Document:

Form of Amendment No. 2 to the Five Year Revolving Credit Agreement

 Exhibit 10.24 
 FORM OF 
 AMENDMENT NO. 2 TO THE 
 FIVE YEAR REVOLVING CREDIT AGREEMENT 
 Dated as of October 31, 2006

 AMENDMENT NO. 2 TO THE FIVE YEAR REVOLVING CREDIT AGREEMENT (this “Second Amendment”), among KBR HOLDINGS,
LLC, a Delaware limited liability company (the “Borrower”), the banks, financial institutions and other institutional lenders parties to the Credit Agreement referred to below (collectively, the “Banks”), and
Citibank, N.A., as paying agent (the “Agent”) for the Banks. 
 PRELIMINARY STATEMENTS 
 (1) The Borrower, the Banks and the Agent have entered into a Five Year Revolving Credit Agreement, dated as of December 16, 2005 (as amended,
amended and restated, supplemented or otherwise modified through the date hereof, the “Credit Agreement”). Capitalized terms not otherwise defined in this Second Amendment have the same meanings as specified in the Credit Agreement.

 (2) The Borrower and the Required Banks have agreed to amend the Credit Agreement as hereinafter set forth. 
 SECTION 1. Amendments to Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows: 
 (a) Section 1.01 is amended as follows:

 (i) a new defined term is inserted in the appropriate alphabetical order to read as follows: “‘Change of
Control’ means the occurrence of any of the following at any time from and after the Borrower ceases to be a consolidated subsidiary of the Parent in accordance with GAAP: (a) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of the Borrower (or other securities convertible
into such Voting Interests) representing 25% or more of the combined voting power of all Voting Interests of the Borrower or (b) during any period of up to 24 consecutive months, commencing after the date the Borrower ceases to be a
consolidated subsidiary of the Parent in accordance with GAAP, the Continuing Directors shall cease for any reason (other than death or disability) to constitute a majority of the board of directors of the Borrower; provided that if the
Borrower becomes a wholly-owned subsidiary of another Person (“New Parent”) at the time or before it ceases to be a consolidated subsidiary of the Parent in accordance with GAAP, the tests for Change of Control shall relate to New Parent
rather than the Borrower.”; 
  

 (ii) the definition of “Consolidated Debt” is amended by deleting the words
“and Permitted Non-Recourse Indebtedness” immediately following the words “Project Financing” in the third line thereof; 
 (iii) a new defined term is inserted in the appropriate alphabetical order to read as follows: “‘Continuing Directors’ means the directors of the Borrower on the date the Borrower ceases to be a
consolidated subsidiary of the Parent in accordance with GAAP, and each other director if, in each case, such other director’s nomination for election to the board of directors of the Borrower is recommended by at least a majority of the then
Continuing Directors; provided that if there is at the time Borrower ceases to be a consolidated subsidiary of the Parent in accordance with GAAP a New Parent, references to Borrower in this definition shall be deemed to be references to New
Parent.”; 
 (iv) the definition of “EBITDA” is deleted in its entirety and restated as follows:
“‘EBITDA’ means, for any period, (a) the sum, determined on a consolidated basis, of (i) net income (or net loss), (ii) interest expense, including commissions and fees incurred in respect of letters of credit,
(iii) income tax expense, (iv) depreciation expense, (v) amortization expense, (vi) minority interest in income of Subsidiaries, (vii) charges related to restructuring, asset impairment or other extraordinary items or
related to non-cash estimate project losses (including non-extraordinary items), (viii) charges indemnified or required to be indemnified pursuant to the Indemnity Agreement or in respect of which a subordinated loan or a capital contribution
is or will be required to be made pursuant to the Subordination Agreement, minus (b) cash payments related to restructuring, asset impairment or other extraordinary items or related to non-cash estimate project losses (including
non-extraordinary items) to the extent previously included in the computation of EBITDA pursuant to clause (a)(vii) of this definition (except to the extent indemnified or required to be indemnified pursuant to the Indemnity Agreement or in respect
of which a subordinated loan or a capital contribution is or will be required to be made pursuant to the Subordination Agreement), in each case of the Borrower and its Subsidiaries (excluding any Project Finance Subsidiary), determined in accordance
with GAAP for such period; provided, however, that with respect to any Project Finance Subsidiary, any cash distribution made by such Project Finance Subsidiary to the Borrower or any Subsidiary of the Borrower (other than any Project
Finance Subsidiary) to the extent not previously included in the equity and earnings of such Person shall be included for purposes of calculation of EBITDA.”; 
 (v) a new defined term is inserted in the appropriate alphabetical order to read as follows: “‘Extended Letter of
Credit’ has the meaning specified in Section 2.01(b).”; 
 (vi) the definition of “Fixed Charge
Coverage Ratio” is amended by deleting the words “and Permitted Non-Recourse Indebtedness” in the seventh line thereof; 
 (vii) the definition of “Intercompany Note” is deleted in its entirety and restated as follows: “‘Intercompany Note’ means, collectively, (i) that certain existing note made by the
Borrower to HESI in an amount not to exceed $489 million and (ii) that certain existing note made by Georgetown Finance Ltd. to Avalon Financial Services, Ltd. in an amount not to exceed $285 million, or, in either case, any note hereafter
issued as contemplated by Section 5.02(l) hereof.”; 
  

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 (viii) the definition of “Loan Document” is deleted in its entirety and
restated as follows: “Loan Documents” means this Agreement, the Guarantee, the New Parent Guarantee, the Notes, the Indemnity Agreement, the Pre-IPO Reimbursement Agreement and the Subordination Agreement.”; 
 (ix) the definition of “Loan Parties” is deleted in its entirety and restated as follows: “‘Loan Parties’
means the Borrower, the New Parent and the Subsidiary Guarantors.”; 
 (x) the definition of “Maturity Date”
is deleted in its entirety and restated as follows: “‘Maturity Date’ means June 29, 2010; provided that if the unpaid balance of the Intercompany Note shall have been irrevocably reduced to zero on or prior to
November 30, 2006, the “Maturity Date” shall mean December 16, 2010.”; 
 (xi) a new defined term is
inserted in the appropriate alphabetical order to read as follows: “‘New Parent’ shall have the meaning given to such term in the proviso to the definition of “Change of Control”; 
 (xii) a new defined term is inserted in the appropriate alphabetical order to read as follows: “‘New Parent
Guarantee’ means a guarantee to be executed by New Parent within three Business Days following such Person becoming the controlling shareholder of the Borrower, which New Parent Guarantee shall: 
 (a) be substantially in the form of the Subsidiary Guarantee with such conforming changes as the Agent shall reasonably require, and

 (b) provide that the New Parent shall assume all of the affirmative and negative covenants of the Borrower contained
herein, as such guarantee may be amended, amended and restated, modified or otherwise supplemented.”; 
 (xiii) the
definition of “Permitted Non-Recourse Indebtedness” is deleted in its entirety and restated as follows: “‘Permitted Non-Recourse Indebtedness’ means Indebtedness and other Obligations of: 
 (a) the Borrower, any Subsidiary, or any Project Finance Subsidiary of the Borrower incurred in connection with the acquisition or
construction by the Borrower, such Subsidiary, or such Project Finance Subsidiary of any property with respect to which the holders of such Indebtedness and other Obligations agree that they will look solely to the property so acquired or
constructed and securing such Indebtedness and other Obligations, and neither the Borrower nor any such Subsidiary (i) provides any direct or indirect credit support, including any undertaking, agreement or instrument that would constitute
Indebtedness or (ii) is otherwise directly or indirectly liable for such Indebtedness; or 
 (b) any Special Purpose
Subsidiary incurred in connection with the acquisition or construction by a Special Purpose Subsidiary of any property with respect to which the holders of such Indebtedness and other Obligations agree that they 

  

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will look solely to Special Purpose Subsidiaries, and neither the Borrower nor any Subsidiary (other than any Special Purpose Subsidiary) (i) provides
any direct or indirect credit support, including any undertaking, agreement or instrument that would constitute Indebtedness or (ii) is otherwise directly or indirectly liable for such Indebtedness; 
 provided that in the case of either (a) or (b) no default with respect to such Indebtedness or Obligations would cause, or permit (after
notice or passage of time or otherwise), according to the terms thereof, any holder (or any representative of any such holder) of any other Indebtedness (other than Project Financing or Permitted Non-Recourse Indebtedness) of the Borrower or such
Subsidiary (other than a Project Finance Subsidiary, a Special Purpose Subsidiary and Subsidiaries thereof) to declare a default on such other Indebtedness or cause the payment, repurchase, redemption, defeasance or other acquisition or retirement
for value thereof to be accelerated or payable prior to any scheduled principal payment, scheduled sinking fund or maturity.”; 
 (xiv) a new defined term is inserted in the appropriate alphabetical order to read as follows: “‘Special Purpose Subsidiary’ means (i) any Subsidiary of the Borrower (other than a Loan Party) that incurs Permitted
Non-Recourse Indebtedness and owns and operates its permitted assets, and/or acts as an operator of third-party assets, and substantially all of the assets of such Subsidiary are limited to (a) those assets for which the acquisition,
improvement, installation, design, engineering, construction, development, completion, maintenance, operation, securitization or monetization is being, or has been financed in whole or in part by Permitted Non-Recourse Indebtedness, (b) equity
interests in its Subsidiaries, and/or (c) capital contributed to such Subsidiary, and (ii) any Subsidiary (other than a Loan Party) of a Subsidiary described in clause (i) above.”; 
 (xv) the definition of “Termination Date” is amended by deleting the date “December 16, 2010” and substituting
therefor the words “Maturity Date”; and 
 (xvi) a new defined term is inserted in the appropriate alphabetical
order to read as follows: “Voting Interests” means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled
to vote to the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such contingency.” 
 (b) Section 2.01(b) is deleted in its entirety and restated as follows: 
 “(b) Letters of Credit. Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of
credit (collectively, the “Letters of Credit”, and each a “Letter of Credit”) for the account of the Borrower (such issuance, and any funding of a draw thereunder, to be made by the Issuing Banks (including through
such branches or Affiliates as such Issuing Bank and the Borrower shall jointly agree) in reliance on the agreements of the other Banks pursuant to Section 2.03) from time to time on any Business Day during the period from the Effective Date
until 10 days prior to the Maturity Date in an aggregate Available Amount (i) for all Letters of Credit issued by the Issuing Banks not to exceed at any time the lesser of (A) the aggregate Letter of Credit Commitments at such time
and (B) the Letter of 

  

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Credit Commitment of such Issuing Bank at such time (or such greater amount as such Issuing Bank shall approve) and (ii) for each such Letter of Credit
not to exceed an amount equal to the Unused Revolving Credit Commitments of the Banks at such time. No Letters of Credit shall have expiration dates later than 10 Business Days prior to the Maturity Date; provided, however, that if the
applicable Issuing Bank and the Agent each consent, in their sole discretion, the expiration date (including, without limitation, any expiration date which may be extended automatically under the terms of the Letters of Credit) of any Letter of
Credit may extend beyond the date referred to in this sentence (each such Letter of Credit, together with any Letter of Credit outstanding on the effective date of Amendment No. 2 to this Agreement with an expiration date beyond the Maturity
Date, an “Extended Letter of Credit”); provided, further, that, on or prior to the date that is 95 days prior to the Maturity Date (or, if later, the date of issuance of the applicable Extended Letter of Credit), the Borrower
shall provide cash collateral for each Extended Letter of Credit that is outstanding or is issued after the date that is 95 days prior to the Maturity Date in an amount equal to 102% of the face amount of such Extended Letter of Credit;
provided, further, that at no time shall the aggregate amount of Extended Letters of Credit plus the unpaid principal amount of Revolving Credit Advances exceed the sum of the Borrowing Sublimit plus the amount of cash collateral then
held with respect to the Extended Letters of Credit. The cash collateral specified in the foregoing sentence shall be provided to the Agent by the Borrower by requesting a Revolving Credit Advance pursuant to Section 2.01(a). If the Borrower
shall fail to make such request, the Agent may make such request on the Borrower’s behalf. The Banks agree that they will make such Revolving Credit Advance whether or not the applicable conditions precedent in Section 3.02 are then
satisfied. Upon the furnishing by the Borrower of such cash collateral on the ninety-fifth day prior to the Maturity Date to the Agent, the Agent shall transfer to individual cash collateral accounts established by each Issuing Bank which has issued
an Extended Letter of Credit the pro rata share of such cash collateral allocable to such Issuing Bank. Simultaneous with receipt of such cash collateral, such Extended Letters of Credit, shall for all purposes cease to be Letters of Credit
hereunder. Thereafter, fees, costs and expenses, as well as terms for release of such cash collateral, shall be as agreed from time to time between the Borrower and such Issuing Bank. Within the limits referred to above, the Borrower may request the
issuance of Letters of Credit under this Section 2.01(b), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this
Section 2.01(b).”; 
 (c) Section 5.01(d) is amended by deleting the words “a reconciliation in reasonable
detail of excluding” in clause (B) of subsection (i) and the words “reconciling in reasonable detail the effect of excluding” in clause (C) of subsection (ii) thereof and substituting therefor the words “a
reconciliation in reasonable detail of the effect on EBITDA of non-cash estimate project losses (including non-extraordinary items) and cash payments related thereto and the effect of excluding”.; 
 (d) Section 5.01(h) is amended by inserting the words “or the New Parent” immediately following the word
“Parent” in the sixth line thereof; 
 (e) Section 5.02(a) is amended by: 
 (i) inserting the words “surety bonds” and a comma immediately thereafter, immediately prior to the word “acceptances”
in the fourth line thereof; 
  

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 (ii) amending subsection (ix) thereof by deleting it in its entirety and restating
it to read as follows: “Liens securing reimbursement obligations in respect of overdraft facilities, letters of credit, surety bonds, acceptances or bank guarantees and other Indebtedness, provided that at the time of the creation,
incurrence or assumption of any reimbursement obligations in respect of overdraft facilities, letters of credit, surety bonds (other than surety bonds permitted by subsection (x) hereof), acceptances or bank guarantees or other Indebtedness
secured by such Liens and after giving effect thereto, the sum of the principal amount of such reimbursement obligations in respect of overdraft facilities, letters of credit, surety bonds, acceptances or bank guarantees and other Indebtedness
secured by Liens permitted by this clause (ix) shall not exceed, in the aggregate, the sum of (A) $150,000,000 and (B) the aggregate amount of letters of credit which had been Extended Letters of Credit but ceased to be Letters of
Credit hereunder following being cash collateralized as contemplated by Section 2.01(b) hereof.”; and 
 (iii)
adding a new subsection (x) thereto after the end of subsection (ix) thereof to read as follows: “Liens securing obligations under joint venture agreements, surety bonds, and indemnification agreements related thereto on any assets
related to such joint venture or bonded work, as the case may be, including, without limitation, equipment, property, contracts, distributions and accounts related thereto and cash collateral required thereby.”; 
 (f) Section 5.02(b) is amended by: 
 (i) deleting subsection (vi) thereof in its entirety and restating it to read as follows: “(vi) Indebtedness in respect of any Project Financing or any Permitted Non-Recourse Indebtedness;”; 

(ii) deleting the figure “$75,000,000” contained in the third line of subsection (viii) thereof and substituting
therefor the figure “$150,000,000”; 
 (iii) deleting the period following the word “Agreement” at the end
of subsection (ix) thereof and substituting therefor the following “; provided further that, in the event that the Borrower ceases to be a consolidated subsidiary of the Parent in accordance with GAAP, then, thirty (30) days
from and after such event, there shall be no Indebtedness of the Borrower or any Subsidiary of Borrower owed to the Parent or HESI in respect of the KBR Cash Management Note or any other cash management system; and”; and 
 (iv) adding a new subsection (x) thereto after the end of subsection (ix) thereof to read as follows: “(x) Indebtedness
representing letter of credit reimbursement obligations secured as contemplated by clause (B) of the proviso to Section 5.02(a)(ix).” 
 (g) Section 5.02(f) is amended by: 
 (i) deleting subsection (iii) thereof in its
entirety and restating it to read as follows: “(iii) advances under the Halliburton Cash Management Note; provided that (A) such transfers are consistent with past practices, (B) Parent’s senior unsecured long term debt is
rated at least BBB- by S&P and Baa3 by Moody’s at the time of each such transfer, and (C) no Default or Event of Default shall have occurred and be continuing; provided, further, that in the 

  

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event that the Borrower ceases to be a consolidated subsidiary of the Parent in accordance with GAAP, then, thirty (30) days from and after such event,
there shall be no Indebtedness of the Parent or HESI owed to the Borrower of any of its Subsidiaries in respect of the Halliburton Cash Management Note or any other cash management system.” ; 
 (ii) inserting the words “or the New Parent or its Subsidiaries” immediately following the words “the Parent or its
Subsidiaries” in the second line of subsections (vi) and (vii) thereof; 
 (iii) deleting the figure
“$75,000,000” contained in clause (C) of subsection (viii) thereof and substituting therefor the figure “$150,000,000”; 
 (iv)(A) deleting the word “and” at the end of subsection (x) thereof, (B) deleting the period at the end of subsection (xi) thereof and substituting therefor “; and”, and
(C) adding a new subsection (xii) thereto to read as follows: “loans from Subsidiaries to the Borrower and loans permitted by Section 5.02(g)(x) and (xi).”; and 
 (v) adding a new paragraph following the end of the last subsection thereof to read as follows: “For purposes of this
Section 5.02(f), the amount of an Investment shall be determined as of the date of such Investment, and such amount shall be equal to the cash amount or the fair market value of other property or asset invested.” 
 (h) Section 5.02(g) is amended by: 
 (i) deleting the word “Subsidiary” following the word “any” in the first line of subsection (vi) thereof and substituting therefor “Person (other than the Borrower)”; 
 (ii) deleting the word “and” at the end of subsection (ix) thereof and inserting at the end thereof a semicolon; and

 (iii) deleting the period at the end of clause (x) and adding the following: 
 “(xi) the Borrower may pay cash dividends or loans to New Parent in amounts equal to: 
 (A) the amounts required for New Parent to pay any federal, state or local income taxes to the extent that such income taxes are directly
attributable to the income of the Borrower and its Subsidiaries; 
 (B) the amounts required for New Parent to pay franchise
taxes and other fees required to maintain its legal existence; 
 (C) an amount to permit New Parent to pay its corporate
overhead expenses incurred in the ordinary course of business, and to pay salaries or other compensation of 

  

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employees who perform services for both New Parent and the Borrower; 
 (xii) the Borrower or any Subsidiary of the Borrower may redeem, repurchase, retire or otherwise acquire any of its Equity Interests in
connection with a compensation plan, program or practice (or pay cash dividend or loans to New Parent to accomplish such actions); provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $25 million in any fiscal year of the Borrower; and 
 (xiii) the Borrower and any Subsidiary of the Borrower may
grant, issue, distribute or dividend Equity Interests to its directors, officers and employees and make or permit the vesting, lapse, exercise or payment of Equity Interests in options, restricted stock, performance awards (in the form of either
cash or stock of the Borrower), and other similar grants and awards pursuant to existing (or substantially similar replacement or amended) compensation plans, programs or practices. 
 For purposes of this Section 5.02(g), to the extent that a Subsidiary issues any Equity Interests which result in a reduction in the
proportionate interest of the Borrower or any Subsidiary in such Subsidiary, then such transaction shall be treated as a sale.”; 
 (i) Section 5.02(l) is deleted in its entirety and restated to read as follows: “Amendment to Intercompany Note. Amend, modify or change in any manner any term or condition of the Intercompany Note,
agree in any manner to any other amendment, modification or change of any term or condition of the Intercompany Note or take any other action in connection with the Intercompany Note that would impair the interest or rights of the Agent or any Bank,
or permit any of its Subsidiaries to do any of the foregoing; provided that notwithstanding the foregoing, the Intercompany Note may be amended, modified, changed, replaced or refinanced so long as (i) the maturity date of such amended,
modified, or changed Intercompany Note or any replacement or refinancing thereof shall not be earlier than June 30, 2010, and (ii) any other amendment, modification or change is not adverse to the Banks in any respect.”; 

(j) Section 6.01(c) is amended to insert the words “or the New Parent” following the words “the Borrower” in
the first line thereof; 
 (k) Section 6.01(d) is amended by deleting the words “Permitted Non-Recourse Debt”
in the third line thereof and substituting therefor the words “Permitted Non-Recourse Indebtedness.”; 
 (l)
Section 6.01(i) is amended by deleting it in its entirety and restating it as follows: “A Change of Control shall occur; or”; 
 (m) Schedule 5.02(b)(ii) to the Credit Agreement is hereby replaced with a new Schedule 5.02(b)(ii) thereto attached hereto as Annex A; 
  

 8 

 (n) Schedule I to the Subordination Agreement is hereby replaced with a new Schedule I
thereto attached hereto as Annex B; and 
 (o) Schedule II to the Subordination Agreement is hereby replaced with
a new Schedule II thereto attached hereto as Annex C. 
 SECTION 3. Conditions of Effectiveness. This Second Amendment
shall become effective as of the date first above written when, and only when, the Agent shall have received counterparts of this Second Amendment executed by the Borrower and the Required Banks or, as to any of the Banks, advice satisfactory to the
Agent that such Bank has executed this Second Amendment and the consent attached hereto executed by each Relevant Party (other than the Borrower). This Second Amendment is subject to the provisions of Section 8.01 of the Credit Agreement.

 SECTION 4. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: 
 (a) the representations and warranties contained in each Loan Document are correct on and as of the date hereof (except (i) those
representations and warranties contained in (A) Section 4.01(i) of the Credit Agreement to the extent such matters are subject to, and covered by, (x) the Indemnity Agreement and (y) the Disclosed Litigation, and
(B) Section 4.01(f) of the Credit Agreement and (ii) those other representations and warranties that expressly relate solely to a specific earlier date, which shall remain correct as of such earlier date) after giving effect to this
Second Amendment, as though made on and as of the date hereof; and 
 (b) no event has occurred and is continuing, after
giving effect to this Second Amendment, which constitutes a Default or an Event of Default. 
 SECTION 5. Reference to and Effect on the
Loan Document. (a) On and after the effectiveness of this Second Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit
Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference
to the Credit Agreement, as amended by this Second Amendment. 
 (b) The Credit Agreement and each of the other Loan Documents, as
specifically amended by this Second Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. 
 (c) The execution, delivery and effectiveness of this Second Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Bank or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents. 
 SECTION 6. Costs and Expenses. The Borrower
agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Second Amendment and the other instruments and documents to be delivered
hereunder (including, without limitation, the 

  

 9 

 
reasonable fees and expenses of counsel for the Agent) in accordance with the terms of Section 8.04 of the Credit Agreement. 
 SECTION 7. Execution in Counterparts. This Second Amendment may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Second Amendment
by telecopier shall be effective as delivery of a manually executed counterpart of this Second Amendment. 
 Section 8. Governing
Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. 
 [signature page
follows] 
  

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

			
	KBR HOLDINGS, LLC
		
	By	 	  
		 	 Title:

  

			
	 CITIBANK, N.A.,
 as Paying Agent and as Bank

		
	By	 	  
		 	 Title:

			
	
	  
	 [Insert Name of Bank]

		
	By:	 	  
	 Name:
	 	
	 Title:
	 	

 CONSENT 
 Dated as of                         , 2006 
 The undersigned, one of the Relevant Parties referred to in the Credit Agreement referred to in the foregoing Second Amendment, hereby consents to such
Second Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Second Amendment, each Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, except that, on and after the effectiveness of such Second Amendment, each reference in each Loan Document to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a
reference to the Credit Agreement, as amended by such Second Amendment . 
  

			
	 KELLOGG BROWN & ROOT LLC (fka KELLOGG BROWN & ROOT, INC.)
 KELLOGG BROWN & ROOT SERVICES, INC.
 KELLOGG BROWN & ROOT
INTERNATIONAL, INC.

		
	By:	 	  
	 Name:
	 	
	 Title:
	 	

  

			
	 HALLIBURTON COMPANY
 HALLIBURTON ENERGY
SERVICES, INC.

		
	By:	 	  
	 Name:
	 	
	 Title:Exhibit 10.1 - Mineral Lease Agreement

    Exhibit
      10.1 to Form 8-K

     

    MINERAL
      LEASE AGREEMENT

    

    THIS
      MINERAL LEASE AGREEMENT ("Agreement") is made effective as of the day
      of
      October 24, 2006 ("Effective Date"), between DALTON LIVESTOCK, a Nevada general
      partnership, and WINCHELL RANCH, a Nevada corporation, Lessors, and NEWGOLD,
      INC., a Delaware corporation, Lessee.

    RECITALS

    

    A. Lessors
      are owners of the surface and varying interests of the minerals in and to
      property described in Exhibit "A" attached hereto, which property is located
      in
      Elko County, Nevada (the "Premises").

    

    B. Lessee
      desires to lease the interests of Lessors in the Premises upon the terms and
      conditions herein set forth.

    

    C. Lessors
      desire to lease their interests in the Premises to Lessee upon the terms and
      conditions herein set forth.

    

    AGREEMENT

    

    FOR
      AND
      IN CONSIDERATION of the payments herein required, the mutual covenants
herein
      contained, and other good and valuable consideration, the receipt and
      sufficiency of which are
      hereby acknowledged, Lessors and Lessee (the "Parties" and individually a
      "Party") agree as follows:

    

    1.
      GRANT OF LEASE RIGHTS

    

    A. Grant
      of Lease.
      Lessors
      hereby lease exclusively to Lessee and its successors and assigns
      all of Lessors' interest in and to all minerals, including barite, (hereafter
      the "Mineral Substance") except for and excluding all oil, gas, oil shale and
      other hydrocarbons (liquid or gaseous), coal, uranium and fissionable materials
      and geothermal resources, of every nature and kind (hereinafter "reserved
      substances") beneath the surface of, within, or that may be produced from the
      premises.

    

    B. Rights
      of Lessee.
      Lessee
      shall have the following rights in respect of the Premises:

    

    i. Mining
      and Access Rights.
      Subject
      only to any limitations imposed by federal,
      state and local regulations, the free, unrestricted and uninterrupted right
      of
      access, ingress and egress to the Premises over existing roads or alternate
      routes approved by Lessors and the right to enter upon and occupy the Premises
      for all purposes reasonably incident to exploring for, developing, mining (by
      underground mining, surface mining, strip mining or any other surface or
      subsurface method, including any method later developed), extracting, milling,
      smelting, refining, stockpiling, storing, processing, removing and marketing
      therefrom all ores, metals, minerals, mineral products (including intermediate
      products) and materials of every nature or sort, and the right to place,
      construct, maintain, use and thereafter remove such structures, facilities,
      equipment, roadways, haulageways, utility lines, reservoirs and water courses,
      and other improvements as may be necessary, useful or convenient for the full
      enjoyment of all of the rights granted under this Agreement subject to
      subsection F herein. Lessee shall have sole and exclusive custody, possession,
      ownership and control of all ore, rock, drill core and other Mineral Substances
      extracted or removed from the Premises and may sell or otherwise dispose
      thereof. In the exercise of such rights, Lessee shall be subject only to
      compliance with applicable statutes, rules, regulations and the terms of this
      Agreement. These rights are also granted and may be utilized for the purpose
      or
      in the course of carrying on exploration, development or mining operations
      on
      any other properties in which Lessee may have or acquire any right or interest,
      provided Lessors assent to the same.

    

    ii. Cross
      Mining.
      The
      right, if Lessee so desires, to mine and remove any Mineral Substances existing
      on, in or under the Premises through or by means of shafts, openings or pits
      which may be sunk or made upon adjoining and nearby properties, and the right
      to
      store any Mineral Substances from the Premises upon any such properties. In
      addition, Lessee may use the Premises for any shafts, openings, pits and storage
      areas sunk or made for the mining, removal and/or stockpiling of any Mineral
      Substances from any adjoining or nearby properties. Mineral Substances taken
      from the Premises shall at all times be kept entirely separate and distinct
      from
      any other ore or concentrated product until the same are measured and sampled
      so
      that the rights of Lessors shall be at all times preserved and
      protected

    

    iii. Commingling.
      The
      right to commingle ore removed from the Premises or products
      derived therefrom after treatment, with other ore or products, before or after
      concentration or beneficiation, so long as the data necessary to determine
      the
      weight, grade, and recoverability of both the ore removed from the Premises
      or
      products derived therefrom and the ore or products with which it is commingled
      are obtained by Lessee. Lessee shall then use that data to determine Lessors'
      royalty for such in minerals, metals and/or other products extracted from ores
      or products so mixed. Such data and determinations shall be acquired and
      completed in accordance with generally accepted industry practices.

    

    iv. Deposit
      of Waste Materials.
      The
      right to temporarily or permanently deposit on or off the Premises tailings,
      waste rock, overburden, surface stripping materials, process solutions, and
      all
      other materials originating from the Premises or from adjoining or nearby
      properties, even if the sole use of the Premises may be for the placement of
      such materials subject to any and all reclamation as required by state and
      Federal statutes and regulations, including but not limited to providing access
      for livestock and seeding.

    

    v. Treatment.
      The
      right, at Lessee's election and in any manner it deems fit, to beneficiate,
      concentrate, process, smelt, refine, and otherwise treat on or off the Premises
      any Mineral
      Substances taken from the Premises or from adjoining or nearby properties by
      any
      physical or chemical method or methods. In exercising this right, Mineral
      Substances may be removed to a plant or plants existing, established or
      maintained upon the Premises or elsewhere.

    

    vi. Water
      Rights.
      The
      right to use any of Lessors' water rights on, about, under or appurtenant to
      the
      Premises or to which the Premises are riparian to facilitate the exploration,
      mining
      and processing rights granted in this Agreement subject to approval of the
      Lessors which will not unreasonably be withheld if such use does not materially
      interfere with Lessors' livestock use of the area.

    

    2.
      TERM

    

    A.
       Term.
      The
      term of this Agreement shall commence as of the Effective Date and shall
      continue for a period of five years thereafter unless sooner terminated in
      the
      manner herein provided. If at the end of said five-year period, being the
      primary term, Lessee is engaged in Mining Operations (as defined below), the
      term of this Agreement shall automatically continue for so long thereafter
      as
      Lessee continues to be engaged in Mining Operations.

    

    B. Definition
      of Mining Operations.
      For
      purposes of this Agreement "Mining Operations"
      shall include, but shall not be limited to, development, extraction, processing.
      leaching or sale of ores, concentrates or derivatives retrieved through leaching
      of ores, produced from the Premises. Activities off the Premises shall
      constitute Mining Operations when they are conducted in connection with an
      integrated mining operation involving the Premises and other properties in
      which
      Lessee holds an interest. Development includes activities, including permitting,
      carried on diligently and in good faith preparatory to commencing or resuming
      operations at a mine. Lessee shall be deemed to be actively engaged in Mining
      Operations so long as all such operations, once begun, do not cease for a period
      of more than 365 consecutive days. In the event Lessee is actively engaged
      in
      Mining Operations at the end of the primary term but at any time is unable
      to
      obtain a satisfactory market or a satisfactory price for Mineral Substances
      and
      as a result suspends mining, processing or marketing operations from time to
      time, then Mining Operations shall not be deemed to have ceased and this
      Agreement shall not expire or terminate provided that Lessee notifies Lessors
      of
      such loss of market or inability to obtain a satisfactory price and diligently
      attempts to market Mineral Substances at a satisfactory price and recommence
      operations. Mining Operations shall not be deemed to have ceased if once begun
      they are interrupted through Force Majeure in accordance with Section 8. If
      Mining Operations have not commenced at the end of the primary term because
      of
      Force Majeure conditions, the primary term shall be extended until such Force
      Majeure conditions cease.

    

    C. Continuation
      of Use.
      If, at
      the end of the primary or extended term, Lessee is not conducting
      or has ceased Mining Operations, but is utilizing the Premises in support of
      Mining Operations
      on other lands, then this Agreement shall continue in force as to the lands
      subject to such uses and such expansions thereof as may reasonably be
      contemplated, as designated in good faith by Lessee, and the payment provided
      in
      Section 3.A shall be rental for such uses.

    

    3.
      PAYMENTS TO LESSORS

     

    A. Annual
      Rental.
      As
      initial consideration for the lease rights granted herein, Lessee shall pay
      to
      Lessors Twenty Thousand Dollars ($20,000.00). Subject to Lessee's right to
      terminate this Agreement, Lessee shall pay the following additional amounts
      to
      Lessors as rent:

    

      
        	
                Due
                  Date (in each case prior to )

              	
                Payment

              
	
                First
                  yearly anniversary of Effective Date

                Second
                  yearly anniversary of Effective Date

                Third
                  yearly anniversary of Effective Date

                Fourth
                  yearly anniversary of Effective Date

                Fifth
                  yearly anniversary of Effective Date and

                each
                  subsequent anniversary of Effective Date thereafter

              	
                $50,000

                $50,000

                $50,000

                $50,000

                 

                $50,000

              

      

    

     

    On
      each
      five year term the annual rentals shall be subject to adjustment as set forth
      in
      subsection E herein. 

    

    None
      of
      the payments made in accordance with the schedule set forth above shall be
      deductible as
      a
      credit against production royalties payable to Lessors pursuant to Section
      3.B
      until production commences. After production commences no production royalties
      shall be due Lessors until the royalties exceed the annual $50,000.00 rental
      after each anniversary of the effective date. Lessee's production royalties
      shall be deductible as a credit against the annual payment until the royalties
      exceed $50,000.00 during the lease year and then paid to Lessors.

    

    B. Production
      Royalty.
      When
      Lessee commences production of ores, minerals or materials from the premises,
      Lessee shall pay to Lessors a production royalty equal to Lessors' percentage
      in
      the mineral interest of the parcel from which production occurs as set out
      in
      Exhibit "B" of a percentage of the Net Smelter Returns (NSR) received by Lessee
      from the sale of said ores, minerals or materials, except for barite, from
      the
      Premises, should such amount exceed the annual rental payment specified above.
      The percentage of net smelter returns to which Lessors' percentage payment
      shall
      be applied or credited to Lessee's annual rental is as follows:

     

    
      	
              Price
                of Gold (U.S.)

            	
              Percent
                NSR

            
	
              $150.00
                to $250.00 per ounce or less

              $250.00
                to $350.00 per ounce

              $350.00
                to $450.00 per ounce

              $450.00
                to $550.00 per ounce

              $550.00
                to $650.00 per ounce

              $650.00
                to $750.00 per ounce

              $750.00
                per ounce or above

            	
              2.0%

              2.5%

              3.0%

              3.5%

              4.0%

              4.5%

              5.0%

            

    

    

    For
      all
      other minerals other than gold, the average fair market value at the time of
      production, as quoted in Metals
      Week
      or a
      comparable publication.

    

    For
      barite, the production royalty shall be 5% of the gross revenues derived from
      the sale of any barite mined upon the premises adjusted to Lessors' percentage
      in the mineral interest in the parcel from which production occurs.

    

    (1) If
      Lessee
      sells refined gold or silver, Lessee will be deemed to have received proceeds
      from the sale thereof equal to the number of ounces of refined gold or silver
      outturned to Lessee's account during the calendar quarter multiplied in the
      case
      of gold by the average daily London Bullion Brokers P.M. Gold Fixing during
      such
      calendar quarter and in the case of silver by the average of the daily Engelhard
      industrial bullion price for silver during the calendar quarter. The average
      price for a calendar quarter shall be determined by dividing the sum of all
      daily prices posted during the calendar quarter by the number of days that
      prices were posted The posted price shall be obtained from the Wall Street
      Journal, Reuters, E&MJ or other industry-accepted source. If a posted price
      referenced above becomes no longer available, Lessee shall, acting reasonably,
      select an alternative posted price that closely approximates such original
      posted price. Lessee shall have the right to market and sell to third parties
      refined gold and silver in any manner it chooses, including the sale of such
      refined gold and silver on the commodity market. In this regard, Lessors shall
      have no right to participate in any gains and/or profits or obligation to suffer
      any losses accruing to Lessee as a result of forward sales, options trading,
      commodities futures trading or similar transactions.

    

    (2) Charges
      to be deducted from proceeds in determining Net Smelter Returns are
      the
      following:

    

    (a) all
      costs, charges and expenses paid or incurred by Lessee for treatment
      in the smelting and refining processes (including handling, processing, interest
      and provisional
      settlement fees, sampling, assaying and representation costs, penalties and
      other processor
      deductions);

    

    (b
      ) all
      costs, charges and expenses paid or incurred by Lessee for transportation
      (including freight, insurance, security, transaction taxes, handling, port,
      demurrage, delay and forwarding expenses incurred by reason of or in the course
      of such transportation) of Mineral Substances from the Premises to the place
      or
      places of treatment and thence to the place or places of sale;

    

    (3) Royalties
      shall accrue quarterly (based on calendar quarters) and shall become
      due and payable by Lessee prior to the end of the month following the end of
      each quarter. Royalty payments shall be accompanied by pertinent information
      in
      sufficient detail to explain the calculation of the royalty
      payment.

    

    (4) All
      statements for royalties rendered to Lessors by Lessee during any quarter shall
      conclusively be presumed to be true and correct after one year following the
      end
      of such quarter unless within said one-year period Lessors takes written
      exception thereto and makes a claim on Lessee for adjustment. No adjustment
      favorable to Lessee shall be made unless it is made within the same prescribed
      period.

    

    (5) Lessors,
      upon notice in writing to Lessee, and utilizing a designated representative,
      shall have the right to audit Lessee's accounts and records relating to the
      payment of the royalty for any calendar quarter within the one-year period
      following the end of such calendar quarter; provided, however, the making of
      any
      audit shall not extend the time for the taking of written exception to and
      the
      adjustment of accounts as provided for in the paragraph above. All audits shall
      be conducted by Lessors, at Lessors' sole expense, at the office of Lessee
      where
      the relevant books and records are maintained and such audit shall be conducted
      during normal business hours.

    

    C. Place
      and Allocation of Payment.
      All
      payments shall be made and allocated in accordance
      with the provisions of Section 9 below.

    

    D. No
      Royalty on Test Materials.
      Lessee
      shall have the right to mine and market amounts
      of Mineral Substances reasonably necessary for sampling. assaying. metallurgical
      testing and evaluation of the mineral potential of the Premises without
      incurring any obligation to make production royalty payments.

    

    E. The
      primary term base rental shall be adjusted upward or downward, on each Fifth
      yearly anniversary of the effective date by an increase or decrease based on
      the
      Consumer Price Index (1982-84=100), base beginning with August 2006, published
      by the Bureau of Labor and Statistics, United States Department of Labor, as
      follows:

    

    1. A
      basic
      index figure for the purpose herein shall be the index figure for the month
      of
      August 2006 for "all items" in the Consumer Price Index' All Urban Consumers,
      which is agreed to be 2039. If the corresponding index figure for the month
      of
      August immediately preceding the commencement of each FIVE (5) year term renewal
      of this Lease, shall vary from the basic index figure for the month of August
      2006, then the base rental for the Lease term commencing on the next anniversary
      of the Effective Date following shall be adjusted upward or downward to an
      amount arrived at by multiplying the sum of $50,000.00, times the percentage
      increase or decrease in the basic index figure from August 2006 to the month
      of
      August preceding the commencement of said the second five year term. (Example:
      Based upon an August 2006 Consumer Price Index of 203.9 and an increase to
      215.00 for August 2011. 215.0-203.9 = 5.44%. (5.44% X $50,000.00) + 50,000.00
      =
      $52,720.00 rental for the succeeding five year period.

    

    2. The
      adjustment of the base rental, as provided in paragraph 1 above, shall be
      determined as soon as the corresponding index figure to the basic index figure
      is available from the Bureau of Labor Statistics, United States Department
      of
      Labor, and the annual rental payment shall be adjusted accordingly. The adjusted
      rental shall be applicable from the beginning of each five year term, whether
      or
      not it has been calculated by said date.

    

    3. The
      parties understand and agree that the provision for adjustment of base rental
      herein contained is intended to provide for an increase or decrease, to keep
      the
      base rental, commencing with the second five year term of this lease and each
      five year term thereafter equivalent to the base rental adjusted for the
      increase or decrease in the Consumer Price Index.

    

    4. In
      the
      event that the Bureau of Labor Statistics, United States Department of Labor
      changes the form or the basis of calculating the Consumer Price Index, the
      parties agree that the comparable date shall be used to adjust the base rental
      to an amount equivalent to the purchasing power of such rental as of August,
      2006. In the event the Bureau of Labor Statistics shall change the base period
      (now 1982-84 = 100), the new index number for the month of August, 2006 shall
      be
      substituted for the number used in this Lease.

    

    F. Compensation
      for Surface Disturbance and Use.
      Lessors
      shall receive no compensation for surface damage to the Premises for the use
      of
      existing roads or alternate routes approved by Lessors.

    

    Lessors
      shall receive compensation for those rights granted to Lessee set forth in
      subsection B on any portion of the Premises used by Lessors in excess of a
      total
      of 100 acres upon which Lessors do not hold a 100% interest in the mineral
      estate. Such compensation shall be at the rate of $25.00 per acre per annum
      which may be prorated as follows:

    

    1. If
      Lessors have an interest in the mineral rights and that portion is actively
      being mined, the compensation shall be prorated on the basis of Lessors'
      interest. Example: Lessors have a 50% interest in the minerals on a parcel
      being
      actively mined. Lessors shall be compensated at the rate of $12.50 per acre
      per
      annum for any acreage in excess of 100 acres in the entire Leased
      area.

    

    2. If
      an
      area in excess of 100 acres is being disturbed by the uses set forth in
      subsection B, and Lessors have no mineral interest in the excess acreage,
      Lessors shall be compensated at the rate of $25.00 per acre per
      annum.

    

    3. If
      Lessors have an interest in the mineral estate and that portion of the Premises
      is not being actively mined but is occupied by the Lessee for other uses
      incidental to such mining operation, and the total disturbed acreage in the
      entire leased Premises exceeds 100 acres, Lessors shall be compensated at $25.00
      per acre per annum prorated as to their interest, unless they will receive
      royalties from other portions of the Premises Leased.

    

    There
      shall be excluded from the 100 acre limit, any portion of the Premises leased
      upon which Lessors own a 100% interest in the mineral estate and that portion
      is
      being actively mined.

    

    4.
      TITLE MATTERS

    

    A. Representations
      and Warranties.
      Lessors
      covenant and warrant to Lessee, which covenants
      and warranties shall survive termination of this Agreement, as
      follows:

    

    (1) Lessors
      warrant, to the best of their knowledge and belief, there are no claims,
      actions, suits or proceedings pending or threatened on account of or as a result
      of ownership of the real property which, if adversely determined, would prevent
      or hinder the conditions contained in this Agreement.

    

    (2) Lessors
      warrant, to the best of their knowledge and belief, they have good and
      merchantable title to the surface of the property, except for reservations
      and
      exceptions made by previous owners, including any reservations contained in
      patents issued by the United States of America or the State of Nevada and that
      Lessee has not entered into any leases, licenses, easements or other agreements,
      recorded or unrecorded, granting rights to any parties in any of the premises
      and no person or other entity has any right to possess in their occupancy of
      any
      portion of the premises. Notwithstanding the foregoing, nothing contained in
      this Agreement shall be construed to create an obligation on the part of the
      Lessors to take any title clearative action whatsoever, including, but not
      limited to, corrections to remove reservations, restrictions, restrictive
      easements, easements or rights-of-way of record as may exist to the date
      hereof.

    

    (3) Lessors
      warrant that they have no knowledge of violation of law or ordinance with
      respect to the use of ownership of the premises.

    

    (4) Lessors
      are duly organized and in good standing under the laws of the State of Nevada
      and has full right, power and capacity to enter into this Agreement under the
      terms set forth herein.

    

    (5) Lessee
      shall have quiet and peaceable possession of the Premises.

    

    (6) Lessors
      have no knowledge or information indicating that any reclamation obligations
      for
      prior operations on the Premises are unsatisfied.

    

    B. Title
      Defects, Defense and Protection.
      Lessee
      may at any time cause a title search to be made covering all or any part of
      the
      Premises. Lessors shall provide Lessee with any abstracts and other evidences
      of
      title in Lessors possession or control. If, (1) in the opinion of Lessee,
      Lessors title to all or any part of the Premises is defective or less than
      as
      represented in Section 4.A; or (2) Lessors title is contested, questioned or
      limited by any person or entity and Lessors are unable or unwilling to promptly
      correct the alleged defects, Lessee may, without obligation and without waiver
      of any remedies of Lessee, attempt to perfect or defend Lessors' title. In
      that
      event, Lessors shall cooperate as reasonably necessary to assist Lessee in
      its
      efforts to perfect or defend Lessors title, time being of the essence. Any
      improvement or perfection of title to the Premises shall inure to the benefit
      of
      Lessee in the same manner and to the same extent as if such improvement or
      perfection had been made prior to the execution of this Agreement.

    

    C. Lesser
      Interest.
      If
      Lessors' mineral ownership interest in any of the Premises from which production
      is made is less than 100%, then the production royalty payable pursuant to
      Section 3.B shall be payable only as to the share of production that is
      attributable to Lessors actual mineral ownership interest in the portion of
      the
      Premises from which such production is made. Such reductions in payments shall
      not waive or eliminate any other rights or remedies Lessee may have in
      connection with the extent of Lessors' actual mineral interest in the Premises.
      This lesser interest shall not apply to the payments payable pursuant to Section
      3.A.

    

    5.
      OBLIGATIONS OF LESSEE

    

    A. Outstanding
      Mineral Interests.
      Lessee
      has conducted a mineral review of the Premises described in Exhibit "A" and
      is
      aware Lessors' mineral interest in the above described lands vary from NONE
      to
      100%. Lessee shall have the obligation, to determine the outstanding mineral
      ownership on parcels of interest and obtain proper authorization to mine from
      those third parties.

    

    B. Protection
      from Liens.
      Lessee
      shall keep title to the Premises free and clear from any
      liens, claims and encumbrances (other than liens for taxes not yet due and
      delinquent) arising from
      its
      operations hereunder. Lessee shall pay for all labor performed upon or material
      furnished to the Premises at the request of Lessee and shall keep the Premises
      free and clear from liens of mechanics or materialmen in connection with
      services performed and material supplied at Lessee's request. Lessee shall,
      however, have the right in good faith to contest the validity of any lien,
      claim
      or liability and shall not be required to remove any such lien, claim or
      liability so long as Lessee is contesting the validity or the amount thereof.
      The foregoing provisions shall not restrict Lessee from placing a mortgage,
      trust deed or other lien upon its interest in the Premises for financing
      purposes.

    

    C. Indemnification.
      Lessee
      shall protect Lessors against any damages arising out of Lessee's
      operations on the Premises and shall indemnify Lessors against liability
      resulting from Lessee's
      operations on the Premises; provided, however, that any act or omission by
      Lessors or any agent acting on their behalf, or any breach of warranty by
      Lessors, shall not have been a contributing cause to the event giving rise
      to
      any such damages.

    

    D. Taxes
      and Assessments.
      Except
      as provided below, Lessee shall pay promptly before
      delinquency all taxes and assessments that may be assessed during the term
      of
      this Agreement
      upon the Premises resulting from Lessee's activities and products derived
      therefrom. However,
      Lessee shall always have the right to contest, in the courts or otherwise,
      either in its own name or in the name of Lessors, the validity or amount of
      any
      such taxes or assessments, or to take such other steps or proceedings as it
      may
      deem necessary to secure a cancellation, reduction, readjustment or equalization
      thereof, before it shall be required to pay such taxes or assessments.
      Notwithstanding the foregoing, Lessee shall not permit any part of the Premises
      to be conveyed and title lost as the result of nonpayment of such taxes and
      assessments. Lessee shall provide Lessors with copies of all receipts evidencing
      payment of such taxes and assessments. If Lessors should receive tax bills
      or
      claims that are the responsibility of Lessee, Lessors shall promptly forward
      such bills or claims to Lessee for appropriate action. Lessee shall pay the
      above-referenced taxes that are assessed from the Effective Date of this
      Agreement to its date of termination. Nothing in this paragraph shall be
      construed to obligate Lessee to pay that portion of any tax based upon an
      assessment of improvements or structures made or placed on the Premises by
      Lessors. Lessee shall not be liable for any taxes levied on or measured by
      Lessors' income or based upon payments made to Lessors by Lessee under this
      Agreement.

    

    E.
       Compliance
      with Laws and Regulations.
      Lessee
      shall perform all of its operations on the Premises in compliance with all
      applicable federal, State and local laws and regulations pertaining to
      environmental protection, reclamation and bonding. Specifically, Lessee shall
      comply with all permitting and other regulatory requirements set forth by the
      U.S. Bureau of Land Management, the U.S. Forest Service, the U.S. Environmental
      Protection Agency, the Nevada Department of Environmental Protection, and any
      other regulatory authority having rightful jurisdiction in the conduct of
      exploration, development and production operations on the Premises, including
      without limitation, requirements applicable to the plugging of drill holes
      and
      reclaiming, re-contouring and re-seeding of drill pads, trenches, access roads
      and other disturbances. Lessee shall have no obligations with respect to prior
      operations or preexisting conditions on the Premises. The indemnification
      obligations of Lessee pursuant to Section 5.B shall specifically be applicable
      to all of Lessee's environmental obligations. The obligations of Lessee under
      this Section 5.D shall survive termination of this Agreement.

    

    F. Cooperation
      with Lessors' Ranching Operations.
      In
      exercising its rights hereunder, Lessee shall use reasonable efforts to avoid
      interfering with Lessors' ranching operations on the Premises and immediate
      vicinity. Such efforts shall include, but not be limited to the
      following:

    

    (1) Location
      of roads.

    

    (2) Control
      of dust conditions on the roads which are causing damage to livestock forage
      whether such roads are on or off the leased lands but within the grazing area
      of
      use.

    

    (3) Fencing
      of areas which create a hazard for livestock use together with the gates and
      cattle guards as may be requested by Lessors.

    

    (4) Placement
      of culverts at road crossings and water courses and drainage to insure natural
      stream flow and drainage.

    

    (5) Reimbursement
      to Lessors for the full market value for all livestock killed or injured by
      activities of the Lessee.

    

    (6) Placement
      of livestock waters comparable to those now used by Ellison in the event
      existing stockwater sources are damaged or inaccessible to livestock and such
      use adversely effects the customary grazing of livestock in the
      area.

    

    (7) Remediation
      of any noxious weeds introduced by its activities on the premises.

    

    G. Lessors'
      Right to Inspect.
      During
      the term of this Agreement Lessee shall allow Lessors
      and representatives of Lessors, at their sole risk and expense, access to the
      Premises for the purposes of viewing or inspecting Lessee's operations, at
      times
      which, in Lessee's discretion, do not unreasonably interfere with its
      operations. Lessors and Lessors' representatives agree to indemnify, protect,
      save and hold harmless Lessee and its affiliated and direct and indirect parent
      corporations and their respective directors, partners, officers, employees,
      agents and corporate affiliates from and against any and all losses, costs,
      damages, expenses, attorney fees, claims, demands, liabilities, suits and
      actions of every kind and character that may be imposed upon or incurred by
      Lessee and its affiliated and direct and indirect parent corporations and their
      respective directors, partners, officers, employees, agents or corporate
      affiliates on account of, or arising directly or indirectly from, Lessors rights
      under this Section 5.G. Lessors acknowledges and agrees that information
      obtained pursuant to this Section 5.G shall be subject to the confidentiality
      provisions set forth in Section 10 hereof.

    

    H.  Delivery
      to Data.
      Upon
      termination of this Agreement, Lessee shall furnish Lessors within a reasonable
      time and without warranty or liability one set of copies of all available data
      generated from work by or for Lessee on the Premises. Such data is to include,
      but not necessarily be limited to, geochemical and assay data; sample maps;
      geologic maps, cross sections and reports; geophysical maps, cross sections
      and
      reports; and drill logs. Lessee shall authorize and permit Lessors to take
      possession of any available drill core, drill cuttings, rejects and pulps
      derived from the Premises whether or not such materials are stored on the
      Premises. Lessee shall have no liability to Lessors or any third party for
      lack
      of availability or poor condition of any such cores or samples or for any
      deficiencies in the accuracy, reliability or completeness of any information
      and
      data furnished to Lessors. Lessors shall assume all risks stemming from reliance
      upon such data by itself and by third parties after disclosure thereof by
      Lessors and shall indemnify and hold harmless Lessee as to any claims made
      by
      such third parties.

    

    I.
        No
      Obligation to Mine.
      Nothing
      in this Agreement shall impose any obligation or covenant,
      express or implied, upon Lessee to conduct any exploration, development or
      mining operations
      upon the Premises, it being the intent of the Parties that Lessee shall have
      sole discretion to determine the technical and economic feasibility, timing,
      method, manner and rate of conducting any such operations. Only the express
      duties and obligations provided under this Agreement shall be binding upon
      Lessee. The nature, manner and extent of all exploration development, mining
      and
      other operations, if any, shall be matters to be determined solely within the
      discretion of Lessee.

    

    J. Exploration.
      Lessee
      shall expend sums for exploration work within the premises as
      follows:

    

      
        	
                First
                  lease year

                Second
                  lease year

                Third
                  lease year

                Fourth
                  lease year

                Fifth
                  lease year

              	
                $

              	
                150,000.00

                450,000.00

                1,000,000.00
                  

                1,500,000.00

                2,000,000.00

              

      

    At
      the
      request of Lessors, Lessee shall provide to Lessors an accounting of the
      expenditures made to evidence satisfaction of this obligation.

     

    6.
      TERMINATION

    

    A.
       Termination
      by Lessors.
      In the
      event Lessors consider that Lessee has not complied with any obligation
      hereunder, Lessors shall notify Lessee setting out specifically in what respect
      it is claimed that Lessee has breached this Agreement. If the alleged breach
      is
      not cured within 30 days after written notice is given of default for failure
      to
      make a required cash payment or 60 days after written notice is given of any
      other default or if Lessee has not within that time either commenced to cure
      the
      alleged breach (other than a breach for non-payment) and does not thereafter
      diligently complete such cure, or challenges the legitimacy of the allegation,
      Lessors may terminate this Agreement by delivering to Lessee written notice
      of
      such termination; provided, however, that in the event Lessee challenges the
      legitimacy of the allegation, Lessee may give written notice to Lessors within
      such 30-day or 60-day period setting forth such fact. If Lessors give written
      notice within 15 days of Lessee's notice that Lessors reject Lessee's position
      then this Agreement shall not be terminable by Lessors until there is a final
      judicial determination by a court of competent jurisdiction that a default
      exists and shall not be terminated thereafter if Lessee shall satisfy such
      judgment within 30 days following its entry (or if an appeal of such judgment
      is
      taken following its affirmance by the highest court to which such an appeal
      is
      made). Failure of Lessors to give such notice shall constitute agreement by
      Lessors that Lessee is not in default. Lessors shall not be entitled to
      terminate this Agreement for any default which by its nature is not
      retroactively curable if Lessee has used its best efforts to cure such a default
      to the extent practical or if Lessee has paid Lessors' damages for such default
      where damages are an appropriate remedy. Lessors shall have no right to
      terminate this Agreement except as expressly provided in this Section 6.A,
      and
      termination of this Agreement shall be the sole remedy of Lessors. Neither
      the
      service of any notice nor the performance of any acts by Lessee intended to
      meet
      any such alleged breach shall be deemed an admission or presumption that Lessee
      has failed to perform all of its obligations under this Agreement.
      Notwithstanding the foregoing provisions of this Section 6.A, this Agreement
      may
      not be terminated, in whole or in part, by less than all the individuals or
      entities included within the term "Lessors."

    

    B. Termination
      by Lessee.
      Lessee
      shall have the right in its sole discretion to terminate this Agreement atany
      time with respect to all or any part of the Premises by giving Lessors written
      notice of such termination. Partial termination shall not cause a reduction
      in
      the payments prescribed in Section3.A. Upon such termination, all right, title
      and interest of Lessee under this Agreement shall terminate with respect to
      the
      Premises affected. Lessee shall be relieved of all further obligations set
      forth
      in this Agreement as to the Premises affected except those obligations, if
      any,
      which have accrued prior to such termination. Any taxes, assessments and
      governmental charges for which Lessee was responsible prior to termination
      shall
      be prorated as of the termination date.

    

    C. Release.
      Following termination of this Agreement as to all or a part of the Premises,
      Lessee shall promptly deliver to Lessors a fully executed release of this
      Agreement in recordable
      form, as to those parts of the Premises that are affected.

    

    D. Reclamation:
      Removal of Property.
      Upon
      termination of this Agreement, Lessee shall
      have a continuing right to enter upon the Premises to complete required
      reclamation. Lessee shall
      within one year after the date of termination remove from the Premises all
      of
      its machinery, buildings,
      structures, facilities, equipment and other property of every nature and
      description erected,
      placed or situated thereon except foundations of a permanent nature, supports,
      track and pipe
      placed in shafts, drifts or openings in the Premises. Any property of Lessee
      not
      removed by the
      end
      of this one-year period shall become the property of Lessors; however, Lessee
      does not warrant
      the condition or safety of any such property. Lessee shall have the right to
      keep a watchman
      on the Premises during this one-year period.

    

    7.
      LIENS

    

    In
      the
      event that Lessors fail to promptly pay, when due, taxes, mortgages or other
      liens levied against the Premises and payable by Lessors, Lessee shall have
      the
      right (but shall not be obligated) to pay such past due amounts and, if Lessee
      does so, Lessee shall be subrogated to all the rights of the holders thereof
      and
      Lessors shall reimburse Lessee for all such payments and for all related costs
      and expenses paid or incurred by Lessee (including, without limitation, related
      attorney fees) within three months after the same are paid or incurred by
      Lessee. Any payments to Lessors under this Agreement may be credited by
      reimbursements to Lessee under this Section. The provisions of this Section
      shall survive termination of this Agreement.

    

    8.
      FORCE MAJEURE

    

    Lessee
      shall not be liable for failure to perform any of its obligations, other than
      making payments due under Section 3A, during any period in which performance
      is
      prevented, in whole or inpart, by causes herein termed Force Majeure. For
      purposes of this Agreement, the term "Force Majeure" shall include labor
      disputes; acts of God; action of the elements, including inclement weather,
      floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules,
      regulations, orders, directives and requests of governmental bodies or agencies;
      delay, failure or inability of suppliers or transporters of materials, parts,
      supplies, services or equipment or by contractors' or subcontractors' shortage
      of, or inability to obtain, labor, transportation, materials, machinery,
      equipment, supplies, utilities or services; accidents; breakdown of equipment,
      machinery or facilities; judgments or orders of any court or agency; inability
      to obtain on reasonably acceptable terms or in reasonably acceptable time any
      public or private licenses, permits or other authorizations; curtailment or
      suspension of activities to remedy or avoid an actual or alleged, present or
      future violation of federal, state or local environmental standard; acts of
      war
      or conditions arising out of or attributable to war, whether declared or
      undeclared; riot; civil strife; fire; explosion; or any other cause whether
      similar or dissimilar to the foregoing, except for the inability to meet
      financial commitments. If Lessee desires to invoke the provisions of this
      Section, Lessee shall give notice of the commencement of the circumstances
      giving rise to such Force Majeure. The time for discharging Lessee's obligations
      with respect to the prevented performance, or the time within which Lessee
      must
      undertake or complete any activity, shall then be extended for the period of
      Force Majeure.

    

    9.
      NOTICES AND METHODS OF MAKING PAYMENTS

    

    A. 
      Notices.
      Any
      required notice or communication shall be in writing and shall be effective
      when personally delivered (including delivery by express courier service) to
      the
      following addresses, or when addressed as follows and deposited, postage
      prepaid, in the United States mail for certified delivery:

    

    

      
        	
                If
                  to Lessors:

                 

                 

                 

                 

                If
                  to Lessee:

                 

              	
                Walter
                  Winchell

                Winchell
                  Ranch

                PO
                  Box 456

                Wells,
                  NV 89835

                 

                Newgold,
                  Inc.

                400
                  Capitol Mall, Suite 900

                Sacramento,
                  CA 95814

              	
                Vernon
                  Dalton

                Dalton
                  Livestock

                HC
                  60, Box 125

                Wells,
                  NV 89835

                 

                 

                 

              

      

    Either
      party may, by notice to the other given as aforesaid, change its mailing address
      for future notices.

    

    B. Any
      payment required to be made by Lessee to lessors may be made in cash or by
      check, in the sole discretion of Lessee, and may be delivered personally or
      deposited in the United States mail, postage prepaid and registered or
      certified, return receipt requested. All payments shall be allocated as
      follows:

    

    (1) The
      initial consideration and each annual rental shall be paid one-half (1/2) to
      DALTON LIVESTOCK and one-half (1/2) to WINCHELL RANCH.

    

    (2) Any
      production royalty shall be paid to each Lessors or credited to each Lessor
      in
      the percentage as set forth in Exhibit "B".

    

    C. Payments
      After a Transfer of Interest. In
      the
      event payments should be made to other parties because of any transfer of the
      interest of any of the entities constituting Lessors, payments tendered to
      Lessors' designated agent, or to the party making the transfer if only one
      party
      constitutes Lessors, shall conclusively be deemed payment to the transferee
      until Lessee receives notice and evidence satisfactory to it from both the
      agent
      (if applicable) and the transferor that the transferor's interest has been
      transferred and that payments should be made to the transferee or the
      transferee's designated agent.

    

    10.
      CONFIDENTIALITY

    

    Lessors
      shall not, without the express written consent of Lessee not to be unreasonably
      withheld, disclose any information concerning the terms of this Agreement
      (excepting the Memorandum of Mineral Lease Agreement described in Section 11.F)
      or operations conducted under this Agreement (except information and data that
      is generally available to the public), nor issue any press releases concerning
      such information. However, if Lessors contemplates transferring its interest
      to
      a third party, it shall have the right to disclose such information to that
      party if it first obtains an agreement in writing from such third party,
      satisfactory to Lessee after review in advance, providing that the third party
      shall hold confidential the information furnished to it.

    

    11.
      MISCELLANEOUS 

    

    A. Cooperation
      by Lessors.
      Lessors
      shall execute all documents and otherwise cooperate with Lessee as needed in
      connection with the conduct of operations on the Premises, including the
      acquisition of governmental permits, post-mining reclamation approvals, water
      rights, and other rights and privileges related to the conduct of operations
      on
      the Premises and reclamation thereof. In that regard, Lessors agrees not to
      protest, challenge or otherwise oppose any water right or operational permit
      filings that Lessee may make to facilitate operations or proposed operations
      on
      or in connection with the Premises if, in the opinion of Lessors, any such
      water
      right or permit filing does not adversely effect Lessors' livestock operation
      or
      water rights presently held by Lessors.

    

    B.
      Sharing
      of Data by Lessors.
      Lessors
      shall, upon execution of this Agreement, provide or make available to Lessee
      any
      available technical and title information and drill core and other samples
      (such
      as cuttings, pulps, drill logs, assay results, feasibility reports, etc.)
      concerning the Premises that are in Lessors' possession or control. Similarly,
      Lessors shall, as soon as possible, provide or make available to Lessee any
      such
      information and samples that Lessors may acquire subsequent to the execution
      of
      this Agreement, whether obtained personally or from third parties..

    

    C.
      Relationship
      of the Parties.
      Nothing
      contained herein shall be deemed to constitute

    either
      Party, in its capacity as such, the partner, agent or legal representative
      of
      the other Party, or to create any partnership, mining partnership or other
      partnership relationship, or fiduciary relationship between them, for any
      purpose whatsoever. Except as expressly provided in this Agreement, each Party
      shall have the free, unrestricted and independent right to engage in and receive
      the full benefits of any and all business endeavors of any sort whatsoever
      outside the Premises or outside the scope of this Agreement, whether or not
      competitive with the endeavors contemplated herein, without consulting the
      other
      or inviting or allowing the other therein.

    

    D. Transfers.
      Lessors
      and Lessee and their respective successors shall have the right to assign or
      otherwise transfer their respective interests in this Agreement in whole or
      in
      part provided that the transferee agrees in writing to assume all, or a portion
      of all if applicable, obligations of Lessors or Lessee hereunder, as the case
      may be. No such transfer shall be effective against the non-transferring Party
      until that Party receives written notice of the transfer in accordance with
      Section 9A.

    

    E.
      Binding
      Effect.
      Subject
      to the provisions of Section 11.D above, the provisions of this
      Agreement shall inure to the benefit of and be binding upon the Parties and
      their respective

    heirs,
      executors, administrators, personal representatives, beneficiaries, successors
      and assigns.

    

    F. Memorandum
      of Agreement.
      Upon
      execution of this Agreement, the Parties shall also execute a short form of
      this
      Agreement (the "Memorandum of Mineral Lease Agreement") which shall be recorded
      in the office of the EIko County Recorder. The execution and recording of the
      Memorandum of Mineral Lease Agreement shall not limit, increase or in any manner
      affect any of the terms of this Agreement, or any rights, interests or
      obligations of the Parties.

    

    G. Construction
      of Agreement.
      This
      Agreement and its Exhibit constitute the entire understanding
      of the Parties with respect to the Premises, all previous agreements, promises,
      representations,
      negotiations, writings and understandings between the Parties concerning the
      Premises
      being expressly rescinded. Except for obligations of good faith and fair
      dealing, there are no terms or conditions, express or implied, other than herein
      stated. This Agreement shall be subject
      to all valid and applicable provisions of statutory or common law, rules and
      regulations. Should
      this Agreement or any of its provisions or operations be found to be contrary
      to
      any such valid
      law, rule or regulation, the latter shall be deemed to control and this
      Agreement shall be regarded
      as modified accordingly. Subject to the preceding sentence, no modification
      or
      alteration of this Agreement shall be effective unless made in writing and
      executed by the Parties with the same formality as this Agreement. Wherever
      the
      term "including" is used herein. it shall be deemed to mean "including without
      limitation, " and wherever the phrase "shall include" is used herein, it shall
      mean "shall include without limitation. "

    

    H. Headings.
      The
      headings used herein are for convenience only and shall be disregarded
      in construing and enforcing this Agreement.

    

    I. Multiple
      Counterparts.
      This
      Agreement may be executed in multiple counterparts and
      all
      counterparts taken together shall be deemed to constitute one and the same
      document

    

    J.
      Rule
      Against Perpetuities.
      The
      Parties do not intend nor desire for this Agreement to violate the common law
      Rule Against Perpetuities or any analogous statutory provision or any other
      statutory or common law rule imposing time limits on the vesting or termination
      of estates in
      land.
      If any provision of this Agreement does or would violate the Rule Against
      Perpetuities or
      any
      analogous statutory provision or any other statutory or common law rule imposing
      time limits
      on
      the vesting or termination of estates in land, then this Agreement shall not
      be
      deemed void
      or
      voidable, but shall be interpreted in such a way as to maintain and carry out
      the Parties' objectives
      to the fullest extent possible by law.

    

    K. Applicable
      law.
      This
      Agreement shall be construed, interpreted and governed by the
      laws
      of the State of Nevada.

    

    L.
      Attorney
      Fees.
      In the
      event either Party brings any action or proceeding for damages or equitable
      relief against the other Party for an alleged breach or default of any provision
      of this Agreement to recover monies due or to enforce, protect or establish
      any
      right or remedy of either Party under this Agreement, the prevailing Party
      shall
      be entitled to recover as a part of such action or proceeding reasonable
      attorney fees and court costs.

    

    M.
      Disputes.
      Disputes or differences between the Parties shall not interrupt performance
      of
      this Agreement or the continuation of operations hereunder. In the event of
      any
      dispute or difference. operations may be continued and payments may be made
      hereunder in the same manner as prior to such dispute or difference, In case
      of
      suit, adverse claim. dispute or question as to the ownership of the Premises
      or
      production royalties. or any interest therein. Lessee may, in its sole
      discretion, deposit the payment ( or the portion of the payment in dispute.
      if
      less than the whole payment is in dispute) into an escrow account and Lessee
      shall not be held in default in payment thereof until such suit, claim. dispute
      or question has been finally disposed of.

    

    IN
      WITNESS WHEREOF the Parties have executed this Agreement on the dates set forth
      in the acknowledgments below. but effective as of the Effective
      Date.

    

    
      	 	
              LESSORS:

               

              DALTON
                LIVESTOCK, a Nevada partnership

               

              By:
                /s/
                D. Vernon
                Dalton                                              
                

                  D.
                VERNON DALTON, General Partner

               

              WINCHELL
                RANCH, a Nevada corporation

               

              By:
                /s/
                Walter W.
                Winchell                                          
                

                  WALTER
                W. WINCHELL, President

               

              LESSEE:

               

              NEWGOLD,
                INC., a Delaware corporation

               

              By:/s/
                Scott
                Dockter                                                        

                  SCOTT
                DOCKTER, President

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