Document:

EXECUTION
VERSION

     

    PLEDGE
AGREEMENT

     

    This
PLEDGE AGREEMENT (this “Agreement”) is made
as of July 14, 2010, by and between DESERT HAWK GOLD CORP., a Nevada
corporation (the “Pledgor”), and DMRJ
GROUP I, LLC, a Delaware limited liability company, or its successors and
assigns (the “Secured
Party”).

     

    RECITALS

     

    A.          Contemporaneously
with the execution and delivery hereof, the Pledgor and the Secured Party
entered into that certain Investment Agreement, dated as of the date hereof,
pursuant to which the Secured Party agreed to make available to the Pledgor a
senior secured term loan credit facility of up to $6,500,000 for the purpose of,
among other things, providing capital to the Secured Party for the conduct of
certain mining activities (as the same may be amended, modified, supplemented,
renewed, restated, extended or replaced, the “Investment
Agreement”).

    

    B.           Pledgor
is the owner of 2,713,636 shares of common stock, par value $0.001 per share, of
Blue Fin Capital, Inc., a Utah corporation (the “Blue Fin Shares”),
which represents all of the issued and outstanding shares of Blue Fin Capital,
Inc.

    

    C.           In
order to induce the Secured Party to enter into the Investment Agreement and
make available to the Pledgor the senior secured term loan credit facility
contemplated thereby, the Pledgor agreed to execute and deliver to and for the
benefit of the Secured Party this Agreement pursuant to which the Pledgor shall
pledge to the Secured Party the Blue Fin Shares as collateral security for the
timely payment and performance in full of the Secured Obligations (as defined
herein).

    

    D.           This
Pledge Agreement is the “Pledge Agreement” defined and referenced in the
Investment Agreement.

    

    AGREEMENT

     

    ACCORDINGLY,
in consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Pledgor agrees
with and for the benefit of the Secured Party as follows:

     

    1.           Definitions:  The
following terms shall have the meanings ascribed to them below:

     

    “Agreement” has the
meaning set forth in the preamble hereof.

     

    “Blue Fin Shares” has
the meaning set forth in the Recitals hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

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

     

    “Distributions” has
the meaning specified in Section 2(a) hereof.

     

    “Foreclosure Event”
shall mean any “Event of Default” (as defined in the Investment
Agreement).

     

    “Investment Agreement”
has the meaning set forth in the Recitals hereof.

     

    “Note” has the meaning
set forth in the Investment Agreement.

     

    “Person” shall mean
any individual, partnership (including limited partnership), corporation,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.

     

    “Pledged Collateral”
has the meaning specified in Section 2 hereof.

     

    “Pledgor” has the
meaning set forth in the preamble hereof.

     

    “Secured Obligations”
shall mean the Obligations (as defined in the Investment
Agreement).

     

    “Secured Party” has
the meaning set forth in the preamble hereof.

     

    “UCC” shall mean the
Uniform Commercial Code as in effect from time to time in the State of New
York.

     

    2.           Security
Interest.  As security for the prompt and complete payment and
performance, when due (whether at stated maturity, acceleration or otherwise),
of the Secured Obligations, the Pledgor, for value received, hereby pledges and
assigns to the Secured Party and grants to the Secured Party a continuing, first
priority security interest in and lien on the following (the “Pledged
Collateral”):

     

    (a)           the
Blue Fin Shares and the certificates, if any, representing such Blue Fin Shares,
and all products and proceeds of such Blue Fin Shares, including, without
limitation, all distributions, dividends, cash, instruments, subscription,
warrants and any other rights and options and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Blue Fin Shares (“Distributions”) and
including, without limitation, all “proceeds” as such term is defined in the
UCC;

     

    (b)           all
additional shares of stock or other equity interests of or in Blue Fin Capital,
Inc. from time to time acquired by the Pledgor in any manner, and the
certificates, if any, representing such additional shares or interests (any such
additional shares or interests will constitute part of the Blue Fin Shares under
and as defined in this Agreement), and all products and proceeds of any such
additional Blue Fin Shares, including, without limitation, all distributions,
dividends, cash, instruments, subscription, warrants and any other rights and
options and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional Blue
Fin Shares;

     

    
      
         

      

      
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    (c)           all
other claims of any kind or nature and any instruments, certificates, chattel
paper or other writings evidencing such claims, whether in contract or tort and
whether arising by operation of law, consensual agreement or otherwise, at any
time acquired by the Pledgor against Blue Fin Capital, Inc. or any other Person
having any liability to holders of the Blue Fin Shares; and

     

    (d)           any
“investment property” (as defined in the UCC) now owned or hereafter acquired by
the Pledgor with respect to the property described in clauses (a), (b) or (c)
above.

     

    3.           Voting Rights;
Distributions.  So long as no Foreclosure Event has occurred
and is continuing, the Pledgor may exercise any voting rights incident to the
Pledged Collateral and shall have the right to receive and retain any and all
Distributions to the extent that all or any portion of such Distributions are
permitted to be made by Blue Fin Capital, Inc. in accordance with the provisions
of the Investment Agreement.

     

    4.           Delivery of Pledged
Collateral.  The Pledgor shall deliver to the Secured Party
(i) simultaneously with or prior to the execution and delivery of this
Pledge Agreement, all certificates representing the Blue Fin Shares, and
(ii) promptly upon the receipt thereof by the Pledgor, all other
certificates and instruments constituting Pledged Collateral owned by the
Pledgor.  All such certificates shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in Exhibit A attached
hereto.

     

    5.           Representations and
Warranties.  The Pledgor hereby represents and warrants to the
Secured Party as follows:

     

    (a)           Enforceability; Creation of
Security Interest.  This Agreement has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
the Pledgor, enforceable against the Pledgor in accordance with its terms,
subject to bankruptcy, insolvency, moratorium, reorganization and similar laws
of general applicability affecting the rights and remedies of creditors and to
general principles of equity, regardless of whether enforcement is sought in
proceedings in equity or at law.  The security interest created hereby
constitutes (i) a legal and valid security interest in the Pledged Collateral
owned by the Pledgor securing the payment and performance of the Secured
Obligations, and (ii) a first priority and perfected security interest in the
Pledged Collateral.  The security interest created hereby shall be
prior to any lien on the Pledged Collateral, other than liens arising by
operation of law and that would be prior in right.

     

    
      
         

      

      
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    (b)           Ownership and
Liens.  The Pledgor is the record and beneficial owner of Blue
Fin Shares, and the Blue Fin Shares constitute all of the issued and outstanding
capital stock of Blue Fin Capital, Inc.  The  Pledgor owns
the Pledged Collateral, free and clear of all liens, except for the security
interest created by this Agreement and the Transaction Documents (as defined in
the Investment Agreement).  The Pledgor has not executed any other
security agreement affecting the Pledged Collateral, and no financing statement
or other similar instrument in respect of the Pledged Collateral is in effect or
on file in any recording office in any jurisdiction, except pursuant to the
Transaction Documents.

     

    6.           Covenants.  The
Pledgor shall comply with the covenants contained in this Section 6 at all times
during the period of time this Agreement remains in effect unless the Secured
Party shall otherwise consent in writing:

     

    (a)           Ownership and
Liens.  The Pledgor will maintain good and valid title to the
Pledged Collateral, free and clear of all liens, except for the security
interest created by this Agreement and the Transaction Documents.

     

    (b)           Adverse
Claim.  The Pledgor will promptly notify the Secured Party of
any claim, action or proceeding affecting ownership of the Pledged Collateral,
or any part thereof, or the security interest created hereunder.  The
Pledgor will promptly deliver to the Secured Party a copy of all written notices
received by the Pledgor with respect to the Pledged Collateral.  The
Pledgor will defend the Pledged Collateral pledged hereby against, and take such
other action as is necessary to remove, any lien or charge on, defect in title
to, or other encumbrance on, any of the Pledged Collateral.

     

    (c)           Further
Assurances.  The Pledgor will from time to time at its expense
promptly execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that the Secured Party may reasonably
request in order (i) to perfect and protect the security interest created
or purported to be created hereby and the priority of such security interest,
(ii) to enable the Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral, and (iii) to
otherwise effect the purposes of this Agreement.

     

    7.          Transfer or
Encumbrance.  The Pledgor will not (i) sell, assign (by
operation of law or otherwise), transfer or otherwise dispose of the Pledgor’s
rights in any of the Pledged Collateral, or (ii) grant a lien or security
interest in or execute, file or record any financing statement or other security
instrument with respect to the Pledged Collateral to any party other than the
Secured Party.

     

    
      
         

      

      
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    8.          Remedies Upon Foreclosure
Event.  If a Foreclosure Event occurs, the Secured Party may
exercise any and all the rights, powers and remedies of any owner of the Pledged
Collateral (including the right to vote the securities and receive dividends and
distributions with respect to such securities) and shall have and may exercise
without demand any and all the rights and remedies granted to a secured party
upon default under the UCC or otherwise available to the Secured Party under
applicable law. Without limiting the foregoing, following a Foreclosure Event,
the Secured Party is authorized to sell, assign, convey, transfer and deliver at
its discretion, from time to time, all or any part of the Pledged Collateral
together with all rights and entitlements appurtenant thereto at any private
sale or public auction, on not less than ten (10) days written notice to the
Pledgor, at such price or prices and upon such terms as the Secured Party may
deem commercially reasonable.  The Pledgor shall have no right to
redeem the Pledged Collateral after any such sale or assignment.  At
any such sale or auction, the Pledgor may bid for, and become the purchaser of,
the whole or any part of the Pledged Collateral offered for sale.  In
case of any such sale, after deducting the reasonable costs, attorneys’ fees and
other expenses of sale and delivery, the remaining proceeds of such sale shall
be applied to the Secured Obligations (first, to the payment in full of all
amounts owing under the Investment Agreement, with the balance to the remaining
Secured Obligations); provided that after
payment in full of the indebtedness under the Note and all other Secured
Obligations, the balance of the proceeds of sale then remaining shall be paid to
the Pledgor, and the Pledgor shall be entitled to any remaining portion of the
Pledged Collateral.  The Pledgor shall be liable for any deficiency if
the remaining proceeds are insufficient to pay the indebtedness under the Note
in full and the other Secured Obligations, including the reasonable fees of any
attorneys employed by the Secured Party to collect such
deficiency.  Upon the occurrence and during the continuation of a
Foreclosure Event and upon request of the Secured Party, the Pledgor will not
exercise any voting rights with respect to the Pledged Collateral.

     

    9.          Waiver of
Presentment.  The Pledgor hereby waives, to the fullest extent
permitted by applicable law, presentment, notice (other than such notices as are
expressly provided for) and demand with respect to breaches of the payment of
any of the Secured Obligations.

     

    10.          Power of Attorney;
Performance.  The Pledgor hereby irrevocably appoints the
Secured Party as its attorney-in-fact during the term of this Agreement (such
power of attorney being coupled with an interest and with full right of
substitution) and proxy to exercise any voting rights with respect to the
Pledged Collateral, and to take such other actions and exercise such other
remedies provided herein, but only upon the occurrence and during the
continuation of a Foreclosure Event.  If the Pledgor fails to perform
any obligation hereunder required to be performed on the part of the Pledgor,
the Secured Party may itself perform (or cause the performance of) such
obligation, and the reasonable expenses of the Secured Party incurred in
connection therewith shall be paid by the Pledgor.

     

    11.          No Assumption of Duties;
Reasonable Care.  The rights and powers granted to the Secured
Party hereunder are being granted in order to preserve and protect the Secured
Party’s security interest in and to the Pledged Collateral granted hereby and
will not be interpreted to, and will not, impose any duties on the Secured Party
in connection therewith.  The Secured Party will be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially similar to that which the Secured Party accords its own
property.

     

    12.          Miscellaneous.

     

    (a)           Amendment.  No
modification, consent or amendment of any provision of this Agreement shall be
valid or effective unless the same is in writing and signed by the party against
whom it is sought to be enforced.

     

    
      
         

      

      
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    (b)           Waiver by the Secured
Party.  The Secured Party may waive any Foreclosure Event
without waiving any other subsequent Foreclosure Event.  Neither the
failure by the Secured Party to exercise, nor the delay by the Secured Party in
exercising, any right or remedy upon any Foreclosure Event shall be construed as
a waiver of such Foreclosure Event or as a waiver of the right to exercise any
such right or remedy at a later date.  No single or partial exercise
by the Secured Party of any right or remedy hereunder shall exhaust the same or
shall preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time.  No waiver of any
provision hereof or consent to any departure by the Pledgor therefrom shall be
effective unless the same shall be in writing and signed by the Secured Party
and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein
specified.  No notice to or demand on the Pledgor in any case shall of
itself entitle the Pledgor to any other or further notice or demand in similar
or other circumstances.

     

    (c)           Costs and
Expenses.  The Pledgor will, within five (5) days after
demand, pay to the Secured Party the amount of any and all reasonable costs and
expenses (including, but not limited to, attorneys’ fees and expenses and all
costs and expenses of collection and sale of collateral), which the Secured
Party may incur after a Foreclosure Event in connection with (i) the
exercise or enforcement of any of the rights or remedies of the Secured Party
under the Investment Agreement, this Agreement or applicable law, or
(ii) the failure by the Pledgor to perform or observe any of the provisions
hereof.

     

    (d)           GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF, EXCEPT FOR SECTIONS 5-1401 AND 5-4102 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.

     

    (e)           Jurisdiction,
Etc.

     

    (i)           Each
of the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York County, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the fullest extent
permitted by law, in such Federal court.  Each of the parties hereto
agrees that a final judgment in any such action or proceeding, to the extent
permitted by law, shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
in the courts of any jurisdiction.

     

    
      
         

      

      
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    (ii)           Each
of the parties hereto irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State or Federal
court.  Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

     

    (f)           WAIVER OF JURY
TRIAL.  EACH OF THE PLEDGOR AND THE SECURED PARTY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

     

    (g)          Severability.  If
any provision of this Agreement is held by a court of competent jurisdiction to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, shall not impair or invalidate the remainder
of this Agreement and the effect thereof shall be confined to the provision held
to be illegal, invalid or unenforceable

     

    (h)          Notices. All notices
and other communications provided for hereunder shall be in writing (including
telecopy communication confirmed by mail or delivery) and mailed, telecopied,
e-mailed or delivered:

     

    (i)           if
to the Pledgor, to it at:

     

    8921
North Indian Trail Road

    Number
288

    Spokane,
WA  99208

    Attention:  Bob
Jorgensen

    Telephone:  (509)
434-8161

    Telecopier:  (509)
468-1937

    E-mail
Address:  bjorg53@yahoo.com

     

    
      
         

      

      
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    with a
copy to:

    

    Holland
& Hart LLP

    555
Seventeenth Street

    Denver,
CO  80202

    Attention:  Kevin
W. Johnson

    Telephone:  (303)
295-8486

    Telecopier:  (303)
713-6203

    E-mail
Address:  Kjohnson@hollandhart.com

     

    (ii)           if
to the Secured Party, to it at:

     

    Carnegie
Hall Tower

    152 West
57th
Street

    New York,
NY  10019

    Attention:
David Levy

    Telephone:  212)
582-2222

    Telecopier:  (212)
582-2424

    E-mail
Address:  dlevy@platinumlp.com

     

    with a
copy to:

     

    Katten
Muchin Rosenman LLP

    575
Madison Avenue

    New York,
NY  10022

    Attention:  Elliot
Press

    Telephone:  (212)
940-6348

    Telecopier:  (212)
940-6621

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

     

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

     

    
      
         

      

      
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    (i)           Binding Effect and
Assignment.  This Agreement (i) creates a continuing
security interest in the Pledged Collateral, (ii) shall be binding on the
Pledgor and the successors and permitted assigns of the Pledgor, and
(iii) shall inure to the benefit of the Secured Party and any permitted
assignee under the Investment Agreement.  The Pledgor may not assign
or delegate any of its rights or obligations hereunder without the prior written
consent of the Secured Party.

     

    (j)           Termination.  This
Agreement (and the pledge hereunder) shall terminate upon the payment and
performance in full in cash of the Secured Obligations.  Upon the
termination of this Agreement, the Secured Party shall promptly deliver to the
Pledgor any certificates or instruments representing the Pledged Collateral
delivered to the Secured Party in accordance with Section 4 of this Agreement
that have not previously been sold or otherwise applied pursuant to this
Agreement.

     

    (k)          Gender and
Number.  Within this Agreement, words of any gender shall be
held and construed to include the other gender, and words in the singular number
shall be held and construed to include the plural and words in the plural number
shall be held and construed to include the singular, unless in each instance the
context requires otherwise.

     

    (l)           Descriptive
Headings.  The headings in this Agreement are for convenience
only and shall in no way enlarge, limit or define the scope or meaning of the
various and several provisions hereof.

     

    (m)         Construction.  The
construction and interpretation of this Agreement shall not take into
consideration the party who drafted or whose representatives drafted this
Agreement or any portion hereof, and no canon of construction shall be applied
that resolves ambiguities against the drafter of a document.  The
parties hereto are sophisticated parties and have been represented by counsel
throughout the negotiation, execution and delivery of this Agreement and have
carefully negotiated the provisions hereof.  Each of the parties
hereto waives, to the fullest extent permitted by applicable law, any statute,
rule, regulation or other law that relates to, or provides for, the construction
or interpretation of a contract against the drafter of such
contract.

     

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

      

    [Signature
Page Follows]

      

    
      
        
           

        

        
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    EXECUTED
as of the date first written above.

     

    
      
        
          
            
              
                
                  
                    	
                            PLEDGOR:

                          
	 
      
	
                            DESERT
      HAWK GOLD CORP.

                          
	 	 
	
                            By:

                          	
                            /s/ Robert E. Jorgensen

                          
	 
      	
                            Name:  Robert
      E. Jorgensen

                          
	 
      	
                            Title:    Chief
      Executive Officer

                          
	 
      	 
      
	
                            SECURED PARTY:

                          
	 
      
	
                            DMRJ
      GROUP I, LLC

                          
	 	 
	
                            By:

                          	
                            /s/ Daniel Small

                          
	 
      	
                            Name:
      Daniel Small

                          
	 
      	
                            Its:       Portfolio
      Manager

                          

                  

                

              

            

          

        

      

    

     

    [Signature Page to Pledge Agreement]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Exhibit
A

    to

    Pledge
Agreement

    dated as
of July 14, 2010

    in favor
of DMRJ GROUP I, LLC

    as
Secured Party

    

    Irrevocable Stock
Power

     

    FOR VALUE
RECEIVED, Desert Hawk Gold Corp., a Nevada corporation, hereby sells, assigns
and transfers unto __________________________ 2,713,636 shares of Common Stock
of Blue Fin Capital, Inc. (the “Shares”), standing in
its name on the books of Blue Fin Capital, Inc., and does hereby irrevocably
constitute and appoint ____________________________ attorney to transfer such
Shares on the books of Blue Fin Capital, Inc., with full power of
substitution.

     

    Dated:
_____________________

     

    
      
        
          	
                  DESERT
      HAWK GOLD CORP.

                
	 
      
	
                  By:

                	
                   

                
	 
      	
                  Name:  Robert
      E. Jorgensen

                
	 
      	
                  Title:    Chief
      Executive OfficerLOAN
AGREEMENT

     

    This Loan
Agreement (this “Agreement”) is dated as of
November 18, 2009, (the “Effective Date”) by and among
Desert Hawk Gold Corp., a Nevada corporation (the “Company”), and each lender
listed on the Schedule of Lenders attached hereto (each, a “Lender” and collectively, the
“Lenders”).

     

    RECITALS:

     

    A.          The
Company is seeking project funding through borrowed funds which in the aggregate
shall not exceed $600,000.

     

    B.           The
Company will issue 15% convertible promissory notes (collectively the “Notes” and individually a
“Note”) to each Lender
evidencing such borrowed funds, which Notes are being offered and sold to the
Lenders in reliance upon the exemption from securities registration afforded by
Section 4(6) and Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and
Rule 506 of Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act.

     

    C.           Each
Lender wishes to purchase, and the Company wishes to sell, the Notes upon the
terms and conditions stated in this Agreement.

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each of the Lenders agree as
follows:

     

    1.           LOAN
TRANSACTION.

     

    a.           Loan and
Note.  Subject to the terms of this Agreement, the Lender shall
loan to the Company, and the Company promises to repay, the funds set forth in
the Schedule of Lenders attached hereto (the “Loan”).  Each Loan
shall be evidenced and governed by the terms and conditions of the Note, the
form of which is attached hereto as Exhibit A.

     

    b.           Payment of Funds;
Issuance of Note.  Upon execution of
this Agreement by a Lender, such Lender shall deliver to the Company immediately
available funds in the principal amount of the Loan to the Company and the
Company shall execute and deliver to the Lender a Note representing such
Loan.

     

    c.           Conversion
Rights.  Each Lender shall
have the right to convert the principal amount of and unpaid interest on the
Note into shares of common stock of the Company (the “Conversion Shares”) as
provided in the Note.

     

    d.           Stock
Issuance.  As partial
consideration for loaning the funds to the Company, the Company shall issue to
the Lender one share of the Company’s common stock for each $2.00 loaned to the
Company (the “Bonus
Shares”).  The Company shall promptly, but in no event later
than five business days following receipt of the loaned funds from the Lender,
irrevocably instruct the Company’s transfer Agent to issue and deliver to the
Lender a stock certificate representing the Bonus Shares.

     

    e.           Penalty
Shares.  In the event the Company fails to repay a Loan, or
interest thereon, in full on the maturity date of the Note, the Company will
issue an additional one share of the Company’s common stock for each $2.00 of
the original principal amount of the Note at the maturity date (the “Penalty Shares”) and the
maturity date of the Note shall be extended for one year, as provided in the
Note.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    f.           Piggyback
Registration Rights.  The Company
hereby grants to each Lender the one-time right to include the Conversion
Shares, the Bonus Shares, and any Penalty Shares held by the Lender (the “Registerable Shares”) in an
appropriate registration statement filed by the Company as set forth in Section
4 below.

     

    2.           REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.  The Company hereby represents
and warrants to each of the Lenders as follows:

     

    a.           Organization and
Standing. 
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada.  The Company has all
requisite corporate power and authority to carry on its business as presently
conducted.  The Company is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where failure to be so qualified would not have a material adverse effect on the
Company’s business as now conducted.

     

    b.           Corporate
Power. The
Company has all requisite legal and corporate power to execute and deliver this
Agreement, to issue the Notes, to issue the Bonus, Conversion and Penalty
Shares, and to carry out and perform its obligations under the terms of this
Agreement.

     

    c.           Capitalization.  The authorized
capital stock of the Company consists of 100,000,000 shares of Common Stock, of
which approximately 6,249,244 shares are issued and outstanding as of the
Effective Date.  All issued and outstanding shares of the Company’s
capital stock have been duly authorized and validly issued, are fully paid and
nonassessable.  There are no other outstanding shares of capital stock
or other securities, rights, options, warrants, conversion rights (except
potential conversion of amounts owed to Mr. Jorgensen for past consulting fees
into shares of Common Stock), or other agreements either directly or indirectly
for the purchase of any shares of the Company’s capital stock.

     

    d.           Common
Stock.  The holders of
the Company’s common stock are entitled to equal dividends and distributions,
per share, with respect to the common stock when, as and if declared by the
Board of Directors from funds legally available therefore.  No holder
of any shares of common stock has a pre-emptive right to subscribe for any
securities of the Company nor are any common shares subject to redemption or
convertible into other securities of the Company.  Upon liquidation,
dissolution or winding up of our company, and after payment of creditors, the
assets will be divided pro-rata on a share-for-share basis among the holders of
the shares of common stock.  Each share of common stock is entitled to
one vote with respect to the election of any director or any other matter upon
which shareholders are required or permitted to vote.  Holders of the
Company’s common stock do not have cumulative voting rights.

     

    e.           Authorization.  All corporate
action on the part of the Company, its officers and directors necessary for the
authorization, execution, delivery and performance by the Company of this
Agreement, the authorization, issuance, sale and delivery of the Notes, the
Bonus, Conversion, and Penalty Shares, and the performance of all of the
Company’s obligations hereunder has been taken.  This Agreement, when
executed and delivered by the Company, shall constitute a valid and legally
binding obligation of the Company enforceable in accordance with its respective
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.  The Bonus, Conversion,
and Penalty Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable, and the Bonus,
Conversion, and Penalty Shares and will be free of any liens or encumbrances
created by the Company; provided, however, that the Bonus, Conversion, and
Penalty Shares will be subject to restrictions on transfer under applicable
securities laws as set forth herein.

    
      
         

      

      
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    f.           Litigation.  There is no
action, proceeding or investigation pending, or to Company’s knowledge
threatened, against the Company or its officers, directors or stockholders, or,
to the Company’s knowledge, against employees or consultants of the Company
which might result, either individually or in the aggregate, in any material
adverse change in the business, prospects, conditions, affairs or operations of
the Company.  The Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality.  There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate.

     

    g.           Brokers or
Finders.  The Company has
not incurred, and will not incur, directly or indirectly, as a result of any
action taken by or on behalf of the Company, any liability for brokerage or
finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement.

    

    h.           Current
Non-Public Offering.  The Company is currently engaged in a
non-public offering of up to 400,000 shares of common stock at $0.70 per share
solely to accredited investors.  As of the Effective Date the Company
has sold 246,000 shares in this offering and received gross proceeds of
$172,200.

    

    3.           REPRESENTATIONS
AND WARRANTIES OF THE LENDERS.  Each Lender hereby, as to
itself only and for no other Lender, represents and warrants to the Company as
follows:

     

    a.           Authorization.  This Agreement,
when executed and delivered by the Lender, will constitute a valid and legally
binding obligation of the Lender, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application relating to or affecting
enforcement of creditors’ rights.

     

    b.           Accredited
Investor.  The Lender is an
“accredited investor” as defined in Rule 501 of Regulation D.

     

    c.           Restricted
Securities.  The Lender
understands that the Note and the Bonus, Conversion, and Penalty Shares have not
been registered pursuant to the Securities Act, or any state securities act, and
thus are “restricted securities” as defined in Rule 144 promulgated by the SEC
and are subject to Paragraph (i) of Rule 144 which prohibits reliance on Rule
144 by persons holding shares of non-reporting former shell companies until the
issuer files a registration statement with the SEC and has filed all periodic
reports for a period of at least one year from the filing date of the
registration statement.  Therefore, the Lender is prepared to hold the
Note and the Bonus, Conversion, and Penalty Shares for an indefinite
period.

     

    d.           Investment
Purpose.  The Lender
acknowledges that the Note and the Bonus, Conversion, and Penalty Shares are
being purchased for his, her, or its own account, for investment, and not with
the present view towards the distribution, assignment, or resale to others or
fractionalization in whole or in part.  The Lender further
acknowledges that no other person has or will have a direct or indirect
beneficial or pecuniary interest in the Note or the Bonus, Conversion, or
Penalty Shares.

     

    
      
         

      

      
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    e.           Limitations on
Resale; Restrictive Legend.  The Lender
acknowledges that he, she, or it will not sell, assign, hypothecate, or
otherwise transfer any rights to, or any interest in, the Note or the Bonus,
Conversion, or Penalty Shares except (i) pursuant to an effective registration
statement under the Securities Act, or (ii) in any other transaction which, in
the opinion of counsel acceptable to the Company, is exempt from registration
under the Securities Act, or the rules and regulations of the SEC
thereunder.  The Lender also acknowledges that an appropriate legend
will be placed upon each of the certificates representing the Notes and the
Bonus, Conversion, and Penalty Shares stating that the securities have not been
registered under the Securities Act and setting forth or referring to the
restrictions on transferability and sale of the securities.

     

    f.      
    Information. The Lender, or if the Lender
is any entity, its undersigned representative, has been furnished (i) with all
requested materials relating to the business, finances, management, and
operations of the Company; (ii) with information deemed material to making an
informed investment decision; and (iii) with additional requested information
necessary to verify the accuracy of any documents furnished to the Lender by the
Company.  Such person has been afforded the opportunity to ask
questions of the Company and its management and to receive answers concerning
the terms and conditions of the loan transaction.

     

    g.           Knowledge and
Experience in Business and Financial Matters.  The Lender,
either individually or together with his, her, or its purchaser representative,
has such knowledge and experience in business and financial matters that he,
she, or it is capable of evaluating the risks of the prospective investment, and
that the financial capacity of such party is of such proportion that the total
cost of such person’s commitment in the loaned funds would not be material when
compared with his, her, or its total financial capacity.

     

    h.           No
Advertisements.  The Lender is not
entering into this Agreement as a result of or subsequent to any advertisement,
article, notice, or other communication published in any newspaper, magazine, or
similar media or broadcast on television or radio, or presented at any seminar
or meeting.

     

    i.           Relationship to
Company. The
Lender, either individually or, if an entity, through its representative, has a
preexisting personal or business relationship with the Company or one of its
officers, directors, or controlling persons, or, by reason of his or her
business or financial experience (or the business or financial experience of his
professional advisors who are unaffiliated with and who are not compensated by
the Company), the Lender has the capacity to protect his, her, or its own
interests in connection with the loan.

     

    j.          
No Public
Market.  The Lender
understands that no public market now exists for the common stock of the Company
and that the Company has made no assurances that a public market will ever exist
for the Company’s securities.

     

    k.           Brokers or
Finders.  The Lender has
not engaged any brokers, finders, or agents and has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finder’s fee or
agents’ commissions or any similar charges in connection with this Agreement and
the transactions contemplated hereby.

     

    4.           PIGGYBACK
REGISTRATION RIGHTS.  The Company hereby grants to the Lenders
the following piggyback registration rights:

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    a.           Registration
Statement.

    

    i.           Right to
Piggyback.  If the Company proposes to undertake an offering of
shares of its common stock for its account or for the account of other
stockholders and the registration form to be used for such offering may be used
for the registration of the Registerable Shares held by the Lender  (a
“Piggyback
Registration”), the Company will give prompt written notice to each
Lender holding Registerable Shares of its intention to effect such a
registration (each, a “Piggyback Notice”) and,
subject to Sections 4(a)(ii) and (iii) below, the Company will use its best
efforts to cause to be included in such registration all Registerable Shares
held by the Lenders with respect to which the Company has received written
requests for inclusion therein within 20 days after the date of sending the
Piggyback Notice.

    

    ii.          Priority on Primary
Registrations.  If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number that can be
sold in an orderly manner within a price range acceptable to the Company, the
Company will include in such registration (a) first, the securities the Company
proposes to sell and (b) second, the Registerable Shares requested to be
included in such registration and any other securities requested to be included
in such registration that are held by persons other than the Lenders pursuant to
registration rights, pro rata among the Lenders holding Registerable Shares and
the holders of such other securities requesting such registration on the basis
of the number of shares of such securities owned by each such
holder.

    

    iii.        Priority on Secondary
Registrations.  If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company’s securities other
than the Lenders holding the Registerable Shares (the “Other Holders”), and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in a orderly manner in such offering within a price
range acceptable to the Other Holders requesting such registration, the Company
will include in such registration (a) first, the securities requested to be
included therein by the Other Holders requesting such registration and (b)
second, the Registerable Shares requested be include in such resignation
hereunder, pro rata amount the Lenders holding the Registerable Shares
requesting such registration on the basis of the number of shares of such
securities owned by each such holder.

    

    iv.           Selection of
Underwriters.  In the case of an underwritten Piggyback
Registration, the Company will have the right to select the investment banker(s)
and managers(s) to administer the offering.

    

    b.           Registration
Procedures.

    

    i.    
    Registration.  The
Company will use its reasonable best efforts to effect the registration of such
Registerable Shares in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as
possible:

    

    (a)          Registration
Statement.  Prepare and file with the SEC a registration
statement with respect to such Registerable Shares and use its reasonable best
efforts to cause such registration statement to become effective.

     

    (b)          Amendments and
Supplements.  Promptly prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for the period required by the intended method of
disposition and the terms of this Agreement and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (c)           Provisions of
Copies.  Promptly furnished to each seller of Registerable
Shares the number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registerable Shares owned by such seller.

     

    (d)           Prospectus
Updating.  Promptly notify each seller of such Registerable
Shares when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any of the following events  (i)
the occurrence of one or more event which, individually or together, represents
a fundamental change in the information contained in the prospectus included
with such registration statement; (ii) any material addition or change on the
plan of distribution; or (iii) any event which would cause the information in
the prospectus included in such registration statement to contain an untrue
statement of a material fact or omit any material fact necessary to make the
statements therein not misleading.  In such event, at the request of
any such seller, the Company will promptly prepare a supplement or amendment to
such prospectus.

     

    (e)           Due
Diligence.  Make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such registration
statement.

     

    (f)           Deemed Underwriters or
Controlling Persons.  Permit any Lender holding the
Registerable Shares which person, in such person’s reasonable judgment, might be
deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable statement and
to require the insertion therein of material in form and substance satisfactory
to such person and to the Company and furnished to the Company in writing, which
in the reasonable judgment of such person and its counsel should be
included.

     

    (g)          Management
Availability.  In connection with underwritten offerings, make
available appropriate management personnel for participation in the preparation
and drafting of such registration or comparable statement, for due diligence
meetings and for “road show” meetings.

     

    (h)      Stop
Orders.  Promptly notify the holders of the Registerable Shares
of the threat of issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceeding
for that purpose, and make every reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement.  In
the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Registerable Shares
included in such registration statement for sale in any jurisdiction, the
Company will use its reasonable best efforts promptly to obtain the withdrawal
of such order.

     

    ii.           Further Information.  The
Company may require each Lender holding Registerable Shares to furnish to the
Company in writing such information regarding the proposed distribution by such
person of such Registerable Shares as the Company may from time to time
reasonably request.

    
      
         

      

      
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    iii.           Notice to Suspend Offers and
Sales.  Each Lender participating in the registration of the
Registerable Shares severally agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections
4(b)(i)(d) or 4(b)(i)(h) hereof, such person will forthwith discontinue
disposition of the Registerable Shares pursuant to a registration hereunder
until receipt of the copies of an appropriate supplement or amendment to the
prospectus under Section 4(b)(i)(d) or until the withdrawal of such order under
Section 4(b)(i)(h).

    

    iv.          Reference to
Lenders.  If any such registration or comparable statement
refers to any Lender by name or otherwise as the holder of any securities of the
Company and if, in the Lender’s reasonable judgment, such Lender is or might be
deemed to be a controlling person of the Company, such Lender shall have the
right to require (a) the insertion therein of language in form and substance
satisfactory to such Lender and the Company and presented to the Company in
writing, to the effect that the holding by such Lender of such securities is not
to be construed as a recommendation by such Lender of the investment quality of
the Company’s securities covered thereby and that such holdings do not imply
that such Lender will assist in meeting any future financial requirements of the
Company, or (b) in the event that such reference to such Lender by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such Lender, provided that with
respect to this clause (b) such Lender shall furnish to the Company an opinion
of counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to the Company.

    

    c.           Registration
Expenses.

    

    i.           Expense Borne by
Company.  Except as specifically otherwise provided in Section
4(c)(ii) below, the Company will be responsible for payment of all expenses
incident to any registration hereunder, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, road show
expenses, advertising expenses and fees and disbursements of counsel for the
Company and all independent certified public accountants and other Persons
retained by the Company in connection with such registration (all such expenses
borne by the Company being herein called the “Registration
Expenses”).

    

    ii.           Expense Borne by Selling
Security Holders.  Each Lender will be responsible for payment
of his, her, or its own legal fees (if such Lender retains legal counsel
separate from that of the Company), underwriting fees and brokerage discounts,
commissions and other sales expenses incident to any registration hereunder,
with any such expenses which are common to the selling security holders divided
among such security holders (including the Company and holders of the Company’s
securities other than Registerable Shares, to the extent that securities are
being registered on behalf of such persons) pro rata on the basis of the number
of shares being registered on behalf of each such security holder, or as such
security holders may otherwise agree.

    
      
         

      

      
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    d.           Indemnification
Section.

    

    i.             Indemnification by
Company.  The Company agrees to indemnify, to the fullest
extent permitted by law, each Lender holding Registerable Shares and each person
who controls (within the meaning of the Securities Act) such holder against all
loses, claims, damages, liabilities and expenses in connection with defending
against any such losses, claims, damages and liabilities or in connection with
any investigation or inquiry, in each case caused by or based on any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arise out of any violation by the Company of any rules or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with such
registration, except insofar as the same are (i) contained in any information
furnished in writing to the Company by such person expressly for use therein;
(ii) caused by such person’s failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto; or (iii)
caused by such person’s failure to discontinue disposition of shares after
receiving notice from the Company pursuant to Section 4(b)(iii)
hereof.  In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each person who
controls (within the meaning of the Securities Act) such underwriters at least
to the same extent as provided above with respect to the indemnification of the
Lenders holding the Registerable Shares.

    

    ii.           Indemnification by
Holder.  In connection with any registration statement in which
a Lender holding Registerable Shares is participating, each such Lender will
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls (within the meaning of the
Securities Act) the Company against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information so furnished in writing by
such Lender expressly for use in connection with such registration; provided
that the obligation to indemnify will be individual to each Lender and will be
limited to the net amount of proceeds received by such Lender from the sale of
Registerable Shares pursuant to such registration statement. In connection with
an underwritten offering, each such Lender will indemnify such underwriters,
their officers and directors and each person who controls (within the meaning of
the Securities Act) such underwriters at least to the same extent as provided
above with respect to the indemnification of the Company.

    

    iii.           Assumption of Defense by
Indemnifying Party.  Any person entitled to indemnification
hereunder will (a) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (b) unless in such
indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party.  If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld).  An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim. unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.

    

    iv.           Binding
Effect.  The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of
securities.  The Company also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such party in
the event the Company’s indemnification is unavailable for any
reason.  Each Lender holding Registerable Shares also agrees to make
such provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event such person’s indemnification is
unavailable for any reason.

    
      
         

      

      
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    5.           ADDITIONAL
COVENANTS.

    

    a.           Financial and
Business Information.  Until the
Maturity Date (as defined in the Note), the Company shall deliver to each of the
Lenders so long as such Lender holds a Note:

     

    i.           Quarterly Statements
- as soon as practicable, and in any event within 45 days after the close of
each of the first three fiscal quarters of each fiscal year of the Company in
the case of quarterly statements, a consolidated balance sheet, statement of
income and statement of cash flows of the Company and any Subsidiaries as at the
close of such month or quarter and covering operations for such month or
quarter, as the case may be, and the portion of the Company’s fiscal year ending
on the last day of such month or quarter, all in reasonable detail and prepared
in accordance with GAAP, subject to audit and year-end adjustments, setting
forth in each case in comparative form the figures for the comparable period of
the previous fiscal year.

     

    ii.           Annual Statements -
as soon as practicable after the end of each fiscal year of the Company, and in
any event within 90 days thereafter, duplicate copies of:

     

    (a)           consolidated
and consolidating balance sheets of the Company and any subsidiaries at the end
of such year; and

     

    (b)           consolidated
and consolidating statements of income, stockholders’ equity and cash flows of
the Company and any subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and accompanied by an opinion thereon of independent certified public
accountants of recognized national standing selected by the Company, which
opinion shall state that such financial statements fairly present the financial
position of the Company and any subsidiaries on a consolidated basis and have
been prepared in accordance with GAAP (except for changes in application in
which such accountants concur) and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards.

     

    b.           Reservation of Common
Stock.  The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance of the Conversion and Penalty
Shares in such amount as may be required to fulfill its obligations in full
under the Notes.  In the event that at any time the then authorized
shares of Common Stock are insufficient for the Company to satisfy its
obligations in full under the Notes, the Company shall promptly take such
actions as may be required to increase the number of authorized
shares.

     

    c.           Use of
Proceeds.  The loaned funds will be used to develop, mine,
truck and process ores of the Yellow Hammer Pit as well as the B Zone and C
Zone; to haul and process ores at either or both the Cactus Mill Site
and/or the Marysville Mill site; for overhead costs of the Company directly
associated with this project; for the purchase of mining equipment specific to
this project; and to pay the legal costs for the preparation of the documents
for this transaction.

     

    
      
         

      

      
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    6.           MISCELLANEOUS.

    

    a.           Notices.  All
communications provided for herein shall be in writing and shall be deemed to be
given or made on (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service, or (b) three business days after mailing
if mailed from within the continental United States by registered or certified
mail, return receipt requested, to the party entitled to receive the same, if to
the Company at 8921 N. Indian Trail Road, #288, Spokane, WA 99208, Attention:
Robert E. Jorgensen, CEO, or if to the Lender, at the address set forth on the
Signature Page of this Agreement, or at such other address as shall be
designated by any party hereto in written notice to the other party hereto
delivered pursuant to this paragraph.

     

    b.           Attorneys’
Fees.  Should either
party hereto default in any of the covenants, conditions, or promises contained
herein, the defaulting party shall pay all costs and expenses, including a
reasonable attorney’s fee, which may arise or accrue therefrom, or in pursuing
any remedy provided hereunder or by the statutes of any state.

     

    c.           Governing Law and
Venue.  This Agreement
and the rights and duties of the parties hereto shall be construed and
determined in accordance with the laws of the State of Washington (without
giving effect to any choice or conflict of law provisions), and any and all
actions to enforce the provisions of this Agreement shall be brought in a court
of competent jurisdiction in the County of Spokane, State of Washington and in
no other place.

     

    d.           Rights Are
Cumulative.  The rights and remedies granted to the parties
hereunder shall be in addition to and cumulative of any other rights or remedies
either may have under any document or documents executed in connection herewith
or available under applicable law.  No delay or failure on the part of
a party in the exercise of any power or right shall operate as a waiver thereof
nor as an acquiescence in any default nor shall any single or partial exercise
of any power or right preclude any other or further exercise thereof or the
exercise of any other power or right.

     

    e.           Waiver and
Amendment.  None of the provisions hereof may be changed,
waived, terminated or discharged orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, termination
or discharge is sought.

     

    f.           Severability.  If
any provision of this Agreement is held invalid or unenforceable by any court of
final jurisdiction, it is the intent of the parties that all other provisions of
this Agreement be construed to remain fully valid, enforceable, and binding on
the parties.

     

    g.           Headings.  The
descriptive headings of the various paragraphs or parts of this Agreement are
for convenience only and shall not affect the meaning or construction of any of
the provisions hereof.

     

    h.           Exhibits.  Each
of the exhibits referenced in this Agreement is annexed hereto and is
incorporated herein by this reference and expressly made a part
hereof.

     

    i.           Counterparts.
This Agreement may be executed in any number of counterparts and all such
counterparts taken together shall be deemed to constitute one
instrument.  Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement.  Any party delivering an executed
counterpart of this Agreement by facsimile also shall deliver a manually
executed counterpart of this Agreement, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, or binding
effect of this Agreement.

    

    [SIGNATURE
PAGE TO FOLLOW]

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, each of the parties hereto has caused their respective
signature page to this Loan Agreement to be duly executed by their respective
authorized signatories as of the day and year set forth below

     

    
      
        	
                COMPANY:

              	
                Desert
      Hawk Gold Corp.

              
	 
      	 
      	 
      
	
                Date:  November
      27, 2009

              	
                By: 

              	
                /s/ Robert E. Jorgensen

              
	 
      	 
      	
                Robert
      E. Jorgensen, Chief Executive Officer

              
	 
      	 
      	 
      
	
                LENDERS:

              	
                West
      C. Street LLC

              
	 
      	 
      	 
      
	
                Date:  November
      20, 2009

              	
                By:

              	
                /s/s Richrad Meadows

              
	 
      	 
      	
                Richard
      Meadows, Manager

              
	 
      	
                21838
      NE 102nd
      Street

              
	 
      	
                Redmond,
      WA 98053

              
	 
      	 
      	 
      
	 
      	IBEARHOUSE
      LLC
	 
      	 
      	 
      
	
                Date:  November
      30, 2009

              	
                By:

              	
                /s/ Kelley Price

              
	 
      	 
      	
                Kelley
      Price, Manager

              
	 
      	
                7806
      NE 10th
      Street

              
	 
      	
                Medina,
      WA 98039

              

      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    SCHEDULE
OF LENDERS

     

    
      
        
          
            
              	
                      Name of Lender

                    	 	
                      Amount of Loan

                    	 	 	
                      Number of

                      Bonus Shares

                    	 	 	
                      Number of

                      Conversion Shares

                      (excluding interest)

                    	 	 	
                      Number of

                      Penalty Shares

                    	 
	
                      West
      C. Street LLC

                    	 	$	300,000	 	 	 	150,000	 	 	 	200,000	 	 	 	150,000	 
	
                      IBEARHOUSE
      LLC

                    	 	$	300,000	 	 	 	150,000	 	 	 	200,000	 	 	 	150,000	 
	
                      TOTAL

                    	 	$	600,000	 	 	 	300,000	 	 	 	400,000	 	 	 	300,000	 

            

          

        

      

    

    
      
         

      

      
        12

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