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 EXPLORATION AND EXPLOITATION MINING CONTRACT AND PROMISE OF TRANSFER OF MINING RIGHTS CELEBRATED BETWEEN A) EMILIO ACUÑA PERALTA, REPRESENTED IN THIS ACT BY MR. CONRADO ACUÑA ARANDA IN HIS PERSONALITY AS GENERAL AGENT (THE CONCESSIONAIRE) AND B) AMERICAN COPPER MINING, S. A. DE C. V., REPRESENTED IN THIS ACT BY MR. RAMIRO TREVIZO LEDEZMA IN HIS PERSONALITY AS SOLE ADMINISTRATOR AND LEGAL REPRESENTATIVE (THE EXPLORER), JOINTLY NAMED (THE PARTIES), IN ACCORDANCE WITH THE FOLLOWING PREVIOUS RECORDS, DECLARATIONS AND CLAUSES.

 

 
PREVIOUS RECORDS
 

 

 I.

The CONCESSIONAIRE is the legitimate title holder of the mining rights derived from the 8 (eight) concessions that are detailed following, and are integrated in the mining project named “
Picacho”, all of them located in the Municipality of Bacoachi, State of Sonora: (the CONCESSIONS):

 

 	 	 	
	
Title
	
Lot
	
Surface

	
161,838
	
El Picacho
	
21.0000 Hectares

	
206,327
	
Unificación Rey de Oro
	
495.3229 Hectares

	
214,776
	
Mis Recuerdos
	
2.1708 Hectares

	
218,818
	
Picacho II
	
448.5564 Hectares

	
222,511
	
Dos Amigos
	
24.4306 Hectares

	
222,789 
	
Picacho II
	
4.9217 Hectares

	
222,925
	
El Picacho I
	
2,155.6890 Hectares

	
226,154
	
Crestón
	
84.0000 Hectares

 

 II.

In recent days, the
EXPLORER referred to the CONCESSIONAIRE its interest in carrying out exploration and exploitation mining activities in the lots properly known as the
CONCESSIONS (the LOTS) as well being granted the option that the mining rights derived from the
CONCESSIONS might be ceded to him in the future through the formality of the respective promissory contract, paying in exchange, as a counterclaim, a certain amount of money.

 III.

In view of the
CONCESSIONAIRE’S acceptance of the proposal by the  EXPLORER, PARTIES proceeded to write up this present contract for all legal purposes that might arise, with the purpose of formalizing the terms and conditions that would regulate their mercantile relationship regarding the
CONCESSIONS.
 

 

 

 

 1

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

DECLARATIONS

 

 I.

The CONCESSIONAIRE declares through the offices of its general agent and under oath of stating the truth, that:

 1.  He is a Mexican citizen, of age, married under the bond of separation of goods, to be in full enjoyment of his physical and mental faculties, as well as enabled to practice all kinds of mercantile operations and reason why he is endowed with the necessary and sufficient personality to intervene in this present judicial act;

 2.  His general agent is endowed with the faculties, mandates and required powers to subscribe this contract in representation of the
CONCESSIONAIRE as faith of it is given in Public Writ number 25,243 granted on the 18th February 2008 before the testimony or Mr. David Martín Magaña Monreal, Attorney at Law and Notary Public number 16 of the City of Hermosillo, State of Sonora, and same that have not been limited, suspended, restrained or revoked as of the date of this present instrument;

 3.   He is duly inscribed in the Federal Taxpayers Registry under Identification Certificate number
AUPE-501019-NQO, and is current to date in the payments of his income tax and other contributions that have corresponded to him in conformity to the applicable and current legislation;

 4.   He is the legitimate title holder of the rights derived from the
CONCESSIONS.
 

 5. To date he has duly complied to the obligations that the applicable and current legislation imposes on the holders of administrative authorizations such as are the
CONCESSIONS, including payment of the pertaining rights in conformity with the Federal Law of Rights and reason why the respective mining rights are current to date and in good legal standing;

 6.  The mining rights derived from the
CONCESSIONS are free of any lien, attachment, affectation or limitation whatever the nature in their domain and thus the
CONCESSIONAIRE is free to deal with them in any manner he finds convenient;
 

 7.  The
LOTS are in good condition considering that the mining activities carried out on them to date have complied to the applicable legal dispositions in matters concerning mining, environmental care and others of similar nature;

 8.  The landmarks that show the precise location of the starting point of the
LOTS are in good condition of preservation having been built in compliance to the applicable and current legal dispositions;

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

 9.  To date there does not exist any standing contract or agreement that includes in its object the
CONCESSIONS either direct or indirectly reason why the subscription of this present instrument does not imply a non compliance by the
CONCESSIONAIRE to commitments previously engaged nor does it affect any previous rights granted in favor of any third party;

 10.  Previous to the date of subscription and ratification of this present contract, it received from the
EXPLORER as an advance to the counterclaim that will be described in the forthcoming clauses, the amount of $500,000.00 Dollars (Five hundred thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$575,000.00 Dollars (Five hundred seventy five thousand Dollars 00/100 in United States currency) the
ADVANCE.
 

 11.  It is his free will to subscribe this present contract with the purpose of granting in favor of the
EXPLORER the necessary and sufficient right to develop all kinds of mining activities in exploration and exploitation in the
LOTS, complying in full to the terms and conditions included in the forthcoming clauses, and;

 12.  Likewise, it is his free will to subscribe this present contract in order to commit itself with the
EXPLORER by virtue of a contract of promise of transfer of the mining rights derived from the
CONCESSIONS, complying in full to the terms and conditions included in the forthcoming clauses.

 

 II.

The EXPLORER declare through the offices of its general agent and under oath of stating the truth, that:

 1.   It is a Mexican mercantile society, specifically a Stock Company with Varying Amount of Capital, duly established and in operation in agreement to the applicable and current legislation of the United States of Mexico, just as faith is given in Public   Writ number 17,348 granted on the 18
th December 2006 before the testimony of Mr..Eugenio Fernando García Russek, Attorney at Law and applicant to the position of Notary Public and assigned to Public Notary number 28 of the Morelos Judicial District of the State of Chihuahua of which Mr. Felipe Colomo Castro, Attorney atLaw, is Title Holder, and instrument which is duly inscribed in the Public Registry of Commerce of said District under electronic mercantile folio number 23,391*10 on the 29
th January 2007 and reason why he is endowed with the required personality to subscribe this present contract;

 2.  As soon as possible the formal inscription in the Public Registry of Mines of the described instrument in the above numeral will be requested with the purpose of enjoying the required legitimacy for registration acknowledgement as holder of all kinds of mining rights, considering that its social object expressly includes the possibility of carrying out all kinds of activities within the mining field, as such is the case of this present contract;

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

 3.   Its representative enjoys the mandates, powers and necessary and sufficient faculties to represent the
EXPLORER in this present act, just as faith is given in Public Writ described in numeral 1 above, and same that have not restrained, limited, suspended or revoked, and reason why he is endowed with the required capacity to sign this agreement;

 4.  The shareholders of the
EXPLORER have authorized the formalization of this present mercantile operation under the terms of their current and applicable social statutes, among another conductive and internal norm, specifically by virtue of the Shareholders Ordinary Assembly celebrated on the 1
st July 2009;
 

 5.   It is duly inscribed in the Federal Taxpayers Registry under Identification Certificate
ACM-061220-TIA, and being to date current in its income tax payments and other contributions that might have corresponded to it in conformity with the current and applicable fiscal legislation;

 6.   It recognizes the
CONCESSIONAIRE as the legitimate holder of the rights derived from the CONCESSIONS having taken the opportunity of proving such legal situation personally before competent authorities;

 7.  It expressly recognizes that the
CONCESSIONAIRE has duly complied with the obligations that the applicable and current legislation imposes upon holders of administrative authorizations such as the
CONCESSIONS are, including payment of the corresponding rights in conformity with the Federal Law of Rights, having taken the opportunity of personally proving such legal situation before competent authorities and reason by which he accepts that the respective mining rights are current to date and in good legal standing;

 8.   He recognizes that the
LOTS are in good condition taking into consideration that the mining activities carried out on same to date have complied duly with the applicable legal dispositions in matters concerning mining, environmental care and other similar nature;

 9.   It is the free will of its Administration Board, as well as that of its current shareholders, to subscribe this present contract with the purpose that the
CONCESSIONAIRE expressly grants to him the necessary and sufficient right to develop all kinds of exploration and exploitation mining activities on the
LOTS complying in full to the terms and conditions included in the forthcoming clauses;
 

 10.   Likewise, it is the free will of its Administration Board, as well as that of its current shareholders, to subscribe this present contract in order to commit themselves with the
CONCESSIONAIRE by virtue of the promise of transfer contract of the mining rights derived from the
CONCESSIONS, complying in full to the terms and conditions included in the forthcoming clauses.

 

 

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

III.

Both PARTIES declare, through its general agent the former and through its legal representative the latter, under oath of stating the truth, that their recognize the personality of their counterparts in addition of appearing to the subscription of this present contract in good faith, without deceit, ill faith, harms, violence or whatever other vitiation in their consent with the purpose of committing themselves to the following clauses:

 

 
CLAUSES
 

 

FIRST. RIGHT FOR MINING EXPLORATION:  By virtue of the subscription of this present contract, in terms of the Mining Law, its Ruling and other applicable and current legal dispositions, the
CONCESSIONAIRE grants in favor of the EXPLORER the exclusive right to explore and exploit the
LOTS complying to the terms and following conditions.
 

SECOND. EXPLORATION AND EXPLOITATION MINING DISCRTION:  It is expressly agreed by the
PARTIES that, during the totality of its exploration and exploitation mining activities, the EXPLORER will have complete technical, industrial, economical and commercial autonomy. As such, he can make use of the required discretion to freely choose the kind, manner and order of applying the required processes and systems to such an effect.

 
THIRD. ACCESS TO LOTS: The CONCESSIONAIRE expressly commits himself to collaborate in a reasonable manner with the
EXPLORER with the purpose of achieving, for all legal purposes that might arise, the free and complete access to the surface covered by the
LOTS, an indispensable requisite for the execution of exploration and exploitation tasks referred to in this document.

 To such an effect, the
CONCESSIONAIRE commits himself to vie with the or proprietors of the land where the LOTS are located in order to achieve the celebration of contracts and agreements required for the obtainment of direct access already mentioned at least during a time term similar to the duration of this contract in the understanding that the
CONCESSIONAIRE will be the one to intervene as part of such judicial acts in his position as legitimate holder of the mining rights derived from the
CONCESSIONS.
 

 The
EXPLORER must expressly authorize the CONCESSIONAIRE the stipend of any payment or obligation related with the granting of the rights of access in question, it being that the corresponding amount must be reimbursed by the
EXPLORER in favor of the CONCESSIONAIRE periodically, and the EXPLORER must comply with the different obligations agreed by the
CONCESSIONAIRE as agreed in the respective contracts and agreements that be subscribed with the proprietors of the land where the
LOTS are located.
 

 
FOURTH. WORK, CONSTRUCTION AND IMPROVEMENT AT LOTS: The EXPLORER is endowed as of this moment to execute, at its expense and risk, per itself or by means of any third party, the totality of the works, construction and improvements that may be required for the correct development of its activities of mining exploration and 

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

exploitation at
LOTS expressly including the possibility of building the structures, edifices, improvements and access roads necessary for such a purpose. In a like manner, the
EXPLORER will have the right to install and make use of the whole of the machinery and equipment it deems convenient for exploring and exploiting the
LOTS.
 

 The
CONCESSIONAIRE expressly authorizes that works, construction, improvements and machinery implementation for the exploration and exploitation activities on the
LOTS, be good belonging to the EXPLORER or to hired third parties be removed at any moment during the current duration of this instrument, and afterwards, during an extended period of 90 (ninety) natural days after the termination of this present contract, if and ever the removal does not put in risk the safety of the works carried out in which case they must remain set at
LOTS. It is specially agreed that the permanent works of fortification, the propping and, in general, the necessary works to uphold the safety and stability of the mines, will not be allowed to be removed as foreseen in the Mining Law, its Ruling and the rest of the current and applicable legal dispositions.

 
FIFTH. COMMITMENTS TO INVEST IN MINING EXPLORATION: The EXPLORER will have the right to incur in the expenses and to carry out investments that it seems pertinent per its own interests in the development of its activities of exploration and exploitation on the
LOTS, leading to the assessment of the existing mineral potential in same.
 

 Regardless of the discretion granted, the
EXPLORER must invest in those concepts before mentioned, at least, the amounts stated in the applicable and current legal disposition for such an effect and every year for as long as this instrument lasts, bearing in mind the date of expedition of each mining concession title and the surface covered by the
LOTS proper to the CONCESSIONS.
 

 
SIXTH. INVESTMENT SUSPENSION IN EXPLORATION AND MINING EXPLOITATION. If at any moment the EXPLORER should consider inconvenient to continue with its exploration and exploitation activities at
LOTS and, thus, wish to terminate in advance this contract, it will not be held obliged to carry out more investments or expenses than those already done up to the date in which it delivers to the
CONCESSIONAIRE the notice of termination under the terms of the following clause.
 

 SEVENTH. PROOF OF WORK AND STATISTICAL REPORTS: As of the subscription and ratification of this present contract, and for as long as it remains current, it will be the
EXPLORER’S obligation to prepare and present before the competent mining authorities the reports and proofs of work and mining tasks that are carried out at
LOTS, as well as the corresponding statistical reports in case they are applicable and complying to the dispositions of the current and applicable legislation. In case such information is put forward to the competent authority, the
EXPLORER must deliver to the CONCESSIONAIRE an ordinary copy of the corresponding documentation by virtue of which compliance to the described obligations can be accredited and proven.

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

 
EIGHTH. PAYMENT OF MINING RIGHTS: As of the subscription and ratification of this present contract and for as long as it remains current, it will be the
EXPLORER’S obligation to pay for the mining rights required in order to keep the rights derived from the
CONCESSIONS prevalent in favor of the CONCESSIONAIRE complying in full to the current and applicable legal dispositions. The
EXPLORER must deliver to the CONCESSIONAIRE an ordinary copy of the corresponding documentation by virtue of which compliance to the described obligations can be accredited and proven.

 
NINTH. USEFULNESS OF THE MINERAL: It is expressly stipulated that during the prevalence of this contract the
EXPLORER will have the right to extract discretionally those amount of mineral it requires to carry out all kinds of sampling and metallurgical testing with the purpose of assessing the potential of the
LOTS. Likewise, it can extract amounts of mineral it deems convenient, without any limitation, for commercial purposes if and ever it is complying to the payment obligations it assumes by virtue of the following Fifteenth and Sixteenth clauses.

 In this sense,
PARTIES agree that during the prevalence of this present contract, the CONCESSIONAIRE will have the right of access to the totality of the surface covered by the
LOTS, as well as the right to continue ding exploration and exploitation tasks at the ramp known as “San Julián”, located on a portion of the surface of the lots corresponding to the concessions “Unificación Rey de Oro”, “Mis Recuerdos” and “El Picacho”, in the understanding that it cannot extract more than 5,000 (five thousand) tons of material per month (an amount not cumulative) and that, under no assumption, will it be able to interfere with the exploration and exploitation that the
EXPLORER might wish to carry out in said mining installations. The CONCESSIONAIRE expressly accepts that on carrying out its exploration and exploitation works already mentioned, it will not become associated in any way with a third party because under any supposition these works must be carried out by it directly, and making use for such an effect of its own human resources, materials and economy.

 
TENTH. EXPLORER’S OBLIGATIONS: In the execution of the exploration and exploitation works on
LOTS, the EXPLORER is committed furthermore to:
 

1.   To the execution of the exploration and exploitation works conforming to the usages and habits of the mining industry, conforming to the Mining Law, its Ruling and other dispositions current and legally applicable.

 2.   Keep the
LOTS in good preservation condition.
 

 3.   Take care of the starting point landmarks and location of the
LOTS.
 

 4.   Give answer to the obligation in environmental matters regarding the activities of its workers or contractors that are being carried out directly on the
LOS, as well as;
 

 5.   To duly comply with the rest of the obligations corresponding to it in conformity to the current and applicable legislation in the United States of Mexico.

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

ELEVENTH. CONCESSIONAIRE’S OBLIGATIONS: Derived from the right of exploration and exploitation granted in favor of the
EXPLORER, the CONCESSIONAIRE commits itself during the prevalence of this contract to:

 1.   To keep in effect and to its favor the mining rights derived from the
CONCESSIONS, as well as not to request reduction, subdivision or unification of he surface they cover, nor to desist itself from such rights except that it has the prior written authorization from the
EXPLORER to such a purpose.
 

 2.   To abstain from celebrating any contract regarding the
CONCESSIONS except with the EXPLORER or with the individuals or corporations that this latter might  indicate to such an effect, not to transmit in any manner the rights derived from the
CONCESSIONS in favor of third parties other than the EXPLORER or with whom this latter signals in the assumption of exercising the right to acquire same that by virtue of this instruments are granted to it;

 3.   Keep the rights derived from the
CONCESSIONS free of any burden, lien, affectation or limitation of ownership of any kind;

 4. Not to interfere, prevent or hinder the exercise of the exclusive right granted in favor of the
EXPLORER for assessing, exploring and exploiting the LOTS.
 

 5. To reasonable collaborate with the
EXPLORER with the purpose of facilitating and supporting the activities this latter deems convenient to carry out in order to finish mentioned assessments, the exploration and exploitation to its entire satisfaction. In case that the
CONCESSIONAIRE directly, or any of its representatives, agents, contractors or related persons interferes with the development of the
EXPLORER’S operations at LOTS during the prevalence of this contract, it will obliged to reimburse any expense that the
EXPLORER incurs in to avoid or make good the wrong of such an interference, and if not doing so, it accepts that such an amount be deducted from any payment or amount that may correspond to it in accordance to this contract;

 6.  Keep the
EXPLORER, its representatives, executives, workers, employees, consultants and persons related to it free, safe and at peace from any claim and/or responsibility that might be impugned or imputed against them by acts imputable directly to the
CONCESSIONAIRE or any of its representatives, agents, contractors or persons related.
 

 7. Keep in confidence during the prevalence of this contract and afterwards in case the right to acquire the rights derived from the
CONCESSIONS by the EXPLORER are exercised the totality of the information or documentation received by the
EXPLORER and/or its contractors that has been previously known publicly be it of an industrial nature and it will be considered and treated as privileged information and industrial secret. In this sense, the
CONCESSIONAIRE commits itself to return to the EXPLORER the information 
 

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

and documentation described in case it exercises the right to acquire the rights derived from the
CONCESSIONS.
 

 8. Abstain from granting any kind of faculties, mandates or powers regarding the
CONCESSIONS during the prevalence of this contract except when it has the written and previous authorization by the
EXPLORER, as well as:
 

 9. To duly comply with the rest of the obligations that corresponds to it in conformity with the applicable and current legislation in the United States of Mexico.

 
TWELFTH. LABOR RELATIONS: In order to comply to the obligations that each of the PARTIES contracts by virtue of the subscription of this contract, they manifest that they will act as totally independent entities reason by which under no motive will it be understood that there exists a labor relationship between them, thus canceling the possibility of the application of the current social and labor legislation. In consequence,
PARTIES under no assumption will be able to hire employees or workers in the name or representation of their counterpart.

 Regarding their own workers and employees
PARTIES state that there exists no labor relationship whatsoever between the workers and employees of the
CONCESSIONAIRE and the EXPLORER nor between their own and the other. Thus, PARTIES state being the employers of their own workers and employees in compliance to the current social and applicable labor legislation and to be the only and exclusive responsible entities regarding the social and labor obligations to be complied to in favor of such subjects.

 Consequently,
PARTIES commit themselves to free their counterparts of any social or labor responsibility that might be impugned contrary to this clause in relation to their own workers and employees under the terms of the applicable and current social and labor legislation.

 
THIRTEENTH. PROMISE OF TRANSFER OF MINING RIGHTS: By virtue of the subscription of this present contract, the
CONCESSIONAIRE promises and irrevocably commits itself to cede in favor of the EXPLORER, or to the individual or corporation that this latter signals, without reserve or limitation whatsoever, free of burden, lien, affectation or limitation of ownership of any kind, the totality of the mining rights derived from the
CONCESSIONS that cover the LOTS, complying to the following terms and conditions.
 

 FOURTEENTH. ACCESSORY RIGHTS: If the right to acquire the mining rights derived from the execution of the exploration and exploitation works
CONCESSIONS is exercised, the CONCESSIONAIRE must at the same time cede in favor of the
EXPLORER or to the individual or corporation it signals, without reserve or limitation whatsoever, the totality of the rights it detains at the moment in order to access to the surface that cover the
LOTS, such as the rights of lease contracts, commodatum, temporary occupation as well as those licenses, permits, authorizations, bondages or whatever other equivalent permits that, in general, allow for the carrying out of the works regarding the
CONCESSIONS.
 

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

FIFTEENTH. COUNTERCLAIM: Due to the granting of the onerous promise of transfer of the mining rights derived from the
CONCESSIONS, the EXPLORER obliges itself to pay in favor of the CONCESSIONAIRE the amount of
$4’800,000.00 Dollars (Four million eight hundred thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$5’520,000.00 Dollars (Five million five hundred and twenty thousand Dollars 00/100 in United States currency) (the
COUNTERCLAIM) complying to the terms and conditions described following.
 

 SIXTEENTH. MANNER, TIME AND PLACE OF PAYMENT OF THE COUNTERCLAIM: The
EXPLORER commits itself to pay the COUNTERCLAIM amount in favor of the CONCESSIONAIRE by means of nominal checks in favor of the beneficiary’s account, as one, or through electronic transfer of funds to the banking account that for such a purpose the
CONCESSIONAIRE should indicate to the EXPLORER in all opportunity. In any of the cases, the
CONCESSIONAIRE authorizes the EXPLORER as of this moment to choose in all liberty either of the described options the manner in which the
COUNTERCLAIM will be paid.
 

 Regarding the time of the
COUNTERCLAIM payment, PARTIES agree that same be honored by means of several partial payments as per the following schedule:

 1. By virtue of the
ADVANCE, same that was delivered in favor of the CONCESSIONAIRE previously to the signing and ratification of this present contract by an amount of $500,000.00 Dollars (Five hundred thousand Dollars 0/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of $
575,000.00 Dollars (Five hundred seventy five thousand Dollars 00/100 in United States currency).

 2. On the 5
th (fifth) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on the
15th December 2009, the amount of $250,000.00 Dollars (Two hundred and fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$287,500.00 Dollars (Two hundred eighty seven thousand and five hundred Dollars in United States currency).

 3. On the 11
th (eleventh) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on the
15th June 2010, the amount of $250,000.00 Dollars (Two hundred and fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$287,500.00 Dollars (Two hundred eighty seven thousand and five hundred Dollars in United States currency).

 4. On the 17
th (seventeenth) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on the
15th December 2010, the amount of $250,000.00 Dollars (Two hundred and fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$287,500.00 Dollars (Two hundred eighty seven thousand and five hundred Dollars in United States currency).

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

 5. On the 23
rd (twenty third) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on the
15th June 2011, the amount of $250,000.00 Dollars (Two hundred and fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$287,500.00 Dollars (Two hundred eighty seven thousand and five hundred Dollars in United States currency).

 6. On the 29
th (twenty ninth) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on the
15th December 2011, the amount of $250,000.00 Dollars (Two hundred and fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$287,500.00 Dollars (Two hundred eighty seven thousand and five hundred Dollars in United States currency), and,

 7. The balance of the
COUNTERCLAIM, that is, the amount of $3’050.000.00 Dollars (Three million fifty thousand Dollars 00/100 in United States currency), plus the corresponding Added Value Tax, that is, a sum total of
$3’507,500.00 Dollars (Three million five hundred and seven thousand five hundred Dollars 00/100 in United States currency), on the 35
th (thirty fifth) month from the signing and ratification of this present contract before Public Broker, that is, at the latest on  the
15th June 2012.
 

 

 Regardless the terms established in the schedule of payments for paying the corresponding partialities to the
COUNTERCLAIM, the CONCESSIONAIRE expressly grants in favor of the EXPLORER a time period of 30 (thirty) extended natural days beginning as of the date following the date due of each partiality to pay without any penalty at all.

 As of the address in which the
COUNTERCLAIM must be paid, and under the assumptions that the EXPLORER chooses to do so by nominal check in favor of the beneficiary’s account in conformity with the first paragraph of this clause, the
CONCESSIONAIRE expressly accepts that such documents be delivered at the conventional address he establishes for such a purpose in the following clause.

 
SEVENTEENTH. PROOF OF PAYMENT:  Against payment of each of the partialities of the COUNTERCLAIM, the
CONCESSIONAIRE commits itself to extend in favor of the EXPLORER a valid fiscal voucher as required by the applicable and current fiscal legislations.

 The
CONCESSIONAIRE obliges himself to deliver such vouchers at the address of the EXPLORER within the following 5 (five) able days from the date the corresponding payment was made, independently of the manner of payment chosen by the
EXPLORER for such a purpose.
 

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Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

EIGHTEENTH. TRANSFER OF MINING RIGHTS: In the assumption that the
EXPLORER pays in favor of the CONCESSIONAIRE the totality of the amount of the COUNTERCLAIM, be it by keeping to the schedule of partial payments or in an advance manner under the terms of the above clause,
PARTIES commit themselves to subscribe a transfer of mining rights contract by virtue of which, among other terms and conditions, the
CONCESSIONAIRE cedes without reserve of limitation whatsoever, in total and definitely, free of burden, lien, affectation or limitation of ownership of any kind, the totality of the mining rights derived from the
CONCESSIONS, expressly setting as price for such a concept the total amount of the COUNTERCLAIM, as well as the fact that the
CONCESSIONAIRE has received such amount to his satisfaction, and thus, such document will constitute the broadest receipt that may proceed by law in favor of the
EXPLORER.
 

 
PARTIES commit themselves to subscribe and ratify before Public Broker the transfer of mining rights contract within the following 15 (fifteen) able days from the date in which the
EXPLORER paid the totality of the COUNTERCLAIM in favor of the CONCESSIONAIRE.

 The totality of expenses incurred in for the preparation, subscription and ratification of the transfer of mining rights contract will be charged to the
EXPLORER.
 

 
NINETEENTH. DURATION AND ADVANCED TERMINATION: The duration of the right to explore the LOTS, as well as the time term within which the
EXPLORER can exercise, at any time, the right for the totality of the mining rights derived from the
CONCESSIONS to be ceded in his favor, through the full payment of the COUNTERCLAIM, will be
3 (three) years, beginning from the date of the signing and ratification of this document before Public Broker by the
PARTIES
 

 Such time term will be obligatory to the
CONCESSIONAIRE and voluntary for the EXPLORER it being that this latter can terminate the duration of this contract at any moment, at its own discretion and without any responsibility at all, through a written notice given to the
CONCESSIONAIRE at least with 30 (thirty) natural days anticipation to the effective date of cancellation. The
CONCESSIONAIRE expressly accepts, for all legal purposes that might arise, that the mentioned notice will be sufficient and enough to certify the will of the
EXPLORER of terminating in advance the duration of this contract, without the need of subscribing an advanced termination agreement o engaging in any other kind of legal paper work.

 
TWENTIETH. OBLIGATIONS IN CASE OF ADVANCED TERMINATION: In the assumption that the EXPLORER decides to terminate in advance the duration of this present contract under the terms of the foregoing clause, he obliges himself before the
CONCESSIONANIRE to:
 

 1. To return in favor of the
CONCESSIONAIRE the possession of the installations that were built at LOTS within the following 15 (fifteen) natural days of the effective date of termination and without harming the right he has to withdraw the goods belonging to him and of third parties he might have contracted to carry out his endeavors of exploration under the term of the above indicated clause, as well as to

 12

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

:

 2. Deliver in favor of the
CONCESSIONAIRE within the following 30 (thirty) natural days from the effective date of cancellation, the totality of the documentation and information he may have up to that date and related to the
CONCESSIONS, as were derived from his mining exploration activities.
 

 TWENTY FIRST. SECURITIES BY REPENTANCE:
PARTIES expressly accept for all legal purposes that might arise that, in the assumption the EXPLORER decides to terminate in advance the duration of this present contract, under the terms of the before mentioned clause, the amount of partial payments corresponding to the
COUNTERCLAIM that might have been delivered to the CONCESSIONAIRE, should be considered securities by repentance leaving the
EXPLORER without any right to request devolution under no concept, nor the CONCESSIONAIRE be in the ability to request any further payment.

 
PARTIES likewise agree that, in the assumption that this present contract might not be executed in its totality by causes imputable to the
EXPLORER, or by force majeure reasons, fortuitous event or by the makings of nature, or by cancellation of same under the terms of the immediately above paragraph, the totality of payments done in favor of the
CONCESSIONAIRE to that date will remain in his favor as securities of repentance.
 

 TWENTY SECOND. NON COMPLIANCE THROUGH A FORTUITOUS EVENT OR
FORCE MAJEURE: It is expressly agreed that the EXPLORER will not be held responsible for the delay or total non compliance or partial of the obligations it assumes under the terms of this document when such delay or non compliance stems or is a result of a fortuitous event or of
force majeure, that is, from occurrences or acts of nature or man that are unforeseen or that, even if foreseen, cannot be avoided by the
EXPLORER.
 

  As indicated in the immediately above paragraph,
PARTIES convene in that the occurrences cited following in an enunciatively but not limiting manner will be considered fortuitous events or
force majeure causes: disasters such as fires, explosions, floods, storms, earthquakes, epidemics, civil disturbances, labor disturbances, strikes, wars, invasions, oppositions or disturbances caused by rural communities, common land owners (ejidos) or by any other group or association legally constituted or not, as well as oppositions and disturbances caused by any other person that prevents or do not authorize within reason the
EXPLORER the free access to the LOTS, or prevent the correct carrying out of the mining tasks contemplated in this contract, as well as actions or omissions by any government authority, be it federal, state or municipal which includes the delay or the lack of opportune obtainment of permits and authorizations required from any government authority, individual or corporation, groups or entities for carrying out the mining tasks foreseen in this document.

 In case that any of these assumption presents itself leading to a fortuitous event or
force majeure cause, the EXPLORER must notify the CONCESSIONAIRE within a time term of 30 (thirty) natural days as of the date in which the
EXPLORER became aware of any 
 

 13

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

case. Such notice will not be necessary in the assumption that such fortuitous event or
force majeure cause if evident to both PARTIES.
 

Regardless the foregoing, the EXPLORER accepts that it cannot claim fortuitous event or
force majeure cause regarding the payment obligations it assumes by virtue of the subscription of this contract in favor of the
CONCESSIONAIRE.
 

 
TWENTY THIRD. NON COMPLIANCE AND CANCELLATION: PARTIES convene in that, in case one of them does not comply to any of the obligations assumed by virtue of the subscription of this present instrument, the counterpart will have the right to demand the forceful compliance of the obligation not complied to, on one side, or the cancellation of the present contract, on the other, as well as the payment of an indemnity for damages and harms in both cases.

 
TWENTY FOURTH. SEPARATE ENTITIES: None of the terms and conditions of this present instrument must interpreted in the sense that the
PARTIES have constituted a society or association relationship and as such, their assets are not joined together for fiscal responsibility purposes or before third parties, or by any other nature.

 
TWENTY FIFTH. FISCAL OBLIGATIONS: On being registered and established in the Federal Taxpayers Registry, as well as being up to day in their income tax payments and other contributions that might have corresponded to them to date,
PARTIES convene in that each one, separately, will defray tax payments that individually correspond to each due to the compliance to the terms and conditions of this present instrument, complying to the applicable and current fiscal legislation, and each committing itself to leave its counterpart free regarding any fiscal responsibility that might be imputed contrary to this clause by competent authorities.

 
TWENTY SIXTH. FORMALITY AND INSCRIPTION: With the purpose of safeguarding the rights of both PARTIES before third parties regarding this present contract, the
EXPLORER expressly commits itself to carry out the whole of the paper work required to inscribe this present instrument before the Public Registry of Mines and, after it has been inscribed and ratified by both
PARTIES before testimony of a Public Broker of the EXPLORER’S choosing.
 

 The totality of expenses incurred in for the ratification of this present instrument, as well as the inscription of same before the mentioned authority, will be charged to the
EXPLORER.
 

 
TWENTY SEVENTH. ADDRESSES AND CONTACT TELEPHONES: PARTIES convene that for all purposes referring to the execution and compliance of the terms and conditions of this present instrument, as well as to give announcements, notifications and other communications related with same, they state their addresses and contact telephone numbers to be:

 

 

 

 14

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

CONCESSIONAIRE 
 
EXPLORER
 

 Privada de Connecticut 1805

Calle California 5101-206

Fracc. Residencial Campestre

Edificio Ejecutivo Vértice

Ciudad de Chihuahua

Col. Haciendas de Santa Fe

Estado de Chihuahua

Ciudad de Chihuahua

Estado de Chihuahua

 Phone: 52-614-423-4098

Phone: 52-614-200-8483

 

 In case of a change in address,
PARTIES agree in notifying their counterpart of such a circumstance at least 5 (five) natural days before the date in which the change of address is carried out.

 Regardless the foregoing, if any of the
PARTIES should fail to notify its counterpart of the change of address, it will be understood that notifications delivered at the last known address will be fully valid and will bear all legal effects.

 
TWENTY EIGHTH. NOTIFICATIONS AND COMMUNICATIONS: PARTIES agree that any notice, announcement or communication necessary to be given to their counterpart must be done so in writing.

 Delivery of such documents can be done by three means: 1. By ordinary courier service delivered on hand or by certified mail, both with receipt of acknowledgment; 2. Via fax or, 3. Electronic mail. In this last case, delivery will be considered valid and legally carried out only when the reception of the respective electronic mail is confirmed electronically in an expressed manner within the following 3 (three) natural days after it having been sent, by means of an acknowledgement and confirmation message answered to the sender by the addressee.

 
PARTIES likewise agree that the notices, announcements and communications related to this present instrument will take their respective effect on the day of reception. In case that such letters include some kind of term, such term will begin to be in effect on the next able day in which confirmation of reception is given.

 
TWENTY NINTH. CONTACT PERSON: PARTIES agree in that the totality of notices, announcements and communications necessary to be exchanged between them derived from the terms and conditions of this present instrument, must addressed indistinctly to the following persons:

 
CONCESSIONAIRE 
 
EXPLORER
 

 
Emilio Acuña Peralta
 
            Ramiro Trevizo Ledezma

Conrado Acuña Aranda
 
Ramiro Trevizo González
 

 

 15
 
Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

In case it be their will to change the contact persons
PARTIES agree in notifying their counterpart of such a circumstance at least 5 (five) able days in advance to the date in which other persons will be nominated. Not complying to the obligation herein described will means that notices, announcements and communications sent and delivered to the name of the previous addressees of the
PARTY incurring in the change of contact persons, will bear all legal effects in favor of the
PARTY not having been notified in all opportunity as of the date of delivery and for as long as the non compliance subsists.

 
THIRTIETH. TOTALITY OF THE CONTRACT: PARTIES accept that this present contract contains the totality of the agreements between them regarding the object, and leaving without effect as well as canceling the whole of agreements, reports, negotiations, correspondence, commitments and communications carried out previously between them either in writing or verbal.

 
THIRTY FIRST. CESSION: The CONCESSIONAIRE expressly authorizes as of this moment the EXPLORER to cede to any third party it considers convenient, without the need of previous consent by the
CONCESSIONAIRE, the totality of the rights and obligations that may derive in its favor and charge derived from the subscription of this contract.

 The before stated, if and ever in the document formalizing the cession of rights and respective obligations, it be stated by part of the transferee that his acceptance be considered to subrogation in the totality of the obligations that by virtue of this document the
EXPLORER acquires, and that after the celebration of said contract, within the following 15 (fifteen) natural days, written notice be given to the
CONCESSIONAIRE, informing of the third party’s standing who acquired the totality of the rights and obligations derived from the subscription of this instrument.

 
THIRTY SECOND. MODIFICATIONS: The terms and conditions of this present instrument can only be modified by virtue of the subscription of modifying agreements between the
PARTIES. To such agreements must be added as annex an ordinary copy of this contract, always searching for a clear interpretation of the terms and conditions the
PARTIES have agreed upon regarding this mercantile operation.
 

 THIRTY THIRD. HEADINGS:
PARTIES acknowledge that the heading of the clauses in which this contract is divided have been included only with the purpose in mind of making the reading of this document easier as thus are void of any interpretative or linking  value.

 
THIRTY FOURTH. SUBSCRIPTION OF DIFFERENT QUANTITIES: PARTIES expressly accept that this present contract may be subscribed in different quantities for each one of them, and that their consent be considered as fully granted for all legal purposes that might arise as of the date that by their own handwriting it is confirmed at the end of this document.

 

 16

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.
 

 

Likewise, they agree in the possibility that such quantities be ratified before different public brokers, even in different cities with the purpose of achieving its inscription before the competent mining authorities.

 
THIRTY FIFTH. APPLICABLE LAW: This present instrument will abide and will be interpreted in conformity with the Mining Law, its Ruling and the Federal Civil Code among other applicable and current legal disposition in the United States of Mexico.

 
THIRTY SIX. JURISDICTION: In case any controversies may arise related to the validity, intention, interpretation, execution or compliance of this contract,
PARTIES expressly agree to submit same before ht competent Courts of Law of the City of Chihuahua, State of Chihuahua, and surrendering any other jurisdiction or privilege that might correspond t them by reason of their current or future domiciles or by any other circumstance.

 

 
(THERE FOLLOWS A PAGE OF SIGNATURES AND GRANTING OF CONSENT)
 
 
 

 

BOTH PARTIES IN THE KNOWLEDGE OF THE FORCE AND LEGAL REACH OF THIS PRESENT CONTRACT, SUBSCRIBE IT IN CONFORMITY FOR ALL LEGAL EFFECTS THAT MAY ARISE, BEING TOGETHER IN THE CITY OF CHIHUAHUA, STATE OF CHIHUAHUA ON THE FIFTEENTH DAY OF THE MONTH OF JULY OF THE YEAR TWO THOUSAND AND NINE.

 

 
                 CONCESIONAIRE                                                                                           EXPLORER

 Signature 

       Signature

                /s/ Conrado Acuna Aranda                                                                              /s/ Ramiro Trevizo Ledezma

Emilio Acuña Peralta, 
 
American Copper
 
Represented in this act by
 
S. A. de C. V:
 
Conrado Acuña Aranda
 
Represented in this act 
 
by: Ramiro Trevizo
 
Ledezma
 

 

 ###

 17

Exploration and Exploitation Mining Contract and Promise of Transfer of Mining Rights subscribed between Emilio Acuña Peralta and American Copper Mining, S. A. de C. V. on the 15
th July 2009.THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED U

THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW, NEITHER THIS NOTE NOR SUCH SHARES OF COMMON STOCK NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, MORTGAGED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS, AND WITH THE TERMS AND CONDITIONS HEREOF.

TARA MINERALS CORP.

CONVERTIBLE PROMISSORY NOTE

$1,695,000

Date: June 30, 2009

TARA MINERALS CORP. (the “Company”), for value received, hereby promises to pay Tara Gold Resources Corp., or order, (the "Holder”), in legal tender of the United States of America, the principal sum of $1,695,000 on June 30, 2011 (the “Maturity Date”), and to pay interest thereon at the rate of prime plus 3.25% per year.  The prime rate will be the prime lending rate published from time to time by the Wall Street Journal.  Interest shall be computed on the basis of a 365-day year and the number of actual days elapsed.  Interest will be paid quarterly with the first interest payment due on October 15, 2009.

Section 1.  Time and Place of Payment.   This Note shall be paid at 2162 Acorn Court Wheaton, IL 60187, or such other address as may be received by the Holder in writing to the Company. 

Section 2 Prepayments.  The Company shall have the right to prepay this Note, in whole or in part, at any time upon five (5) days prior written notice to the Holder.

Section 3. Conversion.

a)

The Holder shall have the right, at its option, to convert all or any part of the principal amount of this Note, together with all accrued interest thereon in accordance with the provisions of and upon satisfaction of the conditions contained in this Note, into fully paid and non-assessable shares of the Company’s common stock as is determined by dividing (x) by that portion of the outstanding principal balance and accrued interest  under this Note as of such date that the Holder elects to convert by (y) the Conversion Price.  The initial Conversion Price is $0.20.

b)

No fractional shares of common stock shall be issued upon conversion of this Note, and in lieu thereof the number of shares of common stock to be issued upon each conversion shall be rounded up to the nearest whole number of shares of common stock.  

c)

The Holder’s conversion right set forth in this Section may be exercised at any time and from time to time but prior to payment in full of the principal and accrued interest on this Note.

d)

The Holder may exercise the right to convert all or any portion of this Note only by delivery of a properly completed conversion notice on a Business Day to the Company’s principal executive offices.  Such conversion shall be deemed to have been made immediately prior to the close of business on the Business Day of such delivery of the conversion notice (the “Conversion Date”), and the Holder shall be treated for all purposed as the record holder of the shares of common stock into which this Note is converted as of such date.

e)

As promptly as practicable after the Conversion Date, the Company as its expense shall issue and deliver to the Holder of this Note a stock certificate or certificates representing the number of shares of common stock into which this Note has been converted.

f)

Upon the full conversion of this Note the Company shall be forever released from all of its obligations and liabilities under this Note.

g)

Holder acknowledges that the shares of common stock issuable upon conversion of this note are “restricted securities,” as such term is defined under the Securities Act.  Holder agrees that Holder will not attempt to pledge, transfer, convey or otherwise dispose of such shares except in a transaction that is the subject of either: (i) an effective registration statement under the Securities Act and any applicable state securities laws; or (ii) an opinion of counsel rendered by legal counsel satisfactory to the Company, which opinion of counsel shall be satisfactory to the Company, to the effect that such registration is not required.  The Company may rely on such an opinion of Holder's counsel in making such determination.  Holder consents to the placement of a legend on the shares of common stock issuable upon the exercise of this Note stating that the shares represented by the certificate have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale thereof.  

h)

Notwithstanding anything in this Note to the contrary the Company will include the shares issuable upon the conversion of this Note in any Registration Statement which the Company files with the Securities and Exchange Commission.

i)

If prior to the Conversion Date the Company shall (i) pay a stock dividend or make a distribution to all holders of common stock shares of its common stock, (ii) subdivide its outstanding shares of common stock, or (iii) combine its outstanding shares of common stock into a smaller number of shares then the Conversion Price will be proportionately adjusted.

j)   If the common stock to be issued on conversion of this Note shall be changed into any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise, the holder of this Note shall, upon its conversion be entitled to receive, in lieu of the common stock which the Holder would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the Holder if it had exercised its rights of conversion immediately before such changes.

k)

If at any time there shall be a capital reorganization of the Company’s common stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 3) or merger of the Company into another corporation, or the sale of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger or sale, lawful provision shall be made so that the Holder of this Note will receive the number of shares of stock or other securities or property from the successor corporation resulting from such merger to which the Holder would have been entitled as a result of such capital reorganization, 

2

merger or sale if this Note had been converted immediately before such capital reorganization, merger or sale.

l)

The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, merger, dissolution, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holder of this Note against impairment.

m)

Upon the occurrence of each adjustment or readjustment pursuant to any provision hereof, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder of this Note a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. 

Section 4.  Reservation of Stock Issuable Upon Conversion.

At all times while this Note shall be convertible into shares of common stock, the Company shall reserve and keep available out of its authorized but unissued shares of common stock solely for the purpose of effecting the conversion of this Note such number of its shares of such common stock as shall from time to time be sufficient to effect the conversion of this Note in full.  In the event that the number of authorized but unissued shares of such common stock shall not be sufficient to effect the conversion of the entire outstanding principal amount of this Note, then in addition to such other remedies as shall be available to the Holder, the Company shall take such corporate action as may be necessary to increase its authorized but unissued shares of such common stock to such number of shares as shall be sufficient for such purpose.  

Section 5.  Transfer Restrictions.  This Note may not be transferred except upon satisfaction of all of the requirements of the Act and applicable state securities laws.  Without limiting the generally of the foregoing, the Holder agrees that (i) this Note and the shares issuable upon conversion have not been registered under the Act and may not be sold or transferred without registration under the Act or unless an exemption from such registration is available; (ii) the Holder has acquired this Note and will acquire the shares issuable upon conversion for its own account for investment purposes only and not with a view toward resale or distribution; (iii) stop transfer instructions may be placed with the Company’s transfer agent so as to restrict the transfer of this Note and any shares issuable upon conversion in accordance with the provisions of the Note; and (iv) each certificate representing any shares of common stock into which this Note may be converted shall be inscribed with the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS.  NEITHER SUCH SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE SOLD, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT FILED UNDER THE ACT AND SUCH LAWS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION.

3

Section 6.  Default.  At the option of the Holder, this Note shall become immediately due and payable, without notice, presentment, or demand, upon the occurrence at any time of any of the following events of default:

a.

Failure to pay when due any payment of principal or interest due hereunder, and such default continues for a period of ten (10) days after written notice to the Company;

b.

The failure to deliver to the Holder shares of common stock which are due the Holder with three business days of conversion.

c.

The failure to comply with the registration statement requirements of Section 3.h.

d.

The liquidation or dissolution of the Company;

e.

The making of an assignment for the benefit of creditors by the Company, or the appointment of a receiver for all or substantially all of the Company’s property or the filing by the Company of a petition in bankruptcy or other similar proceeding under law for the relief of debtors; or

f.

The filing against the Company of a petition in bankruptcy or other similar proceeding under law for relief of debtors, and such petition is not vacated or discharged within sixty (60) calendar days after the filing thereof.

If this Note is not paid when due, whether at maturity or by acceleration, the Holder will be entitled to all costs of collection, including, without limitation, reasonable attorneys’ fees, and all expenses in connection with the protection of or realization on the collateral securing this Note incurred by the Holder, whether or not suit is filed.

Section 7.  Loss of Note.  Upon receipt by the Company of evidence reasonably satisfactory to its of the loss, theft, destruction or mutilation of this Note, and in case of loss, theft or destruction) of indemnification in form and substance acceptable to the Company in its reasonable discretion, and upon surrender and cancellation of this Note, if mutilated, the Company shall execute and deliver a new Note of like tenor and date.

Section 8.  Entire Agreement.  This Note represents the entire agreement and understanding between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, representations and warranties with respect thereto.

Section 9.  Binding Effect; No Third Party Beneficiaries.  All provisions of this Note shall be binding upon and inure to the benefit of the parties and their respective heirs, legatees, executors, administrators, legal representatives, successors, and permitted transferees and assigns.  No persons other than the Holder and the Company shall have any legal or equitable right, remedy or claim under, or in respect of, this Note.

4

Section 10.

Amendments and Waivers.

This Note may be amended, changed or modified only by a written instrument executed by the Company and the Holder of this Note.  Any waiver of any breach of any of the terms of this Note, and any consent required or permitted to be given hereunder, shall be effective if in writing and executed by or on behalf of the Holder of this Note.  No waiver of any breach nor consent to any transaction shall be deemed a waiver of or consent to any other or subsequent breach or transaction.

Section 11.

Waiver of Presentment, etc.

  The Company hereby waives presentment for payment, demand, notice of non-payment, protest and notice of protest, and hereby agrees to all extensions and renewals of this Note, without notice.

Section 12.

Governing Law.

This Note shall be governed by and construed in accordance with the laws of Nevada applicable to agreements and instruments made and wholly performed and paid in that state, without regard to its conflicts of law principles.

Section 13.

Headings.

The headings used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.

IN WITNESS WHEREOF, the Company has caused this Note to be signed and attested to by its duly authorized officers.

 TARA MINERALS CORP.

By: /s/ Francis Richard Biscan

Name: Francis Richard Biscan, Jr.

Title:  President

5

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