ROYALTY ASSIGNMENT AND AGREEMENT, GRANT OF SECURITY INTEREST AND FINANCING STATEMENT

Exhibit 10.4

ROYALTY ASSIGNMENT AND AGREEMENT,

GRANT OF SECURITY INTEREST

AND FINANCING STATEMENT

THIS ROYALTY ASSIGNMENT AND AGREEMENT (“Agreement”), is made and entered into effective as of May 27, 2009, by and among

HIDDEN SPLENDOR RESOURCES, INC., a Nevada corporation (“Grantor”), and

JOHN THOMAS BRIDGE AND OPPORTUNITY FUND, L.P., a Delaware limited partnership (the “Fund”), DENLY UTAH COAL, LLC, a Texas limited liability company (“Denly”), THOMAS MURCH (“Murch”), JAMES J. MOORE (“Moore”), and JOHN MEEKS (“Meeks”) (collectively the “Grantees”).

RECITALS

A.

Grantor is the owner of certain mineral leasehold interests in lands more particularly described in Exhibit A attached to the Agreement (the “Leased Property”) as well as a fee title interest in real property (the “Owned Property”) more particularly described on Exhibit B to this Agreement.

B.

The Leased Property and the Owned Property are referred to in this Agreement, collectively, as the “Subject Lands”.

C.

Grantor is a wholly owned subsidiary of America West Resources, Inc.  America West Services, Inc., a Nevada corporation, is also a wholly owned subsidiary of America West Resources, Inc.  On the date hereof, Grantees have purchased certain notes dated as of the date hereof issued by America West Services, Inc. in the original principal amount of $2,300,000 (such notes, together with any promissory notes or other securities issued in exchange or substitution therefor or in addition or replacement thereof, and as any of the same may be amended, restated, modified or supplemented and in effect from time to time, being herein referred to individually and collectively as the “Notes”), pursuant to a $3,800,000 debt financing, consisting of a first tranche of $2,300,000 and a second tranche of $1,500,000 (the “Financing”).  The Financing is to be used in part to finance the purchase of certain equipment for use on the Subject Lands.

D.

Contemporaneously with the Financing, Grantees have agreed to purchase from Grantor, and Grantor has agreed to sell to Grantees, an overriding royalty interest on all coal mined, removed and sold from the Subject Lands, for $50,000.00, paid as follows:  by Denly, $25,000.00, by the Fund, $17,500.00, by Murch, $3,000.00, by Moore, $2,500.00, and by Meeks, $2,000.00.

E.

By the terms of this Agreement, Grantor desires to transfer and convey the overriding royalty to Grantees, and the parties seek to define the terms of the overriding royalty interest and the method of payment of said interest.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Grantor and Grantees covenant and agree as follows:

1.

Royalty .  For the sum of $50,000.00, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby assigns, grants, and conveys to Grantees an overriding royalty interest on all coal mined, removed, and sold from the Subject Lands, in the production periods and in the amounts as follows, on the terms and subject to the conditions herein specified:

(1)  If the second tranche of the Financing is not closed within twenty-four (24) months from the date hereof resulting in Grantor receiving gross proceeds of an aggregate of $1,300,000, then thereafter the royalty in item 3 of the table above shall be reduced to $1.25 per ton of coal.  In such event, Denly will be entitled to receive $0.625 per ton of coal, the Fund will be entitled to receive $0.4375 per ton of coal, Murch will be entitled to receive $0.075 per ton of coal, Moore will be entitled to receive $0.0625 per ton of coal, and Meeks will be entitled to receive $0.05 per ton of coal.  If, however, Grantor adds any new roof bolters, continuous miners, shuttle cars, man trips, long wall miners, or feeder breakers (collectively “New Equipment”) to the Subject Lands within sixty (60) months from the date hereof, then there shall be no adjustment as set forth in the preceding sentence, and if such adjustment has already occurred, the royalty will be readjusted to $2.00 per ton of coal mined, effective as of the date the New Equipment was first delivered to the Subject Lands.

(2)  The royalty interest herein granted shall terminate on August 20, 2016.  However, if during any calendar month beginning September 1, 2009, less than 15,000 tons of coal are sold from the Subject Lands, then for each such month one month shall be added to the term of the royalty herein granted.  The royalties payable for the period after May 20, 2010 in the above table (as such royalties may be modified by item (1) above) shall apply to the coal sold during each such month for which the term is extended.  

Grantor warrants and represents that its conveyance of the above-described overriding royalty interest does not violate the terms of any lease agreement covering the Subject Lands; subject to the Code of Federal Regulations.

2

2.

Payment . Royalty payments shall be paid not later than fifteen (15) days after the last day of the calendar month with respect to sales proceeds received by Grantor on all coal sold from the Subject Lands during for the previous month, beginning with coal sold on or after August 20, 2009 (whether or not such coal was mined before or after August 20, 2009).  Payment shall be calculated based on the number of tons sold in an arms-length transaction to a buyer not affiliated with Grantor or Grantor's parent America West Resources, Inc., using the measure of tons upon which such sale is made.  

3.

Escrow of Royalty Payments .  

(a)

Grantor is a Debtor in Case No. BK-N-07-51378-gwz in the U.S. Bankruptcy Court for the District of Nevada, styled In re: Hidden Splendor Resources, Inc. and Mid-State Services, Inc .  By its order entered on December 8, 2008, that court confirmed a Joint Consolidated Plan of Reorganization (the "Plan").  Grantees hereby acknowledge and understand that (i) until such time as Grantor has satisfied all of its payment obligations under the Plan, all royalty payments due hereunder must be placed in an escrow account, and (ii) Zions First National Bank (“Zions”) has a first lien security interest in all proceeds from the coal mined and sold from the Subject Lands as set forth in the Plan.

(b)

Within thirty (30) days from the date of this Agreement, Grantor shall establish a bank account at Wells Fargo Bank, National Association for the benefit of the Grantees (“Overriding Royalty Account”).  Grantor shall make all payments of the royalties due pursuant to this Agreement by wire transfer of funds to the Overriding Royalty Account, or by such other method mutually agreed upon by the parties in writing.  Grantor further agrees to execute and deliver such instruments and documents and take such action as Grantees may reasonably request for the purpose of granting to Grantees a security interest in the Overriding Royalty Account, including, without limitation, the execution of a deposit account control agreement.  Grantees hereby acknowledge and understand that any security interest granted to Grantees in the Overriding Royalty Account will be subordinate to Zions' existing security interest to secure the Zions Debt, and Grantees agree to sign a commercially reasonably subordination agreement reflecting the priority of Zions' security interest.

(c)

Grantees further acknowledge and understand that, until Grantor's obligations under the Plan are satisfied, neither Grantor or Grantee may