LOAN AGREEMENT

THIS LOAN AGREEMENT is dated and effective on and as of October 9, 2008, by and among Denly ACI Partners, Ltd. , a Texas limited partnership (the " Partnership "), and Dennis C. von Waaden, and Sally A. von Waaden, as Co-Trustees ofThe von Waaden 2004 Revocable Trust (the " Trust "), and America West Resources, Inc. , a Nevada corporation (the " Borrower ").  The Partnership and the Trust are hereinafter collectively referred to as the " Lenders ").

The Borrower has requested loans from the Lenders up to the aggregate principal amount of $2,800,000.00.  The Lenders are willing to make the loans to the Borrower in reliance upon, and subject to, the representations, warranties, terms and conditions of this Agreement.

For and in consideration of the mutual covenants and agreements herein contained, the Lenders and the Borrower have agreed and do hereby agree as follows:

1.1   Certain Definitions :  As used in this Loan Agreement:

" Advance " shall mean an advance of proceeds of the Loans.

" Affiliate " shall mean with respect to any Person (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary 10% or more of the securities or interests having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person and (iii) each of such Person's officers, directors, joint venturers and partners.  For the purpose of this definition "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.  Anything herein to the contrary notwithstanding, in no event shall either of the Lenders be considered an "Affiliate" of the Borrower.

" Agreement " shall mean this Loan Agreement, as the same may be modified, amended, restated or replaced from time to time.

" Bankruptcy Code " shall mean Title 11, United States Code, 11 U.S.C. 101 et seq., as the same may be amended and in force and effect from time to time, or any successor law.

" Borrower " shall mean America West Resources, Inc., a Nevada corporation, its successors and assigns.

" Bridge Shares " shall mean the Capital Stock of the Borrower to be issued to the Lenders pursuant to the provisions of the Stock Purchase Agreement.

" C&P " shall mean C&P Coal Associates, LLC, a Utah limited liability company, and its successors and assigns as the "Lessor" under the Columbia Mine Lease.

" Capital Stock " shall mean, as to any Person, the equity interests in such Person, including, without limitation, the shares of each class of capital stock of any Person that is a corporation, membership interests in any Person that is a limited liability company and partnership and joint venture interests (general and limited) in any Person that is a partnership or joint venture.

" Code " shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations thereof or thereunder by the Internal Revenue Service.

" Collateral " shall mean the security for payment of the Indebtedness and performance of the Obligations as contemplated by, and referred to in, Section 4.8 of this Agreement.

" Collateral Documents " shall mean all security agreements, guaranties, collateral assignments, pledge agreements, deeds of trust, mortgages and lien instruments executed by the Borrower or others to secure, guarantee or otherwise provide for payment of the Indebtedness or performance of the Obligations, in favor of or for the benefit of the Lenders, including those which have been previously executed or are executed concurrently herewith or subsequently hereto.

" Columbia Mine " shall mean the coal mine that is the subject of the Columbia Mine Lease.

" Columbia Mine Lease " shall mean that certain Coal Mining Lease and Option to Purchase dated July 2, 2008 between C&P, as Lessor, and the Borrower as the lessee relating to that certain coal mine located in Carbon County, Utah and commonly referred to as the "Columbia Mine."

" Committed Amount " shall mean, as to the Partnership, the principal amount of $1,866,666.66 and, as to the Trust, the principal amount of $933,333.33.

" Compliance Certificate " shall mean a certificate substantially in the form of Exhibit A attached and to be executed and delivered from time to time as required by the provisions of Section 4.1(d) hereof and to be signed by an appropriate officer of the Borrower demonstrating, in reasonable detail, compliance with the covenants set forth in Section  4.1(d) , and containing a statement whether to the knowledge of such officer an Event of Default or Default has occurred hereunder and, if so, whether it is continuing and specifying the steps that are being taken by the Borrower to cure the same.

" Confirmation Order " shall mean an order signed and entered of record which approves a plan of organization in the case of in re: Hidden Splendor Resources, Inc., Case No. BI-N-07-51378-gwz, United States Bankruptcy Court, District of Nevada.

" Contingent Liability " shall mean, as to any Person, any Guaranty, and any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or obligation of any other Person in any manner, whether directly or indirectly, including without limitation any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt, (b) to purchase Property or services for the purpose of assuring the owner of such Debt of its payment, or (c) to maintain the solvency, working capital, equity, cash flow, fixed charge or other coverage ratio, or any other financial condition of the primary obligor so as to enable the primary obligor to pay any Debt or to comply with any agreement relating to any Debt or obligation.

" Credit Limit " shall mean the principal amount of $2,800,000.00, being the aggregate Committed Amount of each of the Lenders.

" Debt " shall mean, as to any Person, all indebtedness as determined in accordance with GAAP and, in any event, shall include (a) all indebtedness secured by any lien upon Property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness and (b) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person, even though the rights and remedies of the seller or Lenders under such agreement in the event of default are limited to repossession or sale of such Property and (c) all capitalized lease obligations.  For all purposes of this Agreement, the Debt of any Person shall include all recourse Debt of any partnership and joint venture in which such Person is a general partner or a joint venturer.

" Default " shall mean any occurrence which, but for the passage of time or giving of notice or both, or the happening of any further condition, event or act, would be an Event of Default.

" Default Rate " shall mean a rate of interest equal to twenty (20%) per annum.

" Dividend " shall mean, as to any Person, (a) any declaration or payment of any dividend on, or the setting aside or the creation of a sinking fund with respect to, or the making of any pro rata distribution, loan, advance or investment to or in any holder (in its capacity as a holder) of, any Capital Stock of such Person (other than a dividend in, or distribution of, Capital Stock of the same class and series or the right to acquire Capital Stock of the same class and series), or (b) any purchase, redemption or other acquisition or retirement for value of any Capital Stock of such Person, or the setting aside of funds or the creation of a sinking fund with respect thereto.

" Environmental Laws " shall mean any and all present and future federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.

" Escrow Agent " shall mean the Person named as Escrow Agent in the Escrow Agreement.

" Escrow Agreement " shall mean the escrow agreement described in Section 4.6 hereof.

" Escrow Funds " shall mean the "Escrow Property" as that term is defined in the Escrow Agreement.

" Escrow Closing Date " shall mean the date of this Agreement or such later date as may be agreed to in writing by the Lenders.

" Event of Default " shall mean any of the events specified or referred to in Section 7.1 of this Agreement with respect to which any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, has been satisfied.

" Final Closing Date " shall mean the date that a Confirmation Order becomes a Final Confirmation Order, but no earlier than fifteen (15) days after the entry of the Confirmation Order and no later than December 5, 2008.

" Final Confirmation Order " shall mean a Confirmation Order with respect to which there is no pending motion for reconsideration, rehearing or the like, and no pending appeal, and the time for filing any such motion or appeal has expired.

" GAAP " shall mean, as to a particular Person and subject to the provisions of Section  1.2 , such accounting practice as, in the opinion of the independent accountants of recognized standing regularly retained by such Person and acceptable to the Lenders, conforms at the time to generally accepted accounting principles, consistently applied.  Generally accepted accounting principles means those principles and practices (a) which are recognized as such by the Financial Accounting Standards Board, (b) which are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the most recent audited financial statements of the Person furnished to the Lenders, and (c) which are consistently applied for all periods after the date hereof so as to reflect properly the financial condition, and results of operations and changes in financial position, of such Person.

" Governmental Authority " shall mean any governmental authority, including that of the United States of America, any State of the United States, any foreign country, and any political subdivision of any of the foregoing, and any domestic or foreign agency, department, commission, board, bureau or court having jurisdiction over the Borrower or the Columbia Mine.

" Governmental Permits" shall mean all certificates, licenses, permits and no action letters from any Governmental Authority required to evidence full compliance by the Borrower and its Subsidiaries and conformance of their respective Properties with all Legal Requirements applicable to the Borrower and its Subsidiaries and the development, management and operation of their respective Properties, including without limitation the Columbia Mine.

" Guaranty " shall mean, as to a Person, any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor or such other Person against loss, including, without limitation, any agreement which assures any creditor or such other Person payment or performance of any obligation, or any take-or-pay contract and shall include without limitation, the contingent liability of such Person in connection with any application for a letter of credit (without duplication of any amount already included in Debt).

" Hazardous Material " shall mean, collectively, (a) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, insulation, transformers or other equipment that in each case contains dielectric fluid containing polychlorinated biphenyls, (b) any chemicals or other material or substances which are now or hereafter become defined as or included in the definition of "hazardous substances", "hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", recontaminants", "pollutants" or words of similar import under any Environmental Laws and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Laws.

" herein ," " hereof ," " hereto ," " hereunder " and similar terms, shall refer to this Agreement and not to any particular section or provision of this Agreement.

" Hidden Splendor " shall mean Hidden Splendor Resources, Inc., a Nevada corporation, and wholly owned Subsidiary of the Borrower.

" Impermissible Qualification " shall mean, relative to the opinion or certification of any independent public accountant as to any financial statement of any Person, any qualification or exception to such opinion or certification (a) which is of a "going concern" or similar nature; (b) which relates to the limited scope of examination or matters relevant to such financial statement not in accordance with GAAP; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause a Default or Event of Default.

" Indebtedness " shall mean all sums at any time and from time to time owed by the Borrower to the Lenders under this Agreement, including principal and interest on the Notes, and any and all other indebtedness now or hereafter to become owing pursuant to any of the other Loan Documents.

" Indemnified Matters " shall have the meaning given such term in Section 4.13(a) .

" Indemnitees " shall have the meaning given such term in Section 4.13(a) .

" Legal Requirement " shall mean any law, statute, ordinance, decree, requirement, order, judgment, rule, or regulation (or interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including (without limitation) any order, writ, injunction, award or decree of any court, arbitrator, administrative agency or other Governmental Authority.

" Lenders " shall mean, collectively, the Partnership and the Trust, and their respective successors and assigns.

" Liabilities " shall mean all Debt and other items of indebtedness or liability (except capital and surplus, but including reserves other than those deducted in determining Tangible Assets) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet.

" Liens " shall mean any mortgage, pledge, security interest, encumbrance, lien, or charge of any kind, including without limitation any agreement to give or not to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or other similar form of public notice under the laws of any jurisdiction (except for the filing of a financing statement or notice in connection with an operating lease).

" Litigation " shall mean any proceeding, claim, lawsuit, arbitration, and investigation conducted or threatened by or before any Governmental Authority, including without limitation proceedings, claims, lawsuits, and investigations under or pursuant to any environmental, occupational, safety and health, antitrust, unfair competition, securities, tax, or other law, or under or pursuant to any contract, agreement, or other instrument.

" Loan Documents " shall mean this Agreement, the Notes, the Collateral Documents, the Escrow Agreement, the Subordination Agreements, the Tri-Party Agreement and all other documents, financing statements, agreements, and certificates executed and delivered by any Person in connection with any thereof.  Anything herein to the contrary notwithstanding, the Stock Purchase Agreement is not, and shall not be deemed to be, a Loan Document.

" Loans " shall mean the loans referred to in Section 2.1 of this Agreement.

" Material Adverse Change " shall mean any circumstance or event that (a) can reasonably be expected to cause a Default or Event of Default, (b) otherwise can reasonably be expected to (i) be material and adverse to the continued operation of the Borrower and its Subsidiaries taken as a whole, or (ii) be material and adverse to the financial condition, business operations, prospects or Properties of the Borrower and its Subsidiaries taken as a whole, or (c) in any manner whatsoever does or can reasonably be expected to materially and adversely affect the validity or enforceability of any of the Loan Documents.

" Maturity Date " shall mean October 9, 2009.

" Maximum Lawful Amount " shall mean the maximum amount of non-usurious interest, and " Maximum Lawful Rate " shall mean the maximum rate of non-usurious interest, permitted with respect to the indebtedness evidenced by the Notes from time to time by applicable law after taking into account any and all fees, payments, and other charges that constitute interest under applicable law.  Use of the term Maximum Lawful Amount shall not be deemed to imply or affirm that there is any Maximum Lawful Amount applicable to the Notes.

" Notes " shall mean the promissory notes evidencing the Loans and delivered or to be delivered to the Lenders by the Borrower pursuant to this Agreement, together with any and all renewals, extensions, modifications and rearrangements thereof.

" Obligations " shall mean any and all of the covenants, conditions, warranties, representations and other obligations (other than to repay the Indebtedness) made or undertaken by the Borrower as set forth in this Agreement, the Notes and any other Loan Documents.

" Operating Agreement " shall mean one or more agreements executed by the Borrower prior hereto, contemporaneously herewith or at any time hereafter and pursuant to which the Borrower contracts with another Person for any or all of the development, management or operation of the Columbia Mine.

" Permitted Liens " shall mean:

(a)            Liens on Property of the Borrower existing on the Escrow Closing Date, provided that such Liens shall secure only those obligations which they secure on the Escrow Closing Date;

(b)            any Lien existing on any Property of the Borrower prior to the acquisition thereof by the Borrower, provided that: (i) such Lien is not created in contemplation of or in connection with such acquisition, and (ii) such Lien does not apply to any other Property of the Borrower;

(c)            Liens for Taxes to the extent nonpayment thereof shall be permitted by Section  3.6 hereof;

(d)            Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens arising in the ordinary course of business and securing obligations that are not due and payable;

(e)            Deposits to secure the performance of bids, trade contracts (other than for indebtedness), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(f)            Zoning restrictions, easements, licenses, covenants, conditions, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business and minor irregularities of title that, in the aggregate, are not substantial in amount and do not materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Borrower;

(g)            Purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Borrower, provided that (i) such Liens secure Debt permitted by the terms of this Agreement, (ii) such Liens are incurred, and the Debt secured thereby is created, within 90 days after such acquisition (or construction), (iii) the Debt secured thereby does not exceed 85% of the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction), and (iv)such Liens do not apply to any other Property of the Borrower;

(h)            Liens arising out of judgments or awards (other than any judgment that constitutes an Event of Default hereunder) in respect of which the Borrower shall in good faith be prosecuting an appeal or proceedings for review and in respect of which it shall have secured a subsisting stay of execution pending such appeal or proceedings for review, provided the Borrower shall have set aside on its books adequate reserves with respect to such judgment or award;

(i)            Deposits, liens or pledges to secure payments of workmen’s compensation and other payments, public liability, unemployment and other insurance, old-age pensions or other social security obligations, or the performance of bids, tenders, leases, contracts (other than contracts for the payment of money), public or statutory obligations, surety, stay or appeal bonds, or other similar obligations arising in the ordinary course of business;

(j)            Deposits, Liens or pledges made in connection with any equipment leasing, provided that (i) such Liens secure Debt permitted by the terms of this Agreement, (ii) the Debt secured thereby does not exceed 85% of the lesser of the cost or the fair market value of the equipment being lease at the time such lease is entered into, and (iii)such Liens do not apply to any Property of the Borrower other than the equipment being leased; and

(g)            Liens securing the payment of the Indebtedness and performance of the Obligations.

" Person " shall mean any individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated association, Governmental Authority or any other form of entity.

" Proper Form " shall mean such form as is satisfactory in form and substance to the Lenders and legal counsel for the Lenders.

" Property " shall mean all types of real, personal, tangible, intangible, or mixed property, whether owned in fee simple or leased.  The term "Property" shall include, but shall not be limited to, the Columbia Mine Lease and the Columbia Mine, together with all rights appurtenant to each thereof.

" Related Party Debt " shall mean Debt owing by the Borrower to related parties described on Schedule 1.1 attached.

" Restricted Payments " shall mean any Dividend or any direct or indirect distribution, dividend or other payment on account of any general or limited partnership interest in (or the setting aside of funds for, or the establishment of a sinking fund or analogous fund with respect to), or shares of Capital Stock or other securities of, the Borrower or any Subsidiary.

" Restricted Purchases " shall mean any payments (or the setting aside of funds for, or the establishment of a sinking fund with respect to) on account of the purchase, redemption or other acquisition or retirement of any general or limited partnership interest in, or shares of Capital Stock or other securities of, the Borrower or any of its Subsidiaries.

" SEC " shall mean the United States Securities and Exchange Commission.

" Securities Act " shall mean the United States Securities Act of 1933, as amended.

" Stock Purchase Agreement " shall mean that certain Common Stock Purchase Agreement of even date herewith among the Borrower and the Lenders, as the same may be modified or amended.

" Subordination Agreements " shall mean subordination agreements in Proper Form among the Borrower, the Lenders and the holders of the Related Party Debt pursuant to which the payment of the Related Party Debt is subordinated to the payment of the Indebtedness and performance of the Obligations.

" Taxes " shall mean all taxes, assessments, imposts, fees, and other charges at any time imposed by any laws or Governmental Authority.

" Tri-Party Agreement " shall mean an agreement among the Borrower, the Lenders and C&P (together with the mortgagee of the Columbia Coal Mine, if any), in Proper Form, and pursuant to which C&P (and its mortgagee, if any) agree, among other things, (i) to give the Lenders notice of any default under the Columbia Mine Lease and a reasonable opportunity to cure the same, (ii) not to terminate the Columbia Mine Lease because of an uncurable default, such as a bankruptcy proceeding or failure to comply with applicable laws) so long as the Lenders cause all monetary obligations to be satisfied and are proceeding in good faith to foreclose their Liens upon the Columbia Mine Lease, (iii) to recognize the Lenders or their nominee or assigns as the lessee under the Columbia Mine Lease upon the foreclosure or assignment thereof to the Lenders, their nominee or assigns, (iv) that the interests of the Borrower and the Lenders will not be disturbed so long as the lease obligations are performed, subject to the Lenders' right to maintain the Columbia Mine Lease without curing uncurable defaults as provided herein, and (v) that the Liens of such mortgagee, if any, upon the Columbia Mine or Columbia Mine Lease, or both, will be released upon the closing of the option to purchase set forth in the Columbia Mine Lease.

1.2   Other Documents; Accounting Terms .  All terms defined in this Agreement shall be used with such defined meanings when used in any note, certificate, schedule, report or other document made or delivered pursuant to this Agreement, unless specifically required otherwise.  Each accounting term not specifically defined herein shall have the meaning given in accordance with GAAP and, when applied to a Person, shall mean such Person and its Subsidiaries on a consolidated basis, unless otherwise expressly stated.  If any change in any accounting principle or practice is required by the Financial Accounting Standards Board in order for such principle or practice to continue as a generally accepted accounting principal or practice and such change results in a change in the method or calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Lenders agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such change with the desired result being that the criteria for evaluating the Borrower's financial condition shall be the same after such change as if such change had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower and the Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated as if such change had not occurred.

1.3   Use of Pronouns .  Terms defined or used in the singular shall include the plural, and those in the plural shall include the singular, unless the context shall otherwise require, and the use of masculine, feminine and neuter pronouns shall include each gender as the context may require.

1.4   Amendments, Etc .  Unless the context otherwise requires or unless otherwise provided, the terms defined in Section 1.1 hereof which mean or refer to a particular agreement, instrument or document shall also mean, refer to and include when appropriate all amendments, renewals, extensions, substitutions and modifications of such agreement, instrument or document, provided that nothing contained in this Section  1.4 shall be construed to authorize the execution or entering into by any Person of any such renewal, extension or modification except as may be permitted by other provisions of this Agreement.

2.1   Term Loans .

(a)   Upon and subject to the terms and conditions of this Agreement, each Lender agrees to advance a loan to the Borrower in a single advance equal to the respective Lender's Committed Amount for the purpose specified in Section  2.2 of this Agreement.

(b)   The obligation of the Borrower to repay the Loans shall be evidenced by its 17% Secured Promissory Notes, in Proper Form, and payable to the order of the Lenders.  Except as otherwise provided herein and in the Notes, the outstanding principal balance of each Promissory Note shall bear interest at a rate equal to seventeen percent (17%) per annum with all principal and interest outstanding under such Promissory Note being due and payable in full on the Maturity Date.  While any Event of Default exists and also following any acceleration of the maturity of the Indebtedness, the Borrower shall pay interest (after as well as before the entry of any judgment thereon to the extent permitted by law) on all outstanding Indebtedness at a rate equal to the Default Rate.

2.2   Use of Proceeds .  The proceeds of the Loans shall be used solely as follows:

(a)   On the Escrow Closing Date, subject to the provisions of Section 6.1 hereof, $2,250,000.00 of the proceeds of the Loans shall be deposited with the Escrow Agent to be held in escrow in accordance with the terms of the Escrow Agreement.  The balance of the proceeds will be deposited to the Escrow Agent at the Final Closing Date, subject to the provisions of Section 6.2 hereof.

(b)   On the Final Closing Date, if all conditions to the final closing of the Loans as set forth in Section 6.2 hereof have been satisfied and remain satisfied and the Lenders have not previously instructed the Escrow Agent to deliver the Escrow Funds to the Lenders pursuant to Section 7.2(e) hereof, then the Escrow Funds shall be distributed by the Escrow Agent (and the Borrower and the Lenders shall so instruct the Escrow Agent) in accordance with the terms of the Escrow Agreement, as follows:

(i)   $2,250,000 shall be distributed to Hidden Splendor, debtor in possession, to pay off obligations of Hidden Splendor pursuant to Hidden Splendor’s Plan of Reorganization as confirmed by a Final Confirmation Order;

(ii)   upon Hidden Splendor’s emergence from bankruptcy, (a) $300,000 shall be distributed by the Escrow Agent as commissions to Riverstone Wealth Management; and

(iii)   the remaining funds shall be distributed by the Escrow Agent to pay the Borrower’s obligations under the Columbia Mine Lease.

(c)   On the Final Closing Date, if all conditions to the final closing of the Loans as set forth in Section 6.2 hereof have not been satisfied or the Lenders have not previously instructed the Escrow Agent to deliver the Escrow Funds to the Lenders pursuant to Section 7.2(e) hereof, then the Escrow Funds shall be distributed by the Escrow Agent to the Lenders in accordance with the terms of the Escrow Agreement.

(d)   None of the Proceeds shall be used for personal, household or agricultural purposes.

2.3   Interest Accrual .  Interest on the Notes shall be calculated at a daily rate based on a year of 360 days, with the daily rate so determined being applied for the actual number of days elapsed, provided that in no event shall the amount of interest payable hereunder exceed the Maximum Lawful Amount.

2.4   Default Interest .  During the continuation of (a) any Default or (b) any Event of Default, the Borrower shall pay, on demand, at the Lenders' option, interest on the principal amount of the Loans outstanding and on all other Obligations due and unpaid hereunder or under any other Loan Document at a per annum rate equal to the Default Rate.  Following the maturity of the Loans, whether by acceleration or otherwise, the Borrower shall pay, on demand, at the Lenders' option, interest (after as well as before judgment to the extent permitted by applicable law) on the principal amount of the Loans outstanding and on all other Obligations due and unpaid hereunder or under any other Loan Document at a per annum rate equal to the Maximum Lawful Rate.

2.5   Accounts Stated .  All statements of account rendered by the Lenders to the Borrower relating to any Obligation or Indebtedness, including without limitation all statements of principal, interest, expenses and costs owing by the Borrower to the Lenders, shall be presumed correct and accurate and shall constitute an account stated between the Borrower and the Lenders unless, within thirty (30) days after receipt thereof by the Borrower, the Borrower shall deliver to the Lenders written objection thereto, specifying the error or errors, if any, contained in such statement.

The Borrower represents and warrants to the Lenders that:

3.1   Authority, Etc. . The Borrower and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.  The Borrower has full legal right, power and authority to carry on its business as presently conducted and to execute, deliver, and perform its obligations under the Loan Documents, and all necessary corporate action has been taken (including any necessary shareholder approvals) for the execution, delivery and performance of its obligations under this Agreement, the Notes and the other Loan Documents to which the Borrower is a party and the performance by the Borrower of its obligations hereunder and thereunder and each thereof is the valid and binding obligation of the Borrower, enforceable in accordance with its respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and principles of equity. All outstanding Capital Stock of the Borrower and each of its Subsidiaries is validly issued and fully paid and nonassessable.  The Borrower and each of its Subsidiaries is duly qualified to do business in and is in good standing in each jurisdiction in which the nature of the business it conducts makes such qualification necessary.

3.2   Financial Condition .  The financial statements of the Borrower which are on file with the SEC as of the Escrow Closing Date are true, complete and correct, have been prepared in accordance with GAAP, and fully and accurately reflect the financial condition of the Borrower, as of the dates and for the periods stated.  No Material Adverse Change has occurred in the condition, financial or otherwise, of the Borrower since the date of the most recent thereof.  

3.3   Debt, Liens, Liabilities .  The Borrower and its Subsidiaries have no outstanding Debt, Liens, or Contingent Liabilities except as shown on its financial statements on file with the SEC as of the Escrow Closing Date.  Except for Liabilities incurred in the normal course of business and not material in amount (either individually or in the aggregate), the Borrower and its Subsidiaries have no liabilities, direct or contingent, that have arisen or been incurred or accrued subsequent to the date of the most recent thereof.

3.4   No Default .  As of the Escrow Closing Date, no Event of Default nor Default exists and neither the Borrower nor any of its Subsidiaries is in default in any respect under any Legal Requirement binding upon or affecting the Borrower or any of its Subsidiaries or by which any of the Properties of the Borrower or any of its Subsidiaries may be bound or affected, or under any agreement or other undertaking or instrument to which the Borrower or any of its Subsidiaries is a party or by which it is bound, and nothing has occurred which would adversely affect in any material respect the ability of the Borrower or its Subsidiaries to carry on their respective businesses or perform their respective obligations under any Legal Requirement or other undertaking or agreement.  The execution and delivery of this Agreement, the Notes and the other Loan Documents by the Borrower, and the performance of the obligations and consummation of the transactions contemplated herein and therein do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, (i) the articles of incorporation or bylaws of the Borrower or (ii) any bond, debenture, note or other evidence of indebtedness or (iii) any contract, indenture, mortgage, loan agreement, lease, joint venture or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its Properties are bound, or result in any violation by the Borrower of any Legal Requirement.  Neither the Borrower nor any of is Subsidiaries is in violation of, and the execution, delivery and performance by the Borrower of the Loan Documents will not result in violation of, any Legal Requirement to which it or any of its Subsidiaries may be subject.

3.5   Governmental Permits .  To the best of the Borrower's knowledge, no claim has been asserted by any Person with respect to the use of any of the Borrower's or any of its Subsidiaries' Governmental Permits.  The Borrower knows of no impediments to the granting to the Borrower and its Subsidiaries, as the case may be, of any  future Governmental Permits and expects to receive the same at such time as required for the Borrower or its Subsidiaries, as the case may be, to carry on their respective businesses as presently conducted and as proposed to be conducted.

3.6   Taxes .  The Borrower and its Subsidiaries (except as provided for in connection with Hidden Splendor's Plan of Reorganization as confirmed by a Final Confirmation Order) have filed all federal, state and other tax returns that are required to be filed by any of them.  The Borrower and its Subsidiaries have paid all Taxes as shown on any such returns, as well as all other Taxes, to the extent due and payable by any of them.  All liabilities for Taxes of the Borrower and its Subsidiaries are adequately provided for on their books, including interest and penalties, and adequate reserves have been established therefor in accordance with GAAP.  No liability for income Taxes, state or federal, has been asserted by taxing authorities for Taxes in excess of those already paid and no taxing authority has notified the Borrower or any of its Subsidiaries of any deficiency in any tax return.

3.7   Columbia Mine Lease .  The Borrower has delivered to the Lenders true, correct and complete copies of the Columbia Mine Lease and all documents and instruments representing and describing its coal reserves, the value thereof and the title thereto which are in the Borrower's possession or otherwise known by the Borrower to exist.  The Columbia Mine Lease is valid and subsisting with no default existing and, to the best of the knowledge of the Borrower, no default threatened.  The Borrower has good and indefeasible leasehold title to the Columbia Mine pursuant to the Columbia Mine Lease, subject to no Liens other than Permitted Liens.  The Columbia Mine Lease contains no provision which materially adversely affects the Borrower's ability to develop, manage and operate the Columbia Mine.  To the best of the Borrower's knowledge, C&P owns good and indefeasible title to the Columbia Mine free and clear of all Liens other than the Columbia Mine Lease and Permitted Liens.  As of the Escrow Closing Date, there are no Operating Agreements.

3.8   Material Agreements .  There are no material agreements entered into by or affecting the development, management and operation of the Columbia Mine, other than the Columbia Mine Lease.  

3.9   No Consents Necessary .  No consent or approval of any third party, including, without limitation, any Governmental Authority, is required in connection with the execution, delivery or performance by the Borrower of this Loan Agreement, the Notes or any other Loan Document.

3.10   No Environmental Hazard .  The Borrower and its Subsidiaries are in compliance with all Environmental Laws applicable to them and the development, management and operation of their respective Properties including, without limitation, the Columbia Mine, and there is not now pending, nor, to the best knowl