Document:

Unassociated Document

    AGREEMENT
AND PLAN OF MERGER

     

    AGREEMENT
AND PLAN OF MERGER (this “Agreement”) dated as of
December 30, 2009, by and among Blue Fin Capital, Inc., a Utah corporation (the
“Target”), Desert Hawk
Gold Corp., a Nevada corporation (“Desert Hawk”), and Desert Hawk
Acquisition Corp., a Utah corporation and wholly-owned subsidiary of Desert Hawk
(the “Merger Sub”). Certain capitalized
terms used in this Agreement are defined in ARTICLE XI of this
Agreement.

     

    WITNESSETH:

     

    WHEREAS,
Desert Hawk desires to acquire Target, and Target desires to be acquired by
Desert Hawk through the merger of Merger Sub with and into Target, with Target
being the surviving entity pursuant to the terms hereinafter set forth (the
“Merger”);

     

    WHEREAS,
the respective Boards of Directors of Desert Hawk, Merger Sub, and Target have
approved and declared advisable the Merger upon the terms and subject to the
conditions of this Agreement, and in accordance with Nevada Corporation Law in
the case of Desert Hawk and the Utah Revised Business Corporation Act (the
“Utah Act”) in the case
of Merger Sub and Target;

     

    WHEREAS,
the respective Boards of Directors of Desert Hawk, Merger Sub, and Target have
determined that the Merger is in furtherance of and consistent with their
respective business strategies and is in the best interest of their respective
shareholders, and Desert Hawk, as the sole shareholder of Merger Sub, has
approved this Agreement and the Merger, and the holders of Target Common Stock
(as defined below) will approve this Agreement and the Merger prior to the
Closing; and

     

    WHEREAS,
Desert Hawk, Merger Sub, and Target each intends, for federal income tax
purposes, that the Merger contemplated hereby constitute a reorganization
pursuant to Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”).

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereto, intending to be legally
bound hereby, agree as follows:

     

    ARTICLE
I.

    ADOPTION
OF AGREEMENT

     

    1.1     The
Merger.  Upon the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.2 herein), in accordance with the relevant provisions of
the Utah Act, Merger Sub shall be merged with and into Target, and Target shall
be the surviving corporation of the Merger (the “Surviving Corporation”). Upon completion of the
Merger, the existence of Merger Sub shall cease at the Effective Time as a
consequence of the Merger.

     

    1.2     Effective Date and Time of
Merger.  Upon the terms and subject to the conditions hereof,
as soon as practicable after the
satisfaction or waiver of the conditions set forth in ARTICLE VII and ARTICLE
VIII of this Agreement, Articles of Merger (the “Articles of Merger”) shall be
executed and delivered to the Utah Division of Corporations and Commercial Code
in accordance with Section 16-10a-1105 of the Utah Act (the time of such filing
being the “Effective
Time”, and
the date of such filing being the “Effective Date”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    1.3     Surviving
Corporation.  Following the Merger, Target shall continue to
exist under and be governed by the laws of the State of Utah and shall be the
Surviving Corporation.

     

    1.4     Effect of
Merger.  At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the Utah Act.  Without
limiting the generality of the foregoing, at the Effective Time, all the
property, rights, privileges, powers, and franchises of the Target and the
Merger Sub shall vest in the Surviving Corporation.

     

    1.5     Articles of Incorporation of
Surviving Corporation.  The Articles of Incorporation of
Target, as in effect at the Effective Time, shall continue in full force and
effect, and shall be the Articles of Incorporation of the Surviving
Corporation.

     

    1.6     Bylaws of Surviving
Corporation.  The Bylaws of Target, as in effect at the
Effective Time, shall continue in full force and effect, and shall be the Bylaws
of the Surviving Corporation.

     

    1.7     Directors and Officers of
Surviving Corporation.  The directors of Target immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation.  The officers
of Target immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation.

     

    ARTICLE
II.

    PLAN
OF MERGER

     

    2.1     Conversion.

     

    (a)           Conversion of Target Common
Stock.  At the Effective Time each share of Common Stock, par
value $0.001 per share, of Target (the “Target Common Stock”), issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive one (1) share of Common Stock, par value $0.01 per share,
of Desert Hawk (the “Desert
Hawk Common Stock”) (such conversion rate is hereinafter referred to as
the “Common Conversion
Rate”).  All converted shares of Target Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously representing any such converted
shares shall thereafter represent the right to receive a certificate (or
electronic register) representing that number of shares of Desert Hawk Common
Stock into which such shares of Target Common Stock were converted in the Merger
pursuant to this Agreement.

     

    (b)           Merger
Sub.  Each share of common stock, par value $0.001 per share,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and be exchanged for one (1) newly and validly issued,
fully paid and nonassessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.

     

    
      
        
        

      

      
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    2.2     Dissenter
Shareholders.  Any holder of shares of Target Common Stock
issued and outstanding immediately prior to the Effective Time, with respect to
which dissenters’ rights, if any, are available by reason of the Merger pursuant
to Section 16-10a-1302 of the Utah Act, who has not voted in favor of the Merger
or consented thereto in writing and who complies with the requirements of
Section 16-10a-1300 et seq. of the Utah Act (the “Target Dissenting
Shares”) shall not be entitled to
receive any Desert Hawk Common Stock pursuant to this ARTICLE II, unless such
holder (the “Target Dissenting
Shareholder(s)”) fails to perfect, effectively withdraws or loses its
dissenters’ rights under the Utah Act.  Each Target Dissenting
Shareholder shall be entitled to receive only such rights as are granted under
Section 16-10a-1300 et seq. of the Utah Act.  If any Target Dissenting
Shareholder fails to perfect, effectively withdraws or loses such dissenters’
rights under the Utah Act, such holder shall no longer be deemed a Target
Dissenting Shareholder and such holder’s Target Dissenting Shares shall
thereupon be deemed to have been converted as of the Effective Time into the
right to receive that class and number of shares of Desert Hawk Common Stock to
which such shares of Target Common Stock are entitled pursuant to this ARTICLE
II, in each case without interest.  Prior to the Effective Time,
Target shall give Desert Hawk prompt notice of any written demands for appraisal
pursuant to Section 16-10a-1321 of the Utah Act received by Target, withdrawals
of any such written demands and any other documents or instruments received by
Target in connection therewith.  Prior to the Effective Time, Target
shall not, except with the prior written consent of Desert Hawk, which consent
shall not unreasonably be withheld or delayed, make any payment with respect to,
or settle or offer to settle, any such demands, or agree to do any of the
foregoing.  Any payments made with respect to Target Dissenting Shares
shall be made solely by the Surviving Corporation, and no funds or other
property shall be provided by Target, Desert Hawk or Merger Sub for such
payment.

     

    2.3     Conversion of Shares of
Target Common Stock.  The manner of converting shares of Target
Common Stock into shares of Desert Hawk Common Stock in accordance with ARTICLE
II above shall be as follows:

     

    (a)           From
and after the Effective Time, Desert Hawk (either directly or through its
transfer agent) shall act as exchange agent in effecting the conversion of
shares of Target Common Stock pursuant to Section 2.1(a)
hereof.  Desert Hawk will issue certificates representing the shares
of Desert Hawk Common Stock issued to each holder of shares of Target Common
Stock other than a Target Dissenting Shareholder (each, a “Participating Shareholder”) in
connection with the Merger. Desert Hawk (either directly or through its transfer
agent) shall cause certificates representing shares of Desert Hawk Common Stock
to be distributed to each Participating Shareholder, all in accordance with the
provisions of this ARTICLE II.  The shares which prior to the
Effective Time represented outstanding shares of Target Common Stock shall
forthwith be canceled.

     

    (b)           Participating
Shareholders shall, for all purposes, be deemed to be shareholders of Desert
Hawk, as of the Effective Time, irrespective of whether they have received their
certificates representing shares of Desert Hawk Common Stock.

     

    2.4     Restricted
Stock.  The Desert Hawk Common Stock to be issued pursuant to
the Merger shall not have been registered and shall be characterized as
“restricted securities” under the federal securities laws, and under such laws
such shares may be resold without registration under the Securities Act only in
certain limited circumstances.  Each certificate evidencing Desert
Hawk Common Stock to be issued pursuant to the Merger shall bear an appropriate
restrictive legend in accordance with Rule 144 under the Securities
Act.

     

    
      
        
        

      

      
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    ARTICLE
III.

    CLOSING

     

    3.1     Closing
Date.  Immediately following the Effective Time, the closing of
the Merger and the consummation of the other transactions contemplated by this
Agreement (the “Closing”) shall take place at the
offices of Ronald N. Vance, Attorney at Law, 1656 Reunion Avenue, Suite 250,
South Jordan, Utah, at 9:00 a.m., mountain standard time, on December 31, 2009,
or as soon as practicable after the satisfaction or waiver of the conditions set
forth in ARTICLE VII and ARTICLE VIII of this Agreement, or such other date,
time and place as each of the parties hereto may otherwise agree in writing (the
“Closing
Date”).

     

    3.2     Execution of Merger
Documents.  On the Closing Date, the parties hereto shall cause
the Merger to be consummated by filing the Articles of Merger, together with any
required, related certificates, with the Utah Division of Corporations and
Commercial Code, in such form as required by, and executed in accordance with
the relevant provisions of, the Utah Act.  The Merger shall be
effective as of the Effective Time.

     

    ARTICLE
IV.

    REPRESENTATIONS
AND WARRANTIES OF TARGET

     

    Target
represents and warrants to Desert Hawk that all of the statements contained in
this ARTICLE IV are true as of the date of this Agreement (or, if made as of a
specified date, as of such date) except as otherwise provided in this
Agreement.

    

    4.1     Due
Incorporation.  Target is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah, with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being owned, leased, operated and
conducted.  True, correct and complete copies of the Articles of
Incorporation and Bylaws of Target have been delivered to Desert
Hawk.  Target does not have any wholly or partially owned subsidiaries
and does not own any economic, voting or management interests in any other
Person.

     

    4.2     Due
Authorization.  Subject to the Shareholder Approval, Target has
full power and authority to enter into this Agreement, the Articles of Merger
and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by Target of this
Agreement have been duly and validly approved and authorized by the Board of
Directors of Target, and, other than the Shareholder Approval, no other actions
or proceedings on the part of Target are necessary to authorize this Agreement,
the Articles of Merger and the transactions contemplated hereby and
thereby.  Target has duly and validly executed and delivered this
Agreement.  This Agreement constitutes the legal, valid and binding
obligation of Target, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or other laws from time to time in effect
which affect creditors’ rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

     

    
      
        
        

      

      
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    4.3     Consents;
Non-Contravention.

     

    (a)           Except
for the filing of the Articles of Merger with the appropriate authorities
pursuant to the Utah Act, filings required by applicable federal and state
securities laws, and the requirement to obtain Shareholder Approval, no permit,
consent, authorization or approval of, or filing or registration with, any
Governmental Authority or any other Person not a party to this Agreement, is
necessary in connection with the execution, delivery and performance by Target
of this Agreement or the Articles of Merger, or the consummation of the
transactions contemplated hereby or thereby, or for the lawful continued
operation by Desert Hawk following the Effective Time of the respective
businesses currently conducted by the Target Parties.

     

    (b)           Except
as would not result in a Target Material Adverse Effect, the execution, delivery
and performance by Target of this Agreement and the Articles of Merger do not
and will not (i) violate any Law; (ii) violate or conflict with, result in a
breach or termination of, or constitute a default (or a circumstance which, with
or without notice or lapse of time or both, would constitute a default) under
any Target Material Contract; (iii) give any third party any additional right
(including a termination right) under, permit cancellation of, or result in the
creation of any Lien (except for any Lien for taxes not yet due and payable)
upon any of the assets or properties of any Target Party under any Contract to
which any Target Party is a party or by which any Target Party or any of their
respective assets or properties are bound; (iv) permit the acceleration of the
maturity of any indebtedness of any Target Party or indebtedness secured by any
Target Party’s assets or properties; (v) violate or conflict with any provision
of the Articles of Incorporation or Bylaws of Target; or (vi) result in the
activation of any anti-dilution rights or a reset or repricing of any debt or
security instrument of any creditor or equity holder of any Target Party except
as provided for in this Agreement.

     

    4.4     Capitalization.  The
authorized capital stock of Target consists of 50,000,000 shares of Target
Common Stock and 5,000,000 shares of Target Preferred Stock.  On the
date hereof, there are issued and outstanding 2,713,636 shares of Target Common
Stock and no shares of preferred stock.  All of the issued and
outstanding shares of Target Common Stock are validly issued, fully paid and
non-assessable and the issuance thereof was not subject to preemptive rights or
was issued in compliance therewith.  No shares of Target’s capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by Target; (ii) there are no outstanding
debt securities; (iii) there are no outstanding shares of capital stock,
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 Target, or contracts, commitments, understandings or
arrangements by which Target is or may become bound to issue additional shares
of capital stock of Target 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 Target; (iv) there are
no agreements or arrangements under which Target is obligated to register the
sale of any of its securities under the Securities Act; (v) there are no
outstanding securities of Target which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which Target is or may become bound to redeem a security of
Target; (vi) there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of the shares as
described in this Agreement; (vii) Target does not have any stock appreciation
rights plans or agreements or any similar plan or agreement; and (viii) there is
no dispute as to the class of any shares of Target’s capital stock.

     

    
      
        
        

      

      
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    4.5     No Material
Liabilities.  The Target has no material debts, liabilities or
obligations of any nature.

     

    4.6     Contracts.  The
Target has no material Contracts.

     

    4.7     Reorganization
Treatment.

     

    (a)           Assets.  At
the Effective Time, Target will hold at least 90 percent of the fair market
value of its net assets and at least 70 percent of the fair market value of its
gross assets held immediately prior to the Effective Time.  For
purposes of this representation, amounts paid by the Surviving Corporation to
holders of Target Dissenting Shares and, pursuant to Section 2.1(g), holders of
Target Common Stock and amounts used by Target or the Surviving Corporation to
pay Merger expenses, in each case, will be treated as constituting assets of
Target immediately prior to the Effective Time.

     

    (b)           Business.  Target
currently conducts a business.  Such business is Target’s “historic
business” within the meaning of Treasury Regulations Section 1.368-1(d), and no
assets of Target have been sold, transferred, or otherwise disposed of that
would prevent Desert Hawk from continuing the “historic business” of Target or
from using a “significant portion” of Target’s “historic business assets” in a
business following the Merger, as such terms are used in Treasury Regulations
Section 1.368-1(d).

     

    (c)           Investment
Company.  Target is not an “investment company” as defined in
Sections 368(a)(2)(F)(iii) and (iv) of the Code.

     

    (d)           Redemptions and
Distributions.  Neither Target nor any person related to Target
within the meaning of Treasury Regulations Sections 1.368-1(e)(3), (e)(4) and
(e)(5) has purchased, redeemed or otherwise acquired, or made any distributions
with respect to, any of Target’s stock prior to or in contemplation of the
Merger, or otherwise as part of a plan of which the Merger is a
part.

     

    (e)           Dividends.  At
the Effective Time, there will be no accrued but unpaid dividends on Target
Common Stock.

     

    (f)           Control.  In
the Merger, stock of Target representing “control” of Target (within the meaning
of Section 368(c) of the Code) will be exchanged solely for “voting stock” of
Desert Hawk (within the meaning of Sections 368(a)(1)(B) and (2)(E) of the
Code).

     

    4.8     Environmental.  To
the Knowledge of Target, it is in compliance in all material respects with all
applicable federal, state and local laws and regulations governing the
environment, public health and safety and employee health and safety (including
all provisions of the Occupational Safety and Health Act (“OSHA”)) and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand or
notice has been filed or commenced against Target and, to the Knowledge of
Target, no such charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand or notice is pending or threatened in
writing.

     

    
      
        
        

      

      
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    4.9     Litigation.  There
are no actions, suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations pending or, to the Knowledge of
Target, threatened against Target or any of its officers or directors in their
capacity as such, or any of its properties or businesses, and Target has no
Knowledge of any facts or circumstances which may reasonably be likely to give
rise to any of the foregoing.  Target is not subject to any order,
judgment, decree, injunction, stipulation or consent order of or with any court
or other Governmental Authority.  Target has not entered into any
agreement to settle or compromise any proceeding pending or threatened in
writing against it which has involved any obligation for which Target has any
continuing obligation.  There are no claims, actions, suits,
proceedings, or investigations pending or, to the Knowledge of Target,
threatened by or against Target with respect to this Agreement or the Articles
of Merger, or in connection with the transactions contemplated hereby, and
Target has no reason to believe there is a valid basis for any such claim,
action, suit, proceeding or investigation.

     

    4.10   Board
Approval.  The Board of Directors of Target, at a meeting duly
called and held prior to execution of this Agreement, duly adopted resolutions,
unanimously approved by those directors present at such meeting: (a) approving
and declaring advisable this Agreement, the Merger and the transactions
contemplated hereby (such approvals having been made in accordance with the Utah
Act); (b) determining that the terms of the Merger are fair to and in the best
interests of Target and its shareholders; (c) recommending that the shareholders
of Target approve and adopt this Agreement and the Merger; and (d) adopting this
Agreement, which resolutions have not been modified, supplemented or rescinded
and remain in full force and effect.

     

    4.11   Title to
Properties.  To the Knowledge of Target, Target: (a) has good
and marketable title to, and is the lawful owner of, all of the tangible and
intangible assets, properties (including real property); and (b) at the
Effective Time, will have good and marketable title to, and will be the lawful
owner of, all of such tangible and intangible assets, properties and rights, in
any case free and clear of any Liens, except for (i) any Lien for current taxes
not yet due and payable and (ii) Liens that have arisen in the ordinary course
of business, consistent with past practice, which do not, individually or in the
aggregate, materially detract from the value of the assets subject to such Lien,
or materially impair the operations of Target.

     

    4.12   Full
Disclosure.  No representation or warranty by Target contained
in this Agreement contains any untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstances under which it
was made, to make any of the representations and warranties therein not
misleading.

     

    
      
        
        

      

      
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    ARTICLE
V.

    REPRESENTATIONS
OF DESERT HAWK AND MERGER SUB

     

    Desert
Hawk represents and warrants to Target that all of the statements contained in
this ARTICLE V are true as of the date of this Agreement (or, if made as of a
specified date, as of such date) except as otherwise provided in this
Agreement.

     

    5.1     Due Incorporation; Foreign
Qualification.  Desert Hawk is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with all requisite power and authority to own, lease and operate its properties
and to carry on its businesses as they are now being owned, leased, operated and
conducted.  To the Knowledge of Desert Hawk, Desert Hawk is qualified
or licensed to do business, and is in good standing, as a foreign corporation in
each jurisdiction where the nature of its properties owned, leased or operated
by it, and the business transacted by it, requires such qualification or
licensing, except where the failure to be so qualified or licensed and in good
standing would not, individually or in the aggregate, have an Desert Hawk
Material Adverse Effect.  True, correct and complete copies of the
Articles of Incorporation and Bylaws of Desert Hawk, each as amended or restated
as of the date
hereof, have been delivered to Target.  Except with respect to the
ownership by Desert Hawk of all of the issued and outstanding capital stock of
Merger Sub, Desert Hawk (a) has no wholly or partially owned subsidiaries and
(b) owns no economic, voting or management interest in any other
Person.

     

    5.2     Due
Authorization.  Each of Desert Hawk and Merger Sub has full
power and authority to enter into, as applicable, this Agreement and the
Articles of Merger, and each has full power and authority to consummate the
transactions contemplated hereby and thereby.  The execution, delivery
and performance by Desert Hawk and Merger Sub of this Agreement have been duly
and validly approved and authorized by each of their Boards of Directors and by
the sole shareholder of the Merger Sub; and no other actions or proceedings on
the part of either Desert Hawk or Merger Sub are necessary to authorize this
Agreement, the Articles of Merger or the transactions contemplated hereby and
thereby.  Desert Hawk and Merger Sub each has duly and validly
executed and delivered this Agreement, and Merger Sub will duly and validly
execute and deliver the Articles of Merger on the Effective
Date.  This Agreement constitutes the legal, valid and binding
obligation of each of Desert Hawk and Merger Sub, enforceable in accordance with
its terms as to each of Desert Hawk and Merger Sub, except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or other laws from time to time in effect
which affect creditors’ rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

     

    5.3     Non-Contravention.

     

    (a)           Except
for the filing of the Articles of Merger with the appropriate authorities
pursuant to the Utah Act and filings required by applicable federal and state
securities laws, no permit, consent, authorization or approval of, or filing or
registration with, any Governmental Authority, or any other Person not a party
to this Agreement, is necessary in connection with the execution, delivery and
performance by Desert Hawk or Merger Sub of this Agreement or the Articles of
Merger, or the consummation of the transactions contemplated hereby or thereby,
or for the lawful continued operation of the respective businesses currently
conducted by Desert Hawk or Merger Sub following the Effective
Time.  There are no Contracts to which Desert Hawk or Desert Hawk Sub
is a party that require a novation or consent to the Merger or change of
control, as the case may be, prior to the Effective Time.

     

    
      
        
        

      

      
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    (b)           Except
as would not result in a Desert Hawk Material Adverse Effect, the execution,
delivery and performance by each of Desert Hawk and Merger Sub of this Agreement
and the Articles of Merger do not and will not (i) violate any Law; (ii) violate
or conflict with, result in a breach or termination of, or constitute a default
(or a circumstance which, with or without notice or lapse of time or both, would
constitute a default) under any Contract; (iii) give any third party any
additional right (including a termination right) under, permit cancellation of,
or result in the creation of any Lien (except for any Lien for taxes not yet due
and payable) upon any of the assets or properties of Desert Hawk under any
Contract to which Desert Hawk is a party or by which Desert Hawk or any of its
assets or properties are bound; (iv) permit the acceleration of the maturity of
any indebtedness of Desert Hawk or indebtedness secured by Desert Hawk’s assets
or properties; (v) violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Desert Hawk; or (vi) result in the activation of any
anti-dilution rights or a reset or repricing of any debt or security instrument
of any creditor or equity holder of Desert Hawk except as provided for in this
Agreement.

     

    5.4     Capitalization.

     

    (a)           The
authorized capital stock of Desert Hawk consists of an aggregate of 100,000,000
shares of Common Stock, par value $0.01 per share.  On the date hereof
there are issued and outstanding an aggregate of 4,357,408 shares of Common
Stock.  All such issued and outstanding shares of capital stock are
validly issued, fully paid and non-assessable, and issuance thereof was not
subject to preemptive rights or made in compliance therewith.  Upon
the issuance of shares of Desert Hawk Common Stock to Participating Shareholders
as contemplated herein, such shares, when issued, will be validly issued, fully
paid and non-assessable, and will not be subject to preemptive
rights.

     

    (b)             No
shares of Desert Hawk’s capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by
Desert Hawk; (ii) there are no outstanding debt securities; (iii) there are no
outstanding shares of capital stock, 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 Desert
Hawk, or contracts, commitments, understandings or arrangements by which Desert
Hawk is or may become bound to issue additional shares of capital stock of
Desert Hawk 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 Desert Hawk; (iv) there are no
agreements or arrangements under which Desert Hawk is obligated to register the
sale of any of its securities under the Securities Act; (v) there are no
outstanding securities of Desert Hawk which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which Desert Hawk is or may become bound to redeem a security of
Desert Hawk; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the shares as described in this Agreement; (vii) Desert Hawk does not have any
stock appreciation rights plans or agreements or any similar plan or agreement;
and (viii) there is no dispute as to the class of any shares of Desert Hawk’s
capital stock.

     

    
      
        
        

      

      
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    5.5     Title to
Properties.  To the Knowledge of Desert Hawk, Desert Hawk: (a)
has good and marketable title to, and is the lawful owner of, all of the
tangible and intangible assets, properties (including real property) and rights
reflected as being owned in the Desert Hawk Financial Statements; and (b) at the
Effective Time, will have good and marketable title to, and will be the lawful
owner of, all of such tangible and intangible assets, properties and rights, in
any case free and clear of any Liens, except for (i) any Lien for current taxes
not yet due and payable and (ii) Liens that have arisen in the ordinary course
of business, consistent with past practice, which do not, individually or in the
aggregate, materially detract from the value of the assets subject to such Lien,
or materially impair the operations of Desert Hawk.

     

    5.6     Tax
Matters.  Neither Desert Hawk nor any of Desert Hawk’s
affiliates has taken or agreed to take any action that would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.  Desert Hawk is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.

     

    5.7     Reorganization
Treatment.

     

    (a)           Intention Regarding
Target.  Desert Hawk has no plan or intention: (i) to liquidate
Target; (ii) to merge Target into another corporation; (iii) to sell or
otherwise dispose of any shares of stock of Target pursuant to this Agreement,
except for transfers and successive transfers described in Treasury Regulation
Section 1.368-2(k) or transfers and successive transfers to one or more
corporations controlled in each transfer by the transferor corporation (within
the meaning of Section 368(c) of the Code); or (iv) to cause Target to sell or
otherwise dispose of any of its assets, except for (w) dispositions made in the
ordinary course of business, (x) transfers and successive transfers described in
Treasury Regulation Section 1.368-2(k) or transfers and successive transfers to
one or more corporations controlled in each transfer by the transferor
corporation (within the meaning of Section 368(c) of the Code), (y) dispositions
after which Target would continue to hold the amount of assets set forth in
Section 4.15(a) following the Merger (assuming the correctness of the
representation set forth in Section 4.15(a)), or (z) transfers to partnerships
that satisfy the provisions of Treasury Regulation Section
1.368-1(d)(4)(iii)(B).

     

    (b)           Intention Regarding Desert
Hawk Common Stock.  Neither Desert Hawk nor any Person related
to Desert Hawk within the meaning of Treasury Regulation Sections 1.368-1(e)(3),
(e)(4) and (e)(5) has any plan or intention to repurchase, redeem or otherwise
acquire any of the stock of Desert Hawk issued to the Participating Shareholders
pursuant to this Agreement following the Merger.  Other than pursuant
to this Agreement, neither Desert Hawk nor any Person related to Desert Hawk
within the meaning of Treasury Regulation Sections I.368-1(e)(3), (e)(4) and
(e)(5) has acquired any Target Common Stock in contemplation of the Merger, or
otherwise as part of a plan of which the Merger is a part.

     

    
      
        
        

      

      
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    (c)           Control.  Prior
to the Merger, Desert Hawk will be in control of Merger Sub, and following the
Merger, Desert Hawk will be in control of Target, within the meaning of Section
368(c) of the Code.  Desert Hawk has no plan or intention to cause
Target, after the Effective Time, to issue additional shares of stock that would
result in Desert Hawk losing control of Target within the meaning of Section
368(c) of the Code.

     

    (d)           Business.  Following
the Merger, Desert Hawk intends to continue the historic business of each Target
Party (or, alternatively, if such Target Party has more than one line of
business, intends to continue at least one significant line of such Target
Party’s historic business) or use a significant portion of such Target Party’s
historic business assets in a business, in a manner consistent with Treasury
Regulation Section 1.368-1(d).

     

    (e)           Investment
Company.  Desert Hawk is not an “investment company” as defined
in Sections 368(a)(2)(F)(iii) and (iv) of the Code.

     

    (f)           
Dividends.  At
the Effective Time, there will be no accrued but unpaid dividends on any stock
of Desert Hawk.

     

    5.8     Environmental.  To
the Knowledge of Desert Hawk, Desert Hawk is in compliance in all material
respects with all applicable federal, state and local laws and regulations
governing the environment, public health and safety and employee health and
safety (including all provisions of OSHA) and no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, demand or notice has been filed
or commenced against Desert Hawk and, to the Knowledge of Desert Hawk, no such
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand or notice is pending or threatened in writing.

     

    5.9     Litigation.  There
are no actions, suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations pending or, to the Knowledge of
Desert Hawk, threatened against Desert Hawk or any of its officers or directors,
in their capacities as such, or any properties or businesses of Desert Hawk or
any of its officers or directors; and, to the Knowledge of Desert Hawk, there
are no facts or circumstances which may reasonably be likely to give rise to any
of the foregoing.  Desert Hawk is not subject to any order, judgment,
decree, injunction, stipulation or consent order of or with any court or other
Governmental Authority; and Desert Hawk has not entered into any agreement to
settle or compromise any proceeding pending or threatened in writing which has
involved any obligation for which Desert Hawk has any continuing
obligation.  There are no claims, actions, suits, proceedings or
investigations pending or, to the Knowledge of Desert Hawk, threatened by or
against Desert Hawk with respect to this Agreement or in connection with the
transactions contemplated hereby, and Desert Hawk has no reason to believe there
is a valid basis for any such claim, action, suit, proceeding or
investigation.

     

    5.10   Compliance with
Laws.  Desert Hawk is not subject to or in default under any
order of any court, Governmental Authority or other agency or arbitration board
or tribunal to which it is or was subject; and Desert Hawk is not in violation
of any Laws (including, but not limited to, those relating to environmental,
safety, building, product safety or health standards or labor or employment
matters), except for such violations as would not, individually or in the
aggregate, have a Desert Hawk Material Adverse Effect.  The businesses
of Desert Hawk have been conducted in material compliance with all Applicable
Laws, except to the extent failure, individually or in the aggregate, would not
have a Desert Hawk Material Adverse Effect.

     

    
      
        
        

      

      
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    5.11   Board
Approval.  The Boards of Directors of each of Desert Hawk and
Merger Sub, at meetings duly called and held or pursuant to written consents
fully executed prior to execution of this Agreement, duly and unanimously
adopted resolutions: (a) approving and declaring advisable this Agreement, the
Merger and the transactions contemplated hereby (such approvals having been made
in accordance with the Utah Act as it relates to Merger Sub and applicable laws
of the State of Nevada as they relate to Desert Hawk); (b) determining that the
terms of the Merger are fair to and in the best interests of Desert Hawk and its
shareholders; and (c) adopting this Agreement, which resolutions have not been
modified, supplemented or rescinded and remain in full force and
effect.

     

    5.12   Takeover
Restrictions.  No Takeover Statute is applicable to the Merger,
except for such statutes or regulations as to which all necessary action has
been taken by Desert Hawk and Merger Sub and their Boards of Directors and the
sole shareholder of the Merger Sub, if required, to permit the consummation of
the Merger in accordance with the terms hereof, nor does Desert Hawk or Merger
Sub have any shareholder rights or similar “poison pill” plans.

     

    5.13   Full
Disclosure.  No representation or warranty by Desert Hawk
contained in this Agreement contains any untrue statement of material fact or
omits to state a material fact necessary, in light of the circumstances under
which it was made, to make any of the representations and warranties therein not
misleading.

     

    ARTICLE
VI.

    COVENANTS

     

    6.1     Implementing
Agreement.  Subject to the terms and conditions hereof, each
party hereto shall use its commercially reasonable efforts to take, or cause to
be taken, all appropriate action required of it to consummate and make effective
the transactions contemplated by this Agreement.

     

    6.2     Access to Information and
Facilities; Confidentiality.

     

    (a)           From
and after the date of this Agreement, Target shall allow Desert Hawk and its
representatives access during normal business hours to all of the facilities,
properties, books, Contracts, commitments and records of Target and shall make
the officers and employees of Target available to Desert Hawk and its
representatives as Desert Hawk or its representatives shall from time to time
reasonably request.  Desert Hawk and its representatives shall be
furnished with any and all information concerning Target, which Desert Hawk or
its representatives reasonably request and can be obtained by Target without
unreasonable effort or expense.

     

    (b)           From
and after the date of this Agreement, Desert Hawk shall allow Target and its
representatives access during normal business hours to all of the facilities,
properties, books, Contracts, commitments and records of Desert Hawk and its
subsidiaries and shall make the officers and employees of Desert Hawk available
to Target and its representatives as Target or its representatives shall from
time to time reasonably request.  Target and its representatives shall
be furnished with any and all information concerning Desert Hawk and its
subsidiaries, which Target or its representatives reasonably request and can be
obtained by Desert Hawk without unreasonable effort or expense.

     

    
      
        
        

      

      
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    (c)           With
respect to the information disclosed pursuant to this Section 6.2, the parties
shall maintain the confidentiality of any material non-public information
furnished by the other Party.

     

    6.3     Preservation of
Business.  Subject to the terms of this Agreement, from the
date of this Agreement until the Closing Date, each of Target and Desert Hawk
(which for the purposes of this covenant includes their respective subsidiaries
and affiliates), as the case may be, shall
operate only in the ordinary and usual course of business consistent with past
practice, and shall use reasonable commercial efforts to: (a) preserve intact
the present business organization of Target and Desert Hawk, as the case may be;
(b) preserve the good and advantageous relationships of Target and Desert Hawk,
as the case may be, with employees and other Persons material to the operation
of their respective businesses; and (c) not permit any action or omission within
its control which would cause any of the representations or warranties of Target
and Desert Hawk, as the case may be, contained herein to become inaccurate in
any material respect or any of the covenants of Target and Desert Hawk, as the
case may be, to be breached in any material respect.  

     

    6.4     Certain
Notices.  From and after the date of this Agreement until the
Effective Time, each party hereto shall promptly notify the other party hereto
of: (a) the occurrence, or non-occurrence, of any event that would be likely to
cause any condition to the obligations of any party to effect the Merger and the
other transactions contemplated by this Agreement not to be satisfied; or (b)
the failure of Target or Desert Hawk, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it pursuant to this Agreement which would reasonably be expected to result in
any condition to the obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied; provided, however, that the delivery of
any notice pursuant to this Section 6.4 shall not cure any breach of any
representation or warranty requiring disclosure of such matter prior to the date
of this Agreement or otherwise limit or affect the remedies available hereunder
to the party receiving such notice.

     

    6.5     Consents and
Approvals.

     

    (a)           Target
shall use commercially reasonable efforts to obtain all consents, approvals,
certificates and other documents required in connection with the performance by
it of this Agreement and the consummation of the transactions contemplated
hereby.  Target shall make all filings, applications, statements and
reports to all Governmental Authorities and other Persons that are required to
be made prior to the Closing Date by or on behalf of Target pursuant to
Applicable Law or Target Material Contract in connection with this Agreement and
the transactions contemplated hereby.

     

    (b)           Desert
Hawk shall use commercially reasonable efforts to obtain all consents,
approvals, certificates and other documents required in connection with the
performance by it of this Agreement and the consummation of the transactions
contemplated hereby.  Desert Hawk shall make all filings,
applications, statements and reports to all Governmental Authorities and other
Persons that are required to be made prior to the Closing Date by or on behalf
of Desert Hawk pursuant to Applicable Law or otherwise in connection with this
Agreement and the transactions contemplated hereby.

     

    
      
        
        

      

      
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    6.6     Shareholder
Approval.  As soon as practicable following the date of this
Agreement, Target shall use its best efforts to obtain the approval by its
shareholders of the Merger, this Agreement, and the transactions contemplated
hereby.

     

    6.7     Supplemental
Information.  From time to time prior to the Closing, Target,
on the one hand, and Desert Hawk, on the other hand, shall promptly disclose in
writing to the other any matter hereafter arising which, if existing, occurring
or known at the date of this Agreement would have been required to be disclosed
to the other parties hereto or which would render inaccurate any of the
representations, warranties or statements set forth in ARTICLE IV and ARTICLE V,
respectively, hereof.

     

    6.8     Tax-Free Reorganization
Treatment.

     

    (a)           Target
and Desert Hawk shall use their commercially reasonable efforts, and cause their
respective subsidiaries to use their commercially reasonable efforts, to take or
cause to be taken any action necessary for the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the
Code.  Neither Target nor Desert Hawk shall, nor shall they permit any
of their respective subsidiaries to, take or cause to be taken any action that
could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

     

    (b)           This
Agreement is intended to constitute, and the parties hereto hereby adopt this
Agreement as, a “plan of reorganization” within the meaning Treasury Regulation
Sections 1.368-2(g) and 1.368-3(a).  Each of Target and Desert Hawk
shall report the Merger as a reorganization within
the meaning of Section 368 of the Code, unless otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Code.

     

    ARTICLE
VII.

    CONDITIONS
PRECEDENT TO OBLIGATIONS OF DESERT HAWK

     

    The
obligations of Desert Hawk under this Agreement are subject to the satisfaction
(or waiver by Desert Hawk) of the following conditions precedent on or before
the Closing Date:

     

    7.1     Representations and
Warranties.  Without supplementation after the date of this
Agreement, the representations and warranties of Target contained in this
Agreement shall be, with respect to those representations and warranties
qualified by any materiality standard, true and correct in all respects, as of
the Closing Date, and with respect to all other representations and warranties,
true and correct in all material respects, as of the Closing Date, with the same
force and effect as if made as of the Closing Date.

     

    7.2     Compliance with Agreements
and Covenants.  Target shall have performed and complied in all
material respects with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by it on or prior
to the Closing Date.

     

    
      
        
        

      

      
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    7.3     Consents and
Approvals.  Target shall have received written evidence
satisfactory to Desert Hawk that all consents and approvals required for the
consummation of the transactions contemplated hereby have been obtained, and all
required filings have been made.

     

    7.4     No Material Adverse
Change.  At the Closing Date, there shall have been no material
adverse change in the assets, liabilities, prospects, financial condition or
business of Target.  Between the date of this Agreement and the
Closing Date, there shall not have occurred an event that would reasonably be
expected to constitute a Target Material Adverse Effect.

     

    7.5     Actions or
Proceedings.  No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened which: (a) is
likely to have a Target Material Adverse Effect; or (b) could enjoin, restrain
or prohibit, or could result in substantial damages in respect of, any provision
of this Agreement or the consummation of the transactions contemplated
hereby.

     

    7.6     Target Dissenting
Shareholders.  The good faith estimate determined jointly by
Desert Hawk and Target that the aggregate amount to be paid as the fair value of
the shares held by Target Dissenting Shareholders at the Effective Time shall
not exceed $1,000 (the “Dissenter Payment
Threshold”).

     

    7.7     Approval of
Merger.  The holders of Target Common Stock shall have approved
this Agreement and the Merger contemplated hereby in accordance with its
Articles of Incorporation and Bylaws and the Utah Act.

     

    7.8     No
Registration.  Desert Hawk and Merger Sub shall be satisfied
that the issuance of the Desert Hawk Common Stock and the assumption of the
Target Warrants and Target Options in connection with the Merger shall be exempt
from registration under Regulation D of the Securities Act and Section 4(2)
and/or Section 4(6) of the Securities Act and all applicable state securities
laws.

     

    ARTICLE
VIII.

    CONDITIONS
PRECEDENT TO OBLIGATIONS OF TARGET

     

    The
obligations of Target under this Agreement are subject to the satisfaction (or
waiver by Target) of the following conditions precedent on or before the Closing
Date:

     

    8.1     Representations and
Warranties.  Without supplementation after the date of this
Agreement, the representations and warranties of Desert Hawk contained in this
Agreement shall be, with respect to those representations and warranties
qualified by any materiality standard, true and correct in all respects, as of
the Closing Date, and with respect to all other representations and warranties,
true and correct in all material respects, as of the Closing Date, with the same
force and effect as if made as of the Closing Date.

     

    8.2     Compliance with Agreements
and Covenants.  Desert Hawk shall have performed and complied
in all material respects with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by it on or prior
to the Closing Date.

     

    
      
        
        

      

      
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    8.3     Shareholder Approval and
Other Consents and Approvals.  The holders of Target Common
Stock shall have approved this Agreement and the Merger contemplated hereby in
accordance with its Articles of Incorporation and Bylaws and the Utah
Act.  Desert Hawk shall have received written evidence satisfactory to
Target that all consents and approvals required for the consummation of the
transactions contemplated hereby have been obtained, and all required filings
have been made.

     

    8.4     No Material Adverse
Change.  At the Closing Date, there shall have been no material
adverse change in the assets, liabilities, financial condition or business of
Desert Hawk.  Between the date of this Agreement and the Closing Date,
there shall not have occurred an event that would reasonably be expected to
constitute a Desert Hawk Material Adverse Effect.

     

    8.5     Actions or
Proceedings.  No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened which: (a) is
likely to have an Desert Hawk Material Adverse Effect; or (b) could enjoin,
restrain or prohibit, or could result in substantial damages in respect of, any
provision of this Agreement or the consummation of the transactions contemplated
hereby.

     

    8.6     Target Dissenting
Shareholders.  The good faith estimate determined jointly by
Desert Hawk and Target that the aggregate amount to be paid as the fair value of
the shares held by Target Dissenting Shareholders at the Effective Time shall
not exceed the Dissenter Payment Threshold.

     

    8.7     No
Registration.  Target shall be satisfied that the issuance of
the Desert Hawk Common Stock and the assumption of the Target Warrants and
Target Options in connection with the Merger shall be exempt from registration
under Regulation D of the Securities Act and Section 4(2) and/or Section 4(6) of
the Securities Act and all applicable state securities laws.

     

    8.8     No Shareholder Vote of
Desert Hawk Required.  The Merger, the issuance of the Desert
Hawk Common Stock and the other transactions contemplated under this Agreement
relating thereto, will not require the approval of Desert Hawk’s
shareholders.

     

    ARTICLE
IX.

    DELIVERIES
AT CLOSING

     

    9.1     Target Closing
Deliveries.  At the Closing, in addition to any other documents
or agreements required under this Agreement, Target shall deliver to Desert Hawk
the following:

     

    (a)           Resolutions
of the Board of Directors and holders of Target Common Stock approving and
authorizing the execution, delivery and performance of this Agreement the
consummation of the transactions contemplated hereby and thereby, including the
Merger;

     

    (b)           The
executed Articles of Merger; and

     

    (c)           All
other instruments and documents that Desert Hawk or its counsel, in the
reasonable exercise of their reasonable discretion, shall deem to be necessary:
(i) to fulfill any obligation required to be fulfilled by Target on the Closing
Date; and (ii) to evidence satisfaction of any conditions to
Closing.

     

    
      
        
        

      

      
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    9.2     Desert Hawk Closing
Deliveries.  At the Closing, in addition to any other documents
or agreements required under this Agreement, Desert Hawk shall deliver to Target
the following:

     

    (a)           Resolutions
of the Board of Directors of Desert Hawk approving and authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and thereby, including the
Merger;

     

    (b)           Resolutions
of the Board of Directors and the sole shareholder of the Merger Sub approving
and authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby and thereby, including
the Merger;

     

    (c)           The
executed Articles of Merger;

     

    (d)           All
other instruments and documents that Target or its counsel, in the reasonable
exercise of their reasonable discretion, shall deem to be necessary: (i) to
fulfill any obligation required to be fulfilled by Desert Hawk on the Closing
Date; and (ii) to evidence satisfaction of any conditions to
Closing.

     

    ARTICLE
X.

    TERMINATION

     

    10.1   Merger Agreement
Termination.  Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
hereby may be abandoned at any time prior to the Closing Date, only as
follows:

     

    (a)           by
mutual written agreement of Desert Hawk and Target;

     

    (b)           by
Desert Hawk (if Desert Hawk is not then in material breach of its obligations
under this Agreement) if: (i) a material default or breach shall be made by
Target with respect to the due and timely performance of any of its covenants
and agreements contained herein and such default is not cured within thirty
days; (ii) Target makes an amendment or supplement to any Schedule hereto and
such amendment or supplement reflects a Target Material Adverse Effect after the
date of this Agreement; (iii) a Target Material Adverse Change shall have
occurred after the date of this Agreement; (iv) Target enters into any agreement
to effect any transaction described in Section 6.10(b) of this Agreement; (v)
the Board of Directors of Target withdraws its recommendation of the Merger, if
given, or recommends to holders of Target Common Stock the approval of any
transaction other than the Merger; (vi) the holders of Target Common Stock fail
to approve this Agreement as provided in this Agreement; or (vii) the amount
payable to Target Dissenting Shareholders exceeds the Dissenter Payment
Threshold;

     

    (c)           by
Target (if Target is not then in material breach of its obligations under this
Agreement) if: (i) a material default or breach shall be made by Desert Hawk
with respect to the due and timely performance of any of its covenants and
agreements contained herein and such default is not cured within thirty days;
(ii) Desert Hawk makes an amendment or supplement to any Schedule hereto and
such amendment or supplement reflects a Desert Hawk Material Adverse Effect
after the date of this Agreement; (iii) a Desert Hawk Material Adverse Change
shall have occurred after the date of this Agreement; (iv) Desert Hawk enters
into any agreement to effect any transaction described in Section 6.10(b) of
this Agreement; (v) the Board of Directors of Desert Hawk withdraws its
recommendation of the Merger, if given, or recommends to holders of Desert Hawk
Common Stock the approval of any transaction other than the Merger; (vi) holders
of Target Common Stock fail to approve this Agreement as provided in this
Agreement; or (vii) the amount payable to Target Dissenting Shareholders exceeds
the Dissenter Payment Threshold.

     

    
      
        
        

      

      
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    10.2   Effect of
Termination.  In the event of termination of this Agreement
authorized pursuant to Section 10.1 hereof, written notice thereof shall be
given to the other parties and all obligations of the parties shall terminate
and, except as otherwise provided in this Section, no party shall have any right
against any other party hereto for any loss, damage, expense (including
out-of-pocket expenses) or liability, including, without limitation, reasonable
attorneys’ fees and disbursements arising out of the preparation and execution
of this Agreement, fulfilling in whole in part its obligations under this
Agreement or otherwise incurred by a party in any action or proceeding between
such party and the other party hereto or between such party and a third party,
which is determined to have been sustained, suffered or incurred by a party and
to have arisen from or in connection with an event or state of facts which is
subject to claim under this Agreement.  Notwithstanding the foregoing:
(a) if this Agreement is terminated (i) by Target pursuant to Section
10.1(c)(vi) or (ii) by Desert Hawk pursuant to Sections 10.1(b)(i) or (vi), then
Target shall forthwith reimburse Desert Hawk, upon receipt of invoices therefor,
for all reasonable out-of-pocket costs incurred by it in connection with this
Agreement and the transactions contemplated hereby, which costs shall include,
without limitation, reasonable attorneys’ fees; and (b) if this Agreement is
terminated by Target pursuant to Section 10.1(c)(i), then Desert Hawk shall
forthwith reimburse Target, upon receipt of invoices therefor, for all of its
out-of-pocket costs incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall include, without
limitation, reasonable attorneys’ fees.

     

    ARTICLE
XI.

    MISCELLANEOUS

     

    11.1   Certain
Definitions.  As used herein, the following terms shall have
the meanings set forth below:

     

     “Desert Hawk Material Adverse
Effect” shall mean any change or
effect that is, or is reasonably likely to be, materially adverse to the
business, assets and liabilities (taken together), financial condition or
operations or results of operations of Desert Hawk and its subsidiaries, taken
as a whole; provided, however,
that none of the following shall be deemed (either alone or in
combination) to constitute such a change or effect: (a)(i) any adverse change
attributable to the announcement or pendency of the transactions contemplated by
this Agreement; or (ii) any adverse change attributable to or conditions
generally affecting the United States economy or financial markets in general;
(b) any act or threat of terrorism or war anywhere in the world, any armed
hostilities or terrorist activities anywhere in the world, any threat or
escalation of armed hostilities or terrorist activities anywhere in the world or
any governmental or other response or reaction to any of the foregoing; or (c)
any action by Desert Hawk or Merger Sub approved or consented to in writing by
Target.

     

    
      
        
        

      

      
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    “Applicable Law” shall mean all Laws, to
the extent applicable to any Person.

     

    “Contract” shall mean any
contract, lease, commitment or understanding, sales order, purchase order,
agreement, indenture, mortgage, note, bond, instrument or license, whether
written or verbal, which is intended or purports to be a binding and enforceable
agreement.

     

    “Governmental Authority” shall mean: (a) the
government of the United States: (b) the government of any foreign country; (c)
the government of any state or political subdivision of the government of the
United States or the government of any foreign country; or (d) any entity, body
or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     

     “Knowledge” shall mean, as it
relates to Desert Hawk, the actual knowledge of Robert E. Jorgensen, in each
case upon reasonable inquiry; and as it relates to Target, the actual knowledge
of Keith Moe, in each case upon reasonable inquiry.

     

    “Law” shall mean any law,
statute, regulation, ordinance, rule, order, decree, judgment, consent decree,
settlement agreement or governmental requirement enacted, promulgated, entered
into, agreed or imposed by any Governmental Authority.

     

    “Lien” shall mean any mortgage,
lien, charge, restriction, pledge, security interest, option, lease or sublease,
claim, right of any third party, easement, encroachment or encumbrance upon any
of the assets or properties of any Person.

     

    “Permit” shall mean a permit,
license, registration, certificate of occupancy, approval or other authorization
issued by any Governmental Authority.

     

    “Person” shall mean any
corporation, proprietorship, firm, partnership, limited partnership, trust,
association, individual or other entity.

     

    “Securities Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

     

    “Shareholder Approval” shall
mean the approval of the Merger, this Agreement, and the transactions
contemplated hereby by the shareholders of the Target in accordance with the
Articles of Incorporation and Bylaws of Target and the Utah Act.

     

    “Takeover Statute” shall mean any “fair
price,” “moratorium,” “control share acquisition” or other similar anti-takeover
statute of any Governmental Authority.

     

    “Target Material Adverse
Effect” shall mean any change or effect that is, or is reasonably likely
to be, materially adverse to the business, assets and liabilities (taken
together), financial condition or operations or results of operations of Target
and its subsidiaries, taken as a whole; provided, however, that none
of the following shall be deemed (either alone or in combination) to constitute
such a change or effect: (a) (i) any adverse change attributable to the
announcement or pendency of the transactions contemplated by this Agreement; or
(ii) any adverse change attributable to or conditions generally affecting (A)
the soft tissue repair and spinal disk industries as a whole; (B) the United
States economy or financial markets in general; or (C) any foreign economy or
financial markets in any location where Target has material operations or sales;
(b) any act or threat of terrorism or war anywhere in the world, any armed
hostilities or terrorist activities anywhere in the world, any threat or
escalation of armed hostilities or terrorist activities anywhere in the world or
any governmental or other response or reaction to any of the foregoing; or (c)
any action by Target approved or consented to in writing by Desert
Hawk.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    11.2   Other
Definitions.  In addition to the terms set forth in Section
11.1 and elsewhere in this Agreement, each of the following terms is defined in
the section set forth opposite such term:

     

    Defined
Term                                                                                                                                

    

    
      	
              Agreement

            	
              Preamble

            
	
              Articles
      of Merger

            	
              §1.2

            
	
              Closing

            	
              §3.1

            
	
              Closing
      Date

            	
              §3.1

            
	
              Code

            	
              Recitals

            
	
              Common
      Conversion Rate

            	
              §2.1(a)

            
	
              Dissenter
      Payment Threshold

            	
              §7.7

            
	
              Effective
      Date

            	
              §1.2

            
	
              Effective
      Time

            	
              §1.2

            
	
              Utah
      Act

            	
              Recitals

            
	
              Desert
      Hawk

            	
              Preamble

            
	
              Desert
      Hawk Common Stock

            	
              §2.1(a)

            
	
              Merger

            	
              Recitals

            
	
              Merger
      Sub

            	
              Preamble

            
	
              OSHA

            	
              §4.16

            
	
              Participating
      Shareholder

            	
              §2.4(a)

            
	
              Surviving
      Corporation

            	
              §1.1

            
	
              Target

            	
              Preamble

            
	
              Target
      Common Stock

            	
              §2.1(a)

            
	
              Target
      Dissenting Shares

            	
              §2.3

            
	
              Target
      Dissenting Shareholders

            	
              §2.3

            

    

    

    11.3   Expenses.  Except
as otherwise expressly provided herein, each party hereto shall bear its own
expenses with respect to this Agreement and the transactions contemplated
hereby.

     

    11.4   Amendment.  This
Agreement may only be amended, modified or supplemented pursuant to a written
agreement signed by each of the parties hereto.

     

    11.5   Non-Survival of
Representation and Warranty Breach.  No breach of any of the
representations and warranties in this Agreement by any party hereto, or of any
representation or warranty contained in any instrument delivered pursuant to
this Agreement by any party hereto, shall survive the Effective
Time.  This Section 11.15 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective
Time.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    11.6   Press Release; Public
Announcements.  The parties shall not make any other public
announcements in respect of this Agreement or the transactions contemplated
herein without prior consultation and written approval by the other party as to
the form and content thereof, which approval shall not be unreasonably withheld.
Notwithstanding the foregoing, any party may make any disclosure which its
counsel advises is required by applicable law or regulation, in which case the
other party shall be given such reasonable advance notice as is practicable in
the circumstances and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued.

     

    11.7   Notices.  All
notices, consents, waivers, requests, instructions, or other communications
required or permitted hereunder shall be in writing, and shall be deemed to have
been duly given if (a) delivered personally (effective upon delivery), (b) sent
by a reputable, established international courier service (effective one
business day after being delivered to such courier service), or (c) mailed by
certified mail, return receipt requested, postage prepaid (effective three
business days after being deposited in the U.S mail), addressed as follows (or
to such other address as the recipient may have furnished for such purpose
pursuant to this Section):

     

    If to
Target:

    

    Eric Moe,
President

    8921 N.
Indian Trail Road, #288

    Spokane,
WA   99208

    

    and:

     

    If to
Desert Hawk or Merger Sub:

     

    Rick
Havenstrite, President

    1290
Holcomb Avenue

    Reno,
NV  89502

    

    with a
copy (which shall not constitute notice) to:

    

    Ronald N.
Vance, Esq.

    Ronald N.
Vance, P.C.

    1656
Reunion Avenue

    Suite
250

    South
Jordan, Utah  84095

    

    or to
such other individual or address as a party hereto may designate for itself by
notice given as herein provided.

    

    11.8   Waivers.  The
failure of a party hereto at any time or times to require performance of any
provision hereof shall in no manner affect the right of such party at a later
time to enforce the same.  No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    11.9   
Interpretation.  The
headings preceding the text of Articles and Sections included in this Agreement
are for convenience only and shall not be deemed part of this Agreement or be
given any effect in interpreting this Agreement.  The use of the
masculine, feminine or neuter gender herein shall not limit any provision of
this Agreement.  The use of the terms “including” or “include” shall
in all cases herein mean “including, without limitation” or “include, without
limitation,” respectively.

     

    11.10 
Applicable
Law.  This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Utah, without
giving effect to the principles of conflicts of law thereof.

     

    11.11 
Assignment.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that no assignment of
any rights or obligations shall be made by any party without the prior written
consent of all the other parties hereto.

     

    11.12 
No Third Party
Beneficiaries.  This Agreement is solely for the benefit of the
parties hereto and, to the extent provided herein, their respective directors,
officers, employees, agents and representatives, and no provision of this
Agreement shall be deemed to confer upon other third parties any remedy, claim,
liability, reimbursement, cause of action or other right.

     

    11.13 
Further
Assurances.  Upon the reasonable request of the parties hereto,
the other parties hereto shall, on and after the Closing Date, execute and
deliver such other documents, releases, assignments and other instruments as may
be required to effectuate completely the transactions contemplated by this
Agreement.

     

    11.14 
Severability.  If
any provision of this Agreement shall be held invalid, illegal or unenforceable,
the validity, legality or enforceability of the other provisions hereof shall
remain in full force and shall not be affected thereby, and there shall be
deemed substituted for such invalid, illegal or unenforceable provision a valid,
legal and enforceable provision as similar as possible to the provision at
issue.

     

    11.15 
Remedies
Cumulative.  The remedies provided in this Agreement shall be
cumulative and shall not preclude the assertion or exercise of any other rights
or remedies available by law, in equity or otherwise.

     

    11.16 
Entire
Understanding.  This Agreement sets forth the entire agreement
and understanding of the parties hereto and supersede all prior agreements,
arrangements and understandings between the parties.

     

    11.17 
Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  Facsimile transmissions of any signed original document,
or transmission of any signed facsimile document, shall constitute delivery of
an executed original.  At the request of any of the parties, the
parties shall confirm facsimile transmission signatures by signing and
delivering an original document.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered on the date first above written.

     

    
      
        	
                DESERT
      HAWK GOLD CORP.

              
	 
      	 
      
	
                By:

              	
                /s/ Rick Havenstrite

              
	 
      	
                Rick
      Havenstrite, President

              
	 
      	 
      
	
                DESERT
      HAWK ACQUISITION CORP.

              
	 
      	 
      
	
                By:

              	
                /s/ Robert E. Jorgensen

              
	 
      	
                Robert
      E. Jorgensen, President

              
	 
      	 
      
	
                BLUE
      FIN CAPITAL, INC.

              
	 
      	 
      
	
                By:

              	
                /s/ Eric Moe

              
	 
      	
                Eric
      Moe, President

              

      

    

     

    
      
         

      

      
        23Unassociated Document

    Desert
Hawk Gold Corp.

    

    2008  STOCK  OPTION/STOCK  ISSUANCE  PLAN

    (As
Adopted by the Board of Directors on July 12, 2008,

    and by
the Shareholders on August 5, 2008)

    (As
Amended by the Board of Directors and

    the
Shareholders on February 28, 2010)

    

    
      	
              I.

            	
              GENERAL
      PROVISIONS

            

    

    

    
      	
               
      

            	
              A.

            	
              Purpose
      of the Plan

            

    

    

    This 2008
Stock Option/Stock Issuance Plan (the “Plan”) is intended to aid the Corporation
(or any Parent or Subsidiary) in maintaining and developing a management team,
attracting qualified officers and Employees capable of assisting in the future
success of the Corporation, and rewarding those individuals who have
contributed, or may contribute in the future, to the success of the Corporation
(or any Parent or Subsidiary).  It is designed to aid the Corporation
(and any Parent or Subsidiary) in retaining the services of executives and
Employees and in attracting new personnel when needed for future operations and
growth and to provide such personnel with an incentive to remain Employees of
the Corporation, to use their best efforts to promote the success of the
Corporation’s business, and to provide them with an opportunity to obtain or
increase a proprietary interest in the Corporation.  It is further
designed to attract and retain the best available personnel for service as
directors of the Corporation (or any Parent or Subsidiary), whether or not such
individuals may otherwise be Employees.  It is also designed to permit
the Corporation to reward those consultants or other independent advisors who
are not Employees but who are perceived by management as having contributed to
the success of the Corporation (or any Parent or Subsidiary) or who are
important to the continued business and operations of the Corporation (or any
Parent or Subsidiary).

    

    Capitalized
terms herein shall have the meanings assigned to such terms in the attached
Appendix.

    

    
      	
               
      

            	
              B.

            	
              Structure
      of the Plan

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Plan shall be divided into two (2) separate equity
    programs:

            

    

    

    
      	
               
      

            	
              a.

            	
              the
      Option Grant Program under which eligible persons may, at the discretion
      of the Plan Administrator, be granted options to purchase shares of Common
      Stock, and

            

    

    

    
      	
               
      

            	
              b.

            	
              the
      Stock Issuance Program under which eligible persons may, at the discretion
      of the Plan Administrator, be issued shares of Common Stock directly,
      either through the immediate purchase of such shares or as a bonus for
      services rendered to the Corporation (or any Parent or Subsidiary) or as
      an incentive to perform services for the Corporation (or any Parent or
      Subsidiary).

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              2.

            	
              The
      provisions of Sections I and IV shall apply to both equity programs under
      the Plan and shall accordingly govern the interests of all persons under
      the Plan.

            

    

    

    
      	
               
      

            	
              C.

            	
              Administration
      of the Plan

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Plan shall be administered by the Board.  However, any or all
      administrative functions otherwise exercisable by the Board may be
      delegated to the Committee.  Members of the Committee shall
      serve for such period of time as the Board may determine and shall be
      subject to removal by the Board at any time.  The Board may also
      at any time terminate the functions of the Committee and reassume all
      powers and authority previously delegated to the
  Committee.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Plan Administrator shall have full power and authority (subject to the
      provisions of the Plan) to establish such rules and regulations as it may
      deem appropriate for proper administration of the Plan and to make such
      determinations under, and issue such interpretations of, the Plan and any
      outstanding options thereunder as it may deem necessary or
      advisable.  Decisions of the Plan Administrator shall be final
      and binding on all parties who have an interest in the Plan or any option
      thereunder.

            

    

    

    
      	
               
      

            	
              D.

            	
              Eligibility

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      persons eligible to participate in the Plan are as
      follows:  Employees; non-employee members of the Board or
      non-employee members of the board of directors of any Subsidiary; officers
      of the Corporation or any Subsidiary; and consultants and other
      independent advisors who provide a Service.  Options granted, or
      shares issued, to consultants or other independent advisors shall be made
      only to individuals who are natural persons (unless waived by the Plan
      Administrator) and who provide a bona fide Service, provided that the
      Service is not in connection with the offer or sale of securities in a
      capital-raising transaction, and does not directly or indirectly promote
      or maintain a market for the Corporation’s
  securities.

            

    

    

    
      	
            	
              
                2.

              

            	
              The
      Plan Administrator shall have full authority to determine, (i) with
      respect to the option grants under the Option Grant Program, which
      eligible persons are to receive option grants, the time or times when such
      option grants are to be made, the number of shares to be covered by each
      such grant, the status of the granted option as either an Incentive Option
      or a Non-Statutory Option, the time or times at which each option is to
      become exercisable, the vesting schedule (if any) applicable to the option
      shares and the maximum term for which the option is to remain outstanding,
      and (ii) with respect to stock issuances under the Stock Issuance Program,
      which eligible persons are to receive stock issuances, the time or times
      when such issuances are to be made, the number of shares to be issued to
      each Participant, the vesting schedule (if any) applicable to the issued
      shares and the consideration to be paid or given by the Participant for
      such shares.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.

            	
              The
      Plan Administrator shall have the absolute discretion either to grant
      options in accordance with the Option Grant Program or to effect stock
      issuances in accordance with the Stock Issuance
  Program.

            

    

    

    
      	
               
      

            	
              E.

            	
              Stock
      Subject to the Plan

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      stock issuable under the Plan shall be shares of authorized but unissued
      or reacquired Common Stock.  The maximum number of shares of
      Common Stock which may be issued over the term of the Plan shall not
      exceed 3,000,000 shares.

            

    

    

    
      	
               
      

            	
              2.

            	
              Shares
      of Common Stock subject to outstanding options shall be available for
      subsequent issuance under the Plan to the extent (i) the options expire or
      terminate for any reason prior to exercise in full or (ii) the
      options are canceled in accordance with the cancellation-re-grant
      provisions of Section II(E).

            

    

    

    
      	
               
      

            	
              3.

            	
              Should
      any change be made to the Common Stock by reason of any stock split, stock
      dividend, recapitalization, combination of shares, exchange of shares or
      other change affecting the outstanding Common Stock as a class without the
      Corporation’s receipt of consideration, appropriate adjustments shall be
      made to the maximum number and/or class of securities issuable under the
      Plan.  The adjustments determined by the Plan Administrator
      shall be final, binding and
conclusive.

            

    

    

    
      	
              II.

            	
              OPTION GRANT
      PROGRAM

            

    

    

    
      	
               
      

            	
              A.

            	
              Types
      of Options

            

    

    

    The
Option Grant Program shall be comprised of two types of options as
follows:

    

    
      	
               
      

            	
              1.

            	
              Incentive
      Options which are options intended to qualify under the Code, subject to
      limiting conditions, for favorable tax treatment in respect of the
      recognition of ordinary income, gain, or loss and withholding requirements
      applicable to the exercise of the options and disposition of the shares of
      Common Stock acquired upon exercise of Incentive
  Options.

            

    

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              2.

            	
              Non-Statutory
      Options which are those options that are not intended to qualify under the
      Code for favorable tax treatment in respect of the recognition of ordinary
      income, gain, or loss and withholding requirements applicable to the
      exercise of options and disposition of shares of Common Stock acquired
      pursuant to the exercise of the Non-Statutory options.  The
      Option Grant Program intends that the treatment of such transactions in
      respect of Non-Statutory Options will be governed by the taxation rules
      applicable to the transfer of property in connection with the performance
      of services.

            

    

    

    
      	
               
      

            	
              B.

            	
              Option
      Terms Applicable to Both Incentive and Non-Statutory
    Options

            

    

    

    
      	
               
      

            	
              1.

            	
              Option
      Agreements.

            

    

    

    Each
option shall be evidenced by one or more option agreements between the
Corporation and the Optionee.  Option agreements shall designate the
number of shares and the exercise price of the Option to which it pertains, and
shall set forth the vesting schedule of the Option or state that the Option is
vested immediately.  The option agreements shall be in writing, dated
as of the date the option is granted, and shall be executed on behalf of the
Corporation by such officers as the Board shall authorize.  Option
agreements shall be in such form and contain such additional provisions as the
Plan Administrator shall prescribe, but in no event shall they contain
provisions inconsistent with the provisions of this Plan.

    

    
      	
               
      

            	
              2.

            	
              Exercise
      Price.

            

    

    

    
      	
               
      

            	
              a.

            	
              The
      exercise price per share shall be fixed by the Plan Administrator for
      Incentive and Non-Statutory Options as set forth
  below.

            

    

    

    
      	
               
      

            	
              b.

            	
              The
      exercise price shall become immediately due upon exercise of the option
      and shall, subject to the provisions of Section IV(A) and the documents
      evidencing the option, be payable in cash or check made payable to the
      Corporation.  The Plan Administrator, in its discretion, may
      also permit the exercise price to be paid partly in cash and/or as
      follows:

            

    

    

    
      	
               
      

            	
              (1)

            	
              in
      shares of Common Stock valued at Fair Market Value on the Exercise
      Date;

            

    

    

    
      	
            	
              
                (2)

              

            	
              to
      the extent the option is exercised for vested shares, through a special
      sale and remittance procedure pursuant to which the Optionee shall
      concurrently provide irrevocable written instructions (A) to a
      Corporation-designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Corporation, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Corporation by reason of such exercise, and (B) to the
      Corporation to deliver the certificates for the purchased shares directly
      to such brokerage firm in order to complete the
  sale;

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (3)

            	
              with
      options granted  hereby valued at the amount by which the Fair
      Market Value of the Common Stock subject to these options exceeds the
      exercise or purchase price provided on such options; provided that options
      used to satisfy the exercise price shall be surrendered to and cancelled
      by the Corporation;

            

    

    

    
      	
               
      

            	
              (4)

            	
              by
      cancellation of debt owed by the Corporation to the Optionee, including
      debt incurred for professional services rendered, employment
      relationships, or otherwise, upon presentation of an invoice for services
      provided to the Corporation; or

            

    

    

    
      	
               
      

            	
              (5)

            	
              by
      means of an early exercise program adopted by the Plan Administrator
      permitting exercise of options prior to
vesting.

            

    

    

    
      	
               
      

            	
              c.

            	
              Except
      to the extent such sale and remittance procedure is utilized, payment of
      the exercise price for the purchased shares must be made on the Exercise
      Date.

            

    

    

    
      	
               
      

            	
              3.

            	
              Exercise and Term of
      Options.

            

    

    

     Each
option shall be exercisable at such time or times, during such period and for
such number of shares as shall be determined by the Plan Administrator and set
forth in the documents evidencing the option grant.  However, no
option shall have a term in excess of ten (10) years measured from the option
grant date.  The terms of Incentive and Non-Qualified Options shall be
fixed by the Plan Administrator within the limits specified below.

    

    
      	
               
      

            	
              4.

            	
              Effect of Termination
      of Service.

            

    

    

    
      	
               
      

            	
              a.

            	
              The
      following provisions shall govern the exercise of any options held by the
      Optionee at the time of cessation of Service or
  death:

            

    

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (1)

            	
              Should
      the Optionee cease to remain in Service for Misconduct, then the options
      shall terminate on the date of cessation of the
  Service.

            

    

    

    
      	
               
      

            	
              (2)

            	
              Should
      the Optionee cease to remain in Service for any reason other than
      Misconduct, Disability or death, then the Optionee shall have a period of
      three (3) months following the date of such cessation of Service during
      which to exercise each outstanding option held by such
      Optionee.

            

    

    

    
      	
               
      

            	
              (3)

            	
              Should
      Optionee’s Service terminate by reason of Disability, then the Optionee
      shall have a period of twelve (12) months following the date of such
      cessation of Service during which to exercise each outstanding option held
      by such Optionee.

            

    

    

    
      	
               
      

            	
              (4)

            	
              If
      the Optionee dies while holding an outstanding option, then the personal
      representative of his or her estate or the person or persons to whom the
      option is transferred pursuant to the Optionee’s will or the laws of
      inheritance shall have a twelve (12) month period following the date of
      the Optionee’s death to exercise such
option.

            

    

    

    
      	
               
      

            	
              (5)

            	
              Under
      no circumstances, however, shall any such option be exercisable after the
      specified expiration of the option
term.

            

    

    

    
      	
               
      

            	
              (6)

            	
              During
      the applicable post-Service exercise period, the option may not be
      exercised in the aggregate for more than the number of vested shares for
      which the option is exercisable on the date of the Optionee’s cessation of
      Service.  Upon the expiration of the applicable exercise period
      or (if earlier) upon the expiration of the option term, the option shall
      terminate and cease to be outstanding for any vested shares for which the
      option has not been exercised.  However, the option shall,
      immediately upon the Optionee’s cessation of Service, terminate and cease
      to be outstanding with respect to any and all option shares for which the
      option is not otherwise at the time exercisable or in which the Optionee
      is not otherwise at that time
vested.

            

    

    

    
      	
               
      

            	
              b.

            	
              The
      Plan Administrator shall have the discretion, exercisable either at the
      time an option is granted or at any time while the option remains
      outstanding, to:

            

    

    

    
      	
            	
              
                (1)

              

            	
              extend
      the period of time for which the option is to remain exercisable following
      Optionee’s cessation of Service or death from the limited period otherwise
      in effect for that option to such greater period of time as the Plan
      Administrator shall deem appropriate, but in no event beyond the
      expiration of the option term;
and/or

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (2)

            	
              permit
      the option to be exercised, during the applicable post-Service exercise
      period, not only with respect to the number of vested shares of Common
      Stock for which such option is exercisable at the time of the Optionee’s
      cessation of Service but also with respect to one or more additional
      installments in which the Optionee would have vested under the option had
      the Optionee continued in Service.

            

    

    

    
      	
               
      

            	
              5.

            	
              Shareholder
      Rights.  The holder of an option shall have no
      shareholder rights with respect to the shares subject to the option until
      such person shall have exercised the option, paid the exercise price, and
      become a holder of record of the purchased
  shares.

            

    

    

    
      	
               
      

            	
              6.

            	
              [RESERVED]

            

    

    

    
      	
               
      

            	
              7.

            	
              Limited
      Transferability of Options.  During the lifetime of the
      Optionee, the option shall be exercisable only by the Optionee and shall
      not be assignable or transferable other than by will or by the laws of
      descent and distribution following the Optionee’s
  death.

            

    

    

    
      	
               
      

            	
              8.

            	
              Withholding.  The
      Corporation’s obligation to deliver shares of Common Stock upon the
      exercise of any options granted under the Plan shall be subject to the
      satisfaction of all applicable Federal, state and local income and
      employment tax withholding
requirements.

            

    

    

    
      	
               
      

            	
              C.

            	
              Incentive
      Options

            

    

    

    The terms
specified below shall be applicable to all Incentive Options.  Except
as modified by the provisions of this Section II(C), all the provisions of the
Plan shall be applicable to Incentive Options.  Options which are
specifically designated as Non-Statutory Options shall not be subject to the
terms of this Section II (C).

    

    
      	
               
      

            	
              1.

            	
              Eligibility.  Incentive
      Options may only be granted to
Employees.

            

    

    

    
      	
               
      

            	
              2.

            	
              Exercise
      Price.  The exercise price per share shall not be less
      than one hundred percent (100%) of the Fair Market Value per share of
      Common Stock on the option grant date.  For options granted to a
      10% Shareholder, the exercise price per share shall not be less than one
      hundred ten percent (110%) of the Fair Market Value per share of Common
      Stock on the option grant date.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    
      	
               
      

            	
              3.

            	
              Dollar
      Limitation.  The aggregate Fair Market Value of the
      shares of Common Stock (determined as of the respective date or dates of
      grant) for which one or more options granted to any Employee under the
      Plan (or any other option plan of the Corporation or any Parent or
      Subsidiary) may for the first time become exercisable as Incentive Options
      during any one (1) calendar year shall not exceed the sum of One Hundred
      Thousand Dollars ($100,000).  To the extent the Employee holds
      two (2) or more such options which become exercisable for the first time
      in the same calendar year, the foregoing limitation on the exercisability
      of such options as Incentive Options shall be applied on the basis of the
      order in which such options are
granted.

            

    

    

    
      	
               
      

            	
              4.

            	
              Option
      Term for 10% Shareholder.  If any Employee
      to whom an Incentive Option is granted is a 10% Shareholder, then the
      option term shall not exceed five (5) years measured from the option grant
      date.

            

    

    

    
      	
               
      

            	
              D.

            	
              Non-Statutory
      Options

            

    

    

    The terms
specified below shall be applicable to all Non-Statutory
Options.  Except as modified by the provisions of this Section II(D),
all the provisions of the Plan shall be applicable to Non-Statutory
Options.

    

    
      	
               
      

            	
              1.

            	
              Eligibility.  Non-Statutory
      Options may be granted to the following
persons:

            

    

    

    
      	
               
      

            	
              a.

            	
              Employees,

            

    

    

    
      	
               
      

            	
              b.

            	
              non-employee
      members of the Board or the non-employee members of the board of directors
      of any Parent or Subsidiary, and

            

    

    

    
      	
               
      

            	
              c.

            	
              consultants
      and other independent advisors who provide services to the Corporation (or
      any Parent or Subsidiary), provided that such consultants or advisors are
      natural persons; that they provide bona fide services to the Corporation
      (or the Parent or Subsidiary); and that the services are not in connection
      with the offer or sale of securities in a capital-raising transaction, and
      do not directly or indirectly promote or maintain a market for the
      Corporation’s securities.

            

    

    

    
      	
               
      

            	
              2.

            	
              Exercise
      Price.  The exercise price per share covered by a
      Non-Statutory Option shall not be less than eighty-five percent (85%) of
      the Fair Market Value per share of Common Stock on the option grant
      date.

            

    

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              E.

            	
              Corporate
      Transaction

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Plan and each option outstanding under the Plan at the time of a Corporate
      Transaction shall terminate and cease to be outstanding, but only after
      each Optionee (or the successor in interest) has been given, for the
      period of ten (10) days ending five (5) days before the effective date of
      the Corporate Transaction (or such longer period as the Board may
      specify), the right to exercise any unexpired option in full or in part,
      as if such option was fully vested and exercisable notwithstanding
      anything to the contrary contained in any option agreement between the
      Corporation and any optionee.  However, the outstanding options
      shall not terminate and cease to be outstanding on such an accelerated
      basis if and to the extent such options are assumed by the successor
      corporation (or parent thereof) in the Corporate
    Transaction.

            

    

    

    
      	
               
      

            	
              2.

            	
              Each
      option which is assumed in connection with a Corporate Transaction shall
      be appropriately adjusted, immediately after such Corporate Transaction,
      to apply to the number and class of securities which would have been
      issuable to the Optionee in consummation of such Corporate Transaction,
      had the option been exercised immediately prior to such Corporate
      Transaction.  Appropriate adjustments shall also be made to (i)
      the number and class of securities available for issuance under the Plan
      following the consummation of such Corporate Transaction and (ii) the
      exercise price payable per share under each outstanding option, provided
      the aggregate exercise price payable for such securities shall remain the
      same.

            

    

    

    
      	
               
      

            	
              3.

            	
              The
      Plan Administrator shall have the discretion, exercisable either at the
      time the option is granted or at any time while the option remains
      outstanding, to provide for the automatic acceleration (in whole or in
      part) of one or more outstanding options upon the occurrence of a
      Corporate Transaction, whether or not those options are to be assumed or
      replaced in the Corporate
Transaction.

            

    

    

    
      	
               
      

            	
              4.

            	
              The
      portion of any Incentive Option accelerated in connection with a Corporate
      Transaction shall remain exercisable as an Incentive Option only to the
      extent the applicable One Hundred Thousand Dollar ($100,000) limitation is
      not exceeded.  To the extent such dollar limitation is exceeded,
      the accelerated portion of such option shall be exercisable as a
      Non-Statutory Option under the Federal tax
laws.

            

    

    

    
      	
               
      

            	
              5.

            	
              Subject
      to Section II(F) below, the grant of options under the Plan shall in no
      way affect the right of the Corporation to adjust, reclassify, reorganize
      or otherwise change its capital or business structure or to merge,
      consolidate, dissolve, liquidate or sell or transfer all or any part of
      its business or assets.

            

    

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              F.

            	
              Adjustments

            

    

    

    
      	
               
      

            	
              1.

            	
              If
      the Corporation shall at any time subdivide its outstanding shares of
      Common Stock by recapitalization, reclassification or split-up thereof, or
      if the Corporation shall declare a stock dividend or distribute shares of
      Common Stock to its stockholders, the number of shares of Common Stock
      purchasable upon exercise of the options immediately prior to such
      subdivision shall be proportionately increased in each instance, and if
      the Corporation shall at any time combine the outstanding shares of Common
      Stock by  recapitalization, reclassification or combination
      thereof, the number of shares of Common Stock purchasable upon exercise of
      the options immediately prior to such combination shall be proportionately
      decreased in each instance.  Any adjustment which is the result
      of a stock dividend or distribution shall be effective on the record date
      therefor.

            

    

    

    
      	
               
      

            	
              2.

            	
              Whenever
      the number of shares of Common Stock purchasable upon the exercise of any
      of the options is required to be adjusted as provided in Section II(F)(1)
      above, the exercise price per share shall be adjusted (to the nearest
      cent) in each instance by multiplying such exercise price per share
      immediately prior to such adjustment by a fraction (x) the numerator of
      which shall be the number of shares of Common Stock purchasable upon the
      exercise of the options immediately prior to such adjustment, and (y) the
      denominator of which shall be the number of shares of Common Stock so
      purchasable immediately thereafter.

            

    

    

    
      	
               
      

            	
              3.

            	
              In
      case the Corporation shall, at any time prior to the expiration date of
      the options, and prior to the exercise thereof, offer to the holders of
      its Common Stock any right to subscribe for additional shares of any class
      of the Corporation, then the Corporation shall give written notice thereof
      to the registered holders of the options not less than thirty (30) days
      prior to the date on which the books of the Corporation are
      closed  or a record date fixed for the determination of
      stockholders entitled to such subscription rights.  Such notice
      shall specify the date as to which the books shall be closed or record
      date be fixed with respect to such offer or subscription, and the right of
      the holders to participate in such offer or subscription shall terminate
      if the options shall not be exercised on before the date of such closing
      of the books or such record date.

            

    

    

    
      	
               
      

            	
              4.

            	
              If
      the Corporation shall take any action affecting the shares of its Common
      Stock, other than that action described in this Plan, which, in the
      opinion of the Plan Administrator, would materially affect the rights of
      the holders of the options or the exercise price per share, the number of
      shares of Common Stock purchasable on exercise of the options shall be
      adjusted in each instance and at such time as the Plan Administrator, in
      good faith, may determine to be equitable under the
      circumstances.  The adjustments determined by the Plan
      Administrator shall be final, binding, and
  conclusive.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              5.

            	
              Any
      changes or adjustments in the number of shares of Common Stock purchasable
      upon the exercise of the options or in the exercise price of options, as
      required or authorized by this Section II(F), shall be made with respect
      to all authorized options whether or not they have yet been issued or
      outstanding at the time of the occurrence of the circumstance leading to
      such change or adjustment.

            

    

    

    
      	
               
      

            	
              G.

            	
              Cancellation
      and Re-Grant of Options

            

    

    

    The Plan
Administrator shall have the authority to effect, at any time and from time to
time, with the consent of the affected option holders and subject to approval of
the shareholders of the Corporation, the cancellation of any or all outstanding
options under the Plan and to grant in substitution therefor new options
covering the same or different number of shares of Common Stock but with an
exercise price per share based on the Fair Market Value per share of Common
Stock on the new option grant date.  The type and amount of
consideration for the substituted options shall be subject to the approval of
the Plan Administrator.

    

    
      	
              III.

            	
              STOCK ISSUANCE
      PROGRAM

            

    

    

    
      	
               
      

            	
              A.

            	
              Stock
      Issuance Terms

            

    

    

    Shares of
Common Stock may be issued under the Stock Issuance Program through direct and
immediate issuances without any intervening option grants.  Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below.

    

    
      	
               
      

            	
              1.

            	
              Cost
      of Shares.  Grants of shares
      of Common Stock under the Stock Issuance Program shall be made at such
      cost as the Plan Administrator shall determine and may be issued for no
      monetary consideration, subject to applicable state
  law.

            

    

    

    
      	
               
      

            	
              2.

            	
              Vesting
      Provisions.

            

    

    

    
      	
               
      

            	
              a.

            	
              Shares
      of Common Stock issued under the Stock Issuance Program may, in the
      discretion of the Plan Administrator, be fully and immediately vested upon
      issuance or may vest in one or more installments over the Participant’s
      period of Service or upon attainment of specified performance
      objectives.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                b.

              

            	
              Any
      new, substituted or additional securities or other property (including
      money paid other than as a regular cash dividend) which the Participant
      may have the right to receive with respect to the Participant’s unvested
      shares of Common Stock by reason of any stock dividend, stock split,
      recapitalization, combination of shares, exchange of shares or other
      change affecting the outstanding Common Stock as a class without the
      Corporation’s receipt of consideration shall be issued subject to (i) the
      same vesting requirements applicable to the Participant’s unvested shares
      of Common Stock and (ii) such escrow arrangements as the Plan
      Administrator shall deem
appropriate.

            

    

    

    
      	
               
      

            	
              c.

            	
              Unless
      specified otherwise in the Stock Issuance Agreement, the Participant shall
      have full shareholder rights with respect to any shares of Common Stock
      issued to the Participant under the Stock Issuance Program, whether or not
      the Participant’s interest in those shares is vested, and accordingly, the
      Participant shall have the right to vote such shares and to receive any
      regular cash dividends paid on such
shares.

            

    

    

    
      	
               
      

            	
              d.

            	
              Should
      the Participant cease to remain in Service while holding one or more
      unvested shares of Common Stock issued under the Stock Issuance Program or
      should the performance objectives not be attained with respect to one or
      more such unvested shares of Common Stock, then those shares shall be
      immediately surrendered to the Corporation for cancellation, and the
      Participant shall have no further shareholder rights with respect to those
      shares.  To the extent the surrendered shares were previously
      issued to the Participant for consideration paid in cash or cash
      equivalent (including the Participant’s purchase-money indebtedness), the
      Corporation shall repay to the Participant the cash consideration paid for
      the surrendered shares and shall cancel the unpaid principal balance of
      any outstanding purchase-money note of the Participant attributable to
      such surrendered shares.

            

    

    

    
      	
               
      

            	
              e.

            	
              The
      Plan Administrator may in its discretion waive the surrender and
      cancellation of one or more unvested shares of Common Stock (or other
      assets attributable thereto) which would otherwise occur upon the
      non-completion of the vesting schedule applicable to such
      shares.  Such waiver shall result in the immediate vesting of
      the Participant’s interest in the shares of Common Stock as to which the
      waiver applies.  Such waiver may be effected at any time,
      whether before or after the Participant’s cessation of Service or the
      attainment or non-attainment of the applicable performance
      objectives.

            

    

    

    
      	
               
      

            	
              3.

            	
              Non-transferability.  Shares
      of Common Stock granted under the Stock Issuance program shall not be
      transferable until the shares are
vested.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              B.

            	
              Corporate
      Transaction

            

    

    

    
      	
               
      

            	
              1.

            	
              Upon
      the occurrence of a Corporate Transaction all unvested shares not assumed
      by the successor corporation (or parent thereof) shall be immediately
      surrendered to the Corporation for cancellation, and the Participant shall
      have no further shareholder rights with respect to those
      shares.  To the extent the surrendered shares were previously
      issued to the Participant for consideration paid in cash or cash
      equivalent (including the Participant’s purchase-money indebtedness), the
      Corporation shall repay to the Participant the cash consideration paid for
      the surrendered shares and shall cancel the unpaid principal balance of
      any outstanding purchase-money note of the Participant attributable to
      such surrendered shares.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Plan Administrator shall have the discretionary authority, exercisable
      either at the time the unvested shares are issued or any time while the
      Corporation’s repurchase rights with respect to those shares remaining
      outstanding, to provide that those rights shall automatically terminate on
      an accelerated basis, and the shares of Common Stock subject to those
      terminated rights shall immediately vest, in the event of a Corporate
      Transaction or in the event that the Participant’s Service should
      subsequently terminate by reason of an Involuntary Termination within a
      period designated by the Plan Administrator following the effective date
      of any Corporate Transaction in which those repurchase rights are assumed
      by the successor corporation (or parent
  thereof).

            

    

    

    
      	
               
      

            	
              C.

            	
              Share
      Escrow/Legends

            

    

    

    Unvested
shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be
issued directly to the Participant with restrictive legends on the certificates
evidencing those unvested shares.

    

    
      	
              IV.

            	
              MISCELLANEOUS

            

    

    

    
      	
               
      

            	
              A.

            	
              Financing

            

    

    

    The Plan
Administrator may permit any Optionee or Participant to pay the option exercise
price or the purchase price for shares issued to such person under the by
delivering a full-recourse, interest-bearing promissory note payable in one or
more installments and secured by the purchased shares.  In no event
shall the maximum credit available to the Optionee or Participant exceed the sum
of (i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    
 

    
      	
               
      

            	
              B.

            	
              Effective
      Date and Term of Plan

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Plan shall become effective when adopted by the Board, but no option
      granted under the Plan may be exercised, and no shares shall be issued
      under the Plan, until the Plan is approved by the Corporation’s
      shareholders.  If such shareholder approval is not obtained
      within twelve (12) months after the date of the Board’s adoption of the
      Plan, then all options previously granted under the Plan shall terminate
      and cease to be outstanding, and no further options shall be granted and
      no shares shall be issued under the Plan.  Subject to such
      limitation, the Plan Administrator may grant options and issue shares
      under the Plan at any time after the effective date of the Plan and before
      the date fixed herein for termination of the
  Plan.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Plan shall terminate upon the earliest of (i) ten years after the Plan was
      adopted by the Board or was approved by the Corporation’s shareholders,
      whichever was earlier, (ii) the date on which all shares available for
      issuance under the Plan shall have been issued, or (iii) the termination
      of all outstanding options in connection with a Corporate
      Transaction.  All options and unvested stock issuances
      outstanding at that time under the Plan shall continue to have full force
      and effect in accordance with the provisions of the documents evidencing
      such options or issuances.

            

    

    

    
      	
               
      

            	
              C.

            	
              Amendment
      of the Plan

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Board shall have complete and exclusive power and authority to amend or
      modify the Plan in any or all respects, except as set forth
      herein.  However, no such amendment or modification shall
      adversely affect the rights and obligations with respect to options or
      unvested stock issuances at the time outstanding under the Plan unless the
      Optionee or the Participant consents to such amendment or
      modification.  The Board shall not be required to submit any
      amendment to the Plan to a vote of the Corporation’s shareholders unless
      it is required by applicable statues or regulations.  An
      amendment that does not require shareholder approval may nevertheless not
      be effective unless such approval is obtained if the Board, in passing
      upon the amendment, so determines.  Notwithstanding the
      foregoing, the Board shall not amend the Plan, without approval of the
      shareholders of the Corporation, in a manner which
  would:

            

    

    

    
      	
               
      

            	
              a.

            	
              Cause
      Options which are intended to qualify as Incentive Options to fail to
      qualify;

            

    

    
      	
               
      

            	
              b.

            	
              increase
      the number of shares of Common Stock issuable over the term of the
      Plan;

            

    

    
      	
               
      

            	
              c.

            	
              extend
      the duration of the Plan;

            

    

    
      	
               
      

            	
              d.

            	
              cause
      the Plan to fail to meet the requirements of Rule 16b-3;
  or

            

    

    
      	
               
      

            	
              e.

            	
              violate
      applicable law.

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    
      	
               
      

            	
              2.

            	
              Options
      may be granted under the Option Grant Program and shares may be issued
      under the Stock Issuance Program which are in each instance in excess of
      the number of shares of Common Stock then available for issuance under the
      Plan, provided any excess shares actually issued under those programs
      shall be held in escrow until there is obtained shareholder approval of an
      amendment sufficiently increasing the number of shares of Common Stock
      available for issuance under the Plan.  If such shareholder
      approval is not obtained within twelve (12) months after the date the
      first such excess issuances are made, then (i) any unexercised options
      granted on the basis of such excess shares shall terminate and cease to be
      outstanding and (ii) the Corporation shall promptly refund to the
      Optionees and the Participants the exercise or purchase price paid for any
      excess shares issued under the Plan and held in escrow, together with
      interest (at the applicable Short Term Federal Rate) for the period the
      shares were held in escrow, and such shares shall thereupon be
      automatically canceled and cease to be
  outstanding.

            

    

    

    
      	
               
      

            	
              D.

            	
              Use
      of Proceeds

            

    

    

    Any cash
proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.

    

    
      	
               
      

            	
              E.

            	
              Withholding

            

    

    

    The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of
any options or upon the vesting of any shares issued under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

    

    
      	
               
      

            	
              F.

            	
              Regulatory
      Approvals

            

    

    

    The
implementation of the Plan, the granting of any options under the Plan and the
issuance of any shares of Common Stock (i) upon the exercise of any option or
(ii) under the Stock Issuance Program shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it and the shares
of Common Stock issued pursuant to it.

    

    
      	
               
      

            	
              G.

            	
              No
      Employment or Service Rights

            

    

    

    Nothing
in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without
cause.

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              H.

            	
              Indemnification

            

    

    

    In
addition to such other rights as they may have as directors or as members of the
Committee, the members of the Plan Administrator shall be indemnified by the
Corporation against the reasonable expenses, including attorneys’ fees, actually
and necessarily incurred in connection with the defense of any action, suit, or
proceeding, and in connection with any appeal therein, to which they or any of
them may be a party by reason of any action or failure to act under or in
connection with this Plan or any option or stock award granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Corporation) or paid by
them in satisfaction of a judgment in any such action, suit, or proceeding,
except in relation to matters as to which it shall be finally adjudged in such
action, suit, or proceeding that such member of the Plan Administrator is liable
for gross negligence or willful misconduct in the performance of his duties;
provided that within 60 days after institution of any such action, suit, or
proceeding (or within 30 days after service upon such member of legal process in
such case, if later) a member of the Plan Administrator shall in writing offer
the Corporation the opportunity, at its own expense, to handle and defend the
same.

    

    
      	
               
      

            	
              I.

            	
              Rule
      16b-3

            

    

    

    With
respect to Participates subject to Rule 16b-3, transactions under the Plan are
intended to comply with all applicable provisions of Rule 16b-3.  To
the extent any provision of the Plan or action by the Plan Administrator fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Plan Administrator.

    

    
      	
               
      

            	
              J.

            	
              Relationship
      to Other Plans

            

    

    

    Nothing
in this Plan shall prevent the Corporation (or any Parent or Subsidiary) from
adopting or continuing other or additional compensation arrangements, including
without limitation plans providing for the granting of restricted stock awards,
options, cash, or Common Stock performance bonuses.  Grants under the
Plan may form a part of or otherwise be related to such other or additional
compensation arrangements.

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

     

    APPENDIX

    

    The
following definitions shall be in effect under the Plan:

    

    Board
shall mean the Corporation’s Board of Directors.

    

    Code
shall mean the Internal Revenue Code of 1986, as amended.

    

    Committee
shall mean a committee of two (2) or more non-employee Board members appointed
by the Board to exercise one or more administrative functions under the
Plan.

    

    Common
Stock shall mean the Corporation’s common stock.

    

    Corporate
Transaction shall mean either of the following shareholder approved
transactions to which the Corporation is a party:

    

    (a)           a
merger or consolidation in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction, or

    

    (b)           the
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the
Corporation.

    

    Corporation
shall mean Desert Hawk Gold Corp. (formerly known as Lucky Joe Mining Company),
a Nevada corporation.

    

    Disability
shall mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances.

    

    Employee
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of
performance.

    

    Exercise
Date shall mean the date on which the Corporation shall have received
written notice of the option exercise.

    

    Fair
Market Value per share of Common Stock on any relevant date shall be
determined as prescribed by the Code and regulations promulgated thereunder, or
as otherwise determined by the Plan Administrator.

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    Incentive
Option shall mean an option which satisfies the requirements of Code
Section 422.

    

    Involuntary
Termination shall mean the termination of the Service of any individual
which occurs by reason of:

    

    (a)           such
individual’s involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct, or

    

    (b)           such
individual’s voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and target bonuses under any corporate performance
based bonus or incentive programs) by more than fifteen percent (15%), or (c) a
relocation of such individual’s place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected
without the individual’s consent.

    

    The Plan
Administrator shall be entitled to revise the definition of Involuntary
Termination and Misconduct with respect to individual Optionees or Participants
under the Plan.

    

    Misconduct
shall mean the commission of any act of fraud, embezzlement or dishonesty by the
Optionee or Participant, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner.  The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).

    

    1934
Act shall mean the Securities Exchange Act of 1934, as
amended.

    

    Non-Statutory
Option shall mean an option not intended to satisfy the requirements of
Code Section 422.

    

    Option
Grant Program shall mean the option grant program in effect under the
Plan.

    

    Optionee
shall mean any person to whom an option is granted under the Plan.

    

    Parent
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

    

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    

    Participant
shall mean any person who is issued shares of Common Stock under the Stock
Issuance Program.

    

    Plan
shall mean the Corporation’s 2008 Stock Option/Stock Issuance Plan, as set forth
in this document.

    

    Plan
Administrator shall mean either the Board or the Committee acting in its
capacity as administrator of the Plan.

    

    Rule
16b-3 shall mean Rule 16b-3 promulgated under the 1934 Act by the U.S.
Securities and Exchange Commission, as amended, or any successor rule in effect
from time to time.

    

    Service
shall mean the provision of services to the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member of
the board of directors or a consultant or independent advisor, except to the
extent otherwise specifically provided in the documents evidencing the option
grant.

    

    Stock
Issuance Agreement shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

    

    Stock
Issuance Program shall mean the stock issuance program in effect under
the Plan.

    

    Subsidiary
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

    

    10%
Shareholder shall mean the owner of
stock (as determined under Code Section 424(d)) possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation (or any Parent or Subsidiary).

    

    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

    

    THESE SECURITIES HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION BECAUSE
THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER SECTION 4(2) AND/OR 4(6)
OF THE SECURITIES ACT OF 1933.

    

    THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION.  NEITHER THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER AUTHORITY HAS PASSED UPON OR
ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THE
INFORMATION PROVIDED TO THE INVESTORS.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.  INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS OFFERING IN
MAKING AN INVESTMENT DECISION.

    

    DESERT
HAWK GOLD CORP

    GRANT
OF STOCK OPTION

    

    This Grant of Stock Option is hereby
offered to Optionee with respect to the following option grant (the “Option”) to
purchase shares of the Common Stock of Desert Hawk Gold Corp. (the
“Corporation”):

    
      

      
        
          
            
              
                
                  	
                          Optionee:

                        	 
      	 
      

                

              

            

          

        

      

      

      
        
          
            
              	
                      Grant Date:

                    	  	  

            

          

        

      

      

      
        
          
            
              
                	
                        Vesting Commencement:

                      	  	  

              

            

          

        

      

      

      
        
          	
                  Exercise Price:  $_____ per share

                	  

        

      

      

      
        
          	
                  Number of Option Shares:                                       shares

                	
                    

                

        

      

      

      
        
          
            
              	
                      Expiration Date:

                    	  	  

            

          

        

      

      

      
        
          
            
              	
                      Type of Option:

                    	______ Non-Statutory	
                       

                    
	 	
                      
                        ______ Incentive Stock Option

                      

                    	
                       

                    

            

          

        

      

      

      
        
          	
                  Date Exercisable:  Following Vesting

                	  

        

      

      

      
        
          
            
              
                	
                        Vesting Schedule:

                      	   	  

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    Optionee understands and agrees that
the Option is granted subject to and in accordance with the terms of the
Company’s 2008 Stock Option/Stock Issuance Plan (the
“Plan”).  Optionee further agrees to be bound by the terms of the Plan
and the terms of the Option as set forth in the Stock Option Agreement, a copy
of which is attached hereto as Exhibit A.

    

    
      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    

    Optionee understands that any Option
Shares purchased under the Option will be subject to the terms set forth in the
Stock Purchase Agreement attached hereto as Exhibit B.  Optionee
hereby acknowledges receipt of a copy of the Plan in the form attached hereto as
Exhibit C.

    

    All capitalized terms in this Grant
form shall have the meaning assigned to them in this form or in the attached
Plan.

    

    Assuming that you are in agreement with
the terms of this Grant of Stock Option, please sign your name in the space
indicated below.

     

    
      
        
          	 
      	
                  Desert
      Hawk Gold Corp.

                
	 
      	 
      	 
      
	 
      	
                  By

                	
                   

                
	 
      	 
      	
                  Robert
      E. Jorgensen, CEO

                

        

      

      

      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  AGREED:

                                	 
      
	 
      	 
      
	 
      	 
      
	
                                  Optionee

                                	 
      
	 
      	 
      
	 
      	 
      
	
                                  Print
      Name

                                	 
      
	 
      	 
      
	
                                  Address:

                                	 
      	 
      
	 	 	 
	 	 	 

                        

                      

                    

                  

                

              

            

          

        

      

      

      
        	
                Exhibit
      A

              	
                Stock
      Option Agreement

              

      

      
        	
                Exhibit
      B

              	
                Stock
      Purchase Agreement

              

      

      
        	
                Exhibit
      C

              	
                2008
      Stock Option/Stock Issuance
Plan

              

      

    

     

    
      
        
           

        

        
          21

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    

    DESERT
HAWK GOLD CORP.

    STOCK
OPTION AGREEMENT

    

    RECITALS

    

    A.           The
Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or the Board of Directors of any
Parent or Subsidiary and consultants and other independent advisors in the
service of the Corporation (or any Parent or Subsidiary).

    

    B.           Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary),
and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation’s grant of an option to
Optionee.

    

    C.           All
capitalized terms in this Agreement shall have the meaning assigned to them in
the attached Appendix.

    

    NOW, THEREFORE, it is hereby agreed as
follows:

    

    1.           Grant of
Option.  The Corporation hereby grants to Optionee, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Form.  The Option Shares shall be purchasable from time to
time during the option term specified in Paragraph 2 at the Exercise
Price.

    

    2.           Option
Term.  This option shall have a term commencing on the Grant
Date and shall accordingly expire at the close of business on the Expiration
Date, unless sooner terminated in accordance with Paragraph 5 or 6.

    

    3.           Limited
Transferability.  During Optionee’s lifetime, this option shall
be exercisable only by Optionee and shall not be assignable or transferable
other than by will or by the laws of descent and distribution following
Optionee’s death.

    

    4.           Dates of
Exercise.  This option shall become exercisable for the Option
Shares in one or more installments as specified in the Grant Form.  As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

    

    5.           Cessation of
Service.  Except as provided in the Grant Form or the Plan, the
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date should the Optionee cease
to remain in Service as provided in the Plan.  Except as provided in
the Grant Form or the Plan, during the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more than
the number of Option Shares in which Optionee is, at the time of Optionee’s
cessation of Service, vested pursuant to the Vesting Schedule specified in the
Grant Form.  Upon the expiration of such limited exercise period or
(if earlier) upon the Expiration Date, this option shall terminate and cease to
be outstanding for any vested Option Shares for which the option has not been
exercised.  To the extent Optionee is not vested in the Option Shares
at the time of Optionee’s cessation of Service, this option shall immediately
terminate and cease to be outstanding with respect to those
shares.  In the event of a Corporate Transaction, the provisions of
Paragraph 6 shall govern the period for which this option is to remain
exercisable following Optionee’s cessation of Service and shall supersede any
provisions to the contrary in this paragraph.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    6.           Corporate
Transaction

    

    (a)           The
vesting provisions set forth in the Grant Form shall apply in the event of a
Corporate Transaction (as defined in the appendix to this
Agreement).

    

    (b)           Any
unvested option shall immediately vest in its entirety effective upon the time
immediately prior to the consummation of a Corporate Transaction .

    

    (c)           If
this option is assumed in connection with a Corporate Transaction, then this
option shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the Exercise Price, provided, the aggregate
Exercise Price shall remain the same.

    

    (d)           This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

    

    7.           Adjustment in Option
Shares.  Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or class of securities
subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits
hereunder.

    

    8.           Shareholder
Rights.  The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

    

    
      
        
           

        

        
          23

          
            

          

        

        
           

        

      

    

    

    9.           Manner of Exercising
Option.

    

    (a)           In
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following
actions:

    

    (i)           Execute
and deliver to the Corporation a Purchase Agreement for the Option Shares for
which the option is exercised.

    

    (ii)           Pay
the aggregate Exercise Price for the purchased shares in one or more of the
following forms:

    

    (A)           cash
or check made payable to the Corporation; or

    

    (B)           a
promissory note payable to the Corporation, but only to the extent authorized by
the Plan Administrator in accordance with Paragraph 13.

    

    (C)           in
shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to
the Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or

    

    (D)           to
the extent the option is exercised for vested Option Shares, through a special
sale and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (b) to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale.

    

    Except to the extent the sale and
remittance procedure is utilized in connection with the option exercise, payment
of the Exercise Price must accompany the Purchase Agreement delivered to the
Corporation in connection with the option exercise.

    

    (iii)         Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option.

    

    (iv)         Execute
and deliver to the Corporation such written representations as may be requested
by the Corporation in order for it to comply with the applicable requirements of
Federal and state securities laws.

    
 

    
      
        
           

        

        
          24

          
            

          

        

        
           

        

      

    

    

    (v)          Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all federal, state and local
income and employment tax withholding requirements applicable to the option
exercise.

    

    (b)         As
soon as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.

    

    (c)         In
no event may this option be exercised for any fractional shares.

    

    10.           Compliance with Laws and
Regulations.

    

    (a)         The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the NASDAQ National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.

    

    (b)         The
inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of the Common Stock as
to which such approval shall not have been obtained.  The Corporation,
however, shall use its best efforts to obtain all such approvals.

    

    11.           Successors and
Assigns.  Except to the extent otherwise provided in Paragraphs
3 and 6, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the Corporation and its successors and assigns and Optionee,
Optionee’s assigns and the legal representatives, heirs and legatees of
Optionee’s estate.

    

    12.           Notices.  Any
notice required to be given or delivered to the Corporation under the terms of
this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices.  Any notice required to be given or
delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee’s signature line on the Grant
Form.  All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.

    

    13.           Financing.  The
Plan Administrator may, in its absolute discretion and without any obligation to
do so, permit Optionee to pay the Exercise Price for the purchased Option Shares
by delivering a full-recourse, interest-bearing promissory note secured by those
Option Shares.  The payment schedule in effect for any such promissory
note shall be established by the Plan Administrator in its sole
discretion.

    

    14.           Construction.  This
Agreement and the option evidenced hereby are made and granted pursuant to the
Plan and are in all respects limited by and subject to the terms of the
Plan.  All decisions of the Plan Administrator with respect to any
question or issue arising under the Plan or this Agreement shall be conclusive
and binding on all persons having an interest in this option.

    

    
      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    

    

    15.           Shareholder
Approval.  If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may be
issued under the Plan as last approved by the shareholders, then this option
shall be void with respect to such excess shares, unless shareholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
issuable under the Plan is obtained in accordance with the provisions of the
Plan.

    

    16.           Additional Terms Applicable
to an Incentive Option.  To the extent any option designated in
the Grant Form as an Incentive Option would not qualify in whole or in part for
favorable tax treatment as an Incentive Option at the time of exercise, such
option may nevertheless be exercised by the Optionee as a Non-Statutory
Option.

    

    APPENDIX

    

    The
following definitions shall be in effect under the Agreement:

    

    1.           Agreement shall mean
this Stock Option Agreement.

    

    2.           Board shall mean the
Corporation’s Board of Directors.

    

    3.           Code shall mean the
Internal Revenue Code of 1986, as amended.

    

    4.           Committee shall mean
a committee of two (2) or more non-employee Board members appointed by the Board
to exercise one or more administrative functions under the Plan.

    

    5.           Common Stock shall
mean the Corporation’s common stock.

    

    
      	
              6.

            	
              Corporate
      Transaction shall mean either of the following shareholder approved
      transactions to which the Corporation is a
  party:

            

    

    

    (a)           a
merger or consolidation in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction, or

    

    (b)           the
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the
Corporation.

    

    
      	
              7.

            	
              Corporation
      shall mean Desert Hawk Gold Corp., an Nevada corporation, and any
      successor corporation to all or substantially all of the assets or voting
      stock of Desert Hawk Gold Corp. which shall by appropriate action adopt
      the Plan.

            

    

    

    
      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    

    

    
      	
              8.

            	
              Disability
      shall mean the inability of the Optionee or the Participant to engage in
      any substantial gainful activity by reason of any medically determinable
      physical or mental impairment and shall be determined by the Plan
      Administrator on the basis of such medical evidence as the Plan
      Administrator deems warranted under the
  circumstances.

            

    

    

    
      	
              9.

            	
              Employee shall
      mean an individual who is in the employ of the Corporation (or any Parent
      or Subsidiary), subject to the control and direction of the employer
      entity as to both the work to be performed and the manner and method of
      performance.

            

    

    

    
      	
              10.

            	
              Exercise Date
      shall mean the date on which the option shall have been exercised in
      accordance with Paragraph 9 of the
Agreement.

            

    

    

    
      	
              11.

            	
              Exercise Price
      shall mean the exercise price payable per Option Share as specified in the
      Grant Form.

            

    

    

    
      	
              12.

            	
              Expiration Date
      shall mean the date on which the option expires as specified in the Grant
      Form.

            

    

    

    
      	
              13.

            	
              Fair Market
      Value per share of Common Stock on any relevant date shall be
      determined in accordance with the following
  provisions:

            

    

    

    (a)    If
the Common Stock is at the time traded on the NASDAQ National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as such price is reported by the National Association
of Securities Dealers on the NASDAQ National Market or any successor
system.  If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

    

    (b)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange.  If there is
no closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

    

    (c)           If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the NASDAQ National Market, then the Fair Market Value shall be determined by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

    

    14.           Grant Date shall mean
the date of grant of the option as specified in the Grant Form.

    
      
 

      
        	
                15.

              	
                Grant Form
      shall mean the Grant of Stock Option accompanying the Agreement, pursuant
      to which Optionee has been informed of the basic terms of the option
      evidenced hereby.

              

      

       

    

    
      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    

    
      	
              16.

            	
              Incentive
      Option shall mean an option which satisfies the requirements of
      Code Section 422.

            

    

    

    
      	
              17.

            	
              Involuntary
      Termination shall mean the termination of the Service of any
      individual which occurs by reason of
:

            

    

    

    (a)           such
individual’s involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct, or

    (b)           such
individual’s voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and target bonuses under any corporate performance
based bonus or incentive programs) by more than fifteen percent (15%), or (C) a
relocation of such individual’s place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected
without the individual’s consent.

    

    The Plan
Administrator shall be entitled to revise the definition of Involuntary
Termination and Misconduct with respect to individual Optionees or Participants
under the Plan.

    

    
      	
              18.

            	
              Misconduct
      shall mean (i) the final conviction of Employee of, or Employee’s plea of
      guilty or nolo contendere to, any felony involving moral turpitude, (ii)
      fraud, misappropriation or embezzlement by Employee in connection with
      Employee’s duties to the Corporation (or any Parent of Subsidiary), or
      (iii) Employee’s willful failure or gross misconduct in the performance of
      his duties to the Corporation (or any Parent or
    Subsidiary).

            

    

    

    19.           1934 Act shall mean
the Securities Exchange Act of 1934, as amended.

    

    
      	
              20.

            	
              Non-Statutory
      Option shall mean an option not intended to satisfy the
      requirements of Code Section 422.

            

    

    

    
      	
              21.

            	
              Option Shares
      shall mean the number of shares of Common Stock subject to the
      option.

            

    

    

    
      	
              22.

            	
              Optionee shall
      mean the person to whom the option is granted as specified in the Grant
      Form.

            

    

    

    
      	
              23.

            	
              Parent shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations ending with the Corporation, provided each corporation in the
      unbroken chain (other than the Corporation) owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other
      corporations in such chain.

            

    

    

    
      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    24.           Plan shall mean the
Corporation’s 2008 Stock Option/Stock Issuance Plan.

    

    
      	
              25.

            	
              Plan
      Administrator shall mean either the Board or the Committee of the
      Board acting in its capacity as administrator of the
  Plan.

            

    

    

    
      	
              26.

            	
              Purchase
      Agreement shall mean the stock purchase agreement in substantially
      the form of Exhibit B to the Grant
Form.

            

    

    

    
      	
              27.

            	
              Service shall
      mean the provision of services to the Corporation (or any Parent or
      Subsidiary) by a person in the capacity of an Employee, a non-employee
      member of the board of directors or a consultant or independent advisor,
      except to the extent otherwise specifically provided in the documents
      evidencing the option grant.

            

    

    

    
      	
              28.

            	
              Stock Exchange
      shall mean the American Stock Exchange or the New York Stock
      Exchange.

            

    

    

    
      	
              29.

            	
              Subsidiary
      shall mean any corporation (other than the Corporation) in an unbroken
      chain of corporations beginning with the Corporation, provided each
      corporation (other than the last corporation) in the unbroken chain owns,
      at the time of the determination, stock possessing fifty percent (50%) or
      more of the total combined voting power of all classes of stock in one of
      the other corporations in such
chain.

            

    

    

    
      	
              30.

            	
              Vesting
      Schedule shall mean the vesting schedule specified in the Grant
      Form pursuant to which the Optionee is to vest in the Option Shares in a
      series of installments over his or her period of
  Service.

            

    

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

    

    DESERT
HAWK GOLD COMPANY

    STOCK
PURCHASE AGREEMENT

    

    AGREEMENT made this            
 day of                                            ,
20      
, by and between Desert Hawk Gold Corp., an Nevada corporation, and
_____________________,  Optionee under the Corporation’s 2008 Stock
Option/Stock Issuance Plan.

    

    All capitalized terms in this Agreement
shall have the meaning assigned to them in this Agreement or in the attached
Appendix.

    

    A.           EXERCISE OF
OPTION

    

    1.           Exercise.  Optionee
hereby purchases                                                  shares
of Common Stock (the “Purchased Shares”) pursuant to that certain option (the
“Option”) granted Optionee on _______________, 20___ (the “Grant Date”) to
purchase up to ______________ shares of Common Stock (the “Option Shares”)
under the Plan at the exercise price of $                
 per share (the “Exercise Price”).

    

    2.           Payment.  Concurrently
with the delivery of this Agreement to the Corporation, Optionee shall pay the
Exercise Price for the Purchased Shares in accordance with the provisions of the
Option Agreement and shall deliver whatever additional documents may be required
by the Option Agreement as a condition for exercise.

    

    3.           Shareholder
Rights.  Optionee (or any successor in interest) shall have all
the rights of a shareholder (including voting, dividend and liquidation rights)
with respect to the Purchased Shares, subject, however, to the transfer
restrictions of Sections B and C.

    

    
      	
              B.

            	
              SPECIAL TAX
      ELECTION

            

    

    

    In the event the Purchased Shares
include Option Shares which have not yet vested as of the date hereof, the
acquisition of the Purchased Shares may result in adverse tax consequences which
may be avoided or mitigated by filing an election under Code Section
83(b).  Such election must be filed within thirty (30) days after the
date of this Agreement.  OPTIONEE SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b)
ELECTION.  OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE’S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE
SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS OR HER BEHALF.

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

    C.          GENERAL
PROVISIONS

    

    1.           No Employment or Service
Contract.  Nothing in this Agreement or in the Plan shall
confer upon Optionee any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of
Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee’s Service at any time for any reason, with or without
cause.

    

    2.           Notices.  Any
notice required to be given under this Agreement shall be in writing and shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated below such party’s signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph to all other parties
to this Agreement.

    

    3.           No
Waiver.  No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.

    

    D.          MISCELLANEOUS
PROVISIONS

    

    1.           Optionee
Undertaking.  Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.

    

    2.           Agreement is Entire
Contract.  This Agreement constitutes the entire contract
between the parties hereto with regard to the subject matter
hereof.  This Agreement is made pursuant to the provisions of the Plan
and shall in all respects be construed in conformity with the terms of the
Plan.

    

    3.           Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.

    

    4.           Successors and
Assigns.  The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and upon Optionee, Optionee’s permitted assigns and the legal representatives,
heirs and legatees of Optionee’s estate, whether or not any such person shall
have become a party to this Agreement and have agreed in writing to join herein
and be bound by the terms hereof

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF, the parties have
executed this Agreement on the day and year first indicated above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  	 
      	
                                                          Desert
      Hawk Gold Corp.

                                                        
	 
      	 
      	 
      
	 
      	
                                                          By: 
      

                                                        	 
      
	 
      	
                                                          Title: 
      

                                                        	 
      
	 
      	 
      	 
      
	 
      	
                                                          Address:  

                                                        	 
      
	 
      	
                                                           

                                                        	 
      
	 
      	 
      	 
      
	 
      	
                                                          OPTIONEE

                                                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                                          (Signature)

                                                        	 
      
	 	 	 
	 
      	 
      	 
      
	 
      	
                                                          (Print
      Name)

                                                        
	 
      	 
      	 
      
	 
      	
                                                          Address: 
      

                                                        	 
      
	 
      	 
      	 
      

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      
                                                   

    
      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    

    

    SPOUSAL
ACKNOWLEDGMENT

    

    The undersigned spouse of Optionee has
read and hereby approves the foregoing Stock Purchase Agreement.  In
consideration of the Corporation’s granting Optionee the right to acquire the
Purchased Shares in accordance with the terms of such Agreement, the undersigned
hereby agrees to be irrevocably bound by all the terms of such Agreement,
including (without limitation) the right of the Corporation (or its assigns) to
purchase any Purchased Shares in which Optionee is not vested at time of his or
her cessation of Service.

     

    
      
        
          
            
              
                
                  
                    
                      	 
      	 
      	 
      
	 
      	
                              OPTIONEE’S
      SPOUSE

                            
	 
      	 
      	 
      
	 
      	
                              Address: 
      

                            	 
      
	 	 	 

                    

                  

                

              

            

          

        

      

    

    

    APPENDIX

    

    The following definitions shall be in
effect under the Agreement:

    

    
      	
              1.

            	
              Agreement shall
      mean this Stock Purchase Agreement.

            

    

    

    
      	
              2. 

            	
              Board shall
      mean the Corporation’s Board of
Directors.

            

    

    

    
      	
              3. 

            	
              Code shall mean
      the Internal Revenue Code of 1986, as
amended.

            

    

    

    
      	
              4.

            	
              Committee shall
      mean a committee of two (2) or more non-employee Board members appointed
      by the Board to exercise one or more administrative functions under the
      Plan.

            

    

    

    
      	
              5. 

            	
              Common Stock
      shall mean the Corporation’s common
stock.

            

    

    

    
      	
              6.

            	
              Corporate
      Transaction shall mean either of the following shareholder approved
      transactions to which the Corporation is a
  party:

            

    

    

    (a)           a
merger or consolidation in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction, or

    

    (b)           the
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the
Corporation.

    

    
      	
              7. 

            	
              Corporation
      shall mean Desert Hawk Gold Corp., a Nevada
  corporation.

            

    

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

    
      	
              8. 

            	
              Exercise Price
      shall have the meaning assigned to such term in Section
    A.1.

            

    

    

    
      	
              9.

            	
              Fair Market
      Value per share of Common Stock on any relevant date shall be
      determined in accordance with the following
  provisions:

            

    

    

    (a)    If
the Common Stock is at the time traded on the NASDAQ National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as such price is reported by the National Association
of Securities Dealers on the NASDAQ National Market or any successor
system.  If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

    

    (b)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange.  If there is
no closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

    

    (c)           If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the NASDAQ National Market, then the Fair Market Value shall be determined by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

    

    
      	
              10.

            	
              Grant Date
      shall have the meaning assigned to such term in Section
    A.1.

            

    

    

    
      	
              11.

            	
              Grant Form
      shall mean the Grant of Stock Option pursuant to which Optionee has been
      informed of the basic terms of the
Option.

            

    

    

    
      	
              12.

            	
              Incentive
      Option shall mean an option which satisfies the requirements of
      Code Section 422.

            

    

    

    
      	
              13. 

            	
              1933 Act shall
      mean the Securities Act of 1933, as
amended.

            

    

    

    
      	
              14. 

            	
              1934 Act shall
      mean the Securities Exchange Act of 1934, as
  amended.

            

    

    

    
      	
              15.

            	
              Non-Statutory
      Option shall mean an option not intended to satisfy the
      requirements of Code Section 422.

            

    

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    
      	
              16. 

            	
              Option shall
      have the meaning assigned to such term in Section
  A.1.

            

    

    

    
      	
              17.

            	
              Option
      Agreement shall mean all agreements and other documents evidencing
      the Option.

            

    

    

    
      	
              18. 

            	
              Optionee shall
      mean the person to whom the Option is granted under the
    Plan.

            

    

    

    
      	
              19.

            	
              Parent shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations ending with the Corporation, provided each corporation in the
      unbroken chain (other than the Corporation) owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other
      corporations in such chain.

            

    

    

    
      	
              20. 

            	
              Plan shall mean
      the Corporation’s 2002 Stock Option/Stock Issuance
  Plan.

            

    

    

    
      	
              21.

            	
              Plan
      Administrator shall mean either the Board or the Committee acting
      in its capacity as administrator of the
Plan.

            

    

    

    
      	
              22. 

            	
              Purchased
      Shares shall have the meaning assigned to such term in Section
      A.1.

            

    

    

    
      	
              23.

            	
              Recapitalization
      shall mean any stock split, stock dividend, recapitalization, combination
      of shares, exchange of shares or other change affecting the Corporation’s
      outstanding Common Stock as a class without the Corporation’s receipt of
      consideration.

            

    

    

    
      	
              24. 

            	
              SEC shall mean
      the Securities and Exchange
Commission.

            

    

    

    
      	
              25.

            	
              Service shall
      mean the provision of services to the Corporation (or any Parent or
      Subsidiary) by a person in the capacity of an Employee, a non-employee
      member of the board of directors or a consultant or independent advisor,
      except to the extent otherwise specifically provided in the documents
      evidencing the option grant.

            

    

    

    
      	
              26.

            	
              Subsidiary
      shall mean any corporation (other than the Corporation) in an unbroken
      chain of corporations beginning with the Corporation, provided each
      corporation (other than the last corporation) in the unbroken chain owns,
      at the time of the determination, stock possessing fifty percent (50%) or
      more of the total combined voting power of all classes of stock in one of
      the other corporations in such
chain.

            

    

    

    
      	
              27.

            	
              Vesting
      Schedule shall mean the vesting schedule specified in the Grant
      Form pursuant to which the Optionee is to vest in the Option Shares in a
      series of installments over his or her period of
  Service.

            

    

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    THESE SECURITIES HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION BECAUSE
THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER SECTION 4(2) AND/OR 4(6)
OF THE SECURITIES ACT OF 1933.

    

    THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION.  NEITHER THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER AUTHORITY HAS PASSED UPON OR
ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THE
INFORMATION PROVIDED TO THE INVESTORS.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.  INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS OFFERING IN
MAKING AN INVESTMENT DECISION.

    

    DESERT
HAWK GOLD CORP.

    STOCK
ISSUANCE FORM

    

    This
Stock Issuance Form is furnished to the designated participant in the stock
issuance program of the 2008 Stock Option/Stock Issuance Plan of Desert Hawk
Gold Corp., an Nevada corporation (the “Corporation”):

    

    Participant:                                                                                                    

     

    Issuance Date:                                                                                               

    

    Number of Shares:                                                                                        

    

    Consideration for
Shares:                                                                           

    

    Vesting of Shares:                                                                                         

    

    The
Participant understands and agrees that the stock is issued subject to and in
accordance with the terms of the Desert Hawk Gold Corp. 2008 Stock Option/Stock
Issuance Plan (the “Plan”).  The participant further agrees to be
bound by the terms of the Plan, a copy of which is attached hereto as
Exhibit A.

    

    All
capitalized terms in this Stock Issuance Form shall have the meaning assigned to
them in this form or in the attached Plan.

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

    Assuming
that you are in agreement with the terms of this Stock Issuance Form, please
sign your name in the space indicated below.

    

    
      
        	 
      	
                Deseret
      Hawk Gold Corp.

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Robert
      E. Jorgensen, CEO

              

      

    

    

    AGREED:

    

    ____________________________________

    Participant

    

    Address:                                                                

    

    Exhibit
A         2008 Stock Option/Stock
Issuance Plan

    

    
      
        
           

        

        
          37

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