deduction, recoupment or
set-off, not later than 12:00 noon (New York City time) on the day
when due in immediately available U.S. dollars to the Investor to the Investor
Payment Account, with payments being received by the Investor after such time
being deemed to have been received on the next succeeding Business
Day.  Upon receipt by the Company of an Assignment and Acceptance and
registration for transfer by the Company of the transferee’s purchase of a Note
or the Commitment, from and after the effective date of such Assignment and
Acceptance, the Company shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Investor assignee, and the
parties to any such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

    


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    (b)           The
Company hereby authorizes the Investor and its Affiliates, if and to the extent
payment owed to the Investor is not made when due hereunder (after giving effect
to any period of grace) or under a Note, to set-off and apply from time to time,
to the fullest extent permitted by applicable law, any or all amounts owed by
the Investor or its Affiliate to the Company against any or all of the amounts
due the Investor hereunder or under any other Transaction Document.

     

    (c)           All
computations of interest (other than Payment Date Interest, as to which the
parties hereto acknowledge and agree represents interest based solely on a
percentage of the amount of principal repayment or prepayment) shall be made by
the Investor on the basis of a year of 360 days and the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.  Each determination by the Investor of
an interest rate or fee or similar item hereunder shall be conclusive and
binding for all purposes, absent manifest error.

     

    (d)           Whenever
any payment hereunder or under the Note shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest.

     

    (e)           If
the Investor receives funds for application to the Obligations under
circumstances for which the Transaction Documents do not specify the Term Loan
Advances to which, or the manner in which, such funds are to be applied, the
Investor shall apply such funds to the payment (or prepayment) of such of the
outstanding Term Loan Advances or other Obligations then owing to the Investor
and shall return any unused funds to the Company or, if applicable, to the
Investor in accordance with the Transaction Documents.

     

    SECTION
2.07. Taxes.

     

    (a)           Any
and all payments by the Company to or for the account of the Investor hereunder
or under the Note or any other Transaction Document shall be made, in accordance
with Section 2.06 or
the applicable provisions of such other Transaction Document, if any, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in
the case of the Investor, taxes that are imposed on its overall net income by
the United States and taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction
under the laws of which the Investor is organized or has its principal office or
in which its lending office for the Term Loan Advances is located or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Note, together with any interest, additions to tax and
penalties applicable thereto, being hereinafter referred to as “Taxes”).  If
the Company shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under any Note or any other Transaction Document to
the Investor, (i) the sum payable by the Company to the Investor shall be
increased as may be necessary so that after the Company has made all required
deductions (including deductions applicable to additional sums payable under
this Section 2.07),
the Investor receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make all such deductions,
and (iii) the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable
law.

    


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    (b)           In
addition, the Company shall pay any present or future stamp, documentary,
excise, property or similar taxes, charges or levies that are required to be
paid pursuant to applicable law in respect of any payment made by the Company or
any other Transaction Party hereunder or under the Note or any other Transaction
Document or from the execution, delivery or registration of, performance under,
or with respect to, this Agreement, the Note or other Transaction Documents
(hereinafter referred to as “Other
Taxes”).

     

    (c)           The
Company shall indemnify, pay and reimburse the Investor for and hold it harmless
on an after-Tax basis from and against the full amount of Taxes and Other Taxes,
together with the Investor’s reasonable expenses with respect thereto, within
thirty (30) days from the date the Investor makes written demand
therefor.  The Company shall furnish to the Investor, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing such payment, to the extent such a receipt is issued therefor, or
other written proof of payment thereof that is reasonably satisfactory to the
Investor.

     

    (d)           The
Investor organized under the laws of a jurisdiction outside the United States
shall, on or prior to the date of its execution and delivery of this Agreement
or on the date of the Assignment and Acceptance pursuant to which it becomes an
Investor, as the case may be, and from time to time thereafter as reasonably
requested in writing by the Company or promptly upon a change in any material
fact disclosed on the applicable form or certificate (but, in either case, only
so long thereafter as the Investor remains lawfully able to do so), provide the
Company with two original signed and complete Internal Revenue Service Forms
W-8BEN or W-8ECI (or in the case of an Investor entitled to claim exemption from
withholding of United States federal income tax under Section 871(h) or 881(c)
of the Code (A) a certificate stating that it is not (i) a “bank” as
defined in Section 881(c)(3)(A) of the Code, (ii) a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the Company, or
(iii) a controlled foreign corporation related to the Company (within the
meaning of Section 864(d)(4) of the Code), and (B) a signed and complete
Internal Revenue Service Form W-8BEN), as appropriate, or any successor or other
form prescribed by the Internal Revenue Service, certifying that the Investor is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Note or any other Transaction
Document or, in the case of an Investor that has certified that it is not a
“bank”, as described above, certifying that the Investor is a foreign
corporation, partnership, estate or trust.  If the forms provided by
an Investor that is not entitled to claim exemption from withholding of United
States federal income tax under Section 871(h) or 881(c) of the Code at the time
the Investor first becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until the Investor provides
the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that if, at the
effective date of the Assignment and Acceptance pursuant to which an Investor
becomes a party to this Agreement, the Investor assignor was entitled to
payments under paragraph (a) of this Section 2.07 in
respect of United States withholding tax with respect to interest paid at such
date, then the term Taxes shall include (in addition to withholding taxes that
may be imposed in the future or other amounts otherwise includable in Taxes)
United States withholding tax, if any, applicable with respect to the Investor
assignee on such date to the extent that payment would have been required under
paragraph (a) of this Section 2.07 in
respect of such United States withholding tax if the interest were paid to the
Investor assignor on such date.

    


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    SECTION 2.08. Company Has No Right to
Terminate Commitment. The Company shall have no right to terminate the
Commitment hereunder without the prior written consent of the Investor, which
consent may be withheld in its sole and absolute discretion.

     

    SECTION 2.09. Use of
Proceeds.  The proceeds of the Term Loan Advances shall be
available (and the Company agrees that it shall use such proceeds) solely
(a) to pay transaction fees and expenses incurred in connection herewith,
(b) to purchase the equipment identified in Schedule 6.10 hereof,
and (c) from time to time, to provide working capital for the Company for
the purpose of pursuing, engaging in, carrying out and accomplishing the
Yellowhammer Mining Activities and the Kiewit Mining Activities; provided, however, that
(i) in the case of the Term Loan Advances that relate to the Yellowhammer
Mining Activities, no more than $2,500,000 in principal amount of such Term Loan
Advances (without taking into account such additional amount of any Term Loan
Advance as shall be required to be drawn to pay in full all Prepaid Interest
then due and payable under this Agreement in connection with the Borrowing of
such Term Loan Advances) shall be used in connection with the Yellowhammer
Mining Activities (including the payment of miscellaneous expenses) in
accordance with the use of proceeds set forth in the Yellowhammer Pro Forma
Statement, it being understood and agreed that the Initial Borrowing shall be
used to pay transactional expenses, including the fees and expenses of the
Company's and the Investor's outside counsel, and otherwise for working capital
purposes in accordance with the use of proceeds set forth in the Yellowhammer
Pro Forma Statement, and (ii) in the case of the Term Loan Advances that
relate to the Kiewit Mining Activities, no more than $2,750,000 in principal
amount of such Term Loan Advances (without taking into account such additional
amount of any Term Loan Advance as shall be required to be drawn to pay in full
all Prepaid Interest then due and payable under this Agreement in connection
with the Borrowing of such Term Loan Advances) shall be used in connection with
the Kiewit Mining Activities (including the payment of miscellaneous expenses)
in accordance with the use of proceeds set forth in the Kiewit Pro Forma
Statement.

     

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Hawk Investment Agreement

    
      
         


      

      
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    SECTION 2.10. Evidence of Debt; Registered
Notes.

     

    (a)         Investor
Accounts.  The Investor may maintain an account or accounts
evidencing the indebtedness of the Company to the Investor resulting from each
Term Loan Advance owing to the Investor from time to time, including the amounts
of principal and interest payable and paid to the Investor from time to time
hereunder.

     

    (b)         Entries are
Conclusive.  Entries made in good faith by the Investor in its
account or accounts pursuant to paragraph (a) of this Section 2.10 or on
its Note pursuant to paragraph (c) of this Section 2.10 shall be
prima facie evidence of
the amount of principal and interest due and payable or to become due and
payable from the Company to the Investor under this Agreement, absent manifest
error; provided,
however, that the failure of the Investor to make an entry, or any
finding that an entry is incorrect in such account or accounts or Note shall not
limit or otherwise affect the obligations of the Company under this Agreement or
such Note.

     

    (c)          Notes.

     

    (i)           Registration of
Notes.  The Investor shall be issued a promissory note to
evidence the Term Loan Advances owing to, or to be made by, the Investor
hereunder in substantially the form of Exhibit A hereto,
which Note shall duly executed and delivered in registered form and payable to
the Investor and its registered assigns in the amount of the Commitment (such
promissory note, including any promissory note issued in substitution therefor
as provided in this paragraph (c), the “Note”).  The
Company shall keep at its principal executive office a register for the
registration and registration of transfer of any Note.  The name and
address of each holder of one (1) or more Notes, each transfer, thereof, and the
name and address of each transferee of one (1) or more Notes shall be recorded
in such register.  Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes
hereof.  A true and complete copy of such register shall be delivered
to the Investor from time to time as may be requested by the Investor, including
at any time a Note shall be transferred, substituted or otherwise
exchanged.

     

    (ii)           Registration of Transfer of
Notes.  Upon surrender of any Note to the Company at its office
identified pursuant to Section 9.02(a) for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or such holder’s attorney duly
authorized in writing and accompanied by the relevant name, address and other
information for notices of each transferee of such Note or part thereof), within
five (5) Business Days thereafter, the Company shall execute and deliver, at the
Company’s expense, one (1) or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
Commitment of the surrendered Note.  Each such new Note shall be
payable to the transferee thereof or, in the case of an exchange, the Investor
that is the holder thereof.

    


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        23

        
          

        

      

      
         


      

    


    (iii)          Replacement of
Notes.  Upon receipt by the Company at its office identified
pursuant to Section
9.02(a) of notice to the Company of the Investor’s ownership of and loss,
theft, destruction or mutilation of any Note held by the Investor, and
(A) in the case of loss, theft or destruction, a notarized affidavit from a
senior officer (or person performing a similar function) of the Investor
certifying the loss, theft or destruction of any such Note, and (B) in the
case of mutilation, upon surrender and cancellation thereof of such mutilated
Note to the extent reasonably practicable, within five (5) Business Days
thereafter, the Company at its own reasonable expense shall execute and deliver,
in lieu thereof, a new Note.

     

    SECTION 2.11. Issuance of Series A
Preferred Stock to the Investor.

     

    (a)         Issuance of Shares of Series
A Preferred Stock. On the Effective Date and contemporaneous with the
making of the Initial Borrowing, the Company shall issue to the Investor shares
of Series A Preferred Stock in aggregate amount equal to, after giving effect to
such issuance, nine and ninety-nine one hundredth’s percent (9.99%) of the total
number of issued and outstanding shares of Common Stock, as determined on a
fully diluted and as-if converted to common basis (such shares of Series A
Preferred Stock to be so issued, the “Series A
Shares”).  The Series A Shares shall be issued to the Investor
against payment of $0.001 for each Series A Share so issued, and the aggregate
purchase price shall be delivered by the Investor to the Company on the
Effective Date by wire transfer of immediately available funds.  The
Series A Shares shall have such powers, preferences and rights as shall be
required by the Investor and set forth in the Company’s articles of
incorporation (or an amendment thereof) duly filed as of the Effective
Date.  The Series A Shares shall, upon the issuance thereof and
without the payment of any additional consideration therefor by the Investor
other than as provided in this Section 2.11(a), constitute duly issued, fully
paid and non-assessable shares of Series A Preferred Stock of the
Company.

     

    (b)         Representations and
Warranties of the Investor.  The Investor represents and
warrants to the Company as of the date hereof that:

     

    (i)       
    It is an entity duly organized, validly existing and in
good standing under the laws of the state of its organization.

     

    (ii)           It
is acquiring the Series A Shares to be acquired by it and any Common Stock
issuable upon conversion thereof, and the Note, solely for its account for
investment and not with a present view to or for sale or distribution of the
Series A Shares and any such Common Stock or the Note.  The entire
legal and beneficial interests of the Series A Shares and any such Common Stock,
along with the Note, is being acquired for, and will be held for, its account
only.  It does not presently have any contract, undertaking, agreement
or arrangement with any Person to sell, transfer or grant participations to such
Person or to any third person with respect to any of the Series A Shares or the
Note.

    


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        24

        
          

        

      

      
         


      

    


    (iii)          It
(A) has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its investment in the
Series A Shares and the Note, and (B) is able to bear the complete loss of
its investment in the Series A Shares and the Note.  It has had an
opportunity to discuss the Company’s business, management, financial affairs and
the terms and conditions of the offering of the Series A Shares with the
Company's management.  Nothing contained in this subparagraph (iii)
nor any due diligence investigation by the Investor of the Company or its
Subsidiaries shall limit or modify the representations and warranties of the
Company or any of its Subsidiaries made in this Agreement or in any other
Transaction Document or the right of the Investor to rely on any
thereof.

     

    (iv)         It
understands that the Series A Shares and the Note are not, and, at the time of
issuance, any Common Stock acquired on conversion of the Series A Shares may not
be, registered under the Securities Act or any state securities laws by reason
of a specific exemption from the registration provisions of the Securities Act
and state securities laws and the Company is relying on the accuracy of the
Investor’s representations as expressed herein to determine its eligibility for
such exemption.  It understands that the Series A Shares and the Note
and, at the time of issuance, any such Common Stock may be "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Investor must hold the Series A Shares and the Note,
and any such Common Stock, indefinitely unless they are registered under the
Securities Act or an exemption from registration is available.  It
acknowledges that, except as provided in the Registration Rights Agreement, the
Company is under no obligation to file a registration statement under the
Securities Act with respect to the Series A Shares, the Note or any such shares
of Common Stock.

     

    (v)           It
is an “accredited investor” as defined in Regulation D promulgated the
Securities Act.

     

    (vi)          It
understands and agrees that all certificates evidencing the Series A Shares and,
unless registered at the time of issuance, the shares of Common Stock acquired
upon the conversion thereof to be issued to the Investor may bear the following
legend:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT.”

     

    
      “THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A CERTAIN
REGISTRATION RIGHTS AGREEMENT DATED AS OF __________, 2010, AS AMENDED FROM TIME
TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING
SECURITIES.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.”

    

    


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    (vii)         It
understands and agrees that the Note issued to the Investor may bear the
following legend:

     

    
      “THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THIS PROMISSORY NOTE
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
SAID ACT.”

    

     

    ARTICLE
III.

     

    CONDITIONS
OF LENDING

     

    SECTION 3.01. Conditions Precedent to
Initial Borrowing.  The obligation of the Investor to make a
Term Loan Advance on the occasion of the Initial Borrowing pursuant to Section 2.02 shall be
subject to the satisfaction (or waiver by the Investor in writing) of the
following conditions precedent before or concurrently with such Initial
Borrowing:

     

    (a)         The
Investor shall have received on or before the day of the Initial Borrowing the
following, each dated such day (unless otherwise specified), in form and
substance satisfactory to the Investor and (except for the Note) in sufficient
copies for the Investor and, to the extent requested by the
Investor:

     

    (i)          The
Note, registered in the name of and payable to the Investor and its registered
assigns in the amount of the Commitment;

     

    (ii)         The
certificate of designations to the articles of incorporation of the Company to
reflect such powers, preferences and rights in respect of the Series A Shares as
the Investor shall require, and such certificate of designations shall have been
duly filed with the Secretary of State of the State of Nevada;

     

    (iii)        One
(1) or more certificates, duly executed by the Company, representing the number
of duly and validly issued Series A Shares issuable to the Investor pursuant to
Section
2.11(a);

     

    (iv)        the
Registration Rights Agreement, duly executed and delivered by the Company to the
Investor;

    


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    (v)         The
Pledge Agreement, duly executed by the Company, together with the stock
certificates of Blue Fin, accompanied by a stock power or other instrument of
transfer with respect thereto, duly endorsed in blank;

     

    (vi)        The
Collateral Security Agreement, duly executed by the Company and each Subsidiary
thereof, together with:

     

    (A)           a
completed Perfection Certificate, dated the Effective Date, duly executed by a
senior officer of the Company and Blue Fin, together with all attachments
contemplated thereby, including UCC, judgment and tax lien searches;
and

     

    (B)           evidence
of the filing of UCC termination statements in respect of all Liens, if any,
reflected on the lien search report attached to the Perfection Certificate,
dated the Effective Date, to the extent such Liens are not permitted to be
suffered pursuant to the terms of the Transaction Documents;

     

    (vii)       A
separate deposit account control agreement, in such form as shall be reasonably
acceptable to the Investor, in respect of each bank deposit account maintained
by a Transaction Party, executed by the Investor, such Transaction Party, and
the applicable depository institution (each, as amended, a “Deposit Account
Control Agreement”), together with one (1) or more lockbox agreements, in
form and substance reasonably acceptable to the Investor;

     

    (viii)      With
respect to each item of Owned Real Property as of the Effective Date (other than
the Excluded Property), a Mortgage, duly authorized and executed by the
applicable Transaction Party, in form for recording in the recording office of
each jurisdiction where the Owned Real Property to be encumbered thereby is
situated, in favor of the Investor, together with such other instruments as
shall be necessary or appropriate (in the reasonable judgment of the Investor)
to create a Lien under applicable law, all of which shall be in form and
substance reasonably satisfactory to the Investor, which Mortgage and other
instruments create and/or maintain (upon recordation of such instruments) a
first priority Lien on such Owned Real Property other than the Permitted
Encumbrances;

     

    (ix)         With
respect to each item of Leased Real Property as of the Effective Date (other
than the Excluded Property), (A) a Mortgage duly
authorized and executed, assigning the applicable Transaction Party’s interest
in such Leased Real Property to the Investor, in form for recording in the
recording office of each jurisdiction where the Leased Real Property demised
under the Mining Lease related thereto is situated, together with such other
instruments as shall be necessary or appropriate (in the reasonable judgment of
the Investor) to create a Lien under applicable law, all of which shall be in
form and substance reasonably satisfactory to the Investor which Mortgage and other
instruments are effective to create (upon recordation of such instruments) a
first priority Lien on such Transaction Party’s interests in such Leased Real
Property subject to no Liens other than Permitted Encumbrances, and (B) a new memorandum
of lease, in form for recording in the appropriate recording office and
otherwise in form and substance acceptable to the Investor, with respect to each
of the Principal Lease Agreements, which memorandums shall have been duly
executed, filed and recorded;

    


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    (x)           With
respect to each Leased Real Property assigned to the Investor pursuant to
subparagraph (ix) above, (A) the written
consent to the assignment thereof by any landlord or other Person having an
interest in such Leased Real Property (except that the SITLA Consent shall not
be required) to the extent such consent is required by the terms of any lease or
applicable law or deemed appropriate by the Investor, which written consent
shall be in form and substance acceptable to the Investor, and (B) notwithstanding
the foregoing, the Company shall deliver to the Investor written consents of the
lessors to the assignment of each of the Principal Lease Agreements together
with an estoppel certificate executed by such lessors, in each case in form and
substance acceptable to the Investor and regardless of whether consent to the
assignment thereof is expressly required by the terms thereof;

     

    (xi)          With
respect to each item of Owned Real Property and Leased Real Property held by the
Company or any Subsidiary thereof as of the Effective Date, policies or
certificates of insurance of the type required by Section
5.02;

     

    (xii)         With
respect to the Leased Real Property that constitutes the Core Properties, a
title opinion of Holland & Hart, in form and substance acceptable to the
Investor;

     

    (xiii)        Without
limitation of, but not in duplication of any provision contained in this Section 3.01(a),
evidence that all documents and instruments, including UCC financing statements,
required by law or reasonably requested by the Investor to be filed, registered
or recorded to create the Liens intended to be created by the Security Documents
(in each case, including any supplements thereto) and perfect such Liens to the
extent required by, and with the priority required by, the Transaction
Documents, shall have been filed, registered or recorded or delivered to the
Investor for filing, registration or the recording concurrently with, or
promptly following, the execution and delivery of each Security
Document;

     

    (xiv)        Evidence
reasonably acceptable to the Investor of the payment in full by Company of all
search and examination charges, mortgage recording taxes, UCC filing fees and
charges, and any other recordation, registration or filing taxes, fees or
charges, required for the perfection of the security interests created under the
Security Documents or the procurement of title insurance policies;

    


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    (xv)         Certified
copies of the resolutions of the board of directors of each Transaction Party
approving the Transactions (to the extent applicable to it) and each Transaction
Document to which it is or is to be a party and authorizing the officers of such
Transaction Party to act on behalf of such Transaction Party, as the case may
be, and of all documents evidencing other necessary action and governmental and
other third party approvals and consents, if any, with respect to the
Transactions and each Transaction Document to which it is or is to be a
party;

     

    (xvi)        A
copy of a certificate of the Secretary of State of the jurisdiction of
incorporation of each Transaction Party dated reasonably near the date of the
Initial Borrowing, certifying (A) as to a true and correct copy of the
Constitutive Documents of such Transaction Party and each amendment thereto on
file in such Secretary’s office, (B) that (1) such amendments are the only
amendments to such Transaction Party’s Constitutive Documents on file in such
Secretary’s office and (2) such Transaction Party has paid all franchise
taxes to the date of such certificate, and (C) such Transaction Party is
duly incorporated and in good standing under the laws of the State of its
organization;

     

    (xvii)       A
copy of a certificate of the Secretary of State of each jurisdiction in which
each Transaction Party is required to be qualified to do business, dated
reasonably near the date of the Initial Borrowing, stating that such Transaction
Party is duly qualified and in good standing as a foreign corporation in such
State and has filed all annual reports required to be filed to the date of such
certificate;

     

    (xviii)      A
certificate of the Secretary or Assistant Secretary of each Transaction Party,
dated the date of the Initial Borrowing (the statements made in which
certificate shall be true on and as of the date of the Initial Borrowing),
certifying as to (A) the absence of any amendments to the Constitutive
Documents of such Transaction Party since the date of the Secretary of State’s
certificate referred to in Section 3.01(a)(xvi),
(B) a true and correct copy of the bylaws as in effect on the date on which
the resolutions referred to in Section 3.01(a)(xv)
were adopted and on the date of the Initial Borrowing, (C) the due
organization and good standing of such Transaction Party as a corporation,
organized under the laws of the jurisdiction of its organization, and the
absence of any proceeding for the dissolution or liquidation of such Transaction
Party, and (D) the names and true signatures of the officers of such
Transaction Party authorized to sign on its behalf each Transaction Document to
which it is or is to be a party and the other documents to be delivered
hereunder and thereunder;

     

    (xix)        A
certificate of a senior officer of each Transaction Party, certifying as to
(A) the truth of the representations and warranties contained in the
Transaction Documents as though made on and as of the date of the Initial
Borrowing, and (B) the absence of any event occurring and continuing, or
resulting from the Initial Borrowing, that constitutes a Default;

     

    (xx)         A
Borrowing Notice relating to the Initial Borrowing;

    


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    (xxi)        The
audited annual financial statements for the year ended December 31, 2009,
and the unaudited quarterly financial statements for the quarter ended
March 31, 2010, of the Transaction Parties, together with a certificate of
the chief financial officer of the Company to the effect that such statements
accurately present the financial position of the Transaction Parties as of the
periods covered thereby in accordance with GAAP;

     

    (xxii)       A
favorable opinion of Holland & Hart LLP, counsel for the Transaction
Parties, in form and substance acceptable to the Investor;

     

    (xxiii)      A
favorable opinion of Holland & Hart LLP, relating to the recordation of and
lien created by the Mortgage filed on or before the Effective Date with respect
to the Leased Real Property covered by the Principal Lease Agreements, in form
and substance acceptable to the Investor;

     

    (xxiv)      A
certificate of the President of the Company, certifying as to the fulfillment of
such conditions precedent set forth in this Section 3.01 as shall
be required by the Investor; and

     

    (xxv)       A
letter or other instrument in writing, executed by the Jeneane C. Moeller Trust
and addressed to the Investor, (i) certifying as to the fact that the
indebtedness secured by certain mortgages covering the property leased under the
Moeller Trust Lease has been paid and satisfied in full (and attaching true and
correct copies of such debt instrument and mortgage) and (ii) agreeing to
give prompt written notice to the Investor if any foreclosure proceedings shall
be exercised under such mortgage.

     

    (b)         The
holders of the Note Agreement Promissory Notes shall have executed and delivered
to the Investor a subordination agreement in form and substance acceptable to
the Investor (as amended, the “Subordination
Agreement”), pursuant to which the holders of the Note Agreement
Promissory Notes shall have agreed to subordinate the indebtedness evidenced
thereby in right or payment, priority and exercise of remedies to the
indebtedness created under this Agreement, except that so long as no Default
shall have occurred and be continuing, the Company shall have the right to make
monthly payments of interest of up to, in the aggregate, $7,500 per month under
such Note Agreement Promissory Notes.

     

    (c)          There
shall exist no action, suit, investigation, litigation or proceeding affecting
any Transaction Party pending or, to the knowledge of the Company, threatened
(under circumstances under which a reasonable person acting under similar
circumstances would recognize a statement, allegation or other action as
constituting a threat) before any Governmental Authority (i) other than any
thereof satisfactory to the Investor and described on Schedule 4.01(f)
hereto (the “Disclosed
Litigation”) or (ii) that purports to affect the legality, validity
or enforceability of any Transaction Document or the consummation of the
Transactions.

    


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    (d)           All
Governmental Authorizations and third party consents and approvals necessary in
connection with the Transactions shall have been obtained or shall be in the
process of being obtained so long as it is not anticipated that such consents
and approvals may not be obtained (in each case without the imposition of any
conditions that are not acceptable to the Investor) and those obtained shall be
in effect (other than those the failure to obtain which would individually or
collectively be reasonably likely not to have a Material Adverse Effect, it
being agreed that the Company shall not be required to obtain the SITLA
Consent); and no law or regulation shall be applicable in the reasonable
judgment of the Investor, in each case that restrains, prevents or imposes
materially adverse conditions upon the Transactions or the rights of the
Transaction Parties to perform their obligations under the Transaction
Documents, including to grant the Liens under the Security Documents as
contemplated thereby.

     

    (e)           The
Company shall have paid all costs and expenses incurred by the Investor in
connection with the negotiation, preparation, execution and delivery of the
Transaction Documents (including the reasonable fees and expenses of Katten
Muchin Rosenman LLP, counsel to the Investor, and Parsons, Behle and Latimer,
local Utah counsel to the Investor.

     

    SECTION 3.02. Conditions Precedent to Each
Borrowing.  The obligation of the Investor to make a Term Loan
Advance on the occasion of each Borrowing (including the Initial Borrowing)
shall be subject to receipt of a Borrowing Notice by the Investor as required
pursuant to Section
2.02 and the further conditions precedent that on the date of such
Borrowing, the following statements shall be true (and the giving of the
applicable Borrowing Notice and the acceptance by the Company of the proceeds of
such Borrowing shall constitute a representation and warranty by the Company
that both on the date of such notice and on the date of such Borrowing such
statements are true):

     

    (a)           the
representations and warranties contained in each Transaction Document are
correct in all material respects on and as of such date, before and after giving
effect to such Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date, other than any such representations or
warranties that, by their terms, refer to an earlier date, in which case as of
such earlier date;

     

    (b)           no
Default has occurred and is continuing, or would result from such Borrowing or
from the application of the proceeds therefrom;

     

    (c)           if
a Term Loan Advance requested pursuant to such Borrowing, as specified in the
applicable Borrowing Notice, shall be a Yellowhammer Advance, then, with respect
to the last two Yellowhammer Advances of $500,000 each (on a net advance basis,
as listed on the Yellowhammer Pro Forma Statement), the Company shall have
commenced the mining of copper from the Yellowhammer Properties and shall have
produced at least 400,000 pounds of copper concentrate from its ore processing
operations at the Cactus Properties (and the conditions described in this clause
(c) are referred to herein as, collectively, the “Yellowhammer
Milestones”); and

    


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    (d)           if
a Term Loan Advance requested pursuant to such Borrowing, as specified in the
applicable Borrowing Notice, shall be a Kiewit Advance, (i) the Company
shall have obtained all Environmental Permits and Mining Permits necessary to
engage in and conduct the Kiewit Mining Activities, (ii) all such
Environmental Permits and Mining Permits shall be in full force and effect and
all comment and objection periods, if any, with respect thereto shall have
expired and (iii) the Company shall have paid the initial Yellowhammer
Advances repayment amount for the month of February 2011, when due, as specified
and in the amount set forth in Section 2.05(b)(i)
(and the conditions described in this clause (d) are referred to herein as,
collectively, the “Kiewit
Milestones”).

     

    ARTICLE
IV.

     

    REPRESENTATIONS
AND WARRANTIES

     

    SECTION 4.01. Representations and
Warranties of the Company.  The Company represents and warrants
as follows:

     

    (a)           Organization; Capital Stock
of the Company.  Each Transaction Party (i) is a
corporation, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) is duly qualified and in
good standing as a foreign corporation, in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it to
so qualify and (iii) has all requisite corporate power and authority to own
or lease and, in the case of the Company, operate its properties and to carry on
its business as now conducted and as proposed to be conducted in connection with
the Mining Activities, (iv) has all Governmental Authorizations to own or
lease its properties (other than the SITLA Consent for the subleasing of the
Utah Subleases), and (v) in the case of the Company, has all Governmental
Authorizations, including Mining Permits and Environmental Permits, to operate
and carry on its business at the Cactus Mill and on the Cactus Properties, the
Yellowhammer Properties and the Kiewit Properties as such operations and
business are currently conducted or  are contemplated to be conducted
pursuant to the Pro Forma Production and Financial Projections other than, in
the case of this clause (v), those Mining Permits and Environmental Permits that
have not been obtained or are not in full force and effect as described on Schedule
4.01(h).  All of the outstanding Capital Stock and other
securities in the Company (including, when issued on the Effective Date, the
Series A Shares issuable to the Investor hereunder) (i) has been validly
issued, is fully paid and is non-assessable, (ii) are owned by the Persons
in the amounts specified on the applicable portion of Schedule 4.01(a)
hereto, and (iii) were offered, issued and sold in accordance with the
registration or qualification provisions of the Securities Act and any relevant
state securities laws or pursuant to valid exemptions therefrom and the Company
has not violated any other applicable federal or state securities laws in
connection with such offer, issuance and sale.  Except for the rights
of the holders of the Note Agreement Promissory Notes to convert such notes into
shares of Common Stock as set forth in the Note Agreement and the rights of the
Investor under the Transaction Documents to acquire the Series A Shares (and
shares of Common Stock upon the conversion thereof), there are not outstanding
any options, warrants, rights (including conversion or preemptive rights or
rights of first refusal), proxy or shareholder agreement (to the extent known to
the Company) or other agreements for the purchase or acquisition from the
Company of any shares of its Capital Stock or any stock appreciation rights or
similar rights.

    


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    (b)           Subsidiaries of the
Company.  The Company has no Subsidiaries, other than Blue
Fin.  Blue Fin has no Subsidiaries.  Set forth on Schedule 4.01(b)
hereto is, with respect to Blue Fin, as of the date hereof, the jurisdiction of
its organization, the number of shares of each class of its Capital Stock
authorized, and the number outstanding, on the date hereof and the percentage of
each such class of its Capital Stock owned (directly or indirectly) by the
Company and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the date
hereof.  All of the outstanding Capital Stock in Blue Fin has been
validly issued, is fully paid and non-assessable and are owned by the Company
free and clear of all Liens.

     

    (c)           Authorization.  The
execution, delivery and performance by each Transaction Party of each of the
Transaction Documents to which it is or is to be a party and the consummation of
the Transactions by each Transaction Party to the extent applicable to it
(i) have been duly authorized by all corporate action required to be
obtained by such Transaction Party, and (ii) will not (A) violate
(1) any provision of law, statute, rule or regulation (including, without
limitation, any Mining Law), or of the Constitutive Documents of such
Transaction Party, (2) any applicable order of any court or any rule,
regulation or order of any Governmental Authority (including, without
limitation, any Mining Permit held by a Transaction Party or under which a
Transaction Party is entitled to operate) or (3) any provision of any
indenture, lease (including, without limitation, any Mining Lease), agreement or
other instrument to which such Transaction Party is or is to be a party or by
which such Transaction Party or any of its property is or may be bound,
(B) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under, give rise to a right of or
result in any cancellation or acceleration of any right or obligation (including
any payment) or to a loss of a material benefit under, any such indenture, lease
(including, without limitation, any Mining Lease), agreement or other
instrument, where any such conflict, violation, breach or default referred to in
clause (A) or (B) of this Section 4.01(c)(ii),
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, or (C) result in the creation or imposition of any
Lien upon or with respect to any property or assets now owned or hereafter
acquired by such Transaction Party, other than the Liens created by the Security
Documents; provided, however, that the
Company has not obtained the SITLA Consent and the representations and
warranties made pursuant to this clause (ii) shall not be deemed to be violated
or breached on account of the failure on the part of the Company to obtain the
SITLA Consent.

    


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    (d)           Governmental Authorizations
and Filings.  No Governmental Authorization, and no notice to
or filing with, any Governmental Authority or any other third party is required
for (i) the due execution, delivery, recordation, filing or performance by
any Transaction Party of any Transaction Document to which it is or is to be a
party, or for the consummation of the Transactions applicable to it or
(ii) the exercise by the Investor of its rights under the Transaction
Documents, except for (A) the filing of UCC financing statements and
certificates of title, as set forth in Section 5 (as to financing statements)
and Section 17 (as to certificates of title) of the Perfection Certificate,
dated the Effective Date, (B) the recordation of the Mortgages, as set
forth in Section 7(b) of the Perfection Certificate, dated the Effective Date,
(C) the filing of a Form D under Regulation D and pursuant to applicable
“blue sky” laws of the State of New York, and (D) the authorizations,
approvals, actions, notices and filings listed on Schedule 4.01(d)
hereto, all of which have been as of the Effective Date duly obtained, taken,
given or made (or, in the case of the Form D, will be made within the required
15-day calendar period under Regulation D or the time period required under New
York “blue sky” laws), and are (or, in the case of the Form D, will be when
filed under Regulation D or pursuant to New York “blue sky” laws) in full force
and effect (other than those the failure to obtain which would not individually
or collectively be reasonably likely to have a Material Adverse
Effect).

     

    (e)           Enforceability.  This
Agreement has been, and each other Transaction Document when delivered hereunder
will have been, duly executed and delivered by each Transaction Party party
thereto.  This Agreement is, and each other Transaction Document when
delivered hereunder by a Transaction Party party thereto will be, the legal,
valid and binding obligation of such Transaction Party, enforceable against such
Transaction Party in accordance with its terms, subject to (i) the effects
of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
other similar laws affecting creditors’ rights generally, (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and (iii) implied covenants of good
faith and fair dealing.

     

    (f)           Litigation; Compliance with
Law.  Other than the Disclosed Litigation, there is no action,
suit, investigation, litigation or proceeding affecting any Transaction Party,
including any Environmental Action, pending or, to the knowledge of the Company,
threatened (under circumstances under which a reasonable person acting under
similar circumstances would recognize a statement, allegation or other action as
constituting a threat) before any Governmental Authority or
arbitrator.  To the knowledge of the Company, no facts exist that
presently or upon the giving of notice or the lapse of time or otherwise would
render the Company ineligible to receive such Mining Permits as are necessary to
conduct the Yellowhammer Mining Activities and the Kiewit Mining
Activities.  Except as set forth in Schedule 4.01(f)
hereto, none of the Transaction Parties or their respective properties or assets
is in violation of any currently applicable law, rule or regulation (including
any zoning or building ordinance or permit, any Environmental Law, any Mining
Law or any Mining Permit held by a Transaction Party or under which a
Transaction Party is entitled to operate) or violation of any restriction of
public record or any agreement affecting any Mortgaged Property, or is in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
provided, however, that no
Transaction Party shall be deemed to be in violation of the representation made
pursuant to this sentence on account of the failure to engage in Active Mining
Duties on the Real Property (other than the Core Properties)..

    


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    (g)           Financial Statements; No
MAC.  The consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of the Company as of and for the
fiscal year ended December 31, 2009, audited by and accompanied by the
unqualified opinion of Child, Van Wagoner & Bradshaw, PLLC, independent
public accountants, and the consolidated balance sheet and related statement of
income, stockholders equity and cash flows of the Company for the three months
ended March 31, 2010, certified by the chief financial officer of the
Company, copies of which have been provided to the Investor, have been prepared
in accordance with GAAP and present fairly and accurately the consolidated
financial condition and results of operations and cash flows of the Transaction
Parties as of the date and for the period to which they relate.  Since
March 31, 2010, there has been no event or occurrence which has resulted in
or would reasonably be expected to result in, individually or in the aggregate,
a Material Adverse Change.

     

    (h)           Mining
Permits.  Set forth on Schedule 4.01(h) is a
list of all Mining Permits and Environmental Permits that are required to be
obtained by the Company to conduct the Yellowhammer Mining Activities and the
Kiewit Mining Activities and such Schedule 4.01(h)
further sets forth (i) whether such permit has been issued or is pending or
has been applied for and the date of issuance thereof or, in the case of any
pending application, submission thereof, (ii) the amount of all surety
bonds or other collateral required for the bonding of such permit, if known and
as applicable to such permit, and (iii) with respect to any pending permit
application, the status thereof (including a summary of the remaining conditions
required to be satisfied before the Governmental Authority will issue the permit
that is the subject of such application).

     

    (i)       
    Financial
Projections.  The forecasted mineral production levels, cash
flows, operating expenses and debt service of the Company as set forth in and
for the period covered by (A) in the case of the
Yellowhammer Mining Activities, the projections set forth in Schedule 4.01(i)(A)
(the "Yellowhammer Pro
Forma Statement") and (B) in the case of the Kiewit Mining Activities,
the projections set forth in Schedule 4.01(i)(B)
(the "Kiewit Pro Forma
Statement" and, together with the Yellowhammer Pro Forma Statement, the
“Pro Forma
Production and Financial Projections”) were prepared in good faith and on
the basis of the assumptions (if any) stated therein, which assumptions were
fair in light of the conditions existing at the time of delivery of such
forecasts (and remain fair in light of the conditions existing as of the
Effective Date), and represented, at the time of delivery (and continue to
represent, as of the Effective Date), the Company’s reasonable estimate of its
future financial performance for the period covered therein.

    


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    (j)         
No Material
Misstatements.  All written information (other than the Pro
Forma Production and Financial Projections, estimates and information of a
general economic nature) (the “Information”)
concerning the Company and Blue Fin and the Transactions or otherwise prepared
by or on behalf of the Company or Blue Fin or their representatives (excluding
any reserve reports) and made available to the Investor in connection with the
Transactions, when taken as a whole, were true and correct in all material
respects, as of the date such Information was furnished to the Investor, and did
not contain any untrue statement of a material fact as of any such date or omit
to state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were made.

     

    (k)         Margin
Stock.  The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying "Margin Stock" (as defined in
Regulation U), and no proceeds of any Term Loan Advance will be used for the
purchase of purchasing or carrying Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.  None of
the collateral in which the Investor shall have a security interest pursuant to
any Security Document consists of Margin Stock, and the Term Loan Advances are
not "indirectly secured" (within the meaning of Regulation U) by any Margin
Stock.

     

    (l)          Employee Benefit
Plans.  The Company, Blue Fin and each ERISA Affiliate
(a) have never sponsored, maintained or contributed to (i) any
“employee pension benefit plan” (as defined in Section 3(2) of ERISA) or
(ii) any “multiemployer plan” (as defined in Section 3(37) of ERISA and
(b) do not have any liabilities, whether contingent or otherwise, with
respect to any such “employee benefit plan” or “multiemployer
plan”.

     

    (m)        Environmental
Matters.  Except as disclosed on Schedule 4.01(m)
hereto and except as to matters that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:

     

    (i)    
       no written notice, request for
information, order, complaint or penalty has been received by a Transaction
Party and there are no judicial, administrative or other actions, suits or
proceedings pending or threatened in writing against such Transaction Party
which allege a violation of or liability under any Environmental Laws, in each
case relating to a Transaction Party;

     

    (ii)           all
Environmental Permits necessary for conduct of the Yellowhammer Mining
Activities and the Kiewit Mining Activities are listed on Schedule 4.01(h), and
the Transaction Parties are in compliance with the terms of all Environmental
Permits (to the extent issued) and with all other applicable Environmental
Laws;

     

    (iii)          the
Company has made available to the Investor prior to the Effective Date the most
recent environmental audit, if any, with respect to the operations of the
Transaction Parties;

    


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    (iv)          to
the knowledge of the Company, (A) no Hazardous Material is located at any
property currently owned or leased by any Transaction Party, or otherwise held
for operation by any Transaction Party as contemplated by the Mining Activities,
that would reasonably be expected to give rise to (1) any liability of any
Transaction Party under any Environmental Laws or (2) any cost or
obligation under Environmental Laws other than, in the case of the Company,
those costs and obligations that would be incurred in the ordinary course of the
Company's business in connection with engaging in the Yellowhammer Mining
Activities and the Kiewit Mining Activities, and (B) no reportable
quantities of any Hazardous Material has been generated, used, treated, handled
or stored at, or transported to or from, any such property by any Transaction
Party in a manner that would reasonably be expected to give rise to (1) any
liability of such Transaction Party under any Environmental Laws or (2) any
cost or obligation under Environmental Laws other than, in the case of the
Company, those costs and obligations that would be incurred in the ordinary
course of the Company's business in connection with engaging in the Yellowhammer
Mining Activities and the Kiewit Mining Activities;

     

    (v)           there
are no agreements in effect as of the Effective Date pursuant to which a
Transaction Party has expressly assumed or undertaken responsibility for any
liability or obligation of any other Person arising under or relating to
Environmental Laws;

     

    (vi)          to
the knowledge of the Company, there are no landfills or disposal areas located
at, on, in or under the assets of a Transaction Party related to a Mortgaged
Property that require an authorization pursuant to Mining Laws or Environmental
Laws for which such Transaction Party does not hold such an authorization
pursuant to Mining Laws or Environmental Laws;

     

    (vii)         none
of the properties currently or formerly owned or operated by a Transaction
Party, and none of the properties covered by any Mortgage in favor of the
Investor, is listed or proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is adjacent to any such property; set
forth on Schedule
4.01(m) under the heading of “Property Listing” is a listing of all
properties currently or formerly owned or operated by a Transaction Party
(including any predecessor company with or into which a Transaction Party has
merged or consolidated); and

     

    (viii)        there
are not currently and, to the knowledge of the Company, there have not been any
underground storage tanks “owned,” or “operated” (as defined by applicable
Environmental Law) by a Transaction Party or present or located on the Real
Property.

     

    (n)         Tax
Matters.

     

    (i)           
Each Transaction Party (A) has timely filed or caused to be timely filed
all federal, state, local and foreign Tax returns required to have been filed by
it and, to the knowledge of the Company, each such Tax return is true and
correct in all material respects, and (B) has timely paid or caused to be
timely paid all Taxes shown thereon to be due and payable by it and all other
taxes or assessments, except for Taxes that are being contested in good faith by
appropriate proceedings and for which it has set aside on its books adequate
reserves in accordance with GAAP;

    


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    (ii)           The
Transaction Parties have paid in full or made adequate provision (in accordance
with GAAP) for the payment of all Taxes due with respect to all periods or
portions thereof ending on or before the Effective Date; and

     

    (iii)          As
of the Effective Date, with respect to each Transaction Party, (A) there
are no claims being asserted in writing with respect to any Taxes except for
claims being contested in good faith by appropriate proceedings and for which
such Transaction Party (as applicable) has set aside on its books adequate
reserves in accordance with GAAP, and (B) no Tax returns are being examined
by, and no written notification of intention to examine has been received from,
the Internal Revenue Service or any other taxing authority.

     

    (o)         Labor
Matters.  Neither the business nor the properties of the
Company related to the Mining Activities are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that would be reasonably likely to have a
Material Adverse Effect.  No Transaction Party is a party to any
collective bargaining agreement.

     

    (p)         Location of Real Property
and Leased Premises.

     

    (i)        
   Schedule 7(a) to the
Perfection Certificate dated as of the Effective Date lists completely and
correctly as of the Effective Date all Owned Real Property as of such date and
the addresses or location thereof.

     

    (ii)           Schedule 7(a) to the
Perfection Certificate dated as of the Effective Date lists completely and
correctly as of the Effective Date all Leased Real Property as of such date and
the addresses or location thereof.

     

    (q)         Title to Properties;
Possession under Leases.

     

    (i)           Each
Transaction Party has good and valid record fee simple title to, or valid
leasehold (including subleasehold, as applicable) interests in, or good
possessory title to, or easements or other limited property interests in, all
its properties and assets, including all Mortgaged Properties, subject solely to
Permitted Encumbrances and except (A) where the failure to have such title
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and (B) in the case of the Utah Subleases, the
SITLA Consent, which has not been obtained.  To the Company’s
knowledge, each unpatented mining claim that is included in the Mortgaged
Property has been validly located (except no representation or warranty is made
hereunder with respect to a discovery on any such claim) and, subject to
fulfillment by a Transaction Party of its Active Mining Duties, properly
maintained in accordance with state and Federal law and no material conflict
exists with the unpatented mining claims held by any other Person. The Company
has maintained, in all material respects and in accordance with normal mining
industry practice, all of the machinery, equipment, vehicles, processing plants
or facilities, loadout and other transportation facilities and other tangible
personal property now owned or leased by the Company that is necessary to
conduct the Mining Activities as now conducted by it.  All such
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section
6.02 or arising by operation of law.

    


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    (ii)           Each
Transaction Party and, to the knowledge of the Company, each other party has
complied with all obligations under all leases (including the Mining Leases) to
which such Transaction Party is a party, in each case except where the failure
to comply would not have a Material Adverse Effect, and all such leases
(including subleases and, in the case of the Utah Subleases, subject to
obtaining the SITLA Consent) are in full force and effect, except leases
(including subleases) in respect of which the failure to be in full force and
effect could not reasonably be expected to have a Material Adverse
Effect.  Each Transaction Party enjoys peaceful and undisturbed
possession under all such leases, other than leases in respect of which the
failure to enjoy peaceful and un-disturbed possession would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.  A memorandum of lease with respect to each Principal Lease
Agreement has been recorded in the applicable land records office.

     

    (iii)          As
of the Effective Date, the estate, title and interest of the Transaction Parties
in those Real Properties subject to a Mortgage delivered on or prior to the
Effective Date constitute all of the estate, title and interest in Real
Properties necessary for the conduct of the Yellowhammer Mining Activities and
the Kiewit Mining Activities, except as otherwise disclosed on Schedule
4.01(q)(iii).  As of the Effective Date, the Real Properties
subject to a Mortgage delivered on or prior to the Effective Date constitute
substantially all of the base and precious metal or other mineral reserves and
related surface Improvements owned or leased by the Transaction Parties, other
than the Excluded Property.  All of the Owned Real Properties and
Leased Real Properties owned or leased as of the Effective Date (other than the
Excluded Properties, if any) are encumbered by Mortgages in favor of the
Investor securing the Obligations.  All of the After Acquired
Properties (other than any Excluded Property) and Required Properties (in each
case, if any) are, as of the date of the recordation of a respective Additional
Mortgage in respect thereof, encumbered by Additional Mortgages in favor of the
Investor securing the Obligations.

     

    (iv)          Prior
to the Effective Date, no Transaction Party has engaged in any mining
activities, except as otherwise disclosed on Schedule
4.01(q)(iv).

    


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    (v)           As
of the Effective Date, none of the Transaction Parties has received any notice
of any pending or contemplated condemnation proceeding affecting any of the
Mortgaged Properties or any sale or disposition thereof in lieu of condemnation
that remains unresolved as of the Effective Date.

     

    (vi)      
   None of the Transaction Parties is obligated on the Effective
Date under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein, except as permitted under Section 6.02 or 6.05.

     

    (vii)         To
the knowledge of the Company, with respect to each Owned Real Property or Leased
Real Property on which significant surface Improvements are located, there are
no rights or claims of parties in possession not shown by the public records,
encroachments, overlaps, boundary line disputes or other matters which would be
disclosed by an accurate survey or inspection of the premises except as could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

     

    (r)          Mortgages.

     

    (i)       
    The Mortgages executed and delivered on the Effective
Date pursuant to subparagraphs (viii) and (ix) of Section 3.01(a), and
the Additional Mortgages (if any) when executed and delivered after the
Effective Date pursuant to Section 5.10(c),
shall be effective to create in favor of the Investor a legal, valid and
enforceable Lien on all of the applicable Transaction Party’s right, title and
interest in and to the Mortgaged Property thereunder and the proceeds thereof,
and when such Mortgages and Additional Mortgages are filed or recorded in the
proper real estate filing or recording offices, the Liens created by the
Mortgages and the Additional Mortgages in favor of the Investor constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the applicable Transaction Party in such Mortgaged Property (including any After
Acquired Property and Required Property) and, to the extent applicable, subject
to Section 9-315 of the UCC, the proceeds thereof, in each case prior and
superior in right to any other Person, other than with respect to the rights of
a Person pursuant to Liens expressly permitted by Section 6.02(a) and
Liens having priority by operation of law.

     

    (s)         Liens.  Set
forth on Schedule
6.02(a) hereto is a complete and accurate list of all Liens (other than
the Liens created by the Security Documents) on the property or assets of the
Transaction Parties, showing as of the date hereof the lienholder thereof, the
principal amount of the obligations secured thereby and the property or assets
of the Transaction Party subject thereto.

     

    (t)          Investments.  Set
forth on Schedule 4.01(t)
hereto is a complete and accurate list of all Investments consisting of
Indebtedness or equity securities held by any Transaction Party on the date
hereof, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.

     

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    (u)           Licenses,
etc.  (i) The Transaction Parties own or possess all
licenses, permits, franchises, authorizations, patents of intellectual property,
copyrights, service marks, trademarks and trade names, or rights thereto, for
which the failure so to do, individually or in the aggregate, would reasonably
be likely to have a Material Adverse Effect, without known conflict with the
rights of others (other than (A) such Mining Permits and Environmental
Permits relating to the Mining Activities that have not, as of the Effective
Date, been issued, as described on Schedule 4.01(h) and
(B) any Mining Permits and Environmental Permits with respect to the real
property interests held or owned by Blue Fin), (ii) to the knowledge of the
Company, no product or practice of any Transaction Party infringes in any
material respect on any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any other
Person, and (iii) to the knowledge of the Company, there is no violation by
any Person of any right of any Transaction Party with respect to any patent of
intellectual property, copyright, service mark, trademark, trade name or other
right owned or used by any Transaction Party other than such violations that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

     

    (v)           Investment
Company.  Neither the Company nor Blue Fin is an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended.

     

    (w)          Broker
Fees.  Neither the Company nor any of its agents or
representatives has retained any finder, broker, agent, financial advisor or
other intermediary (collectively, “Intermediary”)
in connection with the transactions contemplated by this Agreement, and the
Company agrees to indemnify, defend and hold harmless the Investor from and
against any liability for any compensation to any Intermediary and the fees and
expenses of defending against such liability or alleged liability.

     

    (x)           Core
Properties.  The Core Properties constitute all the properties
held by the Company that are necessary to (i) engage in the Mining
Activities sufficient to produce the ore in the amounts contemplated by the Pro
Forma Production and Financial Projections, and (ii) engage in the milling
and processing of such ore at the Cactus Mill as contemplated by the Pro Forma
Production and Financial Projections.  None of the Utah Subleases is
material to the business, operations or financial condition of the Company to
the extent contemplated by the Pro Forma Production and Financial
Projections.

    


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      ARTICLE
V.

       

      AFFIRMATIVE
COVENANTS

       

      So long
as any Term Loan Advance, any interest thereon or any other Obligation shall
remain outstanding or the Commitment shall remain in effect hereunder, the
Company covenants and agrees with the Investor that, unless the Investor shall
otherwise consent in writing, the Company will, and will cause Blue Fin
to,:

       

    

    SECTION 5.01. Existence; Businesses and
Properties.

     

    (a)           Do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence.

     

    (b)           Do
or cause to be done all things necessary to (i) obtain, preserve, renew,
extend and keep in full force and effect the permits, franchises,
authorizations, patents, trade-marks, service marks, trade names, copyrights,
licenses and rights with respect thereto necessary to the normal conduct of its
business, (ii) comply in all material respects with all material applicable
laws, rules, regulations (including any zoning, mining, building, ordinance,
code or approval or any building permits or any restrictions of record or
agreements affecting the Mortgaged Properties) and judgments, writs,
injunctions, decrees and orders of any Governmental Authority, whether now in
effect or hereafter enacted, and (iii) at all times maintain and preserve
all property necessary to the conduct of the Mining Activities at or on the Core
Properties and all other material property as to which the Investor has a
security interest pursuant to any Security Document and keep such property in
good repair, working order and condition (normal wear and tear excepted) and
from time to time make, or cause to be made, all necessary repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith, if any, may be properly conducted
at all times (in each case except as expressly permitted by this
Agreement).

     

    SECTION
5.02. Insurance.

     

    (a)           Keep
its insurable properties insured at all times by financially sound and reputable
insurers in such amounts as shall be customary for similar businesses and
maintain such other reasonable insurance, of such types, to such extent (with
deductibles limit approved by the Investor) and against such risks, as is
customary with companies in the same or similar businesses and maintain such
other insurance as may be required by law or any Transaction Document; provided, however, that the
Company shall not be permitted to self-insure without the prior written consent
of the Investor.

     

    (b)           Cause
all such property and casualty insurance policies with respect to the collateral
under any Security Document to be endorsed or otherwise amended to include a
lender’s loss payable endorsement, in form and substance reasonably satisfactory
to the Investor, which endorsement shall provide that, from and after the
Effective Date, if the insurance carrier shall have received written notice from
the Investor of the occurrence of an Event of Default, the insurance carrier
shall pay all proceeds otherwise payable to the Company or any other Transaction
Party under such policies directly to the Investor; cause all such policies to
provide that neither the Company, the Investor nor any other party shall be a
coinsurer thereunder and to contain a “Replacement Cost Endorsement,” without
any deduction for depreciation, and such other provisions as the Investor may
reasonably (in light of a Default or a material development in respect of the
insured collateral) require from time to time to protect its interests; deliver
original or certified copies of all such policies or a certificate of an
insurance broker to the Investor; cause each such policy to provide that it
shall not be canceled or not renewed upon less than thirty (30) days’ prior
written notice thereof by the insurer to the Investor; deliver to the Investor,
prior to the cancellation or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Investor), or insurance certificate with respect
thereto, together with evidence satisfactory to the Investor of payment of the
premium therefor.

    


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    (c)         With
respect to each Mortgaged Property, carry and maintain comprehensive general
liability insurance including the “broad form CGL endorsement” (or equivalent
coverage) and coverage on an occurrence basis against claims made for personal
injury (including bodily injury, death and property damage) and umbrella
liability insurance against any and all claims, in each case in amounts (of not
less than $5,000,000 on a per occurrence basis) and against such risks as are
customarily maintained by companies engaged in the same or similar industry
operating in the same or similar locations naming the Investor as an additional
insured, on forms reasonably satisfactory to the Investor.

     

    (d)         Notify
the Investor promptly whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 5.02 is
taken out by a Transaction Party; and promptly deliver to the Investor a
duplicate original copy of such policy or policies, or an insurance certificate
with respect thereto.

     

    (e)         In
connection with the covenants set forth in this Section 5.02, it is
under-stood and agreed that:

     

    (i)       
    none of the Investor and its agents or employees shall
be liable for any loss or damage insured by the insurance policies required to
be maintained under this Section 5.02, it
being understood that (A) the Transaction Parties shall look solely to
their insurance companies or any other parties other than the Investor and its
agents or employees, for the recovery of such loss or damage, and (B) such
insurance companies shall have no rights of subrogation against the Investor or
its agents or employees.  If, however, the insurance policies do not
provide waiver of subrogation rights against such parties, as required above,
then the Company, to the extent permitted by law, shall waive and cause Blue Fin
to waive its right of recovery, if any, against the Investor and its agents and
employees; and

     

    (ii)           the
designation of any form, type or amount of insurance coverage by the Investor
under this Section
5.02 shall in no event be deemed a representation, warranty or advice by
the Investor that such insurance is adequate for the purposes of the business of
the Transaction Parties or the protection of their properties.

     

    SECTION 5.03. Taxes.  Pay
and discharge promptly when due all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its property, before the same shall become delinquent or in default, as well as
all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, might give rise to a Lien upon such properties or any part thereof;
provided, however, that
such payment and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings, and the applicable
Transaction Party shall have set aside on its books reserves in accordance with
GAAP with respect thereto.

    


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    SECTION 5.04. Financial Statements,
Reports, etc.  Furnish to the Investor:

     

    (a)           as
soon as available and in any event within ninety (90) days after the end of each
fiscal year, commencing with the year ended December 31, 2010, a
consolidated balance sheet and related statements of operations, cash flows and
owners’ equity showing the financial position of the Transaction Parties as of
the close of such year and the consolidated results of their operations during
such year and setting forth in comparative form the corresponding figures for
the prior fiscal year, all audited by independent public accountants reasonably
acceptable to the Investor and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present, in all material respects, the
financial position and results of operations of the Transaction Parties on a
consolidated basis in accordance with GAAP;

     

    (b)          commencing
with the quarter ended June 30, 2010, as soon as available and in any event
within forty-five (45) days after the end of each of the first three (3) fiscal
quarters of each fiscal year, a consolidated balance sheet and related
statements of operations and cash flows showing the financial position of the
Transaction Parties as of the close of such fiscal quarter and the consolidated
results of their operations during such fiscal quarter and the then-elapsed
portion of the year and setting forth in comparative form the corresponding
figures for the corresponding periods of the prior fiscal year, all certified by
the chief financial officer of the Company, as fairly presenting, in all
material respects, the financial position and results of operations of the
Transaction Parties on a consolidated basis in accordance with GAAP (subject to
normal year-end audit adjustments and the absence of footnotes);

     

    (c)           (x) concurrently
with any delivery of financial statements under paragraph (a) or (b) of this
Section 5.04, a
certificate of the chief financial officer of the Company (i) certifying
that no Event of Default or Default has occurred or, if such an Event of Default
or Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto, and
(ii) commencing with the fiscal period ending June 30, 2010, setting
forth computations in reasonable detail satisfactory to the Investor
demonstrating compliance with the covenants contained in Sections 6.10 and
6.11, and
(y) concurrently with any delivery of financial statements under paragraph
(a) of this Section
5.04, a certificate of the accounting firm opining on or certifying such
statements stating whether such accounting firm obtained knowledge during the
course of its examination of such statements of any Default or Event of Default
(which certificate may be limited to accounting matters and disclaims
responsibility for legal interpretations);

    


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    (d)           concurrently
with the delivery of the following documents to any stockholder of the Company,
copies of all reports and other materials distributed to the stockholders of the
Company;

     

    (e)           if,
as a result of any change in accounting principles and policies from those as in
effect on the Effective Date, the consolidated financial statements of the
Transaction Parties delivered pursuant to paragraph (a) or (b) of this Section 5.04 will
differ in any material respect from the consolidated financial statements that
would have been delivered pursuant to such clauses had no such change in
accounting principles and policies been made, then, together with the first
delivery of financial statements pursuant to paragraphs (a) and (b) of this
Section 5.04
following such change, a schedule prepared by the chief financial officer of the
Company reconciling such changes to what the financial statements would have
been without such changes;

     

    (f)           within
forty-five (45) days after the beginning of each fiscal year, an operating and
capital expenditure budget, in form satisfactory to the Investor prepared by the
Company for each of the four (4) quarters of such fiscal year prepared in
reasonable detail, of the Transaction Parties, accompanied by the statement of
the chief financial officer of the Company to the effect that, to his knowledge,
the budget is a reasonable estimate for the period covered thereby;

     

    (g)           upon
the reasonable request of the Investor but in any event not later than thirty
(30) days (or, if an Event of Default shall have occurred and be continuing,
promptly) following such request, updated Perfection Certificates (or, to the
extent such request relates to specified information contained in the Perfection
Certificates, such information) reflecting all changes since the date of the
information most recently received pursuant to this paragraph (g) or Section
5.10(b);

     

    (h)           promptly
after the occurrence thereof, notice of any material change to or amendment or
supplement of any agreement relating to (i) the purchase or sale of any
minerals, (ii) the mining of any minerals by any contract miner, or
(iii) any Mining Lease;

     

    (i)      
     promptly, a copy of all reports submitted to the
Board of Directors (or any committee thereof) of any Transaction Party valuing
the mineral reserves owned or controlled by such Transaction Party;
and

     

    (j)    
       promptly, from time to time, such
other information regarding the operations (including as to mineral reserves),
business affairs and financial condition of the Transaction Parties, or
compliance with the terms of any Transaction Document, or such financial
statements, as in each case the Investor may reasonably request.

     

    SECTION 5.05. Litigation and Other
Notices.  Furnish to the Investor written notice of the
following promptly after the Company obtains knowledge thereof:

     

    (a)           any
Event of Default or Default, specifying the nature and extent thereof and the
corrective action (if any) proposed to be taken with respect
thereto;

    


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    (b)           the
filing or commencement of, or any written threat or notice of intention of any
Person to file or commence, any action, suit or proceeding (including any
Environmental Action), whether at law or in equity or by or before any
Governmental Authority or in arbitration, by or against any Transaction Party;
and

     

    (c)           any
other development specific to any Transaction Party that has had, or is
reasonably be expected to have, a Material Adverse Effect.

     

    SECTION 5.06. Compliance with
Laws.  Comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to it or its property (owned or leased)
and all Mining Laws and Mining Permits held by it or under which it is entitled
to operate, except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect; provided that this Section 5.06 shall
not apply to Environmental Laws, which are the subject of Section 5.09, or to
laws related to Taxes, which are the subject of Section
5.03.

     

    SECTION 5.07. Maintaining Records; Access
to Properties and Inspections.  Maintain all financial records
in accordance with GAAP and permit any persons designated by the Investor to
visit and inspect the financial records and the properties of any Transaction
Party, during normal business hours (or, during the continuance of any Event of
Default, at other reasonable times), upon reasonable prior written notice to the
Company, and as often as reasonably requested and to make extracts from and
copies of such financial records, and permit any persons designated by the
Investor upon reasonable prior notice to the Company to discuss the affairs,
finances and condition of any Transaction Party with the officers thereof and
independent accountants therefor (subject to reasonable requirements of
confidentiality, including requirements imposed by law or by
contract).

     

    SECTION 5.08. Use of
Proceeds.  Use the proceeds of the Term Loan Advances solely
for the purposes described in Section
2.09.

     

    SECTION 5.09. Compliance with
Environmental Law.  Comply, and make commercially reasonable
efforts to cause all lessees and other persons occupying its properties
(including all contract miners) to comply, with all Environmental Laws
applicable to its operations and properties; and obtain and renew all material
authorizations and permits required pursuant to Environmental Law for its
operations (to the extent related to the Mining Activities at or on the Core
Properties) and properties, in each case in accordance with Environmental Laws,
except, in each case with respect to this Section 5.09, to the
extent the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

     

    SECTION 5.10. Further Assurances Relating
to Collateral.

     

    (a)           Execute
any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of
financing statements, fixture filings, Mortgages and other documents and
recordings of Liens in stock registries), that may be required under any
applicable law, or that the Investor may reasonably request, to cause all
collateral a security interest in which is required pursuant to any Transaction
Document to be granted, registered, recorded and perfected in favor of the
Investor to be so granted, registered, recorded or perfected, all at the expense
of the Company and provide to the Investor, from time to time upon reasonable
request, evidence reasonably satisfactory to the Investor as to the perfection
and priority of the Liens created or intended to be created by the Security
Documents.

     

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    (b)           With
respect to (i) any Owned Real Property or Leased Real Property that shall
be acquired, leased or otherwise held by any Transaction Party after the
Effective Date (other than any Excluded Property so long as such Excluded
Property Consent has not been revoked) (collectively, the “After Acquired
Properties”) or (ii) any Excluded Property whose status as such
shall have been revoked by the Investor by delivering to the Company an Excluded
Property Revocation Notice (a “Required
Property”), the Company shall have:

     

    (i)    
       caused an additional Mortgage (an
“Additional
Mortgage”) to be duly authorized and executed by the Company or other
Transaction Party, as applicable, in form for recording in the recording office
of each jurisdiction where the After Acquired Property or Required Property to
be encumbered thereby is situated, in favor of the Investor, together with such
other instruments as shall be necessary or appropriate (in the reasonable
judgment of the Investor) to create a Lien under applicable law, all of which
shall be in form and substance reasonably satisfactory to the Investor, which
Additional Mortgage and other instruments is effective to create and/or maintain
a first priority Lien on such After Acquired Property or Required Property other
than the Permitted Encumbrances;

     

    (ii)           if
such After Acquired Property or Required Property shall constitute Leased Real
Property (A) as to which the consent to the assignment thereof by any
landlord having an interest in such Leased Real Property shall be required or
deemed advisable by the Investor, delivered the written consent of such landlord
to the assignment thereof, in form and substance acceptable to the Investor, and
(B) delivered an estoppel certificate (and, if requested by the Investor in
the event that the landlord has granted to its lender a security interest in
such Leased Real Property, a subordination, non-disturbance and attornment
agreement, in each case in form and substance acceptable to the
Investor;

     

    (iii)          delivered
policies or certificates of insurance of the type required by Section 5.02 with
respect to such After Acquired Property or Required Property;

     

    (iv)         caused
to be delivered such opinions of legal counsel as shall be reasonably required
by the Investor covering such matters as shall be reasonably required by the
Investor, including the enforceability and recordation of the Additional
Mortgage and as to title; and

    


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    (v)          paid
or cause to be paid, and delivered evidence acceptable to the Investor of the
payment in full by Company of, all title opinion costs or fees, search and
examination charges, mortgage recording taxes, UCC filing fees and charges, and
any other recordation, registration or filing taxes, fees or charges, required
for the perfection of the security interests created under the Additional
Mortgage or other Security Documents or the procurement of title insurance
policies.

     

    SECTION 5.11. Fiscal Year;
Accounting.  Cause the fiscal year of the Transaction Parties
to end on December 31.

     

    SECTION 5.12. Performance of Mining
Leases.  Make all payments and otherwise perform all
obligations in respect of all Mining Leases to which a Transaction Party is a
party, keep such Mining Leases in full force and effect and not allow such
Mining Leases to lapse or be terminated or any rights to renew such Mining
Leases to be forfeited or canceled, notify the Investor of any default by any
party with respect to such Mining Leases and cooperate with the Investor in all
respects to cure any such default, and cause Blue Fin to do so, except, in any
case, where the failure to do so, either individually or in the aggregate, would
not be reasonably likely to have a Material Adverse Effect; provided, however, that the
Investor agrees that (i) Blue Fin shall not be required to engage in Active
Mining Duties with respect to the unpatented mining claims included in the
Mortgaged Property of Blue Fin, and (ii) the Company shall not be required
to engage in Active Mining Duties with respect to the unpatented mining claims
included in the Mortgaged Property of the Company other than with respect to the
Core Properties.  Without limiting any other right contained in any
Transaction Document, the Company hereby appoints the Investor as its
attorney-in-fact, which power is coupled with an interest and with full power of
substitution either in Investor's name or in the name of the Company, to, from
time to time at the reasonable expense of the Company following a default by the
Company under a Principal Lease Agreement, take all such actions and do all such
things as the Investor shall deem reasonably necessary or appropriate for the
purpose of curing such defaults or otherwise preserving or maintaining such
Principal Lease Agreement in full force and effect or the properties leased or
subleased thereunder or the other rights of the Company contained
therein.

     

    SECTION 5.13. General Further
Assurances.  Promptly upon request by the Investor,
(a) correct (and cause Blue Fin to correct) any material defect or error
(as to which both the Company and the Investor agree in good faith constitutes a
defect or error) that may be discovered in any Transaction Document or in the
execution, acknowledgment, filing or recordation thereof, and (b) take such
action (and cause Blue Fin to take such action) as the Investor may reasonably
require from time to time in order to carry out more effectively the purposes of
the Transaction Documents.

    


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      ARTICLE
VI.

       

      NEGATIVE
COVENANTS

       

      So long
as any Term Loan Advance, any interest thereon or any other Obligation of the
Investor under any Transaction Document shall remain unsatisfied or the
Commitment shall remain in effect hereunder, unless the Investor shall otherwise
consent in writing, the Company will not, and will cause Blue Fin not
to:

       

    

    SECTION 6.01. Indebtedness.  Incur,
create, assume or permit to exist any Indebtedness, except:

     

    (a)           Indebtedness
existing on the Effective Date and listed on Schedule 6.01(a)
hereto;

     

    (b)           Indebtedness
created under the Transaction Documents;

     

    (c)           Indebtedness
owed to (including obligations in respect of letters of credit or bank
guarantees or similar instruments for the benefit of) any person providing
workers’ compensation, health, disability or other employee benefits or
property, casualty or liability insurance to the Company or any Subsidiary
thereof, pursuant to reimbursement or indemnification obligations to such
person; provided that
upon the incurrence of Indebtedness with respect to reimbursement obligations
regarding workers’ compensation claims, such obligations are reimbursed not
later than thirty (30) days following such incurrence;

     

    (d)           Indebtedness
consisting of royalty payments or royalty obligations under the Clifton Lease or
the Moeller Trust Lease, or under any other agreement in respect of the
acquisition of any After Acquired Property the acquisition of which is approved
by the Investor;

     

    (e)           Indebtedness
in respect of performance bonds, bid bonds, appeal bonds, surety bonds, letters
of credit and completion guarantees and similar obligations, in each case
provided in the ordinary course of business, including those incurred to secure
health, safety and environmental obligations (including land reclamation and
other obligations under Mining Permits and Environmental Permits) in the
ordinary course of business;

     

    (f)           Capital
Lease Obligations and purchase money security interest Indebtedness incurred by
the Company at the time of and for the purpose of the acquisition or lease of
the respective asset in an aggregate principal amount that at the time of, and
after giving effect to, the incurrence thereof (together with Indebtedness
outstanding pursuant to this paragraph (f) would not exceed $500,000;
and

     

    (g)           Guarantees
by any Transaction Party of any Indebtedness of the Company or any other
Transaction Party expressly permitted to be incurred under this
Agreement.

     

    SECTION 6.02. Liens.  Create,
incur, assume or permit to exist any Lien on any property or assets at the time
owned by it or on any income or revenues or rights in respect of any thereof,
except:

     

    (a)           Liens
on property or assets of any Transaction Party existing on the Effective Date
and set forth on Schedule 6.02(a)
hereto; provided that
such Liens shall secure only those obligations that they secure on the Effective
Date and shall not subsequently apply to any other property or assets of such
Transaction Party;

    


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    (b)           any
Lien created under the Transaction Documents or permitted in respect of any
Mortgaged Property by the terms of the applicable Mortgage;

     

    (c)           Liens
for taxes, assessments or other governmental charges or levies not yet
delinquent or that are being contested in compliance with Section
5.03;

     

    (d)           landlord’s,
carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction
or other like Liens arising in the ordinary course of business and securing
obligations that are not overdue by more than thirty (30) days or that are being
contested in good faith by appropriate proceedings and in respect of which a
Transaction Party shall have set aside on its books reserves in accordance with
GAAP;

     

    (e)           (i) pledges
and deposits made in the ordinary course of business in compliance with the
Federal Employers Liability Act or any other workers’ compensation, unemployment
insurance and other social security laws or regulations and deposits securing
liability to insurance carriers under insurance or self-insurance arrangements
in respect of such obligations, and (ii) pledges and deposits securing
liability for reimbursement or indemnification obligations of (including
obligations in respect of letters of credit or bank guarantees for the benefit
of) insurance carriers providing property, casualty or liability insurance to
the Transaction Parties;

     

    (f)           deposits
to secure the Transaction Parties’ performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance and return of money bonds,
bids, leases, trade contracts, Environmental Permits, Mining Permits, and other
obligations of a like nature incurred in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations
of the Transaction Parties in the ordinary course of their
business;

     

    (g)           zoning
restrictions, easements, trackage rights, leases (other than Capital Lease
Obligations), licenses, special assessments, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary course
of business that, in the aggregate, do not interfere in any material respect
with the ordinary conduct of the business of a Transaction Party or would result
in a Material Adverse Effect;

     

    (h)           purchase
money security interests in equipment or other property hereafter acquired by
the Company (including the interests of vendors and lessors under conditional
sale and title retention agreements); provided that (i) such
security interests secure Indebtedness permitted by Section 6.01(f),
(ii) such security interests are incurred, and the Indebtedness secured
thereby is created, at the time of the acquisition or lease of such asset,
(iii) the Indebtedness secured thereby does not exceed 100% of the cost of
such equipment or other property at the time of such acquisition, and
(iv) such security interests do not apply to any other property or assets
of the Company (other than to accessions to such equipment or other
property);

     

    (i)      
     Liens securing judgments that do not constitute an
Event of Default under Section
7.01(j);

    


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    (j)         Liens
on Mortgaged Property disclosed by the title insurance policies (if any) or
title opinions (if any) delivered prior to the Effective Date or, with respect
to After Acquired Property or Required Property, after the Effective Date to the
extent such Liens are reasonably acceptable to the Investor; provided that the following
Liens shall be deemed to be reasonably acceptable to the Investor (and shall be
deemed Permitted Encumbrances without regard to whether a title insurance policy
or title opinion has been provided with respect to a particular parcel):
(i) Liens for Taxes, assessments or other governmental charges or levies
not yet delinquent, and (ii) zoning restrictions, easements, trackage
rights, leases (other than Capital Lease Obligations), licenses, rights-of-way,
restrictions on use of real property and other similar encumbrances incurred in
the ordinary course of business that do not in the aggregate interfere in any
material respect with the ordinary conduct of the business of a Transaction
Party at the Real Property affected thereby;

     

    (k)        any
interest or title of, or Liens created by, a lessor under any leases or
subleases entered into by a Transaction Party, as tenant, in the ordinary course
of business;

     

    (l)         Liens
that are contractual rights of set-off (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of
Indebtedness, or (ii) relating to purchase orders and other agreements
entered into with customers of the Company in the ordinary course of
business;

     

    (m)       Liens
arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights; and

     

    (n)        The
following encumbrances which do not, in any case, individually or in the
aggregate, have or result in a Material Adverse Effect:

     

    (i)           encumbrances
typically found upon Real Property used for mining purposes in the applicable
jurisdiction in which the applicable Real Property is located to the extent such
encumbrances would be permitted or granted by a prudent operator of mining
property similar in use and configuration to such Real Property (e.g., surface
rights agreements, wheelage agreements and reconveyance
agreements);

     

    (ii)           rights
and easements of owners (A) of undivided interests in any of the Real
Property where the applicable Transaction Party owns less than 100% of the fee
interest, (B) of interests in the surface of any Real Property where the
applicable Transaction Party does not own or lease such surface interest,
(C) and lessees, if any, of base or precious metals or other minerals where
the applicable Transaction Party does not own such base or precious metals or
such other minerals, and (D) and lessees of other base or precious metals
or other minerals not owned or leased by a Transaction Party; provided, however, that the
rights and easements described in clauses (A) through (D) of this subclause
(n)(ii) shall in no event cause any breach of the representations made in Section
4.01(q)(iii);

    


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    (iii)          with
respect to any Real Property in which a Transaction Party holds a leasehold
interest, terms, agreements, provisions, conditions, and limitations (other than
royalty and other payment obligations which are otherwise permitted hereunder)
contained in the leases granting such leasehold interest and the rights of
lessors thereunder (and their heirs, executors, administrators, successors, and
assigns);

     

    (iv)          farm,
grazing, hunting, recreational and residential leases with respect to which a
Transaction Party is the lessor encumbering portions of the Real Properties to
the extent such leases would be granted or permitted by, and contain terms and
provisions that would be acceptable to, a prudent operator of mining properties
similar in use and configuration to such Real Properties;

     

    (v)           royalty
and other payment obligations to sellers or transferors of fee or lease
properties to the extent such obligations constitute a lien not yet
delinquent;

     

    (vi)          rights
of others to subjacent or lateral support and absence of subsidence rights or to
the maintenance of barrier pillars or restrictions on mining within certain
areas as provided by any Mining Lease, unless in each case waived by such other
person; and

     

    (vii)         rights
of repurchase or reversion when mining and reclamation are
completed.

     

    Notwithstanding
the foregoing, no Liens shall be permitted to exist, directly or indirectly, on
the Mortgaged Property, other than Liens in favor of the Investor and Permitted
Encumbrances.

     

    SECTION 6.03. Sale and Lease-Back
Transactions.  Enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred (a “Sale and
Lease-Back Transaction”).

     

    SECTION 6.04. Investments, Loans and
Advances.  Purchase, hold or acquire any Capital Stock,
evidences of Indebtedness or other securities of, make or permit to exist any
loans or advances to or Guarantees of the obligations of, or make or permit to
exist any investment or any other interest in (each, an “Investment”),
any other Person, except:

     

    (a)           Guarantees
by the Company or any other Transaction Party of such Indebtedness that is
otherwise expressly permitted to be incurred in accordance with the terms of
this Agreement;

     

    (b)           Investments
in Cash Equivalents;

    


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    (c)           Investments
arising out of the receipt by a Transaction Party of noncash consideration for
the sale of assets permitted under Section
6.05;

     

    (d)           accounts
receivable arising and trade credit granted in the ordinary course of business
and any securities received in satisfaction or partial satisfaction thereof from
financially troubled account debtors to the extent reasonably necessary in order
to prevent or limit loss and any prepayments and other credits to suppliers made
in the ordinary course of business; and

     

    (e)           Investments
as of the date hereof by the Company in the Capital Stock of Blue Fin and of
Boyuan Construction Group, Inc. (which shares of Boyuan Construction Group, Inc.
are in the process of being liquidated and may be liquidated without any further
consent of the Investor).

     

    SECTION 6.05. Mergers, Consolidations,
Sales of Assets and Acquisitions.  Merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate
with it, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) all or any part of its assets (whether now owned or
hereafter acquired), or issue, sell, transfer or otherwise dispose of any
Capital Stock of a Transaction Party, or purchase, lease or otherwise acquire
(in one transaction or a series of transactions) all or any substantial part of
the assets of any other Person (whether by stock or asset purchase, merger or
otherwise), except that this Section 6.05 shall
not prohibit:

     

    (a)           (i) the
purchase and sale of inventory in the ordinary course of business by the
Company, (ii) the acquisition or lease of any other operating asset in the
ordinary course of business by the Company consistent with the fulfillment of
the Mining Activities contemplated by the Pro Forma Production and Financial
Projections, (iii) the sale of surplus, obsolete or worn out equipment or
other property by the Company in the ordinary course of business in an aggregate
amount not to exceed $50,000 over the term of this Agreement, or (iv) the
sale by the Company of Cash Equivalents in the ordinary course of
business;

     

    (b)           [Intentionally omitted];

     

    (c)           Investments
permitted by Section
6.04, Liens permitted by Section 6.02 and
Dividends permitted by Section
6.06;

     

    (d)           the
sale of defaulted receivables of the Company in the ordinary course of its
business and not as part of an accounts receivables financing transaction;
and

     

    (e)           the
issuance of the Series A Shares issuable to the Investor pursuant to this
Agreement and the shares of Common Stock issuable upon the conversion
thereof.

     

    Notwithstanding
anything to the contrary contained in this Section 6.05,
(i) no sale, transfer or other disposition of assets shall be permitted by
this Section
6.05 unless such disposition is for fair market value, and (ii) no
sale, transfer or other disposition of assets shall be permitted by paragraph
(a) of this Section
6.05 unless such disposition is for cash consideration unless the
Investor have otherwise consented in writing, which consent shall not be
unreasonably withheld or delayed.

    


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    SECTION 6.06. Dividends and
Distributions.  Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any of its Capital Stock or directly or indirectly redeem, purchase, retire or
otherwise acquire for value any shares of any class of its Capital Stock or set
aside any amount for any such purpose; provided, however,
that:

     

    (a)           the
Company may make, declare and pay dividends on the Series A Shares;
and

     

    (b)           Blue
Fin may declare and pay dividends to the Company.

     

    SECTION 6.07. Transactions with
Affiliates.

     

    (a)           Sell
or transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transaction with, any of its
Affiliates or any known direct or indirect holder of 10% or more of any class of
Capital Stock of the Company, unless such transaction is otherwise permitted (or
required) under this Agreement.

     

    (b)           Paragraph
(a) of this Section
6.07 shall not prohibit dividends permitted under Section
6.06,

     

    SECTION 6.08. Business of the
Company.  Notwithstanding any other provisions hereof, engage
at any time in any business or business activity other than as contemplated by
the Pro Forma Production and Financial Projections.

     

    SECTION 6.09. Limitation on Modifications
of Constitutive Documents; etc.  Amend or modify in any manner
or grant any waiver or release under or terminate in any manner, its
Constitutive Documents.

     

    SECTION 6.10. Capital
Expenditures.  Make any Capital Expenditure, except for those
Capital Expenditures described in Schedule 6.10 hereof
and otherwise in accordance with the use of proceeds and capital expenditures
budget (including as to total dollar amount and, on an annual basis, timing) set
forth in the Pro Forma Production and Financial Projections.

     

    SECTION 6.11. Lease
Obligations.  Create, incur, assume or suffer to exist any
obligation as lessee (excluding for this purpose obligations as lessee under
Capital Lease Obligations, as to which the provisions of Section 6.01(f)
apply) for the rental, hire or other use of any real or personal property of any
kind under leases or agreements having an original term of one (1) year or more
that would cause the direct and contingent liabilities of the Transaction
Parties in respect of all such obligations to exceed such amount as shall be
agreed to by the Company and Investor as payable in any period of twelve (12)
consecutive months determined on a rolling basis.

    


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    SECTION 6.12. Limitations on Modifications
to Certain Indebtedness.  Amend, modify or supplement in any
manner any term, condition or provision of, or refinance any of the Indebtedness
outstanding under, the Note Agreement or any of the Note Agreement Promissory
Notes or any other agreement, instrument or document entered into by the Company
in connection therewith.

     

    SECTION 6.13. Swap
Agreements.  Enter into any Swap Agreement.

     

    SECTION 6.14. Accounting
Changes.  Make or permit any change in the accounting policies
or reporting practices of the Transaction Parties except as required by
GAAP.

     

    SECTION 6.15. Formation of Additional
Subsidiaries; Activities and Assets of the Subsidiaries.  Form
or create, from and after the Effective Date, any entity that shall constitute a
Subsidiary.  None of the Subsidiaries of the Company, whether or not
existing on the date hereof, shall engage in any material business activities,
incur any material liabilities, or acquire or hold any assets or properties
(other than, in the case of Blue Fin, the ownership or possession of those
patented and unpatented mining claims that are the subject of the Mortgaged
Properties as of the Effective Date), it being understood and agreed that the
entering into of any activities prohibited by the provisions of this Section 6.15 may be
conditioned upon, among other things, such Subsidiary executing and delivering
in favor of the Investor a subsidiary guaranty, a collateral security agreement
and one or more Mortgages guarantying and collateralizing the Obligations, in
each case in form and substance acceptable to the Investor.

     

    SECTION 6.16. No Modification of Principal
Lease Agreements or Material Contracts.  Except with the prior
written consent of the Investor, amend or modify in any manner or grant any
waiver or release under or terminate in any manner (i) any Principal Lease
Agreement, or (ii) any other contract or agreement that is material to the
operations, business or financial condition of the Company.

     

    ARTICLE
VII.

     

    EVENTS
OF DEFAULT

     

    SECTION 7.01. Events of
Default.  If any of the following events (each, an “Event of
Default”) shall occur and be continuing:

     

    (a)           any
representation or warranty made or deemed made by the Company or any other
Transaction Party in any Transaction Document, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Transaction Document, shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished by the Company or any
other Transaction Party;

     

    (b)           the
Company shall fail to make payment of any principal of any Term Loan Advance
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof (including any optional
prepayment) or by acceleration or otherwise;

    


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    (c)           (i) the
Company shall fail to make payment of any interest on the Note when and as the
same shall become due and payable, or (ii) the Company or any other
Transaction Party shall fail to make payment of any other amount (other than an
amount referred to in paragraph (b) of this Section 7.01) due
under any Transaction Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five (5)
Business Days after notice thereof is provided by the Investor to the
Company;

     

    (d)           default
shall be made in the due observance or performance by any Transaction Party of
any covenant, condition or agreement contained in Section 5.01(a),
5.02(a), 5.05(a), 5.08 or in Article
VI;

     

    (e)           default
shall be made in the due observance or performance by any Transaction Party of
any covenant, condition or agreement contained in any Transaction Document
(other than those specified in paragraphs (b), (c) and (d) of this Section 7.01) and
such default shall continue unremedied for a period of thirty (30) days after
notice thereof from the Investor to the Company;

     

    (f)           (i) any
event or condition occurs that (A) results in any Indebtedness of $50,000
or more in outstanding principal amount (other than the Term Loan Advances)
becoming due prior to its scheduled maturity or (B) enables or permits
(with all applicable grace periods having expired) the holder or holders of any
such Indebtedness or any trustee or agent on its or their behalf to cause any
such Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity, or
(ii) shall fail to pay the principal of any such Indebtedness at the stated
final maturity thereof; provided that this clause (f)
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness
if such sale or transfer is permitted hereunder and under the documents
providing for such Indebtedness;

     

    (g)           there
shall have occurred a Change in Control;

     

    (h)           an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (i) relief in respect of
any Transaction Party, or of a substantial part of the property or assets of any
Transaction Party, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Transaction Party or for a substantial part of the property or assets of any
Transaction Party, or (iii) the winding-up or liquidation of any
Transaction Party, and such proceeding or petition shall continue undismissed
for sixty (60) days (provided such Transaction Party is proceeding diligently
and in good faith to obtain dismissal) or an order or decree approving or
ordering any of the foregoing shall be entered;

    


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    (i)    
       any Transaction Party shall
(i) voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in paragraph (h) of this Section 7.01,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such Transaction
Party or for a substantial part of the property or assets of such Transaction
Party, (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) become unable, admit in writing its
inability or fail generally to pay its debts as they become due;

     

    (j)   
        the failure by any Transaction
Party to pay one or more final judgments aggregating in excess of $50,000, which
judgments are not discharged or effectively waived or stayed for a period of
thirty (30) consecutive days, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of such Transaction Party to enforce
any such judgment;

     

    (k)           a
Transaction Party or any ERISA Affiliate shall sponsor, maintain or contribute
to (i) any “employee pension benefit plan” (as defined in Section 3(2) of
ERISA) or (ii) any “multiemployer plan” (as defined in Section 3(37) of
ERISA;

     

    (l)     
      (i) any Transaction Document shall for
any reason be asserted by any Transaction Party not to be a legal, valid and
binding obligation of any party thereto, (ii) any guarantor shall revoke,
or deliver notice to the Investor or otherwise publicly declare its intention to
revoke, the Guaranty issued by any Person in favor of the Investor as a guaranty
of any of the Obligations, or (iii) any security interest purported to be
created by any Security Document shall cease to be, or shall be asserted by any
Transaction Party not to be, a valid and perfected security interest (having the
priority required by the relevant Security Document) in the Collateral;
or

     

    (m)          the
Company shall have failed to produce at least 400,000 pounds of copper
concentrate from the Yellowhammer Properties on or prior to the date that is 150
days following the date of the Initial Borrowing hereunder;

     

    then, and
in every such event (other than an event with respect to any Transaction Party
described in paragraph (h) or (i) of this Section 7.01), and at
any time thereafter during the continuance of such event, the Investor may, by
notice to the Company, take any or all of the following actions, at the same or
different times:  (i) terminate forthwith the Commitment, or
suspend the Commitment, (ii) declare the Term Loan Advances then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Term Loan Advances so declared to be due and payable, together
with accrued interest thereon and all other liabilities of the Transaction
Parties accrued hereunder and under any other Transaction Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Company,
anything contained herein or in any other Transaction Document to the contrary
notwithstanding, and (iii) exercise all such other remedies, either
directly or through an agent, as shall be available under any Security Document
or at law or in equity; and in any event with respect to the Company described
in paragraph (h) or (i) of this Section 7.01, the
Commitment shall automatically terminate, the principal of the Term Loan
Advances then outstanding, together with accrued interest thereon and all other
liabilities of the Transaction Parties accrued hereunder and under any other
Transaction Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in any
other Transaction Document to the contrary notwithstanding.

    


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    ARTICLE
VIII.

     

    [INTENTIONALLY
DELETED]

     

    ARTICLE
IX.

     

    MISCELLANEOUS

     

    SECTION 9.01. Amendments,
Etc.  Except as otherwise contemplated by Section 9.07, no
amendment or waiver of any provision of this Agreement or the Notes or any other
Transaction Document, nor consent to any departure by the Investor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Investor, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

     

    SECTION 9.02. Notices,
Etc.  Except as otherwise provided in Section 2.02, all
notices and other communications provided for hereunder shall be in writing
(including telecopy communication confirmed by mail or delivery) and mailed,
telecopied, e-mailed or delivered:

     

    (a)           if
to the Company, to it at:

     

    8921
North Indian Trail Road

    Number
288

    Spokane,
WA  99208

    Attention:  Bob
Jorgensen

    Telephone:  (509)
434-8161

    Telecopier:  (509)
468-1937

    E-mail
Address:  bjorg53@yahoo.com

    


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    with a
copy to:

    


    Holland
& Hart LLP

    555
Seventeenth Street

    Denver,
CO  80202

    Attention:  Kevin
W. Johnson

    Telephone:  (303)
295-8486

    Telecopier:  (303)
713-6203

    E-mail
Address:  Kjohnson@hollandhart.com

     

    (b)           if
to the Investor, to it at:

     

    Carnegie
Hall Tower

    152 West
57th
Street

    New York,
NY  10019

    Attention:
David Levy

    Telephone:  (212)
582-2222

    Telecopier:  (212)
582-2424

    E-mail
Address:  dlevy@platinumlp.com

     

    with a
copy to:

     

    Katten
Muchin Rosenman LLP

    575
Madison Avenue

    New York,
NY  10022

    Attention:  Elliot
Press

    Telephone:  (212)
940-6348

    Telecopier:  (212)
940-6621

    E-mail
address: elliot.press@kattenlaw.com

     

    or, as to
any party, at such other telecopy number or address as shall be designated by
such party in a written notice to the other parties.  All such notices
and other communications shall, when mailed, telecopied, e-mailed or delivered,
be effective when received or, in the case of delivery by mail, on the fourth
(4th)
Business Day after such notice or other communication shall have been deposited
in the mail, postage prepaid, return receipt requested or, in the case of
delivery by overnight express courier, on the Business Day following the
Business Day such notice or communication shall have been deposited with such
courier service.  Delivery by telecopier of an executed counterpart of
any amendment or waiver of any provision of this Agreement or the Note or of any
other Transaction Document shall be effective as delivery of an original
executed counterpart thereof.  Notwithstanding anything to the
contrary contained herein, with respect to any notice or communication given by
email (including any Borrowing Notice given by email pursuant to Section
2.02):  (i) such notice or communication sent to an email
address shall be deemed received upon the sender’s receipt of an acknowledgment
from the intended recipient, such as by the “return receipt requested” function,
as available, return email or other written acknowledgment, and (ii) if
such notice or communication shall have been given after normal business hours
of the recipient, such notice or communication shall be deemed to have been
given at the opening of business on the next Business Day for the
recipient.

    


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    SECTION 9.03. No Waiver;
Remedies.  No failure on the part of the Investor to exercise,
and no delay in exercising, any right hereunder or under the Note or any other
Transaction Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.  The rights and remedies
provided herein and in any other Transaction Document are cumulative and not
exclusive of any remedies provided by law.

     

    SECTION 9.04. Costs and
Expenses.

     

    (a)           The
Company agrees to pay on demand (i) all reasonable costs and expenses of
the Investor in connection with the preparation, execution, delivery,
administration, modification and amendment of the Transaction Documents
(including, without limitation, (A) all reasonable due diligence,
collateral review, transportation, computer, duplication, appraisal, audit,
insurance, consultant, search, filing and recording fees and expenses and
(B) the reasonable fees and expenses of legal counsel to Investor,
including any local counsel in which the Real Property is situated, with respect
to advising the Investor as to their rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the
Transaction Documents, with respect to negotiations with any Transaction Party
or with other creditors of any Transaction Party arising out of any Default or
any events or circumstances that may give rise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any bankruptcy,
insolvency or other similar proceeding involving creditors’ rights generally and
any proceeding ancillary thereto) and (ii) all costs and expenses of the
Investor in connection with the enforcement of the Transaction Documents after
an Event of Default, whether in any action, suit or litigation, or any
bankruptcy, insolvency or other similar proceeding affecting creditors’ rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Investor with respect thereto).

     

    (b)           The
Company shall indemnify, defend and save and hold harmless the Investor and each
of its Affiliates and their respective officers, directors, employees, agents
and advisors (each, an “Indemnified
Party”) from and against, and shall pay on demand, any and all claims,
damages, losses, liabilities, penalties and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (i) the Commitment or the making of Term Loan
Advances hereunder, the actual or proposed use of the proceeds of the Term Loan
Advances, the Transaction Documents or any of the Transactions, or (ii) the
actual or alleged presence of Hazardous Materials on any property of the Company
or any Subsidiary thereof or any Environmental Action relating in any way to the
Company or any Subsidiary thereof, except in each case to the extent such claim,
damage, loss, liability, penalty or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party’s gross negligence or willful misconduct.  In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section
9.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or other proceeding is brought by the Investor, its
partners, equity holders, or creditors or an Indemnified Party, whether or not
any Indemnified Party is otherwise a party thereto and whether or not the
Transactions are consummated.  The Company shall not, and shall cause
its Subsidiaries not to, assert any claim against the Investor or any of its
Affiliates, or any of their respective officers, directors, employees, agents
and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the Commitment or
the making of Term Loan Advances, the actual or proposed use of the proceeds of
the Term Loan Advances, the Transaction Documents or any of the
Transactions.

    


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    (c)           Without
prejudice to the survival of any other agreement of any Transaction Party
hereunder or under any other Transaction Document, the agreements of the Company
contained in this Section 9.04
shall survive the payment in full of principal, interest and all other amounts
payable hereunder and under any of the other Transaction Documents.

     

    SECTION 9.05. Right of
Set-off.  Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the giving of notice (if such
notice shall be required to be given) specified by the last paragraph of Section 7.01 to
declare the Term Loan Advances due and payable pursuant to the provisions of
Section 7.01,
the Investor 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
otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by the Investor or such Affiliate to or for the credit or the account of the
Company or any Subsidiary thereof against any and all of the Obligations now or
hereafter existing under the Transaction Documents, irrespective of whether the
Investor shall have made any demand under this Agreement or the Note and
although such Obligations may be unmatured.  The rights of the
Investor and its Affiliates under this Section 9.05 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that the Investor and its Affiliates may have.

     

    SECTION 9.06. Binding
Effect.  This Agreement shall become effective when it shall
have been executed by the Company and the Investor and thereafter shall be
binding upon and inure to the benefit of the Company and the Investor and its
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Investor.

     

    SECTION 9.07. Assignments and
Participations.

     

    (a)           The
Investor may assign to one (1) or more Persons all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of the Commitment, the Term Loan Advances owing to it and the
Note); provided that
(i) the assignee shall, if any portion of the Commitment shall remain
unfunded, be an Affiliate of the Investor or, if not an Affiliate, have the
financial capability to fund the portion of the Commitment to be so assigned as
determined in the good faith judgment of the Investor, (ii) the assignee
shall, as of the date of the assignment, be capable of making the
representations and warranties made by the Investor under Section 2.11(b) (any
such assignee so qualifying, an “Eligible
Assignee”), and (iii) the parties to each such assignment shall
execute and deliver an assignment and acceptance agreement, substantially in
such form as shall be mutually acceptable to such parties (the “Assignment and
Acceptance”) and deliver a copy thereof to the Company for its recording
in the register maintained by the Company pursuant to Section 2.10(c)(i),
together with any Note subject to such assignment.

    


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    (b)           Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance, the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of the Investor hereunder (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Investor’s
rights and obligations under this Agreement, such Investor shall cease to be a
party hereto except that it shall remain entitled to the benefits of the
provisions of Section
9.04 as though it remained a party hereto).

     

    (c)           By
executing and delivering an Assignment and Acceptance, the Investor assignee
confirms to and agrees with the other parties hereto as
follows:  (i) such assignee confirms that it is an Eligible
Assignee; and (ii) such assignee appoints and authorizes the Investor to
take such action as agent on its behalf and to exercise such powers and
discretion under the Transaction Documents as are delegated to the Investor by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto.

     

    (d)           Upon
its receipt of an Assignment and Acceptance executed by an assigning Investor
and an assignee, together with any Note or Notes subject to such assignment, the
Company shall (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the register maintained by it pursuant to
Section
2.10(c)(ii), and (iii) promptly but within five (5) Business Days
after its receipt of such notice, at its own expense, execute and deliver to the
assignee Investor in exchange for the surrendered Note or Notes a new Note in
registered form payable to such Eligible Assignee and its registered assigns in
an amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if any assigning Investor has retained a Commitment hereunder, a
new note in registered form payable to the assigning Investor and its registered
assigns in an amount equal to the Commitment retained by it
hereunder.  Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the Note.

    


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    (e)           The
Investor may sell participations to one (1) or more Persons in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Commitment, the Term Loan Advances owing to
it and the Note; provided,
however, that (i) the Investor’s obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged,
(ii) the Investor shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Investor shall
remain the holder of the Note for all purposes of this Agreement, (iv) the
Company, shall continue to deal solely and directly with the Investor in
connection with the Investor’s rights and obligations under this Agreement, and
(v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of any Transaction Document, or
any consent to any departure by or on behalf of any Transaction Party therefrom,
except to the extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Note or any other amounts payable hereunder,
in each case to the extent subject to such participation, postpone any date
fixed for any payment of principal of, or interest on, the Note or any other
amounts payable hereunder, in each case to the extent subject to such
participation, or release any guarantor from any Guaranty of any of the
Obligations or any material Collateral from any Security Document.

     

    SECTION 9.08. Execution in
Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of an original executed counterpart of this
Agreement.

     

    SECTION 9.09. Interest Rate
Limitation.  Notwithstanding anything herein to the contrary,
if at any time the applicable interest rate, together with all fees and charges
that are treated as interest under applicable law (collectively, the “Charges”),
as provided for herein or in any other document executed in connection herewith,
or otherwise contracted for, charged, received, taken or reserved by the
Investor, shall exceed the maximum lawful rate (the “Maximum
Rate”) that may be contracted for, charged, taken, received or reserved
by the Investor in accordance with applicable law, the rate of interest payable
hereunder, together with all Charges payable to the Investor, shall be limited
to the Maximum Rate, provided that such excess
amount shall be paid to the Investor on subsequent payment dates to the extent
not exceeding the legal limitation.

     

    SECTION 9.10. Jurisdiction,
Etc.

     

    (a)           Each
of the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York
County, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any of the other Transaction
Documents to which it is a party, 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 any such New York State court or, to the fullest extent
permitted by law, in such Federal court.  Each of the parties hereto
agrees that a final judgment in any such action or proceeding, to the extent
permitted by law, 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 any party
may otherwise have to bring any action or proceeding relating to this Agreement
or any of the other Transaction Documents in the courts of any
jurisdiction.

    


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    (b)           Each
of the parties hereto irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any of the other Transaction Documents
to which it is a party in any New York State or Federal court.  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.

     

    SECTION 9.11. Governing
Law.  This Agreement and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed in such State.

     

    SECTION 9.12. Entire
Agreement.  This Agreement and the other Transaction Documents,
together with all other documents and agreements required to be executed
pursuant to the terms thereof (including that certain side letter, dated as of
the date hereof, between the Investor and the Company regarding the waiver of
certain conditions precedent to closing and the reimbursement of legal fees to
the Investor), constitute the entire agreement between the parties with respect
to the subject matter hereof, and any other agreement, statement, understanding,
representation or warranty, whether oral or written, made or entered into prior
to the date hereof with respect to the subject matter hereof is superseded by
this Agreement and the other Transaction Documents (and such other documents and
agreements).

     

    SECTION 9.13. WAIVER OF JURY
TRIAL.  THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE
TRANSACTION DOCUMENTS, THE TERM LOAN ADVANCES OR THE ACTIONS OF THE INVESTOR IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.

    


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    SECTION 9.14. Confidential
Information.

     

    (a)           Investor
agrees not to use any Confidential Information of the Company for any purpose
other than in connection with (i) its evaluation of the business, operations,
assets, liabilities, customers, employees, business relationships, prospects and
condition (financial or otherwise) of the Company and its Subsidiaries,
(ii) the transactions contemplated by the Transaction Documents (including
the administration of the Term Loan Advances and compliance by the Transactions
Parties of their obligations under the Transaction Documents), (iii) the
exercise of any right or remedy under or in connection with the transactions
contemplated by the Transaction Documents, including any action or proceeding
relating to or arising out of any Transaction Document, and (iv) all
matters incidental or relating to any thereof.  The Company agrees not
to use any Confidential Information of the Investor for any purpose other than
in connection with (i) its evaluation of the business, operations, assets,
liabilities, customers, employees, business relationships, prospects and
condition (financial or otherwise) of the Company and its Subsidiaries or of
engaging in the transactions contemplated by the Transaction Documents, (ii) the
transactions contemplated by the Transaction Documents (including the
administration of the Term Loan Advances and compliance by the Transaction
Parties of their obligations under the Transaction Documents), (iii) the
exercise of any right or remedy under or in connection with the transactions
contemplated by the Transaction Documents, including any action or proceeding
relating to or arising out of any Transaction Document, and (iv) all
matters incidental or relating to any thereof.  Each of the Company
and the Investor agrees not to disclose any Confidential Information of the
other party to third parties, except to those Affiliates, partners,
shareholders, members, investors, directors, managers, investment committees,
officers, employees, agents, lenders, advisors, attorneys, accountants,
consultants, representatives or third party (or potential third party)
assignees, transferees or loan participants (collectively, “Representatives”)
of the receiving party who have a need to know such Confidential Information as
determined in the sole and reasonable discretion of the receiving
party.  As a condition to such disclosure, the receiving party shall
inform its Representatives of the confidential nature of the Confidential
Information and the receiving party’s obligations hereunder with respect
thereto, and the receiving party shall be responsible for any disclosure or use
of the Confidential Information in a manner not authorized by this
Agreement.

     

    (b)           Investor
hereby acknowledges that it is aware, and further agrees that it will advise its
Representatives, that Federal and State securities laws prohibit any person who
has material, non-public information about a company from purchasing or selling
securities of such a company or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities and it agrees that it or
its Representatives will not purchase or sell such securities under such
circumstances.

     

    (c)           Each
of the Company and the Investor agrees that it shall take reasonable measures to
protect the secrecy of and avoid disclosure and unauthorized use of the
Confidential Information of the other party.  Without limiting the
foregoing, each of the Investor and the Company shall take at least those
measures that it takes to protect its own most highly confidential information
and shall ensure that its employees who have access to Confidential Information
of the disclosing party have agreed to comply with the provisions of this Section 9.14
applicable to such employees prior to any disclosure of Confidential Information
to such employees.

     

    [Signature Pages Follow]

    


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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    DESERT
      HAWK GOLD CORP.

                                  
	 
      
	By:	

                                    /s/ Robert E. Jorgensen

                                  
	 
      	
                                    Name:

                                  	
                                    Robert
      E. Jorgensen

                                  
	 
      	
                                    Title:

                                  	
                                    Chief
      Executive Officer

                                  
	 
      
	
                                    DMRJ
      GROUP I, LLC

                                  
	
                                       as
      Investor

                                  
	 
      
	By:	

                                    /s/ Daniel Small

                                  
	 
      	
                                    Name:

                                  	
                                    Daniel
      Small

                                  
	 
      	
                                    Title:

                                  	
                                    Portfolio
      Manager

                                  


                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    [Signature
Page to

    Desert
Hawk Investment Agreement]


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
A

     

    FORM
OF NOTE

     

    THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THIS PROMISSORY NOTE
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
SAID ACT.

     

    DESERT
HAWK GOLD CORP.

    PROMISSORY NOTE DUE
[               ],
2012

     

    
      	
              No.
      R-DH-_______

            	
              Dated:
      _____________, 2010

            


    

    


    FOR VALUE
RECEIVED, the undersigned, DESERT HAWK GOLD CORP., a Nevada corporation (the
“Company”),
HEREBY UNCONDITIONALLY PROMISES TO PAY to DMRJ GROUP I, LLC (the “Investor”)
or its registered assignee the principal amount equal to the lesser of
(i) Six Million Five Hundred Thousand and No/100 Dollars ($6,500,000) and
(ii) the aggregate principal amount of all Term Loan Advances (as defined
below) owing to the Investor by the Company pursuant to the Investment Agreement
dated as of [____________,] 2010 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the “Investment
Agreement”; terms defined therein, unless otherwise defined herein, being
used herein as therein defined) among the Company and the Investor on the dates
provided in the Investment Agreement.

     

    The
Company promises to pay interest (including all Prepaid Interest, Monthly
Interest and Payment Date Interest) on the unpaid principal amount of each Term
Loan Advance, from the date of such Term Loan Advance, until such principal
amount is paid in full, at such interest rates, and payable at such times
(including, in the case of Prepaid Interest with respect to a Term Loan Advance,
on the date of the Borrowing thereof), as are specified in the Investment
Agreement.

     

    Both
principal and interest are payable to the Investor in lawful money of the United
States of America to the Investor Payment Account in same day
funds.  Each Term Loan Advance owing to the Investor by the Company
and the maturity thereof, and all payments made on account of principal thereof,
shall be recorded by the Investor and, prior to any transfer hereof, endorsed on
the grid attached hereto, which is part of this Promissory Note; provided, however, that the failure of
the Investor to make any such recordation or endorsement shall not affect the
Obligations of the Company under this Promissory Note.

     

    Exhibit A
– Form of Note

    
      
         


      

      
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1

        
          

        

      

      
         


      

    


    This
Promissory Note is the “Note” referred to in, and is entitled to the benefits
of, the Investment Agreement and the other Transaction Documents, including the
Security Documents.  The Investment Agreement, among other things,
(i) provides for the making of Term Loan Advances by the Investor to the
Company from time to time in an aggregate amount not to exceed the U.S. dollar
amount first above mentioned, the indebtedness of the Company resulting from
each such Term Loan Advance being evidenced by this Promissory Note,
(ii) provides for the optional and mandatory prepayment of all such Term
Loan Advances prior to the Maturity Date, together with all accrued interest due
on such date of prepayment, on the dates set forth in the Investment Agreement,
and (iii) is secured by the Security Documents.  The outstanding
principal amount of this Promissory Note, together with all interest accrued
hereon and all other Obligations owing to the Investor hereunder and under the
other Transaction Documents, shall be due and payable in full on the Maturity
Date.

     

    If
default is made in the punctual payment of principal or any other amount under
this Promissory Note in accordance with the Investment Agreement, or if any
other Event of Default has occurred, this Promissory Note shall, at the
Investor’s option exercised at any time upon or after the occurrence of any such
payment default or other Event of Default (or in the case of an Event of Default
under Section 7.01(h) or (i) of the Investment Agreement, automatically) and in
accordance with the applicable provisions of the Investment Agreement, become
immediately due and payable.

     

    All
payments of any kind due to the Investor from the Company pursuant to this
Promissory Note shall be made in the full face amount thereof.  All
such payments will be free and clear of, and without deduction or withholding
for, any present or future taxes.  The Company shall pay all and any
costs (administrative or otherwise) imposed by banks, clearing houses, or any
other financial institution in connection with making any payments hereunder,
except for any costs imposed by the Investor’s banking
institutions.

     

    The
Company shall pay all costs of collection, including, without limitation, all
reasonable, documented legal expenses and attorneys’ fees, paid or incurred by
the Investor in collecting and enforcing this Promissory Note.

     

    The
Company and every endorser of this Promissory Note, or the obligations
represented hereby, expressly waives presentment, protest, demand, notice of
dishonor or default, and notice of any kind with respect to this Promissory Note
and the Investment Agreement or the performance of the obligations under this
Promissory Note and/or the Investment Agreement.  No renewal or
extension of this Promissory Note or the Investment Agreement, no release of any
Person primarily or secondarily liable on this Promissory Note or the Investment
Agreement, including the Company and any endorser, no delay in the enforcement
of payment of this Promissory Note or the Investment Agreement, and no delay or
omission in exercising any right or power under this Promissory Note or the
Investment Agreement shall affect the liability of the Company or any endorser
of this Promissory Note.

     

    No delay
or omission by the Investor in exercising any power or right hereunder shall
impair such right or power or be construed to be a waiver of any default, nor
shall any single or partial exercise of any power or right hereunder preclude
the full exercise thereof or the exercise of any other power or
right.  The provisions of this Promissory Note may be waived or
amended only in a writing signed by the Company and the Investor.

     

    Exhibit A
– Form of Note

    
      
         


      

      
        Page
2

        
          

        

      

      
         


      

    

     

    This
Promissory Note shall be governed by, and construed in accordance with, the laws
of the State of New York applicable to contracts made and to be performed in
such State, without giving effect to the conflicts of laws principles thereof
other than Sections 5-1401 and 5-1402 of the General Obligations Law of the
State of New York.

     

    In order
to qualify as a “registered note” for purposes of the Code, transfer of this
Promissory Note may be effected only by (i) surrender of this Promissory
Note to the Company and the re-issuance of this Promissory Note to the
transferee, or the Company’s issuance to the Investor of a new note in the same
form as this Promissory Note but with the transferee denoted as the Investor, or
(ii) the recording of the identity of the transferee by the Company, which
is maintaining a record ownership register of this Promissory
Note.  The terms and conditions of this Promissory Note shall be
binding upon and inure to the benefit of the Company and the Investor and their
permitted assigns; provided,
however, that if any such assignment (whether by operation of law, by way
of transfer or participation, or otherwise) is to any noteholder that is not a
“United States person” within the meaning of Section 7701(a)(30) of the Code,
then such noteholder shall submit to the Company on or before the date of such
assignment an IRS Form W-8BEN (or any successor form) certifying as to such
noteholder’s status for purposes of determining exemption from United States
withholding tax, information reporting and backup withholding with respect to
all payments to be made to such noteholder under the new note (or other
instrument).  Any attempted transfer in violation of the relevant
provisions of this Promissory Note shall be void and of no force and
effect.  Until there has been a valid transfer of this Promissory Note
and of all of the rights hereunder by the Investor in accordance with this
Promissory Note, the Company shall deem and treat the Investor as the absolute
beneficial owner and holder of this Promissory Note and of all of the rights
hereunder for all purposes (including, without limitation, for the purpose of
receiving all payments to be made under this Promissory Note).

     

    It is the
intention of the Company and the Investor that this Promissory Note is to be a
registered instrument and not a bearer instrument and the provisions of this
Promissory Note are to be interpreted accordingly.  This Promissory
Note is intended to be registered as to both principal and interest and all
payments hereunder shall be made to the named Investor or, in the event of a
transfer pursuant to the Investment Agreement and this Promissory Note, to the
transferee identified in the record of ownership of this Promissory Note
maintained by the Company.  Transfer of this Promissory Note may not
be effected except in accordance with the provisions hereof.

     

    
      
        	
                DESERT
      HAWK GOLD CORP.

              
	 
      	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              


      

    

     

    Exhibit A
– Form of Note

    
      
         


      

      
        Page
3

        
          

        

      

      
         


      

    

     

    TERM LOAN ADVANCES AND
PAYMENTS OF PRINCIPAL

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Date

                                	 
      	
                                  Amount of Term

                                  Loan Advance

                                	 
      	
                                  Amount of

                                  Principal Paid or

                                  Prepaid

                                	 
      	
                                  Unpaid Principal

                                  Balance

                                	 
      	
                                  Notation Made

                                  By

                                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                    

                                	 
      	
                                    

                                	 
      	
                                    

                                	 
      	
                                    

                                	 
      


                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Exhibit A
– Form of Note

    
      
         


      

      
        Page
4

        
          

        

      

      
         


      

    


    EXHIBIT
B

     

    FORM
OF

    BORROWING
NOTICE

     

    
      	
               
      

            	
              _____________,
      ______

            


    

     

    DMRJ
Group I, LLC

    as
Investor under the Investment

    Agreement
referred to below

     

    Attention:  ____________________

     

    Ladies
and Gentlemen:

     

    The
undersigned, Desert Hawk Gold Corp., refers to the Investment Agreement dated as
of July ___, 2010
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the “Investment
Agreement”; the terms defined therein being used herein as therein
defined), among the undersigned and DMRJ Group I, LLC as Investor, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Investment
Agreement that the undersigned hereby requests a Borrowing under the Investment
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the “Proposed
Borrowing”) as required by Section 2.02 of the Investment
Agreement:

     

    (i)   
        The Business Day of the Proposed
Borrowing is _______________, ____.

     

    (ii)           The
principal amount of the Term Loan Advance requested by this Borrowing, net of
Prepaid Interest, is $__________.

     

    (iii)          The
aggregate amount of the Proposed Borrowing, after taking into account all
Prepaid Interest, is $__________.

     

    (iv)          The
Term Loan Advance requested by this Borrowing is a [Yellowhammer Advance]
[Kiewit Advance].

     

    (v)           The
aggregate principal amount of all Term Loan Advances previously borrowed under
the Investment Agreement, without taking into account the Proposed Borrowing and
regardless of whether any previously borrowed Term Loan Advance has been repaid,
in whole or in part, is equal to $__________, and $__________ of such amount has
been used for the Yellowhammer Mining Activities and $__________ of such amount
has been used for the Kiewit Mining Activities; the unused Commitment,
determined by subtracting the aggregate principal amount of all Term Loan
Advances made prior to the Proposed Borrowing from the Commitment, is equal to
$__________.

     

    (vi)          The
proceeds of the Proposed Borrowing will be used for the following
purpose(s):  [If the Initial Borrowing,
state: the purposes contemplated by the Initial Borrowing] [Company to describe how funds
will be used in connection with the Yellowhammer Mining Activities or Kiewit
Mining Activities]
_________________
_____________________________________________________________________.

     

    Exhibit B
– Form of Borrowing Notice

    
      
         


      

      
        Page
1

        
          

        

      

      
         


      

    


    DMRJ
Group I, LLC, as Investor

    [Date]

    Page
2

     

    The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Borrowing:

     

    (A)          The
representations and warranties of the Transaction Parties contained in each
Transaction Document are correct on and as of the date of the Proposed
Borrowing, before and after giving effect to the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
other than any such representations or warranties that, by their terms, refer to
an earlier date, in which case, as of such earlier date.

     

    (B)           No
Default has occurred and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds therefrom.

     

    (C)           The
Company has satisfied [the Yellowhammer Milestones,
if required] [the Kiewit Milestones].4

     

    Delivery
of an executed counterpart of this Borrowing Notice by telecopier shall be
effective as delivery of an original executed counterpart of this Borrowing
Notice.

     

    
      
        
          
            	
                    Very
      truly yours,

                  
	 
      
	
                    DESERT
      HAWK GOLD CORP.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  


          

        

      

    

     

      
        

      

    

    
      	
              

                4

              

            	
              Clause
      (C) to be omitted in the case of the first (i.e. the Initial Borrowing),
      second and third Yellowhammer
Advances.

            


    

     

    Exhibit B
– Form of Borrowing Notice

    
      
         


      

      
        Page
2