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      EXHIBIT
        10.3

       

       

       

      
 

       

       

       

       

      

       

        
          

        

      

      MILL
        OPERATING AND OPTION AGREEMENT

       

      By
        and
        Between

       

      Montana
        Tunnels Mining, Inc.

       

      and

       

      Elkhorn
        Goldfields, Inc.

       

      
        
          

        

       

      

       

      

       

       

       

      

       

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

      

      

        

          
            	 	 	 	Page
	
                    ARTICLE
                      I

                  	 	
                    DEFINITIONS

                  	
                    1

                  
	
                    ARTICLE
                      II

                  	 	
                    PROCESSING
                      OF ORE FROM THE ELKHORN MINE THROUGH THE MILL

                  	
                    6

                  
	
                    2.1

                  	 	
                    General
                      Rights and Obligations with Respect to the Processing of
                      Ore

                  	
                    6

                  
	
                    2.2

                  	
                     

                  	
                    Certain
                      Other Matters

                  	
                    7

                  
	
                    2.3

                  	 	
                    Costs

                  	
                    8

                  
	
                    2.4

                  	 	
                    Personnel

                  	
                    8

                  
	
                    2.5

                  	 	
                    Fees
                      Payable to MTM

                  	
                    8

                  
	
                    2.6

                  	 	
                    Maintenance
                      of Permits

                  	
                    8

                  
	
                    2.7

                  	 	
                    Title
                      and Risk of Loss

                  	
                    8

                  
	
                    2.8

                  	 	
                    Removal
                      of Hazardous Materials

                  	
                    9

                  
	
                    2.9

                  	 	
                    Subordination
                      of Rights

                  	
                    9

                  
	
                    2.10

                  	 	
                    Taxes

                  	
                    9

                  
	
                    2.11

                  	 	
                    Audit
                      Rights

                  	
                    9

                  
	
                    ARTICLE
                      III

                  	 	
                    GRANT
                      OF OPTION

                  	
                    9

                  
	
                    3.1

                  	 	
                    Option
                      Granted

                  	
                    9

                  
	
                    3.2

                  	 	
                    Option
                      Period; Termination

                  	
                    10

                  
	
                    3.3

                  	 	
                    The
                      Closing

                  	
                    10

                  
	
                    3.4

                  	 	
                    Removal
                      of the Mill

                  	
                    11

                  
	
                    ARTICLE
                      IV

                  	 	
                    REPRESENTATIVES
                      OF THE PARTIES

                  	
                    11

                  
	
                    4.1

                  	 	
                    EGI
                      Representative

                  	
                    11

                  
	
                    4.2

                  	 	
                    MTM
                      Representative

                  	
                    11

                  
	
                    ARTICLE
                      V

                  	 	
                    SHUTDOWN
                      OF MILL

                  	
                    11

                  
	
                    5.1

                  	 	
                    Shutdown
                      for Maintenance

                  	
                    11

                  
	
                    5.2

                  	 	
                    Shutdown
                      Due to Environmental or Other Concerns

                  	
                    12

                  
	
                    5.3

                  	 	
                    Limitation
                      on Remedies

                  	
                    12

                  
	
                    ARTICLE
                      VI

                  	 	
                    REPRESENTATIONS
                      AND WARRANTIES

                  	
                    12

                  
	
                    6.1

                  	 	
                    EGI’s
                      Representations and Warranties

                  	
                    12

                  
	
                    6.2

                  	 	
                    MTM’s
                      Representations and Warranties

                  	
                    13

                  

          

           

          
            
              
              

            

            
              -i-

              
                

              

            

            
              
              

            

          

           

          
            TABLE
              OF CONTENTS

             

            (continued)

          

           

          
            	 	 	 	Page
	
                    ARTICLE
                      VII

                  	 	
                    INDEMNIFICATION

                  	
                    14

                  
	
                    7.1

                  	 	
                    Survival
                      of Representations, Etc.

                  	
                    14

                  
	
                    7.2

                  	 	
                    MTM’s
                      Indemnity

                  	
                    14

                  
	
                    7.3

                  	 	
                    EGI
                      Indemnity

                  	
                    14

                  
	
                    7.4

                  	 	
                    Limitation
                      on Claims

                  	
                    14

                  
	
                    7.5

                  	 	
                    Claims
                      Procedure.

                  	
                    15

                  
	
                    7.6

                  	 	
                    Dispute
                      Resolution

                  	
                    16

                  
	
                    7.7

                  	 	
                    Knowledge
                      of EGI

                  	
                    16

                  
	
                    7.8

                  	 	
                    Coverage
                      of Indemnities

                  	
                    16

                  
	
                    ARTICLE
                      VIII

                  	 	
                    TERMINATION

                  	
                    16

                  
	
                    8.1

                  	 	
                    Default
                      and Termination

                  	
                    16

                  
	
                    8.2

                  	 	
                    Effect
                      of Termination

                  	
                    17

                  
	
                    8.3

                  	 	
                    Survival

                  	
                    17

                  
	
                    ARTICLE
                      IX

                  	 	
                    ADDITIONAL
                      PROVISIONS

                  	
                    17

                  
	
                    9.1

                  	 	
                    Force
                      Majeure

                  	
                    17

                  
	
                    9.2

                  	 	
                    Consequential
                      and Other Damages

                  	
                    17

                  
	
                    9.3

                  	 	
                    Assignment
                      and Sublease

                  	
                    18

                  
	
                    ARTICLE
                      X

                  	 	
                    MISCELLANEOUS

                  	
                    18

                  
	
                    10.1

                  	 	
                    Cooperation

                  	
                    18

                  
	
                    10.2

                  	 	
                    Entire
                      Agreement

                  	
                    18

                  
	
                    10.3

                  	 	
                    Amendments

                  	
                    18

                  
	
                    10.4

                  	 	
                    Severability

                  	
                    18

                  
	
                    10.5

                  	 	
                    Counterparts

                  	
                    18

                  
	
                    10.6

                  	 	
                    No
                      Waiver

                  	
                    18

                  
	
                    10.7

                  	 	
                    Fees,
                      Costs and Expenses

                  	
                    19

                  
	
                    10.8

                  	 	
                    Third
                      Party Beneficiaries

                  	
                    19

                  
	
                    10.9

                  	 	
                    Construction

                  	
                    19

                  
	
                    10.10

                  	 	
                    Table
                      of Contents and Headings

                  	
                    19

                  
	
                    10.11

                  	 	
                    Notices

                  	
                    19

                  

          

           

          
            
              
              

            

            
              -ii-

              
                

              

            

            
              
              

            

          

           

          
            
              TABLE
                OF CONTENTS

               

              (continued)

            

          

           

          
            	 	 	 	Page
	
                    10.12

                  	 	
                    Applicable
                      Law

                  	
                    20

                  
	
                    10.13

                  	 	
                    No
                      Partnership

                  	
                    20

                  
	
                    10.14

                  	 	
                    Independent
                      Contractor

                  	
                    20

                  
	
                    10.15

                  	 	
                    Confidentiality

                  	
                    20

                  

          

        

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

      MILL
        OPERATING AND OPTION AGREEMENT

       

      THIS
        MILL OPERATING AND OPTION AGREEMENT is
        made
        as of the 28th day of July, 2006 (the “Execution Date”), by and between Montana
        Tunnels Mining, Inc., a Delaware corporation (“MTM”), and Elkhorn Goldfields,
        Inc., a Montana corporation (“EGI”) and an Affiliate of Calim Private Equity LLC
        (“CPE”), with MTM and EGI sometimes referred to herein individually as a “party”
and collectively as “parties.”

       

      RECITALS

       

      A. MTM
        owns
        a mill in Jefferson County, Montana known as the Diamond Hill Mill (the “Mill,”
as more particularly defined below). The Mill is physically located within
        a
        larger mineral processing facility known as the Montana Tunnels Mill Complex,
        which houses another mill used by MTM (the “MTM Mill”) for the processing
        of minerals from its Montana Tunnels Mine (the “MTM Mine”).

       

      B. EGI
        owns
        and operates a gold mine in Jefferson County, Montana known as the Elkhorn
        Mine
        (the “Elkhorn Mine”).

       

      C. MTM
        and
        Elkhorn Tunnels, LLC, another CPE Affiliate, are parties to a Mine Operating
        and
        Development Agreement of even date herewith (the “Mine Operating Agreement”),
        pursuant to which they have agreed to the funding, development and mining
        of the
        MTM Mine. Ore from the MTM Mine will be processed in the MTM Mill.

       

      D. MTM
        and
        EGI desire to enter into this Agreement to (i) provide for the processing
        of ore from the Elkhorn Mine and from other suitable properties in the Mill
        and
        (ii) provide to EGI an option to purchase the Mill.

       

      AGREEMENT

       

      NOW,
        THEREFORE, for good and valuable consideration, the receipt and sufficiency
        of
        which are hereby acknowledged, MTM and EGI hereby agree as follows:

       

      ARTICLE
        I

      DEFINITIONS

       

      1.1
        Definitions. In this
        Agreement, the following terms, when capitalized, shall have the following
        meanings set forth in the remainder of this Section 1.1. Other capitalized
        terms used but not defined in this Agreement shall have the meaning ascribed
        to
        them in the Mine Operating Agreement:

       

      “Affiliate”
        means any person, partnership, joint venture, corporation or other form of
        enterprise which directly or indirectly controls, is controlled by, or is
        under
        common control with, a party to this Agreement. For purposes of the preceding
        sentence, “control” means possession, directly or indirectly, of the power to
        direct or cause direction of management and policies through ownership of
        voting
        securities, contract, voting trust or otherwise.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Agreement”
        means this Agreement, the Schedules and Exhibits attached hereto and any
        and all
        amendments, supplements, variations, waivers, alterations or modifications
        hereto or thereto, made in accordance with this Agreement.

       

      “Business
        Day” means a day on which banks are open in the State of Colorado.

       

      “Claim
        Notice” shall have the meaning set forth in Section 7.5.

       

      “Claims”
        shall mean either EGI Claims or MTM Claims, as those terms are defined in
        Sections 7.2 and 7.3.

       

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

       

      “Conforming
        Ore” means ore coming from sources other than the Elkhorn Mine which EGI desires
        to process at the Mill and MTM has reasonably determined is suitable for
        processing through the Mill without (i) damaging the machinery;
        (ii) causing the Complex to be in violation of any Environmental Laws; or
        (iii) subjecting the Complex to any materially enhanced risk of
        Environmental Liabilities; provided that in the case of (ii) or (iii), such
        shall not be a reason for MTM not to approve ore for processing at the Mill
        if
        (A) approval is first obtained by EGI from each Governmental Authority with
        applicable jurisdiction and (B) EGI is able to obtain bonding against any
        such potential Environmental Liabilities in an amount and with one or more
        surety companies satisfactory to each such Governmental Authority and reasonably
        satisfactory to MTM. 

       

      “Control”
        when used as a verb, with respect to a party, means the ability, directly
        or
        indirectly through one or more intermediaries, to direct or cause the direction
        of the management and policies of such party through (i) the legal or
        beneficial ownership of voting securities or membership interests; (ii) the
        right to appoint managers, directors or corporate management;
        (iii) contract; (iv) operating agreement; (v) voting trust or
        otherwise; and, when used as a noun, an interest which gives the holder of
        Control the ability to exercise any of the foregoing powers with respect
        to such
        party.

       

      “EGI
        Claim” means a Claim by EGI for indemnification, as described in
        Section 7.2.

       

      “EGI
        Representative” shall have the meaning specified in
        Section 4.1.

       

      “Encumbrance”
        means any lien (including, without limitation, environmental and tax liens
        and
        statutory liens), claim, charge, judgment, security interest or mortgage
        of any
        kind or nature.

       

      “Environmental
        Laws” means federal laws including the Comprehensive Environmental Response,
        Compensation and Liability Act as amended by the Superfund Amendments and
        Reauthorization Act, the Federal Solid Waste Disposal Act as amended by the
        Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water
        Act,
        the Hazardous Materials Transportation Act, the Toxic Substances Control
        Act,
        the Federal Water Pollution Control Act, the Safe Drinking Water Act, the
        Endangered Species Act, the National Environmental Policy Act, the Mine Safety
        and Health Act, the Federal Land Policy and Management Act, the 1897 Organic
        Act, the Emergency Planning and Community Right to Know Act, and the National
        Historic Preservation Act, each as amended, and any state law counterparts,
        including but not limited to the Montana Comprehensive Environmental Cleanup
        and
        Responsibility Act, and applicable state common law, together with all other
        laws (including rules, regulations, permits, authorizations, codes, plans,
        injunctions, judgments, orders, decrees, rulings, and charges thereunder)
        of
        federal, state and local governments (and all agencies thereof) concerning
        pollution or protection of the environment, reclamation, public health and
        safety, or employee health and safety, including laws relating to emissions,
        discharges, releases, or threatened releases of pollutants, contaminants,
        or
        chemical, industrial, hazardous, or toxic materials or wastes into ambient
        air,
        surface water, ground water, or lands or otherwise relating to the existence,
        manufacture, processing, distribution, use, treatment, storage, disposal,
        recycling, transport, or handling or reporting or notification to any
        governmental authority in the collection, storage, use, treatment or disposal
        of
        pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
        or wastes.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      “Environmental
        Liabilities” shall mean any liabilities or obligations (whether known or
        unknown, fixed or contingent) arising out of, based on or resulting from
        (i) the presence, release, threatened release, discharge or emission into
        the environment of any Hazardous Materials or substances existing or arising
        on,
        beneath or above the Mill and/or emanating or migrating and/or threatening
        to
        emanate or migrate from the Mill (or the real property on which it is located)
        to other properties; (ii) disposal or treatment of or the arrangement for
        the disposal or treatment of Hazardous Materials present at, originating
        or
        transported from the Real Property or the Mill to an off-site treatment,
        storage
        or disposal facility, (iii) physical disturbance of the environment on or
        from the Mill; or (iv) the violation or alleged violation of any
        Environmental Laws relating to conditions at or the operation of the Mill.
        

       

      “Equipment
        and Supplies” means the mining, office and other equipment and supplies which
        comprise a portion of the Mill, which are identified in Exhibit A
        attached
        hereto.

       

      “Execution
        Date” means the date referred to on page one of this Agreement.

       

      “Governmental
        Authority” means any federal, state, local or other governmental authority,
        agency or regulatory body, including any board, bureau, department, division,
        commission, court or tribunal of any of the foregoing.

       

      “Hazardous
        Materials” means any substance: (a) the presence of which requires
        reporting, investigation, removal or remediation under any Environmental
        Law;
        (b) that is defined as a “solid waste,” “hazardous waste,” “hazardous
        substance,” “extremely hazardous substance,” “pollutant” or “contaminant” under
        any Environmental Law; (c) that is toxic, explosive, corrosive, flammable,
        ignitable, infectious, radioactive, reactive, carcinogenic, mutagenic or
        otherwise hazardous and is regulated under any Environmental Law; (d) the
        presence of which on a property causes or threatens to cause a nuisance upon
        the
        property or to adjacent properties or poses or threatens to pose a hazard
        to the
        environment or health or safety of persons on or about the property;
        (e) that contains gasoline, diesel fuel or other petroleum hydrocarbons; or
        (f) that contains PCBs, asbestos or urea formaldehyde foam insulation; in
        each case subject to exceptions provided in applicable Environmental
        Laws.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      “Indemnified
        Party” means MTM or EGI, as applicable, when one is required to be indemnified
        by the other under Sections 7.2 or 7.3.

       

      “Indemnifying
        Party” means MTM or EGI, as applicable, when one is required to indemnify the
        other pursuant to Sections 7.2 or 7.3 hereof.

       

      “Laws”
        means all applicable federal, state and local laws (statutory or common),
        rules,
        regulations, ordinances, codes, orders, judgments, directives, standards,
        and
        decrees, whether legislative, municipal, administrative or judicial in
        nature.

       

      “Losses”
        means demands, claims, causes of action, assessments, including any federal
        or
        state tax audits, losses, damages, liabilities and costs and expenses,
        including, without limitation, reasonable attorneys’ fees and any expenses
        incident to the defense, investigation or enforcement of such matters and
        remedial and monitoring costs incurred in connection therewith.

       

      “Mill
        Closing Date” means the date of the closing of the purchase of the Diamond Hill
        Mill by EGI if it exercises the Option.

       

      “Montana
        Tunnels Mill Complex” means the physical facilities in Jefferson County, Montana
        in which the Mill and the MTM Mill are situated.

       

      “MTM
        Claim” means a Claim by MTM for indemnification, as described in
        Section 7.3.

       

      “MTM
        Representative” shall have the meaning set forth in
        Section 4.2.

       

      “Option”
        shall mean the exclusive right of EGI to purchase the Diamond Hill Mill pursuant
        to Article III.

       

      “Option
        Period” shall mean the period of time commencing on the Execution Date and
        continuing for a period of two years thereafter, unless EGI has relinquished
        its
        rights hereunder or this Agreement has been terminated.

       

      “Ore”
        shall have the meaning set forth in Section 2.1.

       

      “Permitted
        Encumbrances” means (a) (i) liens for taxes, assessments and
        governmental charges or levies not yet due and payable; and
        (ii) Encumbrances such as materialmen’s, mechanics’, carriers’, workmen’s
        and repairmen’s liens and other similar liens arising in the ordinary course of
        business securing obligations that (x) are not overdue for a period of more
        than 60 days and (y) are not in excess of $5,000 in the aggregate at any
        time; (b) minor survey exceptions, easement agreements and other customary
        encumbrances on title to real property that (i) were not incurred in
        connection with any indebtedness and (ii) do not have a material adverse
        effect on the value or the use of such property for its present purposes;
        (c) zoning restrictions and other limitations imposed by any Governmental
        Authority having jurisdiction over real property; (d) reservations in
        federal patents; (e) Encumbrances of record (which for purposes of this
        Agreement shall include Encumbrances that are reflected in the official records
        of the Broadwater or Jefferson County, Montana Clerk and Recorder’s Office or
        the Broadwater or Jefferson County Assessor’s Office; (f) liens of pledges
        or deposits under workers’ compensation laws or similar legislation,
        unemployment insurance or other types of social security or to secure the
        performance of tenders, statutory obligations, surety and appeal bonds, bids,
        leases, governmental contracts, performance and return of money bonds and
        similar obligations; (g) rights reserved to or vested in any Governmental
        Authority to control or regulate the Mill in any manner, and all laws, rules
        and
        regulations of any Governmental Authority; and (h) any other Encumbrances
        that do not arise by, through or under MTM.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      “Person”
        means any individual, partnership, firm, corporation, company, association,
        trust, unincorporated organization or other entity.

       

      “Prudent
        Operating Practices” shall mean those practices, methods, equipment,
        specifications and standards of safety and performance, as the same may change
        from time to time, as are commonly used by operators in the mining industry
        of
        facilities and equipment of a type and size similar to the Mill as good,
        safe
        and prudent operating practices.

       

      “Purchase
        Price” means $1,000,000 payable to MTM by EGI if EGI exercises the Option,
        payable as set forth in Section 3.1.

       

      “Related
        Agreements” means the Security Agreement and any other agreements contemplated
        hereby.

       

      “Remedial
        Costs” means amounts paid directly by EGI for the use, operation and maintenance
        of the Mill pursuant to Section 2.2(g).

       

      “Scheduled
        Reason” means, with respect to a shutdown of the Mill under Section 5.2, a
        valid determination by MTM to cease operations pursuant to either
        Section 2.4, 2.6, 2.8 or 4.2. 

       

      “Securities
        Act” means the United States Securities Act of 1933, as amended.

       

      “Security
        Agreement” means a Security Agreement and related financing statements in forms
        mutually agreeable to the parties, pursuant to which, effective as of the
        Mill
        Closing Date, EGI shall grant to MTM a first-priority perfected security
        interest in the Mill, to remain in place until the Purchase Price is fully
        paid.

       

      “Taxes”
        means all taxes, charges, fees, levies or other assessments imposed by any
        federal, state or local taxing authority, including, without limitation,
        income,
        excise, property, sale, transfer, severance, net proceeds of mines, payroll
        and
        franchise taxes (including any interest, penalties or additions attributable
        to
        or imposed on or with respect to any such assessment).

       

      1.2
        Terms denoting the singular only shall include the plural, and vice
        versa.

       

      1.3
        Unless otherwise stated, a reference to a Recital, Article, Section, Schedule
        or
        Exhibit is a reference to a Recital, Article, Section, Schedule or Exhibit
        of
        this Agreement.

       

      1.4
        Section numbers and headings are for convenience of reference only, and shall
        not affect the interpretation of this Agreement.

       

      1.5
        Reference to any gender includes the other.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      1.6
        Whether or not so indicated, reference to “including” means including, but not
        by way of limitation.

       

      1.7
        Unless otherwise expressly provided in this Agreement, reference to an agreement
        (including this Agreement), document, or instrument is the same as amended,
        modified, novated or replaced from time to time.

       

      1.8
        Reference to a statute or other legislative act, by-law, rule, regulation,
        or
        order is to the same as amended, modified or replaced from time to time and
        to
        any rule, regulation or order promulgated pursuant to such law.

       

      1.9
        Reference to a “day” is to a calendar day unless otherwise
        specified.

       

      1.10
        All dollar amounts set forth herein are expressed in United States
        currency.

        

       

      ARTICLE
        II

      PROCESSING
        OF ORE FROM THE 

      ELKHORN
        MINE THROUGH THE MILL

       

      2.1
        General Rights and Obligations with Respect to the Processing of Ore.
During the Option Period, to the extent that it does not
        unreasonably
        interfere with operations at the MTM Mill, MTM shall process ore from the
        Elkhorn Mine and Conforming Ore (collectively, “Ore”) through the Mill, on
        behalf of EGI. EGI confirms, acknowledges and agrees that EGI has inspected
        the
        Mill and it is satisfied (or, with respect to Conforming Ore, will first
        satisfy
        itself) that the Ore is amenable to processing through the Mill and that
        the
        Mill is in satisfactory condition to process the Ore. MTM shall have the
        right
        to reject and return to EGI (at EGI’s expense) any shipments of Ore that MTM
        reasonably determines are not amenable to processing through the Mill; provided
        that MTM shall use reasonable efforts to assess any Ore that may be provided
        to
        it in sample quantities prior to processing. EGI represents and warrants
        that
        after careful examination, it is satisfied as of the Execution Date as to
        the
        character of Equipment and Supplies at the Mill, the availability of labor,
        water and power, the adequacy of roads and means of ingress and egress to
        and
        from the Mill, conditions pertaining to transportation, disposal, handling
        and
        storage of Ore, the general and local conditions, the prices and availabilities
        of equipment and materials, and all other matters which may affect the
        processing of the Ore, and that it has taken all actions that a reasonable
        and
        prudent Person engaged in processing Ore through the Mill would take to become
        fully informed regarding all existing and expected conditions and matters
        which
        could affect the processing of Ore through the Mill in any way, and especially
        the cost of such processing. EGI hereby accepts the condition of the Mill
        AS IS
        AND WHERE IS and as suitable for the processing of the Ore, and hereby expressly
        waives and releases MTM from any and all demands or claims for damages of
        any
        kind whatsoever, fees and/or costs, incurred by EGI by reason of any alleged
        representations, warranties, tests, descriptions or statements pertaining
        to the
        Mill and made by MTM prior to the date hereof, and not expressly set forth
        in
        this Agreement. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, MTM MAKES
        NO
        REPRESENTATION OR WARRANTY OF ANY KIND AS TO THE AMENABILITY OF THE ORE TO
        PROCESSING THROUGH THE MILL, OR AS TO THE SUITABILITY OF THE MILL FOR PROCESSING
        THE ORE OR THE CONDITION OF ALL OR ANY PORTION OF THE EQUIPMENT AND SUPPLIES
        COMPRISING THE MILL, AND THE PROCESSING OF ORE THROUGH THE MILL AS SET FORTH
        IN
        THIS AGREEMENT SHALL BE AT EGI’S SOLE RISK AND EXPENSE. 

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      2.2
        Certain Other Matters. In addition to the agreements in
        Section 2.1, the parties agree with respect to the Mill as
        follows:

       

      (a)
        Capital Improvements. EGI shall make all capital improvements to the Mill
        necessary for the processing and treatment of Ore. All such improvements
        will be
        detailed and agreed by the parties by separate addenda to this Agreement
        and,
        unless made to existing Equipment, will remain the property of EGI.

       

      (b)
        Delivery and Stockpiling. EGI shall arrange and pay for delivery of the
        Ore to MTM at the Mill. Ore will be delivered as “run of mine” ore between the
        hours of 7:00 a.m. and 8:00 p.m. (Mountain Time) on normal business
        days (excluding holidays, Saturdays and Sundays) unless otherwise approved
        by
        MTM. MTM will select and designate an area at the Complex at which the Ore
        shall
        be stockpiled and, unless MTM otherwise approves, stockpiles on hand at any
        time
        shall be limited to 20,000 tons. EGI shall ensure that the Ore is
        stockpiled in the designated area, is segregated from and not co-mingled
        with
        other ores and is properly signed and secured pending processing. 

       

      (c)
        Crushing. Ore shall be crushed as necessary by EGI to 100 percent
        passing minus 3⁄4 inch. To the extent MTM is legally and contractually able
        to do so, MTM agrees to make space available at the designated stockpile
        area
        for temporary use by EGI of a crusher. 

       

      (d)
        Processing. Crushed Ore shall be transported by MTM from the designated
        stockpile area to the Mill fine ore hopper via front-end loaders. 

       

      (e)
        Concentrate Marketing. EGI shall be responsible for all costs associated
        with the marketing, treatment and refinement of any final product produced
        from
        Ore at the Mill. These costs shall include containment, load-out, shipment
        and
        insurance of flotation concentrates and dore products. EGI agrees to notify
        MTM
        of all scheduled shipments of flotation concentrate and dore product from
        the
        Mill. 

       

      (f)
        First Right. Except as otherwise provided in Section 2.9, during the
        Option Period, EGI shall have the first right of use of the Mill for processing
        its Ore, and the Mill shall not be operated for the processing of ore for
        Persons other than EGI if such may reasonably be expected to interfere with
        processing of Ore for EGI. 

       

      (g)
        MTM Obligations. Subject to the other terms and provisions of this
        Agreement, MTM shall be obligated to run and operate the Mill for the processing
        of Ore in a good and workmanlike fashion, including without limitation paying
        the normal operating costs of the Mill as and when due and payable and keeping
        the Mill well maintained and in good operating condition. In the event EGI
        determines that MTM is not in compliance with its obligations hereunder,
        as its
        sole remedy with respect thereto, EGI may cause all such deficiencies to
        be
        remedied at its sole cost and expense, in which event to the extent paid
        for by
        EGI such will become Remedial Costs. 

       

      
        
          
          

        

        
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      2.3
        Costs. EGI shall be solely
        responsible and reimburse MTM for all reasonable and necessary costs associated
        with the operation of the Mill for processing Ore during the Option Period.
        The
        costs for which EGI shall be responsible shall include, without limitation,
        employee costs, insurance costs, bonding and permitting costs, costs for
        electrical power, water and other utility charges applicable to the Mill,
        costs
        of maintenance and repairs required to keep the Mill in operating condition,
        costs of assessing any Ore for amenability to processing, costs of Equipment
        and
        Supplies needed to keep the Mill operational, sampling and associated laboratory
        costs, costs of reagents, grinding media and fuel. EGI shall also be solely
        responsible for all costs associated with the recovery, transportation and
        sales
        of any products derived from the Ore.

       

      2.4
        Personnel. EGI acknowledges
        that employees of MTM will process Ore through the Mill. EGI further
        acknowledges that MTM may not now or in the future employ a sufficient number
        of
        employees to adequately and safely process Ore through the Mill. EGI and
        MTM
        agree that MTM shall have no obligation under this Agreement to employ or
        maintain a sufficient number of employees to adequately and safely process
        Ore
        through the Mill, and that any time during the Option Period when MTM reasonably
        believes it does not have a sufficient number of employees to adequately
        and
        safely process Ore through the Mill, it shall notify EGI and shall thereafter
        have no obligation to process any Ore through the Mill.

       

      2.5
        Fees Payable to MTM. As
        compensation to MTM for the processing of Ore under this Agreement, EGI shall
        pay to MTM, on a monthly basis (due and payable not later than the 15th day
        after receipt of an invoice for costs from MTM), a fee equal to 20% of the
        costs
        incurred by MTM to operate the Mill during the previous month, including
        costs
        of the type described in Section 2.3, but excluding costs borne by EGI
        directly, including without limitation (i) capital improvements made
        directly by EGI pursuant to Section 2.2(a); and (ii) Remedial Costs.
        MTM shall provide with each monthly invoice to EGI a report providing reasonable
        evidence of the costs it incurred to operate the Mill during the previous
        month,
        and the tons of Ore processed through the Mill during that month.
 In addition, EGI shall reimburse MTM promptly (and within
        no more than ten days) upon receipt of invoices from MTM at any time and
        from
        time to time for (a) any costs or expenses incurred by MTM in maintaining
        any permits, licenses or approvals from any Governmental Authority (“Permits”)
        or bonds or other surety required to operate the Mill; and (b) any costs or
        expenses (including the fees and expenses of consultants and attorneys) incurred
        by MTM in taking any remedial actions required under applicable Environmental
        Laws or any Permits with respect to processing of Ore through the
        Mill.

       

      2.6
        Maintenance of Permits. EGI
        acknowledges that MTM must operate the Mill in accordance with applicable
        Laws
        and the Permits, and MTM shall be obligated to use commercially reasonable
        efforts to do so during the Option Period. EGI and MTM agree that if MTM
        reasonably determines that it will be unable to operate the Mill in accordance
        with applicable Laws and the Permits, it shall notify EGI and shall thereafter
        have no obligation to process any Ore through the Mill until such time, if
        any,
        as the condition is remedied.

       

      2.7
        Title and Risk of Loss. EGI
        will retain title to and risk of loss associated with the Ore at all times
        while
        it is being stored or processed in or at the Mill.

       

      
        
          
          

        

        
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      2.8
        Removal of Hazardous
        Materials. EGI acknowledges that MTM must comply
        in conducting operations at the Mill under this Agreement with all applicable
        Laws governing the use, handling, processing, production or disposal of
        Hazardous Materials. EGI agrees that if for any reason MTM reasonably believes
        that it will be unable to comply with such Laws, MTM shall notify EGI and
        thereafter shall have no obligation to process any Ore through the
        Mill.

       

      2.9
        Subordination of Rights. In addition to the
        provisions of Sections 5.1 and 5.2, EGI agrees that MTM’s agreement to
        process Ore through the Mill under this Agreement is subordinate to MTM’s rights
        to operate the MTM Mill with respect to operations conducted under the Mine
        Operating Agreement, and that MTM’s agreement to process Ore through the Mill
        may be suspended at any time during the Option Period, to the extent such
        suspension is necessary in MTM’s reasonable opinion due to operational
        requirements or issues associated with the MTM Mill. Such suspension(s) shall
        take effect not later than 45 days after receipt by EGI of written notice
        from MTM notifying EGI of such suspension. MTM agrees that it will use good
        faith efforts to remedy or address the operational requirements or issues
        associated with the MTM Mill that necessitated the suspension of EGI’s right to
        use the Mill, and the Option Period shall be extended for a period of time
        equal
        to the duration of such suspension.

       

      2.10
        Taxes. EGI shall be
        responsible for the payment of and shall pay all Taxes on Ore delivered under
        this Agreement and all Taxes with respect to or computed by reference to
        the
        mining thereof, the severance thereof from the ground, the delivery thereof
        to
        the Mill and the ownership of concentrate, doré and other products as are
        returnable to EGI therefrom pursuant to this Agreement. EGI shall be responsible
        for the payment of and shall pay all Taxes with respect to the concentration
        or
        treatment of such Ore to the extent that such Taxes are imposed on EGI by
        reason
        of its being the owner of such Ore.

       

      2.11
        Audit Rights. EGI, at its sole
        election and expense, shall have the right to procure, not more frequently
        than
        twice annually, an audit of MTM’s records and accounts relating to costs
        incurred in operating the Mill and tons of ore processed through the Mill.
        All
        of the costs reported in any monthly report delivered to EGI under
        Section 2.4 shall be considered final and accepted by EGI, unless EGI gives
        written notice describing and setting forth a specific objection to any such
        costs thereof within six months after receiving any monthly report. MTM shall
        account for any agreed upon deficit or excess in any payment made by EGI
        to MTM
        by adjusting the next monthly statement following completion of such audit
        to
        account for such deficit or excess.

       

      ARICLE
        III

      GRANT
        OF OPTION

       

      3.1
        Option Granted. MTM hereby grants to EGI the
        exclusive and irrevocable option to purchase the Mill, exercisable by EGI
        in its
        sole discretion (the “Option”), but only exercisable by EGI if and after it has
        completed its Initial Contribution under the Mine Operating Agreement, by
        paying
        a purchase price of $1,000,000 (the “Purchase Price”), payable in two equal
        annual installments of $500,000 with the first such installment being due
        on the
        Mill Closing Date, and the second installment being due on the first anniversary
        of the Mill Closing Date.

       

      
        
          
          

        

        
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      3.2
        Option Period;
        Termination.

       

      (a)
        Option Period. Unless the Agreement is sooner terminated pursuant to this
        Section 3.2, the Option shall expire and this Agreement shall terminate at
        5:00 p.m. Mountain time on July 28, 2008 (the “Expiration Date”). The
        Option may be exercised by EGI by delivery to MTM of a written notice of
        election to exercise the Option at any time prior to the end of the Option
        Period (the date such notice is effective being referred to hereinafter as
        the
“Exercise Date”).

       

      (b)
        Termination. 

       

      (i)
        In
        the event EGI desires to terminate this Agreement, which EGI may elect to
        do in
        its sole discretion at any time during the Option Period, EGI may terminate
        this
        Agreement by giving MTM written notice of termination, and this Agreement
        shall
        be deemed terminated immediately upon receipt by MTM of the notice of
        termination. At that time, all outstanding operating costs will become promptly
        due and payable after EGI’s receipt of invoices for the same. 

       

      (ii)
        If
        the Mine Operating Agreement is terminated other than for Cause, or if
        (A) EGI does not complete its Initial Contribution under the Mine Operating
        Agreement, (B) EGI’s Participating Interest under the Mine Operating
        Agreement is converted to an interest in Net Proceeds, or (C) EGI transfers
        its Participating Interest under the Mine Operating Agreement to a third
        party
        that is not an Affiliate of EGI, this Agreement shall terminate
        automatically.

       

      (iii)
        Following expiration of the Option Period without EGI exercising the Option,
        or
        termination of this Agreement for any reason prior to the expiration of the
        Option Period, neither of the Parties shall have any further obligations
        or
        liabilities hereunder, except as set forth in Article VIII.

       

      3.3
        The Closing. If EGI exercises the Option in
        accordance with the terms of this Agreement, the closing of the sale of the
        Mill
        (the “Closing”) shall take place within 30 days after the written notice of
        election to exercise the Option is delivered by EGI to MTM, at a time and
        place
        mutually agreeable to EGI and MTM. 

       

      (a)
        Deliverables.

       

      (i)
        At
        the Closing, MTM shall deliver to EGI a fully executed and acknowledged good
        and
        sufficient special warranty deed, assignment and bill of sale, in form and
        substance mutually agreeable to the parties (the “Conveyance”), conveying the
        Mill to EGI free and clear of all liens and encumbrances arising by, through
        or
        under MTM, but otherwise without representations or warranties of any
        kind.

       

      (ii)
        At
        the Closing, EGI shall deliver: (a) the first installment of the Purchase
        Price ($500,000), which shall be paid by wire transfer in accordance with
        written instructions to be delivered by MTM to EGI prior to the Mill Closing
        Date, (b) a fully executed Security Agreement, and (c) certificates of
        good standing for EGI from the office of the Montana Secretary of State.
        In
        addition, each of EGI and MTM will deliver such other closing certificates
        and
        documents as are reasonably requested by the other party. Closing costs,
        including transfer taxes, sales taxes, recording costs and any escrow fees
        will
        be paid by EGI, including all taxes and disbursements.

       

      3.4
        Removal of the Mill. Following the Closing, EGI
        shall have 365 days to remove the Mill from the Complex, and during such
        period, to the extent MTM is legally entitled to grant such rights, EGI shall
        be
        entitled to operate the Mill at its sole cost and expense and in compliance
        with
        all applicable Laws and Environmental Laws, and the terms and conditions
        of this
        Agreement. MTM agrees to cooperate with EGI in the removal process. EGI agrees
        to conduct the removal of the Mill from the Montana Tunnels Mill Complex
        in a
        manner that does not unreasonably interfere with ongoing operations at the
        MTM
        Mill. EGI may move the Mill to whatever location it may determine; provided
        that
        before moving the Mill, MTM shall have determined to its reasonable satisfaction
        that it has a valid and enforceable first priority security interest in and
        to
        the Mill at such location. 

       

      
        
          
          

        

        
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      ARTICLE
        IV

      REPRESENTATIVES
        OF THE PARTIES

       

      4.1
        EGI Representative. EGI hereby
        designates Robert Trenaman as its representative who shall have the full
        authority to act on its behalf in connection with this Agreement (the “EGI
        Representative”). EGI shall have the right to appoint an additional or
        replacement EGI Representative by written notice to MTM. The EGI Representative
        shall have the right to be present at all times when MTM is processing Ore
        through the Mill.

       

      4.2
        MTM Representative. MTM hereby
        designates David Russell as its representative who shall have the full authority
        to act on its behalf in connection with this Agreement (the “MTM
        Representative”). MTM shall have the right to replace the MTM Representative by
        written notice to EGI. EGI acknowledges and agrees that the MTM Representative
        may in his reasonable discretion refuse to allow further processing of Ore
        through the Mill if the MTM Representative believes that such operations
        (a) may be dangerous to MTM’s employees; (b) may negatively impact
        operations at the Montana Tunnels Mill Complex; (c) may be deleterious to
        environmental conditions at or in the vicinity of the Mill or the Montana
        Tunnels Mill Complex; or (d) may cause or result in a violation of any
        Environmental Law or result in increased or additional Environmental Liabilities
        at the Mill or the Montana Tunnels Mill Complex. The MTM Representative shall
        have the authority, on behalf of MTM, to enforce the provisions of this
        Agreement and to shut down EGI’s operations at the Mill in accordance with the
        provisions of Sections 5.1 and 5.2.

       

      ARTICLE
        V

      SHUTDOWN
        OF MILL

       

      5.1
        Shutdown for Maintenance. MTM
        shall have the right to shut down the Mill for maintenance purposes whenever
        in
        its reasonable judgment such action is necessary. Such shutdown may be imposed
        in connection with MTM’s maintenance activities at any other portion of the
        Montana Tunnels Mill Complex. In the event such a maintenance shut down is
        required, MTM shall be relieved of its obligation to process Ore through
        the
        Mill during the period that the Mill is so shut down. In connection with
        any
        such shutdown in excess of 48 hours, MTM agrees to (i)  provide EGI
        with reasonable notice prior to the shutdown, together with an estimate of
        the
        duration of the proposed shutdown and (ii) to use good faith efforts to
        minimize the duration of each such shutdown. 

       

      
        
          
          

        

        
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      5.2
        Shutdown Due to Environmental or Other
        Concerns. At any time and from time to time, for
        any Scheduled Reason, or in the event of any other default by EGI under this
        Agreement, the MTM Representative may deliver to EGI a notice that MTM will
        immediately cease processing of Ore through the Mill under this Agreement.
        In
        that notice, the MTM Representative shall identify the provisions or provisions
        of this Agreement triggering the shutdown. If the shutdown results from a
        default by EGI, such shutdown notice shall remain in place until the event
        of
        default is cured as provided in Section 8.1(b). If the event of default is
        not timely cured, MTM may terminate this Agreement in accordance with the
        provisions of Section 8.1(b).

       

      5.3
        Limitation on Remedies. If
        operations at the Mill are shut down by MTM for any reason under this Agreement,
        MTM shall have absolutely no obligation or liability to EGI for any
        consequential, special or punitive damages or lost profits incurred by or
        resulting to EGI as a result of such shutdown. 

       

      ARTICLE
        VI

      REPRESENTATIONS
        AND WARRANTIES

       

      6.1
        EGI’s Representations and Warranties. EGI represents and
        warrants to MTM the following as of the Execution Date hereof (except as
        specified otherwise) and as of the Mill Closing Date:

       

      (a)
        EGI
        is corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Montana.

       

      (b)
        EGI
        has the full power and authority to enter into and perform this Agreement
        and to
        consummate the transactions contemplated hereby. The execution and delivery
        of
        this Agreement by EGI, the consummation of transactions contemplated hereby,
        and
        the performance by EGI of all of its obligations under this Agreement have
        been
        duly authorized and approved by EGI. This Agreement has been duly executed
        and
        delivered by authorized officers of EGI. All requisite actions on the part
        of
        EGI’s members, manager, officers and directors, necessary for the execution,
        delivery and performance by EGI of this Agreement and the Related Agreements,
        have been taken.

       

      (c)
        Each
        of this Agreement and the Related Agreements constitutes the legal, valid
        and
        binding obligation of EGI enforceable against it in accordance with its terms,
        except as such enforceability may be limited by applicable bankruptcy,
        reorganization, moratorium, fraudulent transfer or other similar laws affecting
        creditors’ rights generally or by principles governing the availability of
        equitable remedies.

       

      (d)
        Neither the execution and delivery of this Agreement and the Related Agreements
        by EGI, nor the performance by EGI of its obligations hereunder or thereunder,
        will conflict with or result in a breach of any of the terms, conditions
        or
        provisions of EGI’s articles of organization, as amended, or operating
        agreement, as amended, or of any statute or administrative regulation applicable
        to it, nor of any order, writ, injunction, judgment or decree of any court
        or
        any Governmental Authority or of any arbitration award applicable to
        it.

       

      
        
          
          

        

        
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      (e)
        Neither the execution and delivery of this Agreement and the Related Agreements
        by EGI, nor the performance by EGI of its obligations hereunder or thereunder,
        will (i) violate, conflict with or constitute a breach of or default under
        (without regard to requirements of notice, passage of time or elections of
        any
        Person), (ii) permit or result in the termination, suspension or
        modification of, (iii) result in the acceleration of (or give any Person
        the right to accelerate) the performance of EGI under, (iv) or result in
        the creation or imposition of any Encumbrance under, any contract, agreement,
        obligation, arrangement, commitment or plan to which EGI is a party or by
        which
        EGI or any of its assets is bound or affected.

       

      (f)
        EGI
        is the owner of the Mine and of the Ore, and has the full, legal right to
        have
        the Ore processed through the Mill free of any claims or rights of any third
        party.

       

      6.2
        MTM’s Representations and Warranties. MTM hereby represents and
        warrants to EGI as of the Execution Date (except as otherwise specified)
        and as
        of the Mill Closing Date:

       

      (a)
        MTM
        is a corporation duly incorporated, validly existing and in good standing
        under
        the laws of the State of Delaware. MTM is qualified to do business and in
        good
        standing under the laws of the State of Montana.

       

      (b)
        MTM
        has the full corporate or organizational power and authority to enter into
        and
        perform this Agreement and to consummate the transactions contemplated hereby.
        The execution and delivery of this Agreement by MTM, the consummation of
        the
        transactions contemplated hereby, and the performance by MTM of all of its
        obligations under this Agreement have been duly authorized and approved by
        MTM.
        This Agreement has been duly executed and delivered by authorized officers
        of
        MTM. All requisite corporate action on the part of MTM and its officers,
        directors and shareholders, necessary for the execution, delivery and
        performance by MTM of this Agreement and the Related Agreements, have been
        taken.

       

      (c)
        Each
        of this Agreement and the Related Agreements constitutes the legal, valid
        and
        binding obligation of MTM enforceable against it in accordance with its terms,
        except as such enforceability may be limited by applicable bankruptcy,
        reorganization, moratorium, fraudulent transfer or other similar laws affecting
        creditors’ rights generally or by principles governing the availability of
        equitable remedies.

       

      (d)
        Neither the execution and delivery of this Agreement and the Related Agreements
        by MTM, nor the performance by MTM of its obligations hereunder or thereunder,
        will conflict with or result in a breach of any of the terms, conditions
        or
        provisions of MTM’s articles or certificate of incorporation, as amended, or
        by-laws, as amended, or of any statute or administrative regulation applicable
        to it, nor of any order, writ, injunction, judgment or decree of any court
        or
        any Governmental Authority or of any arbitration award applicable to
        it.

       

      
        
          
          

        

        
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      (e)
        Neither the execution and delivery of this Agreement and the Related Agreements
        by MTM, nor the performance by MTM of its obligations hereunder or thereunder,
        will (i) violate, conflict with or constitute a breach of or default under
        (without regard to requirements of notice, passage of time or elections of
        any
        Person), (ii) permit or result in the termination, suspension or
        modification of, (iii) result in the acceleration of (or give any Person
        the right to accelerate) the performance of MTM under, or (iv) result in
        the creation or imposition of any Encumbrance (other than Permitted
        Encumbrances) under, any contract, agreement, obligation, arrangement,
        commitment or plan to which MTM is a party or by which MTM or any of its
        assets
        are bound or affected.

       

      ARTICLE
        VII

      INDEMNIFICATION

       

      7.1
        Survival of Representations,
        Etc. MTM and EGI agree that the
        representations, warranties, covenants and agreements of the parties set
        forth
        in this Agreement, and the indemnification provided for in this Agreement
        shall
        survive the consummation of the transactions contemplated by this
        Agreement.

       

      7.2
        MTM’s Indemnity. MTM shall
        defend, indemnify and hold EGI harmless from and against all Losses that
        EGI may
        suffer, sustain or become subject to by reason of or arising out of (i) any
        breach of any covenant or agreement of MTM contained in this Agreement, and
        (ii) any inaccuracy in any representation or warranty of MTM contained in
        this Agreement, or any other agreement or instrument executed by MTM pursuant
        to
        this Agreement. All of the foregoing are hereinafter collectively referred
        to as
“EGI Claims.” 

       

      7.3
        EGI Indemnity. EGI shall
        defend, indemnify and hold MTM harmless from and against all Losses that
        MTM may
        suffer, sustain or become subject to by reason of or arising out of (i) any
        breach of any covenant or agreement of EGI contained in this Agreement,
        (ii) any inaccuracy in any representation or warranty of EGI contained in
        this Agreement, or any other agreement or instrument executed by EGI pursuant
        to
        this Agreement, (iii) any Environmental Liability or other liability
        arising from or related to the processing of the Ore or the tailings derived
        therefrom, (iv) any claim made by any employee or agent of MTM at any time
        arising from or related to injuries, death or property damage sustained while
        processing Ore at the Mill, unless arising from a negligent act or omission
        of
        MTM, (v) EGI’s operation of the Mill pursuant to Section 3.4, and (vi)
        the quality or quantity of the Ore processed through the Mill or pertaining
        to
        the Ore after it has left the Mill site. All of the foregoing are hereinafter
        collectively referred to as “MTM Claims.” The indemnification obligations of the
        parties in this Agreement shall remain in full force and effect and applicable
        notwithstanding the fact that either of them may have availed itself of any
        other remedy available under this Agreement.

       

      7.4
        Limitation on Claims. Neither
        party shall be entitled to make either an EGI Claim or an MTM Claim (each
        of
        which may be referred to as a “Claim” or “Claims” in the remainder of this
        Article VII) under Section 7.2(i) and 7.2(ii), or Section 7.3(i)
        and 7.3(ii), as applicable, unless and until the aggregate value of all of
        EGI’s, on the one hand, or MTM’s, on the other, Claims exceeds $10,000. EGI
        shall be entitled to compensation for EGI Claims and MTM shall be entitled
        to
        compensation for MTM Claims arising under Sections 7.3(i) or (ii) only if
        the required Claim is served upon either MTM or EGI within twelve months
        after
        the Mine Closing Date. None of the limitations on Claims set forth in this
        Section 7.4 will apply to MTM Claims arising under Sections 7.3(iii),
        (iv) or (v).

       

      
        
          
          

        

        
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      7.5
        Claims Procedure. 

       

      (a)
        In
        the event that any Claim or demand for which any party would be liable to
        an
        Indemnified Party under this Agreement is asserted against or sought to be
        collected by a third party, the Indemnified Party shall promptly notify the
        Indemnifying Party of such claim or demand, specifying the nature of such
        Claim
        or demand and the amount or the estimated amount thereof to the extent then
        feasible (which estimate shall not be conclusive of the final amount of such
        Claim or demand) (the “Claim Notice”). The Indemnifying Party shall have
        ten days from its receipt of the Claim Notice (the “Notice Period”) to
        notify the Indemnified Party (i) whether or not the Indemnifying Party
        disputes its liability to the Indemnified Party hereunder with respect to
        such
        claim or demand, and (ii) if it does not dispute such liability, whether or
        not it desires, at its sole cost and expense, to defend the Indemnified Party
        against such claim or demand; provided, however, that the Indemnified Party
        is
        hereby authorized prior to and during the Notice Period to file any motion,
        answer or other pleading that it shall deem necessary or appropriate to protect
        its interests; provided further, that the Indemnified Party shall use its
        reasonable efforts to provide the Indemnifying Party with notice of any such
        filing and an opportunity to comment thereon. In the event that the Indemnifying
        Party notifies the Indemnified Party within the Notice Period that the
        Indemnifying Party desires to defend against such claim or demand, then except
        as hereinafter provided, the Indemnifying Party shall have the right to defend
        by appropriate proceedings, which proceedings shall be promptly settled or
        prosecuted to a final conclusion as the Indemnifying Party deems necessary
        or
        advisable. If an Indemnified Party desires to participate in, but not control,
        any such defense or settlement it may do so at its sole cost and
        expense.

       

      (b)
        In
        the event that an Indemnified Party should have a claim against the Indemnifying
        Party under this Agreement that does not involve a claim or demand being
        asserted against or sought to be collected from it by a third party, the
        Indemnified Party shall promptly send a Claim Notice with respect to such
        claim
        to the Indemnifying Party. If the Indemnifying Party does not notify the
        Indemnified Party within the Notice Period that it disputes such claim, the
        amount of such claim shall be conclusively deemed a liability of the
        Indemnifying Party hereunder.

       

      (c)
        Nothing herein shall be deemed to prevent an Indemnified Party from making
        a
        claim hereunder for potential or contingent claims or demands provided the
        Claim
        Notice sets forth the specific basis for any such potential or contingent
        claim
        or demand and the estimated amount thereof to the extent then feasible and
        an
        Indemnified Party has reasonable grounds to believe that such a claim or
        demand
        will be made.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

      7.6
        Dispute Resolution. 

       

      (a)
        Good Faith Efforts. If any dispute arises as to the interpretation of or
        the rights and obligations of the parties under this Agreement, the parties
        agree to use good faith efforts to resolve such a dispute within 30 days
        after either party gives notice to the other asserting the existence of such
        a
        dispute and specifically referring to this Section 7.6, although the
        provisions of this Section 7.6(a) shall not prevent either party from
        seeking emergency temporary relief such as a temporary restraining order
        or a
        preliminary injunction.

       

      (b)
        Venue and Jurisdiction. Any action arising from or in any way related to
        this Agreement or the MTM Mill or MTM Mine shall be brought only in the state
        or
        federal courts in Denver County, Colorado and each party agrees that it shall
        not seek forum non conveniens dismissal of any actions so brought. This forum
        selection agreement applies no matter what the form of action, whether in
        rem,
        in personam, or any other, and no matter what the theory of the action, whether
        in tort, contract, or any other, or whether based in common law or on any
        statute, rule, or regulation whether now existing or hereafter
        enacted.

       

      (c)
        Attorneys’ Fees. The prevailing party in any such action shall be
        entitled to recover its costs and expenses incurred in connection with such
        action, including without limitation reasonable attorneys’ fees. 

       

      7.7
        Knowledge of EGI. EGI shall not be entitled to recover in
        respect of any Claims in connection with any matter which was disclosed by
        MTM,
        or of which EGI, its officers, directors, employees or agents, had actual
        knowledge or reasonably should have had knowledge by exercise of reasonable
        diligence at or prior to the Mill Closing Date.

       

      7.8
        Coverage of Indemnities. Rights of indemnity (or rights to be
        held harmless) created in this Agreement stated as in favor of EGI shall
        also be
        in favor of the officers, directors and employees of EGI and its Affiliates.
        Rights of indemnity (or rights to be held harmless) created in this Agreement
        or
        in the Assumption Agreement stated as in favor of MTM shall also be in favor
        of
        the officers, directors and employees of MTM and its Affiliates.

       

      ARTICLE
        VIII

      TERMINATION

       

      8.1
        Default and Termination. This Agreement may be terminated at any
        time prior to the Mill Closing:

       

      (a)
        Upon
        the mutual written consent of MTM and EGI;

       

      (b)
        By
        MTM, in the event of a default by EGI in the performance of any of its covenants
        or obligations under this Agreement after the Execution Date, after MTM has
        provided EGI written notice of the default and EGI has not (a) with respect
        to a default in the making of any payment, made such payment within 15 days
        after receipt of such notice or (b) with respect to any other default,
        cured such default within 30 days after receipt of such notice;
        or

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      (c)
        As
        set forth in Section 3.2(b).

       

      8.2
        Effect of Termination. Termination of this Agreement by a party
        pursuant to this Article VIII shall not of itself result in any liability
        of such party or its respective representatives, directors, officers,
        shareholders or agents; provided, however, that in the event of such termination
        neither party shall be relieved of any of its obligations or liabilities
        under
        this Agreement that have accrued prior to the date of such termination, or
        its
        indemnification obligations under Article VII. In the event of termination
        of this Agreement, the proposed transactions contemplated hereunder shall
        terminate, and MTM shall have no further liabilities or obligations under
        this
        Agreement. Any party’s right of termination under this Article VIII is in
        addition to any other rights it may have under this Agreement or otherwise,
        and
        the exercise of a right of termination will not be deemed an election of
        remedies. 

       

      8.3
        Survival. The provisions of Sections 2.5, 2.10, 3.3, 3.4,
        7.3(iii) and (v), 7.5, 7.8, 8.2, 8.3, 9.2, 9.3 and 10.4 of this Agreement
        shall
        survive the exercise of the Option by EGI.

       

      ARTICLE
        IX

      ADDITIONAL
        PROVISIONS

       

      9.1
        Force Majeure. MTM shall not be liable for any interruption in
        the processing of Ore through the Mill, delay or failure to perform under
        this
        Agreement when such interruption, delay or failure results from causes beyond
        MTM’s reasonable control, including, but not limited to, any strikes, lock-outs
        or other labor difficulties, acts of any Governmental Authority (including
        the
        inability to timely obtain, retain or modify any Permits or the issuance
        of any
        order or notice), acts of environmental groups or other non-governmental
        organizations, changes in Laws, riot, insurrection or other hostilities,
        embargo, fuel or energy shortage, fire, flood, acts of God, wrecks or
        transportation delays, or inability to obtain necessary labor, materials
        or
        utilities. In any such event, MTM’s obligations hereunder shall be postponed for
        such time as MTM’s performance is suspended or delayed on account thereof. MTM
        will notify EGI promptly, either orally or in writing, upon learning of the
        occurrence of such event of force majeure. 

       

      9.2
        Consequential and Other Damages. MTM shall not be liable for,
        and EGI expressly waives any right to recover, whether in contract, in tort
        (including without limitation negligence and strict liability), or otherwise,
        any punitive, exemplary, special, indirect, incidental or consequential damages
        whatsoever, which in any way arise out of, relate to, or are a consequence
        of,
        MTM’s performance or nonperformance hereunder, or the provision of or failure
        to
        provide access to or the right to use the Mill hereunder, including, but
        not
        limited to, loss of profits, business interruptions and claims of customers.
        In
        addition, MTM shall not be liable for, and EGI expressly waives any right
        to
        recover, whether in contract, in tort (including without limitation negligence
        and strict liability), or otherwise, damages of any kind whatsoever (including
        actual damages and those listed above), which in any way arise out of, relate
        to, or are a consequence of, the quantity or quality of any Ore processed
        through the Mill, or which pertain to the Ore after it has left the Mill
        site.

       

      9.3
        Assignment and Sublease. EGI’s rights and obligations under this
        Agreement shall not be assigned, delegated or otherwise transferred (other
        than
        to an Affiliate, in which case EGI shall remain responsible for all of its
        and
        its Affiliate’s obligations and liabilities under this Agreement) without the
        prior written consent of MTM, which consent MTM may withhold in its sole
        discretion. 

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

        

      ARTICLE
        X

      MISCELLANEOUS

       

      10.1
        Cooperation. MTM and EGI shall execute, acknowledge and deliver
        or cause to be executed, acknowledged and delivered such instruments and
        take
        such other action as may be necessary or advisable to carry out their
        obligations under this Agreement and under any document, certificate or other
        instrument delivered in connection herewith or required by law. 

       

      10.2
        Entire Agreement. This Agreement and the Security Agreement, and
        each instrument and agreement delivered by one party to the other party on
        the
        Execution Date or at the Closing, constitute the entire agreement between
        the
        parties and supersede any and all other prior or contemporaneous understandings,
        negotiations or agreements between the parties relating to the transactions
        contemplated hereby, and shall be binding upon and inure to the benefit of
        the
        parties hereto and their respective legal representatives and permitted
        successors and assigns. Each Exhibit and Schedule to this Agreement shall
        be considered incorporated into this Agreement.

       

      10.3
        Amendments. Any amendment, supplement, variation, alteration or
        modification to this Agreement must be made in writing and duly executed
        by an
        authorized representative or agent of each of the parties hereto.

       

      10.4
        Severability. Any provision of this Agreement which is
        prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
        be ineffective to the extent of such prohibition or unenforceability without
        invalidating the remaining provisions hereof, and any such prohibition or
        unenforceability in any other jurisdiction shall not invalidate or render
        unenforceable such provision in any other jurisdiction. To the extent permitted
        by applicable law, each party hereby waives any law which renders any provision
        hereof prohibited or unenforceable in any respect.

       

      10.5
        Counterparts. This Agreement may be executed in counterparts,
        each of which shall be deemed to be an original, and all such counterparts
        shall
        be deemed to constitute one and the same instrument.

       

      10.6
        No Waiver. The failure in any one or more instances of a party
        to insist upon performance of any of the terms, covenants or conditions of
        this
        Agreement, to exercise any right or privilege in this Agreement conferred,
        or to
        waive any breach of any of the terms, covenants or conditions of this Agreement,
        shall not be construed as a subsequent waiver of any such terms, covenants,
        conditions, rights or privileges, but the same shall continue and remain
        in full
        force and effect as if no such forbearance or waiver had occurred. No waiver
        shall be effective unless it is in writing and signed by an authorized
        representative of the waiving party. A breach of any representation, warranty
        or
        covenant shall not be affected by the fact that a more general or more specific
        representation, warranty or covenant was not also breached.

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

      10.7
        Fees, Costs and Expenses. Except as otherwise provided herein,
        each of EGI, on the one hand, and MTM, on the other hand, shall be responsible
        for its own fees, costs and expenses incurred by it in connection with this
        Agreement and the transactions contemplated hereby. 

       

      10.8
        Third Party Beneficiaries. Except as otherwise specifically set
        forth in this Agreement, nothing in this Agreement is intended to create,
        nor
        shall anything in this Agreement be intended to create, nor shall anything
        in
        the Agreement be deemed to create or have created, any third party beneficiary
        rights, other than the indemnification provided in Article VII for EGI’s
        and MTM’s officers, directors, employees and Affiliates.

       

      10.9
        Construction. In this Agreement, unless the context otherwise
        indicates: (a) references to any party to this Agreement shall include the
        successors and permitted assigns of that party; and (b) references to this
        Agreement shall be construed as references to this Agreement or that provision
        of or to any specified provision thereof.

       

      10.10
        Table of Contents and Headings. The table of contents and
        descriptive section headings contained in this Agreement are convenience
        of
        reference only and shall not control or effect the meaning or construction
        of
        any provision of this Agreement.

       

      10.11
        Notices. Except as otherwise provided in this Agreement,
        whenever it is provided in this Agreement that any notice, demand, request,
        consent, approval, declaration or other communication shall or may be given
        to
        or served upon any of the parties by any other party, or whenever any of
        the
        parties desires to give or serve upon any other party any communication with
        respect to this Agreement, each such notice, demand, request, consent, approval,
        declaration or other communication shall be in writing and either shall be
        delivered in person with receipt acknowledged or sent by registered or
        certified-mail, return receipt requested, postage prepaid, or by overnight
        mail
        or courier, or delivery service or by facsimile and confirmed by facsimile
        answer back, addressed as follows:

      

        
          	
                  (a)

                	
                  If
                    to MTM to:

                
	 	 
	 	
                  Montana
                    Tunnels Mining, Inc.

                
	 	
                  5655
                    South Yosemite Street, Suite 200

                
	 	
                  Greenwood
                    Village, Colorado 80111

                
	 	
                  Attn:
                    R. David Russell

                
	 	
                  Telephone:
                    (720) 886-9656

                
	 	
                  Facsimile:
                    (720) 482-0957

                
	 	 
	 	
                  with
                    a copy to:

                
	 	 
	 	
                  Deborah
                    Friedman, Esq.

                
	 	
                  Davis
                    Graham & Stubbs LLP

                
	 	
                  1550
                    17th Street, Suite 500

                
	 	
                  Denver,
                    Colorado 80202

                
	 	
                  Telephone:
                    (303) 892-9400

                
	 	
                  Facsimile:
                    (303) 893-1379

                

        

         

        
          
            
            

          

          
            -19-

            
              

            

          

          
            
            

          

        

         

        
          	
                  (b)

                	
                  If
                    to EGI to:

                
	 	 
	 	
                  Elkhorn
                    Goldfields, Inc.

                
	 	
                  320
                    West Main Street

                
	 	
                  Aspen,
                    Colorado 81611

                
	 	
                  Attn:
                    Rob Trenaman

                
	 	
                  Telephone:
                    (970) 544-9155

                
	 	
                  Facsimile:
                    (970) 920-6944

                
	 	 
	 	
                  with
                    a copy to:

                
	 	 
	 	
                  Merdel
                    Blumenfeld, LLP

                
	 	
                  5809 Acacia
                    Circle

                
	 	
                  El Paso,
                    Texas 79912

                
	 	
                  Attention:
                    Mark E. Merdel

                
	 	
                  Telephone:  (915) 587-7878

                
	 	
                  Facsimile:
                    (915) 587-8808

                

        

      

       

      or
        at
        such other address as may be substituted by written notice given as in this
        Section 10.11. The furnishing of any notice required under this Agreement
        may be waived in writing by the party entitled to receive such notice. Every
        notice, demand, request, consent, approval, declaration or other communication
        under this Agreement shall be deemed to have been duly given or served on
        (i) the date on which personally delivered, with receipt acknowledged,
        (ii) the date on which sent by facsimile and confirmed by answer back,
        (iii) the next Business Day if delivered by overnight or express mail,
        courier or delivery service, or (iv) three Business Days after the same
        shall have been deposited in the United States mail, as the case may
        be.

       

      10.12
        Applicable Law. THIS AGREEMENT SHALL BE GOVERNED AND CONTROLLED
        AS TO ITS VALIDITY, ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT AND
        IN ALL
        OTHER RESPECTS BY THE LAWS OF THE STATE OF COLORADO (WITHOUT REGARD TO THE
        CONFLICTS OF LAWS PROVISIONS THEREOF) APPLICABLE TO CONTRACTS MADE IN THAT
        STATE.

       

      10.13
        No Partnership. Nothing in this Agreement shall be construed to
        create, expressly or by implication, a joint venture, mining partnership,
        commercial partnership, or other partnership relationship among the
        parties.

       

      10.14
        Independent Contractor. MTM shall be deemed for all purposes
        under this Agreement to be an independent contractor and not an agent of
        EGI.

       

      10.15
        Confidentiality. Except as set forth below, each of the parties
        agrees to treat all data, reports, records and other information developed
        or
        made available to it by the other party under this Agreement and applicable
        to
        the Mill as confidential, and unless either party is required by any law,
        rule,
        regulation, or order or by rule or regulation of a stock exchange or securities
        commission to disclose any of such information, information shall not be
        disclosed to any third party without the prior written consent of the
        non-disclosing party, which consent shall not be unreasonably withheld or
        delayed. Disclosure of information relating to this Agreement or the Mill
        may be
        made by either party if such information is required to be disclosed to any
        federal, state, provincial or local government or appropriate agencies and
        departments thereof or if such information is required by law, stock exchange
        rule or regulation to be publicly announced. Otherwise, public announcements
        or
        reports by EGI of information relating to this Agreement or the Property
        shall
        be made only on the basis of agreed texts upon the prior written consent
        of MTM,
        which consent shall not be unreasonably withheld or delayed. EGI agrees that
        it
        will, not less than 2 business days in advance of making public any information
        referred to in this Section 10.15, give MTM written notice of the text of
        the proposed report and provide MTM with the opportunity to comment on the
        form
        and content thereof before the same is issued. MTM shall respond within 2
        business days after receipt of such notice, or its silence will constitute
        a
        waiver of objection to the terms of the proposed text.

       

      
        [balance
          of page intentionally left blank] 

      

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        the
        parties have executed this Agreement as of the date first above
        written.

       

      MONTANA
        TUNNELS MINING, INC.

      

      

      By:
        ______________________________________

      Name: R.
        David
        Russell

      Title: President
        and Chief Executive Officer

      

      

      

      ELKHORN
        GOLDFIELDS, INC.

      

      

      By:
        ______________________________________ 

      Name: Patrick
        Imeson

      Title: President

       

       

      
 

      
        
          
          

        

        
          -21-Unassociated Document

    

      EXHIBIT
        10.4

       

      PROMISSORY
        NOTE

       

      
        
          	$2,640,000	
                  August
                    1,
                    2006

                

        

      

       

       

      FOR
        VALUE RECEIVED,
        MONTANA
        TUNNELS MINING, INC.,
        a
        Delaware corporation (“Borrower”),
        promises to pay to the order of, GREAT
        AMERICAN GROUP
        (“Lender”),
        at
        its office at 9 Parkway North, Suite 300, Deerfield, Illinois 60015, or such
        other place as the holder hereof may from time to time appoint in writing,
        in
        lawful money of the United States of America, the principal sum of Two Million
        Six Hundred Forty Thousand Dollars ($2,640,000),
        or
        such lesser principal amount as may be outstanding hereunder, together with
        interest on the principal balance from time to time unpaid at the rate of
        one
        and one-half percent (1.5%) per month (the “Loan
        Rate”)
        until
        maturity. From and after the occurrence of an Event of Default (as hereinafter
        defined), the outstanding principal amount hereof shall bear interest at
        the
        Loan Rate, plus two percent (2%) per month. Interest will be computed on
        the
        daily principal balance outstanding during the period from the last payment
        date
        to the current payment date. Interest shall be the product resulting when
        multiplying the rate of interest by the principal balance outstanding, dividing
        by 30, and then multiplying by the actual number of days interest has
        accrued.

       

      The
        principal indebtedness evidenced by this Note shall be payable monthly in
        the
        amount of $75,000 with the first payment, attorney fees and Closing Fee (as
        discussed below) due upon execution of this Note and thereafter on the first
        day
        of each successive month with the balance payable in full, together with
        all
        accrued interest thereon, on December 1, 2006. Notwithstanding the prior
        sentence, the second payment due Lender shall be payable on September 1,
        2006
        and then payments will be due on the first day of each successive month.
        The
        Borrower may prepay the outstanding principal amount of this Note in whole
        or in
        part at any time with no penalty. Borrower shall also be responsible to the
        Lender for payment of a Closing Fee in an amount equal to 1% of the total
        amount
        financed.

       

      The
        obligations detailed in this Note are secured by a Security Agreement dated
        the
        date hereof (the “Security
        Agreement”),
        which
        encumbers certain equipment described on Exhibit 1 attached to and made part
        of
        the Security Agreement (hereinafter referred to as the “Equipment”),
        between Borrower and Lender. This Note, the Security Agreement and any and
        all
        other agreements presently existing or hereafter entered into which evidence
        and/or secure any indebtedness from Borrower to Lender shall hereinafter
        be
        collectively referred to as the “Loan
        Documents”.
        The
        terms, covenants, conditions, provisions, stipulations and agreements of
        the
        Loan Documents are hereby made a part of this Note, to the same extent and
        with
        the same effect as if they were fully set forth herein. Borrower does hereby
        covenant to abide by and comply with each and every term, covenant, condition,
        provision, stipulation and agreement set forth in the Loan
        Documents.

       

      Borrower
        shall remain liable for the payment of this Note, including interest,
        notwithstanding any extensions of time of payment or any indulgence of any
        kind
        or nature that Lender may grant to Borrower, whether with or without notice
        to
        Borrower, and Borrower hereby expressly waives such notice. No release of
        any or
        all of the security given for this obligation shall release any other maker,
        co-maker, surety, guarantor, or other party hereto in any capacity. Lender
        shall
        not be required to look first to the Equipment for payment of this Note,
        but may
        proceed against Borrower in such manner as it deems desirable.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      The
        occurrence of any one or more of the following events (regardless of the
        reason
        therefore) shall constitute an “Event
        of Default”
        hereunder:

       

      (a) Borrower
        shall fail to make any payment of principal of, or interest on, this Note
        when
        due and payable or declared due and payable and such failure continues
        unremedied for a period of 5 business days.

       

      (b) Borrower
        shall fail or neglect to perform, keep or observe any provision of this Note,
        the Security Agreement or any other Loan Document and such failure continues
        unremedied for a period of 10 business days after the date upon which notice
        was
        given to Borrower by Lender.

       

      (c) Borrower
        shall fail to take any action that results in Lender failing to have an
        enforceable first priority lien on and security interest in the
        Equipment.

       

      (d) (i)
        Borrower seeks the appointment of a receiver, trustee, liquidator, custodian
        or
        other similar official; for itself or for all or any part of its property;
        (ii)
        Borrower files a petition for relief under the United States Bankruptcy Code
        or
        under any insolvency statute in any state of competent jurisdiction; (iii)
        an
        involuntary bankruptcy petition is filed against Borrower which petition
        is not
        dismissed within thirty (30) days or (iv) Borrower makes a general assignment
        for the benefit of creditors.

       

      (e) Any
        judgments or arbitration awards are entered against Borrower in an aggregate
        amount of $175,000 or more in excess of available insurance coverage to the
        extent not fully paid or discharged for a period of 15 consecutive days during
        which execution is not effectively stayed.

       

      (f) Any
        default occurs under any agreement in connection with any credit Borrower
        has
        obtained from any person other than Lender or which Borrower has guaranteed
        in
        the amount of $175,000 or more in the aggregate and such default consists
        of
        failing to make a payment when due or gives such other person the right to
        accelerate the obligation.

       

      Upon
        the
        occurrence of any Event of Default, Lender may (i) declare all indebtedness
        evidenced by this Note to be immediately due and payable, whereupon all such
        indebtedness shall become due and payable, without presentment, demand, protest
        or further notice of any kind, all of which are expressly waived by Borrower,
        and (ii) exercise all rights and remedies available under the Security
        Agreement, the other Loan Documents and applicable law.

       

      In
        the
        event that Lender institutes legal proceedings to enforce the Loan Documents,
        Borrower agrees to pay to Lender, in addition to any indebtedness due and
        unpaid, all costs and expenses of such proceedings, including reasonable
        attorneys’ fees.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      Lender
        shall not by any act of omission or commission be deemed to waive any of
        its
        rights or remedies hereunder unless such waiver be in writing and signed
        by an
        authorized officer of Lender and then only to the extent specifically set
        forth
        therein. A waiver on one occasion shall not be construed as continuing or
        as a
        bar to or waiver of such right or remedy on any other occasion. All remedies
        conferred upon Lender by the Loan Documents shall be cumulative and none
        is
        exclusive, and such remedies may be exercised concurrently or consecutively
        at
        Lender’s option.

       

      Except
        as
        expressly provided for in this Note or any other Loan Document, every person
        at
        any time liable for the payment of the debt evidenced hereby waives presentment
        for payment, demand, notice of nonpayment of this Note, protest and notice
        of
        protest, all exemptions and homestead laws and all rights thereunder and
        consents that Lender may extend the time of payment of any part or the whole
        of
        the debt, or grant any other modifications or indulgence pertaining to payment
        of this Note at any time, at the request of any other person liable for said
        debt.

       

      This
        Note
        is hereby expressly limited so that in no contingency or event whatsoever,
        whether by acceleration of maturity of the indebtedness evidenced hereby
        or
        otherwise, shall the amount paid or agreed to be paid to Lender for the use,
        forbearance or detention of the money advanced or to be advanced hereunder
        exceed the highest lawful rate permissible under the laws of the State of
        Illinois as applicable to Borrower. If, from any circumstances whatsoever,
        fulfillment of any provision of this Note or of any of the other Loan Documents
        shall, at the time performance of such provisions shall be due, involve the
        payment of interest in excess of that authorized by law, the obligation to
        be
        fulfilled shall be reduced to the limit so authorized by law, and if, from
        any
        circumstances, Lender shall ever receive as interest an amount which would
        exceed the highest lawful rate applicable to Borrower, such amount which
        would
        be excessive interest shall be applied to the reduction of the unpaid principal
        balance of the indebtedness evidenced hereby and not to the payment of
        interest.

       

      All
        covenants, agreements, representations and warranties made herein and in
        the
        other Loan Documents are deemed to have been relied upon by Lender,
        notwithstanding any investigation by Lender.

       

      Should
        this Note be signed by more than one person, firm or corporation or combination
        thereof, all of the obligations herein contained shall be considered joint
        and
        several obligations of each signer hereof. In such case, the liability of
        each
        such signer shall be absolute, unconditional and without regard to the liability
        of any other party hereto.

       

      This
        Note
        is given and accepted as evidence of indebtedness only and not in payment
        or
        satisfaction of any indebtedness or obligation.

       

      The
        form
        and essential validity of this Note shall be governed by the laws of the
        State
        of Illinois. If any provision of this Note is prohibited by, or is unlawful
        or
        unenforceable under, any applicable law of any jurisdiction, such provision
        shall, as to such jurisdiction, be ineffective to the extent of such prohibition
        without invalidating the remaining provisions hereof; provided that where
        the
        provisions of any such applicable law may be waived, they hereby are waived
        by
        Borrower to the full extent permitted by law in order that this Note shall
        be
        deemed to be a valid and binding promissory note in accordance with its
        terms.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      Time
        is
        of the essence with respect to all Borrower’s obligations and agreements under
        this Note.

       

      This
        Note
        and all the provisions, conditions, promises and covenants hereof shall inure
        to
        the benefit of Lender, its successors and assigns, and shall be binding in
        accordance with the terms hereof upon Borrower, its successors and assigns,
        provided nothing herein shall be deemed consent to any assignment restricted
        or
        prohibited by the terms of the Loan Documents.

       

      All
        notices required under this Note or any of the Loan Documents will be in
        writing
        and will be transmitted by personal delivery, first class mail, overnight
        courier or facsimile to the addresses or facsimile numbers appearing on the
        signature page to this Note, or to such other addresses or facsimile numbers
        as
        Borrower and Lender may specify from time to time in writing. Every notice
        shall
        be deemed to have been duly given or served on the date on which personally
        delivered, in person or by overnight courier service, or the date of facsimile
        transmission or five days after the same shall have been deposited in the
        United
        States mail. Failure or delay in delivering copies of any notice shall in
        no way
        adversely affect the effectiveness of such notice.

       

      To
        induce
        Lender to extend to Borrower the loan evidenced by this Note, Borrower
        irrevocably agrees that, subject to Lender’s sole and absolute election, ALL
        ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE
        OR ANY
        LOAN DOCUMENT WILL BE LITIGATED IN COURTS HAVING SITUS IN CHICAGO, ILLINOIS.
        BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED
        WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON BORROWER,
        AND
        AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED
        TO BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF AND SERVICE
        SO
        MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

       

      BORROWER
        AND LENDER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
        TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY DOCUMENT OR UNDER
        ANY
        AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
        FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE AND AGREES THAT ANY SUCH
        ACTION
        OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. BORROWER
        AGREES THAT BORROWER WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY
        OF
        LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
        DAMAGES.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF,
        the
        undersigned has caused its duly authorized officers to execute this Note
        on its
        behalf as of the date and year first set forth above.

       

      MONTANA
        TUNNELS MINING, INC.

      a
        Delaware corporation

       

      By:
        ________________________________

      Name:
        ______________________________

      Title:
        _______________________________

       

      Address:

       

      P.O.
        Box
        176

      Jefferson
        City, MT 59638

      Facsimile
        No.: ____________

       

      Address
        for Notices to Lender:

       

      Great
        American Group

      Attn:
        Mark Naughton,

      Vice-President
        and General Counsel

      9
        Parkway
        North, Suite 300

      Deerfield,
        Illinois 60015

      Facsimile
        No.: 847-444-1401

      

      
        
           

        

        
          5

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