Exhibit
10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of March 31, 2016 and effective as of June 28,
2016 (the “Effective Date”), by and between STAR MOUNTAIN RESOURCES,
INC., a corporation incorporated under the laws of the State of Nevada (the “Company”), and TCA GLOBAL
CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands (the “Buyer”).


 


WHEREAS,
Buyer desires to purchase from Company, and the Company desires to sell and issue to Buyer, upon the terms and subject to the
conditions contained herein, up to Five Million and No/100 United States Dollars ($5,000,000) of senior secured convertible, redeemable
debentures (in the form attached hereto as Exhibit A, the “Debenture(s)”), of which Three Million and
No/100 United States Dollars ($3,000,000) shall be purchased on the date hereof (the “First Closing”) for the
total purchase price of Three Million and No/100 United States Dollars ($3,000,000) (the “Purchase Price”),
and up to Two Million and No/100 United States Dollars ($2,000,000) may be purchased in additional closings as set forth in Section
4.2 below (the “Additional Closings”) (each of the First Closing and the Additional Closings are sometimes
hereinafter individually referred to as a “Closing” and collectively as the “Closings”),
all subject to the terms and provisions hereinafter set forth; 


 


WHEREAS,
the Company, Northern Zinc LLC, a limited liability company organized and existing under the laws of the State of Nevada, St.
Lawrence Zinc Company, LLC, a limited liability company organized and existing under the laws of the State of Delaware, Balmat
Holding Corp., a corporation incorporated under the laws of the State of Delaware, and Bolcan Mining Corporation, a corporation
incorporated under the laws of the State of Nevada (together, jointly and severally, the “Guarantors” and together
with the Company and any other person or entity to hereafter become a guarantor or party hereunder, collectively,, the “Credit
Parties”), have each agreed to secure all of the Company’s Obligations to Buyer under the Debentures, this Agreement
and all other Transaction Documents by granting to the Buyer (i) an unconditional and continuing security interest in all of the
assets and properties of the Company and the Guarantors, whether now existing or hereafter acquired, pursuant to those certain
Security Agreements, each dated as of the date hereof (in the forms attached hereto as Exhibit B, the “Security
Agreements”) and (ii) an unconditional and continuing security interest in the Mortgaged Property, pursuant to that
certain Mortgages, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated as of the date hereof (in the
form attached hereto as Exhibit C, the “Mortgage”);


 


WHEREAS,
the Guarantors will receive a substantial benefit from the Buyer’s purchase of the Debenture and, as such, have agreed to
guarantee all of the Obligations of the Buyer under the Debentures, this Agreement and all other Transactions Documents pursuant
to those certain Guarantee Agreements, each dated as of the date hereof (in the form attached hereto as Exhibit D, the
“Guarantee Agreements”); and


 




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WHEREAS,
as security for the payment and performance of any and all of the Company’s Obligations to Buyer under the Debentures, this
Agreement and all other Transaction Agreements, Pledgors (as defined herein) have agreed to execute those certain Pledge Agreements
in favor of Buyer, whereby each Pledgor shall pledge to the Buyer all of its right, title and interest in and to, and provide
a first priority lien and security interest on, certain issued and outstanding shares of common stock or units of membership interests
of the Pledged Companies, as applicable, each dated as of the date hereof (in the form attached hereto as Exhibit E, the
“Pledge Agreements”).


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound,
agree as follows:


 


ARTICLE
I


RECITALS,
EXHIBITS, SCHEDULES


 


The
foregoing recitals are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated
into this Agreement by this reference.


 


ARTICLE
II


DEFINITIONS


 


For
purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless
the context otherwise requires, the capitalized terms in this Agreement shall have the meanings assigned to them in this Article
as follows:


 


2.1“Affiliate”
means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with,
such Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition,
the term “control,” “controlling,” “controlled” and words of similar
import, when used in this context, means, with respect to any Person, the possession, directly or indirectly, of the power to
direct, or cause the direction of, management policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.


 


2.2“Assets”
means all of the properties and assets of the Person in question, as the context may so require, whether real, personal or mixed,
tangible or intangible, wherever located, whether now owned or hereafter acquired.


 


2.3“Business
Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks are authorized or required
to be closed for the conduct of commercial banking business.


 




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2.4“Claims”
means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments, charges, costs
and expenses of any nature or kind.


 


2.5“Common
Stock” means the common stock of the Company, par value $0.001 per share.


 


2.6“Compliance
Certificate” means that certain compliance certificate executed by an officer of the Company in the form attached hereto
as Exhibit F.


 


2.7“Consent”
means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or
report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person,
which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific result.


 


2.8“Contract”
means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any sales order, purchase
order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management
contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement, buy-sell agreement, option,
warrant, debenture, subscription, call or put.


 


2.9“Collateral”
shall have the meaning given to it in the Security Agreements and the Mortgage.


 


2.10“Credit
Party(ies)” shall have the meaning given to it in the recitals hereof.


 


2.11“DANC”
shall mean Development Authority of the North Country, a New York public benefit corporation.


 


2.12“Debenture(s)”
shall have the meaning given to it in the preamble hereof.


 


2.13“Effective
Date” means the date so defined in the introductory paragraph of this Agreement.


 


2.14“Encumbrance”
means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant, restriction, reservation,
conditional sale, prior assignment, or any other encumbrance, claim, burden or charge of any nature whatsoever.


 


2.15“Environmental
Requirements” means all Laws and requirements relating to human, health, safety or protection of the environment or
to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment
(including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating
to the treatment, storage, disposal, transport or handling of any Hazardous Materials.


 




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2.16“GAAP”
means generally accepted accounting principles, methods and practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial
Accounting Standards Board, or of such other Person as may be approved by a significant segment of the U.S. accounting profession,
in each case as of the date or period at issue, and as applied in the U.S. to U.S. companies.


 


2.17“Governmental
Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court,
agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.


 


2.18“Guarantee
Agreements” shall have the meaning given to it in the recitals hereof.


 


2.19“Guarantors”
shall have the meaning given to it in the recitals hereof.


 


2.20“Hazardous
Materials” means: (i) any chemicals, materials, substances or wastes which are now or hereafter become defined as or
included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic
pollutants” or words of similar import, under any Law; and (iii) any other chemical, material, substance, or waste, exposure
to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.


 


2.21“Intercreditor
Agreement” shall mean that certain Intercreditor Agreement by and between DANC and the Buyer, in the form attached hereto
as Exhibit G.


 


2.22“Irrevocable
Transfer Agent Instructions” shall mean the Irrevocable Transfer Agent Instructions to be entered into by and among
the Buyer, the Company and the Company’s transfer agent, in the form attached hereto as Exhibit H.


 


2.23“Judgment”
means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature whatsoever of any Governmental
Authority.


 


2.24“Law”
means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any Governmental
Authority.


 


 2.25 “Leases” means all leases for real or personal property.




 




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2.26“Material
Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon, the Assets, business,
prospects, properties, financial condition or results of operations of the Company; (ii) a material impairment of the ability
of the Company to perform any of its Obligations under any of the Transaction Documents; or (iii) a material adverse effect on:
(A) any material portion of the “Collateral” (as such term is defined in the Security Agreements); (B) the legality,
validity, binding effect or enforceability against the Credit Parties of any of the Transaction Documents; (C) the perfection
or priority of any Encumbrance granted to Buyer under any Transaction Documents; (D) the rights or remedies of the Buyer under
any of the Transaction Documents; or (E) a material adverse effect or impairment on the Buyer’s ability to sell the shares
of the Company’s Common Stock issuable to Buyer under any Transaction Documents without limitation or restriction. For purposes
of determining whether any of the foregoing changes, effects, impairments, or other events have occurred, such determination shall
be made by Buyer, in its sole, but reasonably exercised, discretion.


 


2.27“Material
Contract” shall mean any Contract to which the Company is a party or by which the Company or any of its Assets
are bound and which: (i) must be disclosed to any Governmental Authority or any other laws, rules or regulations of any Governmental
Authority; (ii) involves aggregate payments of Seventy-Five Thousand Dollars ($75,000) or more to or from the Company; (iii) involves
delivery, purchase, licensing or provision, by or to the Company, of any goods, services, assets or other items having a value
(or potential value) over the term of such Contract of Seventy-Five Thousand Dollars ($75,000) or more or is otherwise material
to the conduct of the Company’s business as now conducted and as contemplated to be conducted in the future; (iii) involves
a Credit Party Lease having a term of one year or more; (iv) imposes any guaranty, surety or indemnification obligations on the
Company; or (v) prohibits the Company from engaging in any business or competing anywhere in the world.


 


2.28“Mortgaged
Property” shall mean that certain real property set forth in Schedule 1.1 attached hereto.


 


2.29“Mortgages”
shall have the meaning given to it in the recitals hereof.


 


2.30“Obligation”
means, now existing or in the future, any debt, liability or obligation of any nature whatsoever (including any required performance
of any covenants or agreements), whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, voluntary
or involuntary, direct or indirect, absolute, fixed, contingent, ascertained, unascertained, known, unknown, whether or not jointly
owed with others, whether or not from time to time decreased or extinguished and later decreased, created or incurred, or obligations
existing or incurred under this Agreement, the Debentures or any other Transaction Documents, or any other agreement between any
of the Credit Parties and the Buyer, as such obligations may be amended, supplemented, converted, extended or modified from time
to time.


 


2.31“Ordinary
Course of Business” means the ordinary course of business of the Person in question, consistent with past custom
and practice (including with respect to quantity, quality and frequency).


 




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2.32“OTC
Markets” means the OTC Markets Group, Inc.


 


2.33“Permit”
means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any Governmental Authority.


 


2.34“Person”
means any individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust,
estate, Governmental Authority, or any other entity of any nature whatsoever.


 


2.35“Pledge
Agreement” shall have the meaning given to it in the recitals hereof.


 


2.36“Pledged
Companies” shall mean each of the Guarantors, respectively.


 


2.37“Pledgors”
shall mean the Company, Northern Zinc LLC and Balmat Holding Corp., respectively.


 


2.38“Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
OTC Bulletin Board, the OTC Markets, the so-called OTC Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever
is at the time the principal trading exchange or market for the Common Stock.


 


2.39“Proceeding”
means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.


 


2.40“Real
Property” means any real estate, land, building, structure, improvement, fixture or other real property of any
nature whatsoever, including, but not limited to, fee and leasehold interests.


 


2.41“Rule
144” shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto).


 


2.42“SEC”
shall mean the United States Securities and Exchange Commission.


 


2.43“Securities”
means, collectively, the Debentures and any additional shares of Common Stock issuable in connection with a conversion of the
Debentures, or the terms of this Agreement or any other Transaction Documents.


 


2.44“Security
Agreements” shall have the meaning given to it in the recitals hereof.


 


2.45“Subordinated
Creditors” shall mean Joseph H. Marchal, an individual with an address at 40 Soaring Bird Court, Las Vegas, NV 89135,
and Edward F. Brogan, an individual with an address at c/o Joseph H. Marchal, 40 Soaring Bird Court, Las Vegas, NV 89135.


 




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2.46“Subordination
Agreement” shall mean that certain Subordination Agreement by and among the Credit Parties, the Buyer and the Subordinated
Creditors, in the form attached hereto as Exhibit I.


 


2.47“Tax”
means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use, occupancy, general property,
real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings, personal holding company,
unemployment compensation, social security, withholding taxes, payroll taxes, or any other tax of any nature whatsoever, (ii)
any foreign, federal, state or local organization fee, qualification fee, annual report fee, filing fee, occupation fee, assessment,
rent, or any other fee or charge of any nature whatsoever, or (iii) any deficiency, interest or penalty imposed with respect to
any of the foregoing.


 


2.48“Tax
Return” means any tax return, filing, declaration, information statement or other form or document required to be filed
in connection with or with respect to any Tax.


 


2.49“Transaction
Documents” means this Agreement any and all documents or instruments executed or to be executed by any Credit Party
in connection with this Agreement, including the Debentures, the Security Agreements, the Mortgage, the Guarantee Agreements,
the Use of Proceeds Confirmation, the Irrevocable Transfer Agent Instructions, the Pledge Agreements, the Use Of Proceeds Confirmation,
the Intercreditor Agreement, the Subordination Agreement and the Validity Certificates, together with all modifications, amendments,
extensions, future advances, renewals, and substitutions thereof.


 


2.50“Use
of Proceeds Confirmation” means that certain use of proceeds confirmation executed by an officer of the Company in the
form attached hereto as Exhibit J.


 


2.51“Validity
Certificate(s)” shall mean those certain validity certificates executed by such officers and directors of the Company
as the Buyer shall require, in the Buyer’s sole discretion, the form of which is attached hereto as Exhibit K.


 


ARTICLE
III


INTERPRETATION


 


In
this Agreement, unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder”
and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references
to the words “Article” or “Section” refer to the respective Articles and Sections of this Agreement, and
references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules annexed hereto; (iii)
references to a “party” mean a party to this Agreement and include references to such party’s permitted successors
and permitted assigns; (iv) references to a “third party” mean a Person not a party to this Agreement; (v) references
to the words “share” or “shareholder”, if in reference to the Company, shall refer to “units”
or “unitholder” respectively and (v) the terms “dollars” and “$” means U.S. dollars; (vi)
wherever the word “include,” “includes” or “including” is used in this Agreement, it will
be deemed to be followed by the words “without limitation”.


 




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ARTICLE
IV


PURCHASE
AND SALE OF DEBENTURES


 


4.1Purchase
and Sale of Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Buyer agrees
to purchase, at each Closing, and Company agrees to sell and issue to Buyer, at each Closing, Debentures in the amount of the
purchase price applicable to each Closing as more specifically set forth below.


 


4.2Closing
Dates. The First Closing of the purchase and sale of the Debentures shall be for Three Million and No/100 United States Dollars
($3,000,000), and shall take place on the Effective Date, subject to satisfaction of the conditions to the First Closing set forth
in this Agreement (the “First Closing Date”). Additional Closings of the purchase and sale of the Debentures
shall be at such times and for such amounts as determined in accordance with Section 4.4 below, subject to satisfaction
of the conditions to the Additional Closings set forth in this Agreement (the “Additional Closing Dates”) (collectively
referred to as the “Closing Dates”). The Closings shall occur on the respective Closing Dates through the use
of overnight mails and subject to customary escrow instructions from Buyer and its counsel, or in such other manner as is mutually
agreed to by the Company and the Buyer.


 


4.3Form
of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on each Closing Date: (i) the Buyer
shall deliver to the Company, to a Company account designated by the Company, the aggregate proceeds for the Debentures to be
issued and sold to Buyer at each such Closing, minus the fees to be paid directly from the proceeds of each such Closing as set
forth in this Agreement, in the form of wire transfers of immediately available U.S. dollars; and (ii) the Company shall deliver
to Buyer the Debentures which Buyer is purchasing hereunder at each Closing, duly executed on behalf of the Company, together
with any other documents required to be delivered pursuant to this Agreement.


 


4.4Additional
Closings. At any time after the First Closing but prior to the maturity date of any of the Debentures issued in the First
Closing, the Company may request that Buyer purchase additional Debentures hereunder in Additional Closings by written notice
to Buyer, and, subject to the conditions below, Buyer shall purchase such additional Debentures in such amounts and at such times
as Buyer and the Company may mutually agree, so long as the following conditions have been satisfied, in Buyer’s sole and
absolute discretion: (i) no default or “Event of Default” (as such term is defined in any of the Transaction Documents)
shall have occurred or be continuing under this Agreement or any other Transaction Documents, and no event shall have occurred
that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default hereunder or
thereunder; and (ii) any additional purchase of Debentures beyond the purchase of Debentures at the First Closing shall have been
approved by Buyer, which approval may be given or withheld in Buyer’s sole and absolute discretion.


 




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ARTICLE
V


BUYER’S
REPRESENTATIONS AND WARRANTIES


 


Buyer
represents and warrants to the Company, that:


 


5.1Investment
Purpose. Buyer is acquiring the Securities for its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof.


 


5.2Accredited
Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501 of Regulation D, as promulgated
under the Securities Act of 1933.


 


5.3Reliance
on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer
to acquire the Securities.


 


5.4Information.
Buyer and its advisors, if any, have been furnished with all materials they have requested relating to the business, finances
and operations of the Company and information Buyer deemed material to making an informed investment decision regarding its purchase
of the Securities. Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries, nor any materials provided to Buyer, nor any other due diligence investigations conducted
by Buyer or its advisors, if any, or its representatives, shall modify, amend or affect Buyer’s right to fully rely on the
Company’s representations and warranties contained in Article VI below. Buyer understands that its investment in the Securities
involves a high degree of risk. Buyer is in a position regarding the Company, which, based upon economic bargaining power, enabled
and enables Buyer to obtain information from the Company in order to evaluate the merits and risks of this investment. Buyer has
sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect
to its acquisition of the Securities.


 


5.5No
Governmental Review. Buyer understands that no United States federal or state Governmental Authority has passed on or made
any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have
such Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.


 




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5.6Authorization,
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer and is a valid
and binding agreement of Buyer, enforceable in accordance with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


 


ARTICLE
VI


REPRESENTATIONS
AND WARRANTIES OF THE COMPANY


 


To
induce the Buyer to purchase the Securities, the Company makes the following representations and warranties to Buyer, each of
which shall be true and correct in all respects as of the date of the execution and delivery of this Agreement and as of the date
of each Closing hereunder, and which shall survive the execution and delivery of this Agreement:


 


6.1Subsidiaries.
A list of all of the Company’s Subsidiaries, direct and indirect, is set forth in Schedule 6.1 hereto.


 


6.2Organization.
Each Credit Party is a corporation, limited liability company, or other form of legally recognized entity, as applicable, duly
organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, and has the full
power and authority and all necessary certificates, licenses, approvals and Permits to: (i) enter into and execute this Agreement
and the Transaction Documents and to perform all of its Obligations hereunder and thereunder; and (ii) own and operate its Assets
and properties and to conduct and carry on its business as and to the extent now conducted. Each Credit Party is duly qualified
to transact business and is in good standing as a foreign corporation in each jurisdiction where the character of its business
or the ownership or use and operation of its Assets or properties requires such qualification. The exact legal name of the Credit
Parties is as set forth in the preamble to this Agreement, and the Credit Parties do not currently conduct, nor have the Credit
Parties, during the last five (5) years conducted, business under any other name or trade name, except for the Company which changes
its name from Jameson Stanford Resources, Inc. on December 15, 2014 and from MyOtherCountryClub.com in 2012.


 


6.3Authority
and Approval of Agreement; Binding Effect. The execution and delivery by Credit Parties of this Agreement and the Transaction
Documents, and the performance by each Credit Party of all of its Obligations hereunder and thereunder, including the issuance
of the Securities, have been duly and validly authorized and approved by each Credit Party and its board of directors, stockholders,
members, managers, partners pursuant to all applicable Laws and no other action or Consent on the part of any Credit Party, its
board of directors, managers, stockholders members, partners or any other Person is necessary or required by the Credit Parties
to execute this Agreement and the Transaction Documents, consummate the transactions contemplated herein and therein, perform
all of Obligations hereunder and thereunder, or to issue the Securities. This Agreement and each of the Transaction Documents
have been duly and validly executed by Credit Parties (and the officer executing this Agreement and all such other Transaction
Documents is duly authorized to act and execute same on behalf of each Credit Party) and constitute the valid and legally binding
agreements of the Credit Parties, enforceable against each Credit Party in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies.


 




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6.4Capitalization.
The authorized capital stock or other capitalization of each Credit Party, as applicable, is set forth in the Public Documents
(as hereinafter defined). All of such outstanding shares or other securities of each Credit Party are validly issued, fully paid
and non-assessable and have been issued in compliance with all foreign, federal and state securities laws and none of such outstanding
shares or other securities were issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
As of the Effective Date, no shares of capital stock or other securities of any Credit Party are subject to preemptive rights
or any other similar rights or any Claims or Encumbrances suffered or permitted by any Credit Party. The Common Stock is currently
quoted on the OTC Markets under the trading symbol “SMRS”. The Company has received no notice, either oral or written,
with respect to the continued eligibility of the Common Stock for quotation on the Principal Trading Market, and the Company has
maintained all requirements on its part for the continuation of such quotation. Except as disclosed in the “Public Documents”
(as hereinafter defined) and except for the Securities to be issued pursuant to this Agreement, as of the date hereof: (i) there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or Contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries, or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock
of the Company or any of its Subsidiaries; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities
or other Contracts or instruments evidencing indebtedness of the Company or any of its Subsidiaries, or by which the Company or
any of its Subsidiaries is or may become bound; (iii) there are no outstanding registration statements with respect to any Credit
Party or any of its securities; (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this Agreement); (v)
there are no financing statements securing obligations filed in connection with the Company or any of its Assets; (vi) there are
no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related
agreement or the consummation of the transactions described herein or therein; and (vii) there are no outstanding securities or
instruments of the Company which contain any redemption or similar provisions, and there are no Contracts by which the Company
is or may become bound to redeem a security of the Company. The Company has furnished to the Buyer true, complete and correct
copies of: each Credit Party’s respective articles of incorporation (including any certificates of designation, is applicable),
bylaws, operating agreement, partnership agreement, certificate of organization or similar organizational and governing documents
(the “Organizational Documents”). Except for the Organizational Documents or as disclosed in the Public
Documents, there are no other shareholder agreements, voting agreements or other Contracts of any nature or kind that restrict,
limit or in any manner impose Obligations on the governance of any Credit Party.


 




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6.5No
Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction Documents,
and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities, will
not: (i) constitute a violation of or conflict with the Organizational Documents of the Credit Parties; (ii) constitute a violation
of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to
any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract to which
any Credit Party is a party or by which any of its Assets or properties may be bound; (iii) constitute a violation of, or a default
or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any Judgment; (iv) constitute
a violation of, or conflict with, any Law (including United States federal and state securities Laws); or (v) result in the loss
or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or
issued to, or otherwise held by or for the use of, any Credit Party or any of its Assets. The Credit Parties are not in violation
of any Credit Parties’ Organizational Documents and the Credit Parties are not in default or breach (and no event has occurred
which with notice or lapse of time or both could put any Credit Party in default or breach) under, and the Credit Parties have
not taken any action or failed to take any action that would give to any other Person any rights of termination, amendment, acceleration
or cancellation of, any Contract to which any Credit Party is a party or by which any property or Assets of the Credit Parties
are bound or affected. The businesses of the Credit Parties are not being conducted, and shall not be conducted so long as Buyer
owns any of the Securities, in violation of any Law. Except as specifically contemplated by this Agreement, no Credit Party is
required to obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute,
deliver or perform any of its Obligations under this Agreement or the Transaction Documents in accordance with the terms hereof
or thereof, or to issue and sell the Securities in accordance with the terms hereof. All Consents which any Credit Party is required
to obtain pursuant to the immediately preceding sentence have been obtained or effected on or prior to the date hereof. The Credit
Parties are not aware of any facts or circumstances which might give rise to any of the foregoing.


 


6.6Issuance
of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued,
fully paid and non-assessable, and free from all Encumbrances with respect to the issue thereof, and will be issued in compliance
with all applicable United States federal and state securities Laws.


 




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6.7Financial
Statements. The Company has delivered to the Buyer a consolidated Balance Sheets and Statement of Operations for the year
ending December 31, 2015 and the four month period ended April 30, 2016 (collectively, together with any financial statements
filed by the Company with the SEC, any Principal Trading Market, or any other Governmental Authority, if applicable, the “Financial
Statements”). The Financial Statements have been prepared in accordance with GAAP, consistently applied, during the
periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and
fairly and accurately present in all material respects the consolidated financial position of the Company and its Subsidiaries
as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). To the best knowledge of the Company, no other information
provided by or on behalf of the Company and its Subsidiaries to the Buyer, either as a disclosure schedule to this Agreement,
or otherwise in connection with Buyer’s due diligence investigation of the Company and its Subsidiaries, contains any untrue
statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light
of the circumstance under which they are or were made, not misleading.


 


6.8Public
Documents. The Common Stock of the Company is registered pursuant to Section 12 of the Exchange Act and the Company is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC, the OTC Markets, or any other Governmental Authority,
as applicable (all of the foregoing filed within the two (2) years preceding the date hereof or amended after the date hereof
and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the “Public Documents”). The Company is current with its filing obligations
with the SEC, the OTC Markets, or any other Governmental Authority, as applicable. The Company represents and warrants that true
and complete copies of the Public Documents are available on the SEC website or the OTC Markets website, as applicable (www.sec.gov,
or www.otcmarkets.com) at no charge to Buyer, and Buyer acknowledges that it may retrieve all Public Documents from such websites
and Buyer’s access to such Public Documents through such website shall constitute delivery of the Public Documents to Buyer;
provided, however, that if Buyer is unable to obtain any of such Public Documents from such websites at no charge, as result of
such websites not being available or any other reason beyond Buyer’s control, then upon request from Buyer, the Company
shall deliver to Buyer true and complete copies of such Public Documents. The Company shall also deliver to Buyer true and complete
copies of all draft filings, reports, schedules, statements and other documents required to be filed with the requirements of
the OTC Markets that have been prepared but not filed with the OTC Markets as of the date hereof. None of the Public Documents,
at the time they were filed with the SEC, the OTC Markets, or other Governmental Authority, as applicable, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any
such Public Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof, which amendments or updates are also part of the Public Documents).
As of their respective dates, the consolidated financial statements of the Company and its Subsidiaries included in the Public
Documents complied in all material respects with applicable accounting requirements and any published rules and regulations of
the SEC and OTC Markets with respect thereto.


 




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6.9Absence
of Certain Changes. Since the date of the most recent of the Financial Statements, none of the following have occurred:


 


(a)There
has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in,
a Material Adverse Effect; or


 


(b)Any
transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit Parties
other than in the Credit Parties’ Ordinary Course of Business.


 


6.10Absence
of Litigation or Adverse Matters. No condition, circumstance, event, agreement, document, instrument, restriction, litigation
or Proceeding (or threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the validity
or priority of the Encumbrances granted to the Buyer under the Transaction Documents; (ii) could adversely affect the ability
of the Company to perform its Obligations under the Transaction Documents; (iii) would constitute a default under any of the Transaction
Documents; (iv) would constitute such a default with the giving of notice or lapse of time or both; or (v) would constitute or
give rise to a Material Adverse Effect. In addition: (vi) there is no Proceeding before or by any Governmental Authority or any
other Person, pending, or the best of Company’s knowledge, threatened or contemplated by, against or affecting the Company,
its business or Assets; (vii) there is no outstanding Judgments against or affecting the Company, its business or Assets; (viii)
the Company is not in breach or violation of any Contract, except as set forth in Schedule 6.10 attached hereto; and (ix)
the Company has not received any material complaint from any customer, supplier, vendor or employee.


 


6.11Liabilities
and Indebtedness of the Company. The Credit Parties do not have any Obligations of any nature whatsoever, except: (i) as disclosed
in the Financial Statements; (ii) the amounts set forth in Schedule 6.11 attached hereto (the “Bridge Loans”),
or (iii) Obligations incurred in the Ordinary Course of Business since the date of the most recent Financial Statements which
do not or would not, individually or in the aggregate, exceed Two Hundred Thousand Dollars ($200,000) or otherwise have a Material
Adverse Effect; or (iv) the Five Hundred Thousand Dollar ($500,000) loan from DANC; or (v) Obligations owed to the Buyer.


 




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6.12Title
to Assets. The Company has good and marketable title to, or a valid leasehold interest in, all of its Assets which are material
to the business and operations of the Company as presently conducted, free and clear of all Encumbrances or restrictions on the
transfer or use of same, except as provided for by record or abstract, in Section 4.15 and Schedule 4.15 of the Purchase Agreement
entered into among Northern Zinc, LLC, the Company, Hudbay Minerals, Inc., Balmat Holding Corporation and St. Lawrence Zinc Company,
LLC dated October 13, 2015 (the “Balmat Acquisition Agreement”). To the knowledge of the Company, the Company’s
Assets are in good operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects
which might impair their usefulness, and are suitable for the purposes for which they are currently used and for the purposes
for which they are proposed to be used.


 


 6.13 Real Estate.




 


(a)Real
Property Ownership. Except for the Credit Party Leases, Real Property, any mineral or mining concession, claim, patent, lease
or other right to explore for, exploit, develop, mine, produce, mill or process minerals or any interest therein (“Concession”),
royalty interests in each of the Concessions and Real Property and as set forth on Schedule 6.13 (the “Land Rights
Agreements”), the Credit Parties do not own any Real Property. 


 


Except
as disclosed in Schedule 6.13 attached hereto, the Land Rights Agreements are in full force and effect and in good standing
and the Land Rights Agreements are held by the Company or its Subsidiaries free and clear of all Liens. Except as disclosed in
Schedule 6.13 attached hereto, and applying customary standards in the mining industry in the United States:


 


(i)each
Concession is in good standing and has been properly located and recorded in compliance with applicable Laws and is comprised
of valid and subsisting mineral claims;


 


(ii)any
and all (a) assessment work required, and (b) other work required by applicable Laws, to be performed and filed under the Concessions
has been performed and filed;


 


(iii)any
and all filings required to be filed in respect of the Concessions and the Real Property have been filed;


 


(iv)the
Company or its subsidiaries, as applicable, has the exclusive right to deal with the Concessions and the Real Property;


 


(v)no
other Person has any interest in the Concessions or the Real Property or any right to acquire any such interest;


 


(vi)there
are no mining concessions, claims, interests in real and immoveable property, leases, licenses, permit or any other rights conflicting
with the Concessions or the Real Property;


 


(vii)there
are no back-in rights, earn-in rights, rights of first refusal, royalty rights or similar provisions which would affect the Company
or its subsidiaries interests in the Concessions or the Real Property; and


 




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(viii)neither
the Company nor its subsidiaries has received any notice, whether written or oral from any Governmental Entity or any Person with
jurisdiction or applicable authority of any default under, or of any revocation or intention to revoke, the Concessions, the Real
Property, the Company or its subsidiaries interests therein.


 


(b)Real
Property Leases. Except for ordinary office Leases, land rights agreements and concessions listed on Schedule 6.13
attached hereto or disclosed to the Buyer in writing prior to the date hereof (the “Credit Party Leases”),
the Credit Parties do not lease any other Real Property.


 


6.14Material
Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to Buyer, and each
of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof.
There are no outstanding offers, bids, proposals or quotations made by any Credit Party which, if accepted, would create a Material
Contract with any Credit Party. To the knowledge of each Credit Party, each of the Material Contracts is in full force and effect
and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To the knowledge
of each Credit Party and its officers, all Obligations required to be performed under the terms of each of the Material Contracts
by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default with
respect to any term or condition thereof, nor has any event occurred which , through the passage of time or the giving of notice,
or both, would constitute a default thereunder or would cause the acceleration or modification of any Obligation of any party
thereto or the creation of any Encumbrance upon any of the Assets of the Credit Parties. Further, no Credit Party has received
notice, nor does any Credit Party have any knowledge, of any pending or contemplated termination of any of the Material Contracts
and, no such termination is proposed or has been threatened, whether in writing or orally.


 


6.15Compliance
with Laws. To the knowledge of each Credit Party and its officers, each Credit Party is and at all times has been in full
compliance with all Laws. No Credit Party has received any notice that it is in violation of, has violated, or is under investigation
with respect to, or has been threatened to be charged with, any violation of any Law.


 


6.16Intentionally
Deleted.


 


6.17Labor
and Employment Matters. Except as disclosed on Schedule 6.17 attached hereto, the Credit Parties are not involved in
any labor dispute or, to the knowledge of each Credit Party, is any such dispute threatened. To the knowledge of each Credit Party
and its officers, none of the employees of any Credit Party is a member of a union and each Credit Party believes that its relations
with its employees are good. To the knowledge of each Credit Party and its officers, the Credit Parties have complied in all material
respects with all Laws relating to employment matters, civil rights and equal employment opportunities.


 




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6.18Employee
Benefit Plans. Except as disclosed to the Buyer in writing prior to the date hereof or as provided for in a Material Contract,
the Credit Parties do not have and have not ever maintained, and have no Obligations with respect to any employee benefit plans
or arrangements, including employee pension benefit plans, as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), multiemployer plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans, stock option plans, bonus plans, stock
purchase plans, hospitalization, disability and other insurance plans, severance or termination pay plans and policies, whether
or not described in Section 3(3) of ERISA, in which employees, their spouses or dependents of the Credit Parties participate (collectively,
the “Employee Benefit Plans”). To each Credit Party’s knowledge, all Employee Benefit Plans meet
the minimum funding standards of Section 302 of ERISA, where applicable, and each such Employee Benefit Plan that is intended
to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has
been incurred under any such Employee Benefit Plans and no “Reportable Event” or “Prohibited Transaction”
(as such terms are defined in ERISA), has occurred with respect to any such Employee Benefit Plans, unless approved by the appropriate
Governmental Authority. To each Credit Party’s knowledge, the Credit Parties have promptly paid and discharged all Obligations
arising under ERISA of a character which if unpaid or unperformed might result in the imposition of an Encumbrance against any
of its Assets or otherwise have a Material Adverse Effect.


 


6.19Tax
Matters. Except as disclosed in Schedule 6.19 attached hereto, the Company and each Guarantor has made and timely filed
all Tax Returns required by any jurisdiction to which it is subject, and each such Tax Return has been prepared in compliance
with all applicable Laws, and all such Tax Returns are true and accurate in all respects. Except and only to the extent that the
Company and each Guarantor has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
Taxes, each Credit Party has timely paid all Taxes shown or determined to be due on such Tax Returns, except those being contested
in good faith, and each Credit Party has set aside on its books provision reasonably adequate for the payment of all Taxes for
periods subsequent to the periods to which such Tax Returns apply. Except as disclosed in Schedule 6.19 attached hereto,
there are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of each Credit Party know of no basis for any such claim. The Credit Parties have withheld and paid all Taxes to the appropriate
Governmental Authority required to have been withheld and paid in connection with amounts paid or owing to any Person. There is
no Proceeding or Claim for refund now in progress, pending or threatened against or with respect to any Credit Party regarding
Taxes.


 




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6.20Insurance.
The Credit Parties are each covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable
insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses and risks which
the Company has deemed commercially prudent (the “Insurance Policies”). Such Insurance Policies are
in full force and effect, and all premiums due thereon have been paid. None of the Insurance Policies will lapse or terminate
as a result of the transactions contemplated by this Agreement. The Credit Parties have complied with the provisions of such Insurance
Policies. The Credit Parties have not been refused any insurance coverage sought or applied for and the Credit Parties do not
have any reason to believe that it will not be able to renew its existing Insurance Policies as and when such Insurance Policies
expire or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not
materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Credit Parties.


 


6.21Permits.
The Credit Parties possess all Permits necessary to conduct its business, and no Credit Party has received any notice of, or is
otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are valid
and in full force and effect and the Credit Parties are in full compliance with the respective requirements of all such Permits.


 


6.22Bank
Accounts; Business Location. Schedule 6.22 sets forth, with respect to each account of the Credit Parties with
any bank, broker or other depository institution: (i) the name and account number of such account; (ii) the name and address of
the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account,
if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account.
The Credit Parties have no office or place of business other than as identified on Schedule 6.22 and each of the
Credit Party’s principal places of business and chief executive offices are indicated on Schedule 6.22. All
books and records of the Credit Parties and other material Assets of the Credit Parties are held or located at the principal offices
of the Credit Parties indicated on Schedule 6.22. 


 


6.23Environmental
Laws. Except as disclosed in Schedule 6.23 attached hereto and as are used in such amounts as are customary in
the Ordinary Course of Business of the Credit Parties and in compliance with all applicable Environmental Laws, each Credit Party
represents and warrants to Buyer that: (i) no Credit Party has generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off any of the premises of the Credit Parties (whether or not owned by
the Credit Parties) in any manner which at any time violates any Environmental Law or any Permit, certificate, approval or similar
authorization thereunder; (ii) the operations of the Credit Parties comply in all material respects with all Environmental Laws
and all Permits certificates, approvals and similar authorizations thereunder; (iii) there has been no investigation, Proceeding,
complaint, order, directive, Claim, citation or notice by any Governmental Authority or any other Person, nor is any pending or,
to the each Credit Party’s knowledge, threatened; and (iv) the Credit Parties do not have any liability, contingent or otherwise,
in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any Hazardous Material.


 




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6.24Illegal
Payments. To the knowledge of each of the Credit Parties, neither the Credit Parties, nor any director, officer, agent, employee
or other Person acting on behalf of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties:
(i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official
or employee.


 


6.25Related
Party Transactions. Except for arm’s length transactions pursuant to which the Credit Parties make payments in the Ordinary
Course of Business upon terms no less favorable than the Credit Parties could obtain from third parties or as provided for in
a Material Contract, none of the officers, directors or employees of the Credit Parties, nor any stockholders who own, legally
or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material Shareholder”),
is presently a party to any transaction with the Credit Parties (other than for services as employees, officers and directors),
including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to
or from, or otherwise requiring payments to or from, any officer, director or such employee or Material Shareholder or, to the
best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee or Material Shareholder
has a substantial or material interest in or of which any officer, director or employee of the Credit Parties or Material Shareholder
is an officer, director, trustee or partner. There are no Claims or disputes of any nature or kind between the Credit Parties
and any officer, director or employee of the Credit Parties or any Material Shareholder, or between any of them, relating to each
Credit Party and its business.


 


6.26Internal
Accounting Controls. Each Credit Party maintains a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to Assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for Assets is compared with the existing Assets at reasonable intervals and appropriate action is taken
with respect to any differences..


 


6.27Acknowledgment
Regarding Buyer’s Purchase of the Securities. Each Credit Party acknowledges and agrees that Buyer is acting solely
in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The
Company and each Guarantor further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the Credit Parties
(or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by Buyer
or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental
to Buyer’s purchase of the Securities. The Credit Parties further represent to Buyer that the Company’s and each Guarantor’s
decision to enter into this Agreement has been based solely on the independent evaluation by the Company, each Guarantor and its
representatives.


 




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6.28Seniority.
No indebtedness or other equity or security of the Credit Parties is senior to the Debentures in right of payment, whether with
respect to interest or upon liquidation or dissolution, or otherwise, except only purchase money security interests (which are
senior only as to underlying Assets covered thereby).


 


6.29Brokerage
Fees. Except as disclosed to the Buyer in writing prior to the date hereto, there is no Person acting on behalf of the Credit
Parties who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection with the execution
of this Agreement or the consummation of the transactions contemplated hereby.


 


6.30No
General Solicitation. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or issuance of the Securities.


 


6.31No
Integrated Offering. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the Securities under the Securities Act or cause this offering of such securities to be integrated
with prior offerings by the Credit Parties for purposes of the Securities Act.


 


6.32Private
Placement. No registration under the Securities Act or the laws, rules or regulation of any other governmental authority is
required for the issuance of the Securities.


 


6.33Full
Disclosure. All the representations and warranties made by the Credit Parties herein or in the Schedules hereto, and all of
the financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials submitted to the
Buyer in connection with or in furtherance of this Agreement or pertaining to the transaction contemplated herein, whether made
or given by the Credit Parties, its agents or representatives, are complete and accurate in all material respects, and do not
omit any material information required to make the statements and information provided, in light of the transaction contemplated
herein and in light of the circumstances under which they were made, not misleading, accurate and meaningful.


 




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ARTICLE
VII


COVENANTS


 


7.1Negative
Covenants.


 


(a)Indebtedness.So
long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly,
create, assume, incur or have outstanding any indebtedness for borrowed money of any nature or kind (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any Obligation of any other Person,
except for: (i) the Debentures; (ii) Obligations disclosed in the financial statements provided to the Buyer as of the Effective
Date; (iii) Obligations for accounts payable, other than for money borrowed, incurred in the Ordinary Course of Business of the
Credit Parties; provided that, any management or similar fees payable by the Credit Parties shall be fully subordinated in right
of payment to the prior payment in full of the Debentures; (iv) obligations permitting the financing of equipment; and (v) indebtedness
owed to DANC as of the Effective Date; provided the Credit Parties shall be allowed either directly or indirectly to create, assume,
incur and have outstanding other indebtedness following the Effective Date so long as the indebtedness is evidenced by a Subordination
Agreement, signed by the Buyer and the third-party creditor, in form acceptable to the Buyer in its sole discretion.


 


(b)Encumbrances.So
long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly,
create, assume, incur or suffer or permit to exist any Encumbrance upon any Asset of the Credit Parties, whether owned at the
date hereof or hereafter acquired, except for any Encumbrance in connection with the financing of equipment.


 


(c)Investments.So
long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly,
make or have outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in, or loans or advances
to, any other Person, or acquire all or any substantial part of the assets, business, stock or other evidence of beneficial ownership
of any other Person, except following: (i) investments in direct obligations of the United States or any state in the United States;
(ii) trade credit extended by any Credit Party in its Ordinary Course of Business; (iii) investments existing on the Effective
Date and set forth in the financial statements provided to the Buyer; and (iv) capital expenditures first approved by the Buyer
in writing, which approval shall not be unreasonably withheld.


 


(d)Issuances.
So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly,
issue any equity, debt or convertible or derivative instruments or securities whatsoever, except upon obtaining Buyer’s
prior written consent, which consent may be withheld in Buyer’s sole discretion, provided, however, notwithstanding anything
to the contrary, the Company shall be permitted to issue and distribute additional capital stock and other securities without
the consent of the Buyer if such issuance and/or distribution does not result in a Change of Control.


 




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(e)Transfer;
Merger. So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly
or indirectly, permit or enter into any transaction involving a “Change of Control” (as hereinafter defined), or any
other merger, consolidation, sale, transfer, license, Lease, Encumbrance or other disposition of all or substantially all of its
properties or business or all or substantially all of its Assets, except for the sale, lease or licensing of property or Assets
of the Credit Parties in the Ordinary Course of Business of the Credit Parties. For purposes of this Agreement, the term “Change
of Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership
interest of the Credit Parties which results in any change in the identity of the individuals or entities previously having the
power to direct, or cause the direction of, the management and policies of the Credit Parties, or the grant of a security interest
in any ownership interest of any Person directly or indirectly controlling the Credit Parties, which could result in a change
in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management
and policies of the Credit Parties.


 


(f)Distributions;
Restricted Payments; Change in Management. So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit
Parties shall not, either directly or indirectly: (i) purchase or redeem any shares of its capital stock; (ii) declare or pay
any dividends or distributions, whether in cash or otherwise, or set aside any funds for any such purpose; (iii) make any distribution
to its shareholders, make any distribution of its property or Assets or make any loans, advances or extensions of credit to, or
investments in, any Person, including, without limitation, any Affiliates of the Credit Parties, or the Credit Parties’
officers, directors, employees or Material Shareholder; (iv) pay any outstanding indebtedness of the Credit Parties, except for
indebtedness and other Obligations permitted hereunder (which for the avoidance of doubt permitted payments are to include the
debt service payments owed to DANC. and debt service payments to Fognani and Faught, PLLC in an amount not to exceed Fifty Thousand
and No/100 United States Dollars ($50,000) per month); (v) increase the annual salary paid to any officers or directors of the
Credit Parties as of the Effective Date, unless any such increase is part of a written employment contract with any such officers
entered into prior to the Effective Date, a copy of which has been delivered to and approved by the Buyer; or (vi) add, replace,
remove, or otherwise change any directors or officers of the Credit Parties from the directors and officers existing as of the
Effective Date, unless first approved by Buyer in writing, which approval may be granted or withheld or conditioned by Buyer in
its sole and absolute discretion.


 


(g)Use
of Proceeds. The Credit Parties shall not use any portion of the proceeds of the Debentures, either directly or indirectly,
for any of the following purposes: (i) to make any payment towards any indebtedness of the Credit Parties, except payments related
to permitted indebtedness and the Bridge Loans as set forth on the Use of Proceeds Confirmation and approved by Buyer in its sole
and absolute discretion; (ii) to pay any Taxes of any nature or kind that may be due by the Credit Parties, except for those Tax
set forth on the Use of Proceeds Confirmation; or (iii) to pay any Obligations of any nature or kind due or owing to any officers,
directors, employees, or Material Shareholders of the Credit Parties, other than salaries and business expenses payable in the
Ordinary Course of Business of the Credit Parties and the Bridge Loans as set forth on the Use of Proceeds Confirmation and approved
by Buyer in its sole and absolute discretion. Each Credit Party covenants and agrees to only use any portion of the proceeds of
the purchase and sale of the Debentures for the purposes set forth in the Use of Proceeds Confirmation to be executed by the Company
on the Effective Date, unless the Company obtains the prior written consent of the Buyer to use such proceeds for any other purpose,
which consent may be granted or withheld or conditioned by Buyer in its sole and absolute discretion.


 




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(h)Business
Activities; Change of Legal Status and Organizational Documents. The Credit Parties shall not: (i) engage in any line of business
other than the businesses engaged in as of the Effective Date and business reasonably related thereto; (ii) change its name, organizational
identification number (if applicable), its type of organization, its jurisdiction of organization or other legal structure; or
(iii) permit its Certificate of Incorporation, Bylaws or other organizational documents to be amended or modified in any way which
could reasonably be expected to have a Material Adverse Effect.


 


(i)Transactions
with Affiliates. The Credit Parties shall not enter into any transaction with any of its Affiliates, officers, directors,
employees, Material Shareholders or other insiders, except in the Ordinary Course of Business of the Credit Parties and upon fair
and reasonable terms that are no less favorable to the Credit Parties than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate of the Credit Parties.


 


(j)Bank
Accounts. The Credit Parties shall not maintain any bank, deposit, credit card payment processing accounts, or other accounts
with any financial institution, or any other Person, other than the Credit Parties’ accounts listed in the attached Schedule
6.22. Specifically, the Credit Parties may not change, modify, close or otherwise affect any of the accounts listed
in Schedule 6.22 without Buyer’s prior written approval, which approval may be withheld or conditioned in
Buyer’s sole and absolute discretion.


 


 7.2 Affirmative Covenants.




 


(a)Corporate
Existence. The Credit Parties shall at all times preserve and maintain its: (i) existence and good standing in the jurisdiction
of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature of its
business makes such qualification necessary, and shall at all times continue as a going concern in the business which the Credit
Parties are presently conducting.


 


(b)Tax
Liabilities. The Credit Parties shall at all times pay and discharge all Taxes upon, and all Claims (including claims for
labor, materials and supplies) against any Credit Party or any of its properties or Assets, before the same shall become delinquent
and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP are being maintained.


 


(c)Notice
of Proceedings. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall have come
to the attention of any officer of the Credit Parties, give written notice to the Buyer of all threatened or pending Proceedings
before any Governmental Authority or otherwise affecting the Credit Parties or any of its Assets.


 


(d)Material
Adverse Effect. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall have come
to the attention of any officer of the Credit Parties, give written notice to the Buyer of any event, circumstance, fact or other
matter that could in any way have or be reasonably expected to have a Material Adverse Effect.


 




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(e)Notice
of Default. The Credit Parties shall, promptly, but not more than five (5) days after the commencement thereof, give notice
to the Buyer in writing of the occurrence of any “Event of Default” (as such term is defined in any of the Transaction
Documents) or of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default hereunder
or under any other Transaction Documents.


 


(f)Maintain
Property. The Credit Parties shall at all times maintain, preserve and keep all of its Assets in good repair, working order
and condition, normal wear and tear excepted, and shall from time to time, as the Credit Parties deem appropriate in its reasonable
judgment, make all needful and proper repairs, renewals, replacements, and additions thereto so that at all times the efficiency
thereof shall be fully preserved and maintained. The Credit Parties shall permit Buyer to examine and inspect such Assets at all
reasonable times upon reasonable notice during business hours. During the continuance of any Event of Default hereunder or under
any Transaction Documents, the Buyer shall, at the Company’s expense, have the right to make additional inspections without
providing advance notice.


 


(g)Maintain
Insurance. Within thirty (30) days of the First Closing, the Credit Parties shall at all times insure and keep insured with
insurance companies acceptable to Buyer, all insurable property, Assets and businesses owned by the Credit Parties which is of
a character usually insured by companies similarly situated and operating like properties, against loss or damage from fire and
such other hazards or risks as are customarily insured against by companies similarly situated and operating like properties;
and shall similarly insure employers’, public and professional liability risks. Within thirty (30) days of the First Closing,
the Credit Parties shall deliver to the Buyer a certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section. All such policies of insurance must be satisfactory to Buyer in relation to the amount and
term of the Debentures and type and value of the Assets of the Credit Parties, shall identify Buyer as loss payee and as an additional
insured. In the event the Credit Parties fail to provide Buyer with evidence of the insurance coverage required by this Section
or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium
in whole or in part relating thereto, then the Buyer, without waiving or releasing any obligation or default by the Credit Parties
hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay
such premium and take any other action with respect thereto, which Buyer deems advisable. This insurance coverage: (i) may, but
need not, protect the Credit Parties’ interest in such property; and (ii) may not pay any claim made by, or against, the
Credit Parties in connection with such property. The Credit Parties may later request that the Buyer cancel any such insurance
purchased by Buyer, but only after providing Buyer with evidence that the insurance coverage required by this Section is in force.
The costs of such insurance obtained by Buyer, through and including the effective date such insurance coverage is canceled or
expires, shall be payable on demand by the Credit Parties to Buyer, together with interest at the highest non-usurious rate permitted
by law on such amounts until repaid and any other charges by Buyer in connection with the placement of such insurance. The costs
of such insurance, which may be greater than the cost of insurance which the Credit Parties may be able to obtain on its own,
together with interest thereon at the highest non-usurious rate permitted by Law and any other charges incurred by Buyer in connection
with the placement of such insurance may be added to the total Obligations due and owing by the Credit Parties hereunder and under
the Debentures to the extent not paid by the Credit Parties.


 






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(h)ERISA
Liabilities; Employee Plans. The Credit Parties shall: (i) keep in full force and effect any and all Employee Plans which
are presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee
Plans, unless such withdrawal can be effected or such Employee Plans can be terminated without liability to the Credit Parties;
(ii) make contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards
of ERISA, including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate
to such Employee Plans; (iv) notify Buyer immediately upon receipt by the Credit Parties of any notice concerning the imposition
of any withdrawal liability or of the institution of any Proceeding or other action which may result in the termination of any
such Employee Plans or the appointment of a trustee to administer such Employee Plans; (v) promptly advise Buyer of the occurrence
of any “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect
to any such Employee Plans; and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401
of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan
to be administered and operated in a manner that does not cause the Employee Plan to lose its qualified status.


 


(i)Reporting
Status; Listing. So long as Buyer owns, legally or beneficially, any of the Securities, the Company shall: (i) file in a
timely manner all reports required to be filed under the Securities Act, the Exchange Act or any securities Laws and
regulations thereof applicable to the Company of any state of the United States, or by the rules and regulations of the
Principal Trading Market; (ii) not terminate its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; (iii) if required by the
rules and regulations of the Principal Trading Market, promptly secure the listing of any shares of Common Stock issuable to
Buyer under any of the Transaction Documents upon the Principal Trading Market (subject to official notice of issuance) and,
take all reasonable action under its control to maintain the continued listing, quotation and trading of its Common Stock
(including, without limitation, any shares of Common Stock issuable to Buyer under any of the Transaction Documents) on the
Principal Trading Market, and the Company shall comply in all respects with the Company’s reporting, filing and other
Obligations under the bylaws or rules of the Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and
such other Governmental Authorities, as applicable. The Company shall promptly provide to Buyer copies of any notices it
receives from the SEC or any Principal Trading Market, to the extent any such notices could in any way have or be reasonably
expected to have a Material Adverse Effect.


 




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(j)Rule
144. With a view to making available to Buyer the benefits of Rule 144 under the Securities Act (“Rule 144”),
or any similar rule or regulation of the SEC that may at any time permit Buyer to sell shares of Common Stock issuable to Buyer
under any Transaction Documents to the public without registration, the Company represents and warrants that:


 


(i)
the Company is, and has been for a period of at least ninety (90) days immediately preceding the date hereof, subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act; (ii) the Company has filed all required reports under Section
13 or 15(d) of the Exchange Act, as applicable, during the twelve (12) months preceding the First Closing Date (or for such shorter
period that the Company was required to file such reports); and (iii) the Company is not currently an issuer defined as a “Shell
Company” (as hereinafter defined). For the purposes hereof, the term “Shell Company” shall mean an issuer
that meets such a description as defined under Rule 144. In addition, so long as Buyer owns, legally or beneficially, any securities
of the Company, the Company shall, at its sole expense:


 


(ii)Make,
keep and ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144,
is publicly available;


 


(iii)furnish
to the Buyer, promptly upon reasonable request: (A) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably requested
by Buyer to permit the Buyer to sell any of the shares of Common Stock acquired hereunder or under any other Transaction Documents
pursuant to Rule 144 without limitation or restriction; and


 




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(iv)promptly
at the request of Buyer, give the Company’s transfer agent (the “Transfer Agent”) instructions
to the effect that, upon the Transfer Agent’s receipt from Buyer of a certificate (a “Rule 144 Certificate”)
certifying that Buyer’s holding period (as determined in accordance with the provisions of Rule 144) for any portion of
the shares of Common Stock issuable under any Transaction Document which Buyer proposes to sell (or any portion of such shares
which Buyer is not presently selling, but for which Buyer desires to remove any restrictive legends applicable thereto) (the “Securities
Being Sold”) is not less than six (6) months, and receipt by the Transfer Agent of the “Rule 144 Opinion”
(as hereinafter defined) from the Company or its counsel (or from Buyer and its counsel as permitted below), the Transfer Agent
is to effect the transfer (or issuance of a new certificate without restrictive legends, if applicable) of the Securities Being
Sold and issue to Buyer or transferee(s) thereof one or more stock certificates representing the transferred (or re-issued) Securities
Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the
Transfer Agent’s books and records. In this regard, upon Buyer’s request, the Company shall have an affirmative obligation
to cause its counsel to promptly issue to the Transfer Agent a legal opinion providing that, based on the Rule 144 Certificate,
the Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration
statement (the “Rule 144 Opinion”). If the Transfer Agent requires any additional documentation in connection
with any proposed transfer (or re-issuance) by Buyer of any Securities Being Sold, the Company shall promptly deliver or cause
to be delivered to the Transfer Agent or to any other Person, all such additional documentation as may be necessary to effectuate
the transfer (or re issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Buyer or
any transferee thereof, all at the Company’s expense. Any and all fees, charges or expenses, including, without limitation,
reasonable attorneys’ fees and costs, incurred by Buyer in connection with issuance of any such shares, or the removal of
any restrictive legends thereon, or the transfer of any such shares to any assignee of Buyer, shall be paid by the Company, and
if not paid by the Company, the Buyer may, but shall not be required to, pay any such fees, charges or expenses, and the amount
thereof, together with interest thereon at the highest non-usurious rate permitted by law, from the date of outlay, until paid
in full, shall be due and payable by the Company to Buyer immediately upon demand therefor, and all such amounts shall be additional
Obligations of the company to Buyer secured under the Transaction Documents. Buyer shall endeavor to use counsel designated by
the Company for any Rule 144 Opinion. In the event that the Company and/or its counsel refuses or fails for any reason to render
the Rule 144 Opinion or any other documents, certificates or instructions required to effectuate the transfer (or re-issuance)
of the Securities Being Sold and the issuance of an unlegended certificate to any such Buyer or any transferee thereof, then:
(A) to the extent the Securities Being Sold could be lawfully transferred (or re-issued) without restrictions under applicable
laws, Company’s failure to promptly provide the Rule 144 Opinion or any other documents, certificates or instructions required
to effectuate the transfer (or re-issuance)of the Securities Being Sold and the issuance of an unlegended certificate to any such
Buyer or any transferee thereof shall be an immediate Event of Default under this Agreement and all other Transaction Documents;
and (B) the Company hereby agrees and acknowledges that Buyer is hereby irrevocably and expressly authorized to have counsel to
Buyer render any and all opinions and other certificates or instruments which may be required for purposes of effectuating the
transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Buyer or any
transferee thereof, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Company, transfer or re-issue any such Securities Being Sold as instructed by Buyer and its counsel.


 




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(k)Matters
With Respect to Securities.


 


(i)Issuance
of Conversion Shares.The parties hereto acknowledge that pursuant to the terms of the Debentures, Buyer has the right,
at its discretion during the continuance of any Event of Default hereunder or under any Transaction Documents, to convert amounts
due under the Debentures into Common Stock in accordance with the terms of the Debentures. In the event, for any reason, the Company
fails to issue, or cause its Transfer Agent to issue, any portion of the Common Stock issuable upon conversion of the Debentures
(the “Conversion Shares”) to Buyer in connection with the exercise by Buyer of any of its conversion
rights under the Debentures, then the parties hereto acknowledge that Buyer shall irrevocably be entitled to deliver to the Transfer
Agent, on behalf of itself and the Company, a “Conversion Notice” (as defined in the Debentures) requesting the issuance
of the Conversion Shares then issuable in accordance with the terms of the Debentures, and the Transfer Agent, provided they are
the acting transfer agent for the Company at the time, shall, and the Company hereby irrevocably authorizes and directs the Transfer
Agent to, without any further confirmation or instructions from the Company, issue the Conversion Shares applicable to the Conversion
Notice then being exercised, and surrender to a nationally recognized overnight courier for delivery to Buyer at the address specified
in the Conversion Notice, a certificate of the Common Stock of the Company, registered in the name of Buyer or its nominee, for
the number of Conversion Shares to which Buyer shall be then entitled under the Debentures, as set forth in the Conversion Notice.


 


(ii)Removal
of Restrictive Legends. In the event that Buyer has any shares of the Company’s Common Stock bearing any restrictive
legends, and Buyer, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal
of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration
requirements under the Securities Act, or otherwise, and the Company and or its counsel refuses or fails for any reason to render
an opinion of counsel or any other documents or certificates required for the removal of the restrictive legends, then the Company
hereby agrees and acknowledges that Buyer is hereby irrevocably and expressly authorized to have counsel to Buyer render any and
all opinions and other certificates or instruments which may be required for purposes of removing such restrictive legends, and
the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions
from the Company, issue any such shares without restrictive legends as instructed by Buyer, and surrender to a common carrier
for overnight delivery to the address as specified by Buyer, certificates, registered in the name of Buyer or its designees or
nominees, representing the shares of Common Stock to which Buyer is entitled, without any restrictive legends and otherwise freely
transferable on the books and records of the Company.


 


(iii)Authorized
Agent of the Company. The Company hereby irrevocably appoints the Buyer and its counsel and its representatives, each as the
Company’s duly authorized agent and attorney-in-fact for the Company for the purposes of authorizing and instructing the
Transfer Agent to process issuances, transfers and legend removals upon instructions from Buyer, or any counsel or representatives
of Buyer, as specifically contemplated herein. The authorization and power of attorney granted hereby is coupled with an interest
and is irrevocable so long as any obligations of the Company under Debentures remain outstanding, and so long as the Buyer owns
or has the right to receive, any shares of the Company’s Common Stock hereunder or under any Transaction Documents. In this
regard, the Company hereby confirms to the Transfer Agent and the Buyer that it can NOT and will NOT give instructions,
including stop orders or otherwise, inconsistent with the terms of this Agreement with regard to the matters contemplated herein,
and that the Buyer shall have the absolute right to provide a copy of this Agreement to the Transfer Agent as evidence of the
Company’s irrevocable authority for Buyer and Transfer Agent to process issuances, transfers and legend removals upon instructions
from Buyer, or any counsel or representatives of Buyer, as specifically contemplated herein, without any further instructions,
orders or confirmations from the Company.


 




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(iv)Injunction
and Specific Performance. The Company specifically acknowledges and agrees that in the event of a breach or threatened breach
by the Company of any provision of this Section 7.2(j), the Buyer will be irreparably damaged and that damages at law would
be an inadequate remedy if this Agreement were not specifically enforced. Therefore, in the event of a breach or threatened breach
of any provision of this Section 7.2(k) by the Company, the Buyer shall be entitled to obtain, in addition to all other
rights or remedies Buyer may have, at law or in equity, an injunction restraining such breach, without being required to show
any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of this
Section 7.2(k).


 


(l)Continued
Due Diligence/Field Audits. The Company acknowledges that during the term of this Agreement, Buyer and its agents and representatives
undertake ongoing and continuing due diligence reviews of the Credit Parties and its business and operations. Such ongoing due
diligence reviews may include, and the Credit Parties do hereby agree to allow Buyer, to conduct site visits and field examinations
of the office locations of the Credit Parties, and the Assets and records of each of them, the results of which must be satisfactory
to Buyer in Buyer’s sole and absolute discretion. In this regard, in order to cover Buyer’s expenses of the ongoing
due diligence reviews and any site visits or field examinations which Buyer may undertake from time to time while this Agreement
is in effect, the Company shall pay to Buyer, within five (5) Business Days after receipt of an invoice or demand therefor from
Buyer, a fee of up to $10,000 per year (based on four (4) expected filed audits and ongoing due diligence of $2,500 per visit
or audit) to cover such ongoing expenses. Failure to pay such fee as and when required shall be deemed an Event of Default under
this Agreement and all other Transaction Documents. The foregoing notwithstanding, from and after the occurrence of an Event of
Default or any event which with notice, lapse of time or both, would become an Event of Default, Buyer may conduct site visits,
field examinations and other ongoing reviews of the Credit Parties’ records, Assets and operations at any time, in its sole
discretion, without any limitations in terms of number of site visits or examinations and without being limited to the fee hereby
contemplated, all at the sole expense of the Company.


 


7.3Reporting
Requirements. The Credit Parties agree as follows:


 


(a)Financial
Statements. The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and
consolidated (if applicable) financial statements in compliance with GAAP (provided that monthly financial statements shall not
be required to have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish
to the Buyer or its authorized representatives such information regarding the business affairs, operations and financial condition
of the Credit Parties as Buyer may from time to time request or require, including:


 




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(i)As
soon as available, and in any event, within ninety (90) days after the close of each fiscal year, a copy of the annual audited
financial statements of the Company, including balance sheet, statement of income and retained earnings, statement of cash flows
for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably
acceptable to Buyer, containing an unqualified opinion of such accountant;


 


(ii)as
soon as available, and in any event, within sixty (60) days after the close of each fiscal quarter, a copy of the quarterly financial
statements of the Company, including balance sheet, statement of income and retained earnings, statement of cash flows for the
fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the CEO or CFO of
the Company;


 


(iii)as
soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of the financial
statements of the Company regarding such month, including balance sheet, statement of income and retained earnings, statement
of cash flows for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by the
CEO or CFO of the Company.


 


No
change with respect to the accounting principles shall be made by the Credit Parties without giving prior notification to Buyer.
The Credit Parties represent and warrant to Buyer that the financial statements delivered to Buyer at or prior to the execution
and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the
financial condition of the Credit Parties in all material respects. Buyer shall have the right at all times (and on reasonable
notice so long as there then does not exist any Event of Default) during business hours to inspect the books and records of the
Credit Parties and make extracts therefrom.


 


(b)Additional
Reporting Requirements. The Company shall provide the following reports and statements to Buyer as follows:


 


(i)Income
Projections; Variance. Within ten (10) days after the Effective Date, the Company shall provide to Buyer an income statement
projection showing, in reasonable detail, the Company’s income statement projections for the twelve (12) calendar months
following the Effective Date (the “Income Projections”). In addition, on the fifteenth (15th)
day of every calendar month after the Effective Date, the Company shall provide to Buyer a report comparing the Income Projections
to actual results. Any variance in the Income Projections to actual results that is more than ten percent (10%) (either above
or below) will require the Company to submit to Buyer written explanations as to the nature and circumstances for the variance.


 




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(ii)Use
of Proceeds; Variance. On the fifteenth (15th) day of every calendar month after the Effective Date, the Company
shall provide to Buyer a report comparing the use of the proceeds from the sale of Debentures set forth in the Use of Proceeds
Confirmation, with the actual use of such proceeds. Any variance in the actual use of such proceeds from the amounts set forth
in the approved Use of Proceeds Confirmation that is more than ten percent (10%) (either above or below) will require the Company
to submit to Buyer written explanations as to the nature and circumstances for the variance.


 


(iii)Bank
Statements. The Company shall submit to Buyer true and correct copies of all bank statements received by the Credit Parties
within five (5) days after the Credit Parties’ receipt thereof from its bank.


 


(iv)Interim
Reports. Promptly upon receipt thereof, the Company shall provide to Buyer copies of interim and supplemental reports,
if any, submitted to the Company by independent accountants in connection with any interim audit or review of the books of the
Credit Parties.


 


(v)Aged
Accounts/Payables Schedules. The Company shall, on the fifteenth (15th) day of each and every calendar month,
deliver to Buyer an aged schedule of the accounts receivable of the Credit Parties, listing the name and amount due from each
Person and showing the aggregate amounts due from: (i) 0-30 days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120 days; and
(v) more than 120 days, and certified as accurate by the CEO or CFO of the Company. The Company shall, on the fifteenth
(15th) day of each and every calendar month, deliver to Buyer an aged schedule of the accounts payable of the
Credit Parties, listing the name and amount due to each creditor and showing the aggregate amounts due from: (v) 0-30 days;
(w) 31-60 days; (x) 61-90 days; (y) 91-120 days; and (z) more than 120 days, and certified as accurate by the CEO or CFO of
the Company.


 


(c)Failure
to Provide Reports. So long as Buyer owns, legally or beneficially, any of the Securities, if the Company shall fail to timely
provide any reports required to be provided by the Company and/or Guarantors to the Buyer under this Agreement or any other Transaction
Document, in addition to all other rights and remedies that Buyer may have under this Agreement and the other Transaction Documents,
Buyer shall have the right to require, at each instance of any such failure, upon written notice to the Company, that the Company
redeem 2.5% of the aggregate amount of the Advisory Fee then outstanding, which cash redemption payment shall be due and payable
by wire transfer of Dollars to an account designated by Buyer within five (5) Business Days from the date the Buyer delivers such
redemption notice to the Company.


 


(d)Covenant
Compliance. The Company shall, within thirty (30) days after the end of each calendar month, deliver to Buyer a Compliance
Certificate, confirming compliance by the Company with the covenants therein, and certified as accurate by an officer of
the Company.


 


(e)View
Only Access. The Credit Parties shall provide Buyer view only access to any and all accounts listed on the attached Schedule
6.22.


 




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7.4Fees
and Expenses.


 


(a)Transaction
Fees. The Company agrees to pay to Buyer a transaction advisory fee equal to one percent (1%) of the amount of the Debentures
purchased by Buyer at the First Closing, which fee shall be due and payable on the Effective Date and withheld from the gross
purchase price paid by Buyer for the Debentures. In the event of any Additional Closings, the Company shall pay to Buyer a transaction
advisory fee equal to one percent (1%) of the amount of the Debentures purchased by Buyer at any such Additional Closings, which
fee shall be due and payable upon such Additional Closing and withheld from the gross purchase price paid by Buyer for the Debentures
at such Additional Closing.


 


(b)Due
Diligence Fees. The Company agrees to pay to the Buyer a due diligence fee equal to Fifteen Thousand and No/100 United States
Dollars ($15,000.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be
due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.


 


(c)Document
Review and Legal Fees. The Company agrees to pay to the Buyer or its counsel a document review and legal fee equal to Twenty
Thousand and No/100 United States Dollars ($20,000.00), which shall be due and payable in full on the Effective Date, or any remaining
portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term
sheet related to this Agreement. The Company also agrees to be responsible for the prompt payment of all legal fees and expenses
of the Company and its own counsel and other professionals incurred by the Company in connection with the negotiation and execution
of this Agreement and the Transaction Documents.


 


(d)Other
Fees. The Company also agrees to pay to the Buyer (or any designee of the Buyer), upon demand, or to otherwise be responsible
for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements
of counsel for the Buyer and of any experts and agents, which the Buyer may incur or which may otherwise be due and payable in
connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, subordination,
waiver or other modification or termination of this Agreement or any other Transaction Documents; (ii) any documentary stamp taxes,
intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental
Authority in connection with this Agreement or any other Transaction Documents; (iii) the exercise or enforcement of any of the
rights of the Buyer under this Agreement or the Transaction Documents; or (iv) the failure by the Credit Parties to perform or
observe any of the provisions of this Agreement or any of the Transaction Documents. Included in the foregoing shall be the amount
of all expenses paid or incurred by Buyer in consulting with counsel concerning any of its rights under this Agreement or any
other Transaction Document or under applicable law. To the extent any such costs, fees, charges, taxes or expenses are incurred
prior to the funding of proceeds from the Closing, same shall be paid directly from the proceeds of the Closing. All such costs
and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid,
at the highest rate set forth in the Debenture, or if none is so stated, the highest rate allowed by law. All of such costs and
expenses shall be additional Obligations of the Credit Parties to Buyer secured under the Transaction Documents. The provisions
of this Subsection shall survive the termination of this Agreement.


 




    	 	32	 



    	 		 



    


 


7.5Advisory
Fee. The Company agrees to pay a cash advisory fee equal to Three Hundred Thousand and No/100 United States Dollars (US$300,000)
(the “Advisory Fee”), which shall be due and payable in full on the Effective Date. The Credit Parties each
acknowledge and agree that fees pursuant to this Section have been fully earned by the Buyer as of the Effective Date and the
Buyer has paid full consideration for such fees as of the Effective Date.


 


7.6Share
Reserve. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance,
three (3) times such number of shares of Common Stock as shall be necessary to effect the issuance of the Conversion Shares under
this Agreement or any other Transaction Documents (collectively, the “Share Reserve”). The Company represents
that it has sufficient authorized and unissued shares of Common Stock available to create the Share Reserve after considering
all other commitments that may require the issuance of Common Stock. The Company shall take all action reasonably necessary to
at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the full conversion of the Debentures that may be issuable hereunder. If upon receipt of a conversion notice from the
Buyer, the Share Reserve is insufficient to effect the full conversion of the Debentures that may be issuable hereunder, the Company
shall take all required measures to implement an increase of the Share Reserve accordingly. If the Company does not have sufficient
authorized and unissued shares of Common Stock available to increase the Share Reserve, the Company shall cause its authorized
and unissued shares to be increased within forty-five (45) days to an amount of shares equal to three (3) times the Conversion
Shares.


 


7.7Subsidiaries.
Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of any Credit Party following the date hereof, within
ten (10) Business Days of such event, shall become an additional party hereto and guarantor of the Company’s Obligation
hereunder, and the Company shall take any and all actions necessary or advisable to cause said Subsidiary to execute a counterpart
to this Agreement and any and all other documents which the Buyer shall require. “Subsidiary” shall mean, respectively,
each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships
or other entities of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined
voting power of all classes of stock/units having general voting power under ordinary circumstances to elect a majority of the
board of directors of such entity if a corporation; (ii) the management authority and capital interest or profits interest of
such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint venture or
similar entity; or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization.


 




    	 	33	 



    	 		 



    


 


ARTICLE
VIII


CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL


 


The
obligation of the Company hereunder to issue and sell the Securities to the Buyer at the Closings is subject to the satisfaction,
at or before the respective Closing Dates, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion:


 


8.1
Buyer shall have executed the Transaction Documents and delivered them to the Company.


 


8.2
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Dates as though made at that time (except for representations and warranties that speak as of a specific date),
and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Dates.


 


8.3
The Company shall have received such certificates, confirmations, resolutions, acknowledgements or other documentation necessary
or advisable from all applicable Governmental Authorities, including, but not limited to, those located in the State of Nevada,
as the Company may require in order to evidence such Governmental Authorities’ approval of this Agreement, the Transaction
Documents and the purchase of the Debentures contemplated hereby.


 


ARTICLE
IX


CONDITIONS
PRECEDENT TO THE BUYER’S OBLIGATIONS TO PURCHASE


 


The
obligation of the Buyer hereunder to purchase the Debentures at the Closings is subject to the satisfaction, at or before each
applicable Closing Date, of each of the following conditions (in addition to any other conditions precedent elsewhere in this
Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in
its sole discretion:


 


9.1
First Closing. The obligation of the Buyer hereunder to purchase the Debentures at the First Closing is subject to the
satisfaction, at or before the First Closing Date, of each of the following conditions (in addition to any other conditions precedent
elsewhere in this Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer
at any time in its sole discretion:


 


(a)
The Company, each Guarantor and/or the Chief Executive Officer (as applicable) shall have executed and delivered the Transaction
Documents applicable to the First Closing and delivered the same to the Buyer.


 



    	 	34	 



    	 		 



    

 


(b)
The representations and warranties of the Credit Parties shall be true and correct in all material respects (except to the extent
that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such
representations and warranties shall be true and correct in all respects without further qualification) as of the date when made
and as of the First Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date) and the Credit Parties shall have performed, satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the Credit Parties at or prior to the
First Closing Date.


 


(c)
The Buyer shall have received an opinion of counsel from counsel to the Credit Parties in a form satisfactory to the Buyer and
its counsel.


 


(d)
The Buyer shall have received evidence in a form satisfactory to the Buyer that the Company has authorized the Buyer to publish
such press releases with respect to this Agreement and the instant transaction, including, but not limited to, a copy of an email
delivered to Marketwire.com by the Company whereby the Company authorizes the Buyer to use its name and, if applicable, stock
symbol, in connection with current or future press releases.


 


(e)
The Credit Parties shall have executed and delivered to Buyer a closing certificate, certified as true, complete and correct by
an officer of the Credit Parties, in substance and form required by Buyer, which closing certificate shall include and attach
as exhibits: (i) a true copy of a certificate of good standing evidencing the formation and good standing of the Credit Parties
from the secretary of state (or comparable office) from the jurisdiction in which the each Credit Party is formed; (ii) the Credit
Parties’ Organizational Documents; (iii) copies of the resolutions of the board of directors of the Credit Parties as adopted
by the Credit Parties’ board of directors or managers, in a form acceptable to Buyer; and (iv) resolution of the Guarantor’s
shareholders, approving and authorizing the execution, delivery and performance of the Transaction Documents to which it is party
and the transactions contemplated thereby, in a form acceptable to the Buyer.


 


(g)
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


 


(h)
The Buyer shall have received copies of UCC search reports, issued by the Secretary of State of the state of incorporation or
residency, as applicable, of the Credit Parties, dated such a date as is reasonably acceptable to Buyer, listing all effective
financing statements which name the Credit Parties, under their present name and any previous names, as debtors, together with
copies of such financing statements.


 


(i)
The Credit Parties shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may require
to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and
joint disbursement instructions as may be required by Buyer.


 



    	 	35	 



    	 		 



    

 


9.2
Additional Closing. Provided the Buyer is to purchase additional Debentures in accordance with Section 4.4 at an
Additional Closing, the obligation of the Buyer hereunder to accept and purchase the Debentures at any Additional Closing is subject
to the satisfaction, at or before the Additional Closing Date, of each of the following conditions:


 


(a)
The Credit Parties shall have executed the Transaction Documents applicable to the Additional Closing and delivered the same to
the Buyer.


 


(b)
The representations and warranties of the Credit Parties shall be true and correct in all material respects (except to the extent
that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such
representations and warranties shall be true and correct in all respects without further qualification) as of the date when made
and as of the Additional Closing Date as though made at that time (except for representations and warranties that speak as of
a specific date) and the Credit Parties shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Credit Parties at or prior
to the Additional Closing Date.


 


(c)
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


 


(d)
No default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Documents,
and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or
an Event of Default under this Agreement or any other Transaction Documents.


 


(e)
The Credit Parties shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may require
to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and
joint disbursement instructions as may be required by Buyer.


 



    	 	36	 



    	 		 



    

 


ARTICLE
X


INDEMNIFICATION


 


10.1
Company’s and the Guarantors’ Obligation to Indemnify. In consideration of the Buyer’s execution and
delivery of this Agreement and acquiring the Securities hereunder, and in addition to all of the Company’s and the Guarantors’
other obligations under this Agreement, the Company and each Guarantor hereby agrees to defend and indemnify Buyer and its Affiliates
and subsidiaries and their respective directors, officers, employees, agents and representatives, and the successors and assigns
of each of them (collectively, the “Buyer Indemnified Parties”) and Company and each Guarantor does
hereby agree to hold the Buyer Indemnified Parties forever harmless, from and against any and all Claims made, brought or asserted
against the Buyer Indemnified Parties, or any one of them, and Company and each Guarantor hereby agrees to pay or reimburse the
Buyer Indemnified Parties for any and all Claims payable by any of the Buyer Indemnified Parties to any Person, including reasonable
attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of investigation and interest
thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable Law, through all
negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any
misrepresentation or breach of any representation or warranty made by the Company and the Guarantors in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement
or Obligation of the Company and the Guarantors contained in this Agreement, the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made against the Buyer Indemnified Parties,
or any one of them, by a third party and arising out of or resulting from the execution, delivery, performance or enforcement
of this Agreement, the Transaction Documents or any other instrument, document or agreement executed pursuant hereto or thereto,
any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the
Debentures, or the status of the Buyer or holder of any of the Securities, as a buyer and holder of such Securities in the Company.
To the extent that the foregoing undertaking by the Company and the Guarantors may be unenforceable for any reason, the Company
and the Guarantors shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which
is permissible under applicable Law.


 


ARTICLE
XI


MISCELLANEOUS


 


11.1
Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:


 


	If
    to the Company:	Star
    Mountain Resources, Inc.
	 	8307
    Shaffer Parkway, Suite 201
	 	Littleton,
    CO 80127
	 	Attention:
    Wayne Rich 
	 	E-Mail:
    wrich@starmountainresources.com
	 	 
	With
    a copy to:	Legal
    & Compliance LLC
	(which
    shall not constitute notice)	330
    Clematis Street, Suite 217
	 	West
    Palm Beach, FL 33401





	 	Attention:	Laura
    Anthony, Esq.
	 	 	Lazarus
    Rothstein, Esq. 





	 	E-Mail:
    	lanthony@legalandcompliance.com
	 	 	lrothstein@legalandcompliance.com
	 	 	 
	If
    to the Buyer:	TCA
    Global Credit Master Fund, LP 
	 	3960
    Howard Hughes Parkway, Suite 500
	 	Las
    Vegas, NV 89169
	 	Attn:
    Mr. Robert Press
	 	E-Mail:
    bpress@tcaglobalfund.com
	 	 
	With
    a copy to:	Lucosky
    Brookman LLP
	(which
    shall not constitute notice)	101
    Wood Avenue South, 5th Floor 
	 	Woodbridge,
    NJ 08830
	 	Attn:
    Seth A. Brookman, Esq. 
	 	E-Mail:
    sbrookman@lucbro.com


 



    	 	37	 



    	 		 



    

 


unless
the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed
delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below,
then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal
Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day
after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand
delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00
p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or
other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be
deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation
from the receiving party) that the notice has been received by the other party.


 


11.2
Obligations Absolute. None of the following shall affect the Obligations of the Company and the Guarantors to Buyer under
this Agreement, Buyer’s rights with respect to the Collateral or any other Transaction Documents:


 


(a)
acceptance or retention by Buyer of other property or any interest in property as security for the Obligations;


 


(b)
release by Buyer of all or any part of the Collateral or of any party liable with respect to the Obligations (other than Company
and the Guarantors);


 


(c)
release, extension, renewal, modification or substitution by Buyer of the debentures or any other Transaction Documents; or


 


(d)
failure of Buyer to resort to any other security or to pursue the Company or any other obligor liable for any of the Obligations
of the Company and the Guarantors hereunder before resorting to remedies against the Collateral.


 


11.3
Entire Agreement. This Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against the
Company, the Guarantors and Buyer in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii)
constitute the entire agreement between the parties; and (iii) are the final expression of the intentions of the Company, the
Guarantors and Buyer. No promises, either expressed or implied, exist between the Company, the Guarantors and Buyer, unless contained
herein or in the Transaction Documents. This Agreement and the Transaction Documents supersede all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the
execution hereof.


 



    	 	38	 



    	 		 



    

 


11.4
Amendments; Waivers. No amendment, modification, termination, discharge or waiver of any provision of this Agreement or
of the Transaction Documents, or consent to any departure by the Company or the Guarantors therefrom, shall in any event be effective
unless the same shall be in writing and signed by Buyer, and then such waiver or consent shall be effective only for the specific
purpose for which given.


 


11.5
WAIVER OF JURY TRIAL. BUYER, THE COMPANY AND THE GUARANTORS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR ANY
OF THE OBLIGATIONS HEREUNDER, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH
THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH BUYER AND THE COMPANY AND/OR THE GUARNATORS ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BUYER PURCHASING THE DEBENTURES.


 


11.6
MANDATORY FORUM SELECTION. TO INDUCE BUYER TO PURCHASE THE DEBENTURES, THE COMPANY AND GUARANTORS IRREVOCABLY AGREE THAT
ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER
WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER TRANSACTION DOCUMENT (WHETHER OR NOT SUCH CLAIM IS BASED UPON
BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED
IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, BUYER MAY, AT BUYER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER
JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED
CONSISTENT WITH FLORIDA LAW. EACH CREDIT PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING ITS SITUS IN SAID COUNTY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. EACH CREDIT PARTY HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO THE COMPANY AND GUARANTORS AS SET FORTH HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE
OF COURT OR OTHERWISE.


 



    	 	39	 



    	 		 



    

 


11.7
Assignability. Buyer may at any time assign Buyer’s rights in this Agreement, the Debentures, any Transaction Document,
or any part thereof and transfer Buyer’s rights in any or all of the Collateral, and Buyer thereafter shall be relieved
from all liability with respect to such Collateral. In addition, Buyer may at any time sell one or more participations in the
Debentures. The Company and the Guarantors may not sell or assign this Agreement, any Transaction Document or any other agreement
with Buyer, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder
or thereunder, without the prior written consent of Buyer, which consent may be withheld or conditioned in Buyer’s sole
and absolute discretion. This Agreement shall be binding upon Buyer, the Guarantors and the Company and their respective legal
representatives, successors and permitted assigns. All references herein to a Company or the Guarantor shall be deemed to include
any successors, whether immediate or remote. In the case of a joint venture or partnership, the term “Company”, or
“Guarantor” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally
liable hereunder.


 


11.8
Publicity. Buyer shall have the right to approve, before issuance, any press release or any other public statement with
respect to the transactions contemplated hereby made by the Company; provided, however, that the Company shall be entitled, without
the prior approval of Buyer, to issue any press release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations. Notwithstanding the foregoing, the Company shall use its best efforts
to consult Buyer in connection with any such press release or other public disclosure prior to its release and Buyer shall be
provided with a copy thereof upon release thereof. Buyer shall have the right to make any press release with respect to the transactions
contemplated hereby without Company’s approval. In addition, with respect to any press release to be made by Buyer, the
Company hereby authorizes and grants blanket permission to Buyer to include the Company’s stock symbol, if any, in any press
releases. The Company shall, promptly upon request, execute any additional documents of authority or permission as may be requested
by Buyer in connection with any such press releases.


 


11.9
Binding Effect. This Agreement shall become effective upon execution by the Company, the Guarantors and Buyer.


 


11.10
Governing Law. Except in the case of the Mandatory Forum Selection Clause in Section 11.6 above, which clause shall
be governed and interpreted in accordance with Florida law, this Agreement and all other Transaction Documents shall be delivered
and accepted in and shall be deemed to be contracts made under and governed by the internal laws of the State of Nevada, and for
all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions
of such State.


 



    	 	40	 



    	 		 



    

 


11.11
Enforceability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under
any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.


 


11.11
Survival of Company’s and the Guarantors’ Representations. All covenants, agreements, representations and warranties
made by the Company and the Guarantors herein shall, notwithstanding any investigation by Buyer, be deemed material and relied
upon by Buyer and shall survive the making and execution of this Agreement and the Transaction Documents and the sale and purchase
of the Debentures, and shall be deemed to be continuing representations and warranties until such time as the Company and the
Guarantors have fulfilled all of its Obligations to Buyer hereunder and under all other Transaction Documents, and Buyer has been
indefeasibly paid in full.


 


11.12
Time of Essence. Time is of the essence in making payments of all amounts due Buyer under this Agreement and the other
Transaction Documents and in the performance and observance by the Company and the Guarantors of each covenant, agreement, provision
and term of this Agreement and the other Transaction Documents. The parties agree that in the event that any date on which performance
is to occur falls on a day other than a Business Day, then the time for such performance shall be extended until the next Business
Day thereafter occurring.


 


11.13
Release. In consideration of the mutual promises and covenants made herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Company and the Guarantors
hereby agree to fully, finally and forever release and forever discharge and covenant not to sue Buyer, and/or any other Buyer
Indemnified Parties from any and all Claims, debts, fees, attorneys’ fees, liens, costs, expenses, damages, sums of money,
accounts, bonds, bills, covenants, promises, judgments, charges, demands, causes of action, suits, Proceedings, liabilities, expenses,
Obligations or Contracts of any kind whatsoever, whether in law or in equity, whether asserted or unasserted, whether known or
unknown, fixed or contingent, under statute or otherwise, from the beginning of time through the Effective Date, including, without
limiting the generality of the foregoing, any and all Claims relating to or arising out of any financing transactions, credit
facilities, debentures, security agreements, and other agreements including each of the Transaction Documents, entered into by
the Company and the Guarantors with Buyer and any and all Claims that the Company and the Guarantors do not know or suspect to
exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially affect their
decision to enter into this Agreement or the related Transaction Documents.


 


11.15
Interpretation. If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such
body interpreting or construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed
against one party because of the rule that an instrument must be construed more strictly against the party which itself or through
its agents prepared the same. The parties hereby agree that all parties and their agents have participated in the preparation
hereof equally.


 



    	 	41	 



    	 		 



    

 


11.16
Compliance with Federal Law. The Company shall: (i) ensure that no Person who owns a controlling interest in or otherwise
controls the Company is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included in any
Executive Orders or any other similar lists from any Governmental Authority, foreign or national; (ii) not use or permit the use
of the proceeds of the Debentures to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto, or any other similar national or foreign governmental regulations; and (iii) comply with all applicable
Lender Secrecy Act laws and regulations, as amended. As required by federal law and Buyer’s policies and practices, Buyer
may need to obtain, verify and record certain customer identification information and documentation in connection with opening
or maintaining accounts or establishing or continuing to provide services.


 


11.17
Termination. Upon payment in full of all outstanding Debentures purchased hereunder, together with all other charges, fees
and costs due and payable under this Agreement or under any of the Transaction Documents, this Agreement and all of the Transaction
Documents shall automatically terminate and Buyer agrees to assist the Company in securing the immediate release of any and all
collateral rights held by the Buyer.


 


11.18
Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.


 


11.19
Execution. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and
considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each
party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf’ format file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as
if such facsimile or “.pdf’ signature page was an original thereof.


 


11.20
Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement.


 


11.21
Further Assurances. The Company and the Guarantors will execute and deliver such further instruments and do such further
acts and things as may be reasonably required by Buyer to carry out the intent and purposes of this Agreement.


 


11.22
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


 


[signature
pages follow]


 



    	 	42	 



    	 		 



    

 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.


 


	COMPANY:	 
	 	 
	STAR
    MOUNTAIN RESOURCES, INC.	 
	 	 	 
	By:	/s/
    Wayne Rich	 
	Name:	Wayne
    Rich	 
	Title:	Chief
    Financial Officer	 


 


	STATE
    OF ________________	)
	 	)  SS.
	COUNTY
    OF ______________	)


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Wayne Rich, the Chief
Financial Officer of Star Mountain Resources, Inc., a Nevada corporation, who is personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed
and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 	 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	 
	 	 	 
	 	 	 


 



    	 	43	 



    	 		 



    







 


BUYER:


 


TCA
GLOBAL CREDIT MASTER FUND, LP


 


	By:
    	TCA
    Global Credit Master Fund GP, Ltd. 
	Its:
    	General
    Partner


 


	By:
    	/s/
    Robert Press	 
	Name:
    	Robert
    Press	 
	Title:	Managing
    Director	 


 



    	 	44	 



    	 		 



    







 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


GUARANTOR:


 


BOLCAN
MINING CORPORATION


 


	By:	 	 
	Name:	Mark
    Osterberg	 
	Title:	President	 


 


	STATE
    OF ________________	)
	 	)  SS.
	COUNTY
    OF ______________	)


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Mark, the President of
Bolcan Mining Corporation, a Nevada corporation, who is personally known to me to be the same person whose name is subscribed
to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said
instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes
therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 	 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	 
	 	 	 
	 	 	 


 



    	 	45	 



    	 		 



    







 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	BALMAT HOLDING CORP.	 
	 	 	 
	By:	/s/
    Wayne Rich	 
	Name:	Wayne
    Rich	 
	Title:	Chief
    Financial Officer	 


 


	STATE
    OF ________________	)
	 	)  SS.
	COUNTY
    OF ______________	)


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Wayne Rich, the Chief
Financial Officer of Balmat Holding Corp., a Nevada corporation, who is personally known to me to be the same person whose name
is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered
the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses
and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 	 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	 
	 	 	 
	 	 	 


 



    	 	46	 



    	 		 



    







 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR:
    	 
	 	 
	ST.
    LAWRENCE ZINC COMPANY, LLC	 
	 	 	 
	By:	/s/
    Wayne Rich	 
	Name:	Wayne
    Rich	 
	Title:	Chief
    Financial Officer	 


 


	STATE
    OF ________________	)
	 	)  SS.
	COUNTY
    OF ______________	)


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Wayne Rich, the Chief
Financial Officer of St. Lawrence Zinc Company, LLC, a Delaware limited liability company, who is personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that
he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 	 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	 
	 	 	 
	 	 	 


 



    	 	47	 



    	 		 



    







 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR:
    	 
	 	 
	NORTHERN
    ZINC LLC	 
	 	 	 
	By:
    	/s/
    Wayne Rich	 
	Name:
    	Wayne
    Rich	 
	Title:
    	Chief
    Financial Officer	 


 


	STATE
    OF ________________	)
	 	)  SS.
	COUNTY
    OF ______________	)


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Wayne Rich, the Chief
Financial Officer of Northern Zinc LLC, a Delaware limited liability company, who is personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed
and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 	 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	 
	 	 	 
	 	 	 


 



    	 	48	 



    	 		 



    







 


EXHIBIT
A


 


FORM
OF DEBENTURE


 



    	 	49	 



    	 		 



    







 


EXHIBIT
B


 


FORM
OF SECURITY AGREEMENT


 



    	 	50	 



    	 		 



    







 


EXHIBIT
C


 


FORM
OF MORTGAGE


 



    	 	51	 



    	 		 



    







 


EXHIBIT
D


 


FORM
OF GUARANTY


 



    	 	52	 



    	 		 



    







 


EXHIBIT
E


 


FORM
OF PLEDGE AGREEMENT


 



    	 	53	 



    	 		 



    







 


EXHIBIT
F


 


FORM
OF COMPLIANCE CERTIFICATE


 



    	 	54	 



    	 		 



    







 


EXHIBIT
G


 


FORM
OF INTERCREDITOR AGREEMENT


 



    	 	55	 



    	 		 



    







 


EXHIBIT
H


 


FORM
OF IRREVOCABLE TRANSFER AGENT INSTRUCTION LETTER


 



    	 	56	 



    	 		 



    







 


EXHIBIT
I


 


FORM
OF SUBORDINATION AGREEMENT


 



    	 	57	 



    	 		 



    







 


EXHIBIT
J


 


FORM
OF USE OF PROCEEDS CONFIRMATION


 



    	 	58	 



    	 		 



    







 


EXHIBIT
K


 


FORM
OF VALIDITY CERTIFICATE


 



    	 	59	 



    	 		 



    







 


SCHEDULE
1.1


 


MORTGAGED
PROPERTY


 


[Lender
to insert]


 



    	 	60	 



    	 		 



    







 


SCHEDULE
6.1


 


SUBSIDIARIES


 


Northern
Zinc LLC


St.
Lawrence Zinc Company, LLC


Balmat
Holding Corp.


Bolcan
Mining Corporation


 



    	 	61	 



    	 		 



    







 


SCHEDULE
6.10


 


ABSENCE
OF LITIGATON OR ADVERSE MATTERS


 


Michael
Christiansen Stipulated Agreement Liability


 


The
Company entered into an agreement with Michael Christiansen (“Christiansen”), a former officer of the Company on August
13, 2013 (the “Stipulated Agreement”) to pay Christiansen $123,272 (the “Amount Due”) relating to a promissory
note, accrued compensation and out-of-pocket expenses incurred on behalf of the Company. The Amount Due was to be paid as follows:
$10,500 on or before August 15, 2013; $10,500 on or before September 15, 2013; $10,500 on or before October 15, 2013; and the
balance in installments of $15,000 beginning on the earlier of (a) the first day of the month following the date on which the
Company receives at least three million dollars of equity funding, or (b) December 31, 2014.


 


As
of April 25, 2016, the payment of this Stipulated Agreement was in default with $79,272 still owed Christiansen.


 


Lanesborough,
LLC Consulting Services Agreement


 


On
January 4, 2016 the Company terminated for cause the Consulting Services Agreement between the Company and Lanesborough, LLC (“Lanesborough”)
dated November 2, 2015 (the “Agreement”). The Agreement was entered into as part of the Company’s agreement
to acquire the Balmat mine. Further, the principal of Lanesborough is the former member of Aviano Financial Group, LLC, the former
sole member of Northern Zinc, LLC. Lanesborough has disputed the termination and has demanded payment of the amounts due under
the Agreement for the balance of its term. As of the date of termination, the Agreement called for payments of $10,000 per month
until its expiration which is, assuming a court determined that the Company’s termination of the Agreement was without cause,
January 3, 2017. The Company disputes Lanesborough’s demand for payment.


 


Fognani
& Faught, PLLC Promissory Note Dated November 2, 2015


 


The
Company is currently in default under the November 2, 2015 original principal balance $540,000 promissory note issued to Aviano’s
legal counsel Fognani & Faught, PLLC bearing interest at 8% per annum for payment of legal fees relating to the Balmat Acquisition
(the “Fognani Note”). The Company is obligated to pay $50,000 per month for ten consecutive months with a final payment
of $40,000 plus accrued interest due on the 15th day of the eleventh month. As of April 28, 2016, the Company had paid
$250,000 as provided for in the Fognani Note leaving a principal balance of $290,000. The balance due under the Fognani Note has
been included in the use of proceeds and will be paid from those proceeds.


 



    	 	62	 



    	 		 



    







 


SCHEDULE
6.11


 


BRIDGE
LOAN


 


On
June __, 2016, in exchange for $250,000 the Company issued to one of its officers and a director (i) Convertible Note in the aggregate
principal amount of $250,000 that bears simple interest at the rate of 15% per annum and is payable by the Company on a lump sum
basis with respect to principal and interest on or before June 30, 2017 unless earlier repaid at the sole option of the Company
or converted into common stock at the option of the holder at a conversion price of $0.50 per share, and (ii) a warrant to purchase
250,000 shares of the Company’s common stock at $1.00 per share for a period of three years from the date of issuance. The
conversion price of in the convertible note and the number of shares of common stock issuable upon exercise of the warrants is
subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. A holder of the
convertible note and warrants will be entitled to piggy-back registration rights for the shares of the Company’s common
stock issuable upon conversion of the convertible note and upon exercise of the warrants.


 



    	 	63	 



    	 		 



    







 


SCHEDULE
6.13


 


REAL
PROPERTY


 


(See
Attached)


 



    	 	64	 



    	 		 



    







 


SCHEDULE
6.13


 


REAL
PROPERTY (continued)


 


Concessions
- Mineral Rights and Leases


 


As
noted in the attached, certain of the agreements granting concessions have expired. Notwithstanding the expiration of such agreements,
St. Lawrence Zinc Company, LLC has continued to make the annual payments required thereunder and the grantors of the concessions
have continued to accept such payments without dispute


 


(See
Attached)


 



    	 	65	 



    	 		 



    







 


SCHEDULE
6.17


 


LABOR
AND EMPLOYMENT MATTERS


 


None


 



    	 	66	 



    	 		 



    







 


SCHEDULE
6.19


 


TAX
MATTERS


 


Northern
Zinc LLC has not filed its tax return for 2014. Since this is a pass through entity, however, no tax is due.


 


REAL
ESTATE TAX PAYMENTS DUE


 


2016
Town/County Tax Bills - Town of Fowler


 


		 		 	Second	 	 	Third	 
	Parcel	 	Tax
    Map Number	 	Installment	 	 	Installment	 
	1	 	403800
    199.001-2-52	 	$	350.64	 	 	$	350.64	 
	2	 	403800
    187.069-1-38	 	 	453.66	 	 	 	453.66	 
	3	 	403800
    187.003-1-4.11/21	 	 	3,024.30	 	 	 	3,024.30	 
	4	 	403800
    187.003-1-4.11/20	 	 	2,419.44	 	 	 	2,419.44	 
	5	 	403800
    187.003-1-4.11/18	 	 	20,541.09	 	 	 	20,541.09	 
	6	 	403800
    187.003-1-4.11/17	 	 	1,814.58	 	 	 	1,814.58	 
	7	 	403800
    187.003-1-4.11/15	 	 	7,185.75	 	 	 	7,185.75	 
	8	 	403800
    187.003-1-4.11/14	 	 	8,468.06	 	 	 	8,468.06	 
	9	 	403800
    187.003-1-4.11/13	 	 	6,048.61	 	 	 	6,048.61	 
	10	 	403800
    187.003-1-4.11/12	 	 	725.84	 	 	 	725.84	 
	11	 	403800
    187.003-1-4.11/11	 	 	677.44	 	 	 	677.44	 
	12	 	403800
    187.003-1-4.11/10	 	 	18,145.84	 	 	 	18,145.84	 
	13	 	403800
    187.003-1-4.11/9	 	 	11,419.78	 	 	 	11,419.78	 
	14	 	403800
    187.003-1-4.11/7	 	 	6,048.61	 	 	 	6,048.61	 
	15	 	403800
    187.003-1-4.11/5	 	 	1,209.72	 	 	 	1,209.72	 
	16	 	403800
    187.003-1-4.11/3	 	 	3,024.30	 	 	 	3,024.30	 
	17	 	403800
    187.003-1-4.11/2	 	 	14,516.67	 	 	 	14,516.67	 
	18	 	403800
    187.003-1-4.11	 	 	471.79	 	 	 	471.79	 
	19	 	403800
    187.003-1-1	 	 	1,209.72	 	 	 	1,209.72	 
	20	 	403800
    186.004-1-44	 	 	350.64	 	 	 	350.64	 
	21	 	403800
    186.004-1-33.11	 	 	355.66	 	 	 	355.66	 
	 	 	Estimated
    finance charges	 	 	2,500.00	 	 	 	2,500.00	 
	 	 	 	 	$	110,962.14	 	 	$	110,962.14	 



 


STATE
SALES TAXES DUE


 


	Estimated state sales taxes due to State of New York	 	$	5,200	 



 



    	 	67	 



    	 		 



    







 


SCHEDULE
6.22


 


BANK
ACCOUNTS; BUSINESS LOCATIONS


 


Bank:
Wells Fargo


 


Account
Name: SMRS Checking Account


 


Routing
Number: 121-000-248


 


Account
Number: 5130703407


 


Authorized
Signatories: Donna Moore, Mark Osterberg (in process of being added: Joe Marchal, Tom Bidgood and Wayne Rich)


 


Bank:
Wells Fargo


 


Account
Name: SMRS Savings Account


 


Routing
Number: 121-000-248


 


Account
Number: 3216627608


 


Authorized
Signatories: Donna Moore, Mark Osterberg (in process of being added: Joe Marchal, Tom Bidgood and Wayne Rich)


 


Bank:
Bank of America


 


Account
Name: SMRS Checking Account


 


Routing
Number: 026-009-593


 


Account
Number: 457029374328


 



    	 	68	 



    	 		 



    

 


Authorized
Signatories: Donna Moore, Mark Osterberg (in process of being added: Joe Marchal, Tom Bidgood and Wayne Rich)


 


Bank:
Bank of America


 


Account
Name: SMRS Savings Account


 


Routing
Number: 026-009-593


 


Account
Number: 457007358117


 


Authorized
Signatories: Donna Moore, Mark Osterberg (in process of being added: Joe Marchal, Tom Bidgood and Wayne Rich)


 


Bank:
Community Bank


 


Account
Name: St. Lawrence Zinc Checking Account


 


Routing
Number: 021-307-559


 


Account
Number: 0102138724


 


Authorized
Signatories: Joe Marchal, Mark Osterberg, Wayne Rich, Ryan Schermerhorn, Mike Porter and Fred Morrill


 


Bank:
Gouverneur Savings & Loan


 


Account
Name: Certificate of Deposit Account – cash reclamation bond held in escrow for New York State Department of Environmental
Conservation


 


Routing
Number: n/a


 


Account
Number: 7500579254


 


Authorized
Signatories: Joe Marchal, Mark Osterberg, Wayne Rich and Ryan Schermerhorn


 


Business
Location(s):


 


Headquarter
Office: 8307 Shaffer Parkway, Suite 201, Littleton, Colorado 80127


 


Accounting
Office: 605 W. Knox Road, Suite 202, Tempe, Arizona 85284*


 


Balmat
Mine: 408 Sylvia Lake Road, Gouverneur, New York 13642


 


*In
process of being moved to Headquarter’s office


 



    	 	69	 



    	 		 



    

 


SCHEDULE
6.23


 


ENVIRONMENTAL
LAWS


 


Our
Balmat Mine in New York is subject to federal and state environmental laws, regulations and permits. The federal agency responsible
for regulatory jurisdiction is the Environmental Protection Agency. The state agency with regulatory jurisdiction is the New York
State Department of Environmental Conservation. We operate under approvals and permits granted by both agencies. As of December
31, 2015, the Company had posted a cash surety bond with the state of New York totaling $1.6 million. We also have in place a
reclamation plan that we believe meets all legal and regulatory requirements. At December 31, 2015, $17.9 million was accrued
for estimated future reclamation activities at our Balmat Mine site.


 


Our
Chopar Project in the Star Mining district of southern Utah is also subject to federal and state environmental laws, regulations
and permits. The governmental agencies and regulators tasked with implementing and enforcing these laws and regulations include
the Bureau of Land Management, the Mine Safety and Health Administration, the Utah Department of Natural Resources, the Utah State
Institutional Trust Lands Administration, the Utah Department of Environmental Quality, the Environmental Protection Agency, and
the Bureau of Alcohol, Tobacco, Firearms and Explosives. As of December 31, 2015, the Company had a surety bond with the State
of Utah totaling $24,000 to ensure environmental reclamation of disturbed areas.


 



    	 	70