10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the quarterly period ended March 31, 2002.
	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the transition period from                 to                 .

Commission File Number: 0-497

Lipid Sciences, Inc.
(Exact name of registrant as specified in its charter)

Arizona	43-0433090
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
7068 Koll Center Parkway, Suite 401,
Pleasanton, California	94566
(Address of Principal Executive Offices)	(Zip Code)

(925) 249-4000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) had been subject to such filing requirements for the past 90 days.  Yes    No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value
Class 21,141,455 shares outstanding
at May 2, 2002

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TABLE OF CONTENTS

PART I
	ITEM 1. FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheet
	Condensed Consolidated Statements of Operations (Unaudited)
	Condensed Consolidated Statements of Cash Flow (Unaudited)
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II.
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT INDEX
EX-10.1
EX-10.2

LIPID SCIENCES, INC.

FORM 10-Q

For the Period Ended March 31, 2002

Table of Contents

			Page No.
PART I
	ITEM 1. FINANCIAL STATEMENTS			3
		Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001 and cumulative period from Inception (May 21, 1999) to March 31, 2002		4
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001 and cumulative period from Inception (May 21, 1999) to March 31, 2002		5
		Notes to Condensed Consolidated Financial Statements		7
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			14
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			22
PART II
	ITEM 1. LEGAL PROCEEDINGS			23
	ITEM 2. CHANGES IN SECURITIES			23
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES			23
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			23
	ITEM 5. OTHER INFORMATION			23
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K			23
SIGNATURES				24
INDEX TO EXHIBITS FOR FORM 10-Q				25

2

PART I

ITEM 1. FINANCIAL STATEMENTS

Lipid Sciences, Inc.
(A Development Stage Company)
Condensed Consolidated Balance Sheet

(In thousands, except share amounts)

			March 31, 2002			December 31, 2001
			(unaudited)
ASSETS
	Current assets:
	Cash and cash equivalents		$	17,885		$	12,811
	Prepaid expenses and other current assets			188			111
	Income tax receivable			—			516
	Current deferred tax asset			497			497
	Current assets of discontinued operations			20,358			19,810
		Total current assets		38,928			33,745
Property and equipment				855			786
Restricted cash				529			527
Non-current deferred tax asset				949			1,544
Non-current assets of discontinued operations				33,477			42,630
Total assets			$	74,738		$	79,232
LIABILITIES AND STOCKHOLDERS’ EQUITY
	Current liabilities:
	Accounts payable and accrued liabilities		$	2,266		$	1,783
	Related party payables			2,000			2,000
	Accrued royalties			375			250
	Accrued compensation			332			235
	Income taxes payable			1,182			—
	Current liabilities of discontinued operations			1,359			1,089
		Total current liabilities		7,514			5,357
Deferred rent				27			25
Long-term liabilities of discontinued operations				19,316			22,573
		Total long-term liabilities		19,343			22,598
Commitments and contingencies (Notes 6, 7, 8, 10)
	Stockholders’ equity:
	Preferred stock, no par value; 10,000,000 shares authorized and issuable; no shares outstanding			—			—
	Common stock, no par value; 75,000,000 shares authorized; 21,141,455 and 21,246,222 shares issued and outstanding at March 31, 2002 and December 31, 2001, respectively			67,107			67,947
	Deficit accumulated in the development stage			(19,226	)		(16,670	)
		Total stockholders’ equity		47,881			51,277
Total liabilities and stockholders’ equity			$	74,738		$	79,232

See accompanying notes to condensed consolidated financial statements

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Lipid Sciences, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)

										Period from Inception (May
				Three Months Ended March 31,						21, 1999) to March 31,
				2002			2001			2002
Net revenue				$	—		$	—		$	—
Operating expenses:
	Research and development				3,019			3,137			17,030
	Selling, general and administrative				967			677			6,560
			Total operating expenses		3,986			3,814			23,590
Operating loss					(3,986	)		(3,814	)		(23,590	)
Interest and other income					14			117			777
Loss from continuing operations					(3,972	)		(3,697	)		(22,813	)
Income tax benefit					1,108			—			3,265
Net loss from continuing operations					(2,864	)		(3,697	)		(19,548	)
Net income from discontinued operations (including gain on disposal of $176)					308			—			322
Net loss				$	(2,556	)	$	(3,697	)	$	(19,226	)
Earnings/(loss) per share – basic and diluted:
		Net (loss) per share continuing operations		$	(0.14	)	$	(0.25	)
		Earnings per share discontinued operations		$	0.02		$	—
		Net loss		$	(0.12	)	$	(0.25	)
Weighted average number of common shares outstanding – basic and diluted					21,186			14,668

See accompanying notes to condensed consolidated financial statements

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Lipid Sciences, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flow (Unaudited)

(In thousands)

										Period from
				Three Months Ended						Inception (May 21,
				March 31,						1999) to March 31,
				2002			2001			2002
Cash flows used in operating activities:
Net loss from continuing operations					($2,864	)		($3,697	)		($19,548	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
	Depreciation and amortization				53			6			110
	Accretion of discount on short-term investments				—			(80	)		(80	)
	Issuance of common stock to consultants and advisors				(351	)		928			3,820
	Issuance of warrants to consultants				—			848			1,044
	Deferred income taxes				595			—			(1,446	)
	Changes in operating assets and liabilities:
		Prepaid expenses and other current assets			(77	)		457			(188	)
		Restricted cash			(2	)		(7	)		(529	)
		Income taxes			1,698			—			1,182
		Accounts payable and other current liabilities			483			(153	)		2,216
		Accrued royalties			125			—			375
		Accrued compensation			97			60			332
		Deferred rent			2			5			27
			Net cash used in operating activities		(241	)		(1,633	)		(12,685	)
Cash flows used in investing activities:
	Capital expenditures				(122	)		(109	)		(965	)
Cash flows (used in)/provided by financing activities:
	Acquisition of NZ Corporation – cash acquired				—			—			20,666
	Payment of acquisition costs				—			—			(1,615	)
	Payment to repurchase stock				(470	)		—			(12,513	)
	Maturities and sales of short-term investments				—			8,125			8,125
	Purchases of short-term investments				—			—			(8,045	)
	Proceeds from sale of common stock, net of issuance costs				(19	)		—			17,429
	Proceeds from issuance of warrants				—			6,175			40
		Net cash (used in)/provided by financing activities			(489	)		14,300			24,087
Net (decrease)/increase in cash and cash equivalents from continuing operations					(852	)		12,558			10,437
Net cash provided by discontinued operations					5,926			—			7,448
Cash and cash equivalents at beginning of period					12,811			1,125			—
Cash and cash equivalents at end of period				$	17,885		$	13,683		$	17,885

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(In thousands)

							Period from
			Three Months Ended				Inception (May 21,
			March 31,				1999) to March 31,
			2002		2001		2002
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Cash paid during the year for:
	Interest (net of amount capitalized)		$	145	$	—	$	245
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
	Acquisition of NZ Corporation:
	Current assets (other than cash)						$	1,040
	Property and equipment							30,193
	Commercial real estate loans							16,335
	Notes and receivables							15,166
	Investments in joint ventures							2,343
	Current liabilities assumed							(1,947	)
	Long-term debt assumed							(14,908	)
	Deferred taxes associated with the acquisition							(7,936	)
		Fair value of assets acquired					$	40,286
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
		Accrued acquisition costs					$	2,050

See accompanying notes to condensed consolidated financial statements

6

Lipid Sciences, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

On November 29, 2001, Lipid Sciences, Inc., a Delaware corporation merged with and into NZ Corporation, an Arizona corporation. In connection with the merger, NZ Corporation changed its name to Lipid Sciences, Inc. In this report, unless the context otherwise requires, the current company, Lipid Sciences, Inc., an Arizona corporation, is referred to as “we,” “the Company” or “Lipid Sciences” with respect to periods of time from the effective date of the merger to the date of this report; the merged company, Lipid Sciences, Inc., a Delaware corporation, is referred to as “we” or “Pre-Merger Lipid” with respect to periods prior to the effective date of the merger; and NZ Corporation, is referred to as “NZ”, with respect to periods prior to the effective date of the merger.

The condensed consolidated results of operations presented herein include the financial results of Lipid Sciences and NZ for the three month period ended March 31, 2002 and the financial results of Pre-Merger Lipid for the three month period ended March 31, 2001. The historical financial statements prior to November 29, 2001 are those of Pre-Merger Lipid. All significant intercompany transactions have been eliminated in consolidation.

The Company is engaged in the research and development of products that can treat major medical indications by regulating plasma lipid levels. Primary activities since incorporation have been establishing offices, recruiting personnel, conducting research and development, performing business and financial planning, and raising capital. Accordingly, the Company is considered to be in the development stage.

In the course of its research and development activities, the Company has sustained continued operating losses and expects those losses to continue for the foreseeable future as we continue to invest in research and development and begin to allocate significant and increasing resources for clinical testing and related activities. The Company continues to expend significant cash resources in pursuit of our primary objectives, and at March 31, 2002 the remaining available cash and investments balance is approximately $17.9 million. We intend to finance our operations through the orderly disposition of NZ’s assets acquired in the merger (see Note 10 of the condensed consolidated financial statements), and through issuances of equity securities, receipt of research and development grants and, in the longer term, revenues from product sales and licenses. If adequate funds are not available to satisfy our requirements we may have to substantially reduce, or eliminate, certain areas of our product development activities, significantly limit our operations, or otherwise modify our business strategy.

The unaudited condensed consolidated financial statements include the accounts of Lipid Sciences and our wholly-owned subsidiaries and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results to be expected for a full year. The condensed consolidated balance sheet of the Company at December 31, 2001, has been derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. These financial statements and footnote disclosures should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2001, which appear in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2002.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates and assumptions.

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Certain prior period amounts have been reclassified to conform to the current period’s presentation. Such reclassifications had no material effect on the Company’s previously reported consolidated financial position, results of operations or cash flows.

NOTE 2: ACQUISITION

On November 29, 2001, Lipid Sciences, Inc., a Delaware corporation merged with and into NZ Corporation, and Arizona corporation. As a result of the merger, the Company was renamed Lipid Sciences, Inc. Pre-Merger Lipid ceased to exist as a separate corporation, and the shareholders of Pre-Merger Lipid became shareholders of the Company. In connection with the merger, Pre-Merger Lipid shareholders received 1.55902 shares of our common stock for each share of Pre-Merger Lipid common stock they held at the time the merger was completed. After the transaction, the Pre-Merger Lipid shareholders owned approximately 75% of the then outstanding stock of the Company and the NZ shareholders owned the remaining shares of the Company’s common stock.

The merger was accounted for under the purchase method of accounting and was treated as a reverse acquisition because the shareholders of Pre-Merger Lipid owned the majority of the Company’s common stock after the merger. Pre-Merger Lipid was considered the acquiror for accounting and financial reporting purposes. The results of operations from NZ have been included only from November 29, 2001, the date of acquisition. The historical financial statements prior to November 29, 2001 are those of Pre-Merger Lipid.

Pre-Merger Lipid acquired NZ for the aggregate purchase price of $60,952,000. The aggregate purchase price equals the fair value of NZ’s net assets. The following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition:

(In thousands)
	Current assets		$	21,706
	Property and equipment			30,193
	Commercial real estate loans			16,335
	Notes and receivables			15,166
	Investments in joint ventures			2,343
		Total assets acquired		85,743
	Current liabilities			1,947
	Long-term debt			14,908
	Long-term deferred taxes			7,936
		Total liabilities assumed		24,791
		Net assets acquired	$	60,952

In connection with the merger, the Company is obligated to issue additional shares of common stock to those individuals and entities who were shareholders of NZ on the day prior to the completion of the merger and who hold perfected stock rights, unless during the 24-month period immediately following the merger, the closing price per share of the Company’s common stock equals or exceeds $12.00 per share throughout any period of 20 consecutive trading days in which the aggregate volume of shares traded equals or exceeds 1,500,000 shares. Each perfected right entitles the holder to receive up to one additional share of the Company’s common stock. Shareholders had until April 30, 2002 to perfect their rights. If additional shares are issued pursuant to the rights, the issuance of additional shares of common stock will have the effect of diluting the ownership of shareholders not holding rights and increasing the proportionate ownership of the shareholders holding rights. The number of outstanding shares of common stock would increase, having the effect of diluting earnings per share.

The unaudited condensed consolidated results of operations from continuing operations on a pro forma basis as if the merger had occurred as of the beginning of the periods presented would be consistent with the results of continuing operations presented in the condensed consolidated statement of operations. The results of operations of NZ have been reclassified to discontinued operations for all periods presented.

8

NOTE 3: EARNINGS / (LOSS) PER SHARE

The merger between the Company and Pre-Merger Lipid was accounted for under the purchase method of accounting and was treated as a reverse acquisition because the shareholders of Pre-Merger Lipid owned the majority of the Company’s common stock after the merger. Pre-Merger Lipid was considered the acquiror for accounting and financial reporting purposes. The weighted average number of common shares has been adjusted for all periods to reflect the exchange ratio of 1.55902 to 1.

The Company computes its net loss per share under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share.” Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three month period ended March 31, 2002 and 2001, the Company has excluded options and warrants to purchase 2,764,207 and 1,135,100 shares of common stock, respectively, from the computation of basic and diluted earnings per share because all such securities are anti-dilutive for all periods presented.

NOTE 4: RECENTLY ISSUED ACCOUNTING STANDARDS

As of January 1, 2001, the Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133, as amended, establishes accounting and reporting standards requiring that all derivative instruments, including certain derivative instruments embedded in other contracts, be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized in current earnings unless specific hedge accounting criteria are met. Currently, the Company does not use derivative instruments nor did the Company’s evaluation identify any embedded derivatives in other contracts. Upon adoption of SFAS No. 133 there was no effect on the financial position or results of operations of the Company.

In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 “Business Combinations” and SFAS No. 142 “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and that the use of the pooling-of-interest method is no longer allowed. The Company has adopted the provisions of SFAS No. 141. SFAS No. 142 requires that amortization of goodwill will cease, and instead, the carrying value of goodwill will be evaluated for impairment on an annual basis. Identifiable intangible assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. Lipid Sciences adopted SFAS No. 142 on January 1, 2002. Adoption of this statement did not have an impact on Lipid Sciences’ financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement will supercede SFAS No. 121 and retains the fundamental provisions of SFAS No. 121 for (i) recognition and measurement of the impairment of long-lived assets to be held and used; and (ii) measurement of the impairment of long-lived assets to be disposed of by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Lipid Sciences adopted SFAS No. 144 on January 1, 2002. Adoption of this statement did not have a significant impact on Lipid Sciences’ financial position or results of operations.

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NOTE 5: PROPERTY AND EQUIPMENT

Property and equipment are carried at cost less accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives, generally three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the remaining term of the lease. Depreciation expense includes amortization of leasehold improvements.

Property and equipment consist of the following (in thousands):

		March 31, 2002			December 31, 2001
Equipment		$	729		$	612
Leasehold improvements			237			232
			966			844
Less accumulated depreciation and amortization			(111	)		(58	)
	Total property and equipment, net	$	855		$	786

NOTE 6: DEVELOPMENT AGREEMENT

In October 2000, we entered into a Development Agreement with SRI International, a California nonprofit public benefit corporation, pursuant to which SRI provides us with various consulting and development services. SRI will assign to us all intellectual property developed during the term of the Development Agreement. The Development Agreement calls for SRI to complete two development phases (as defined in the Development Agreement) during which time SRI will work to develop a medical device to enable us to further develop and commercialize our lipid removal technology.

Phase I was completed on March 28, 2001. Fees for services performed by SRI for Phase I totaled $1,517,000 of which $972,967 was charged to operations in the three months ended March 31, 2001.

Phase II was initiated upon completion of Phase I. Fees for Phase II of the development program are limited to $6,300,000. For the year ended December 31, 2001, $2,499,603 was charged to operations of which $122,135 is included in accounts payable at December 31, 2001. For the three months ended March 31, 2002, $1,590,994 was charged to operations of which $250,830 is included in accounts payable at March 31, 2002.

We also issued SRI warrants to purchase 779,510 shares of common stock at an exercise price of $3.21 per share. The warrants vested with respect to 233,853 shares upon completion of Phase I, with the remaining 545,657 shares vesting upon completion of Phase II. On May 12, 2001, the Development Agreement was amended with respect to the warrants to purchase 545,657 shares of common stock related to Phase II. This amendment splits Phase II into two development milestones with warrants to purchase 272,829 shares vesting at the completion of each milestone. If either development milestone is discontinued at the option of Lipid Sciences, all 545,657 warrants will vest at the completion of the remaining milestone.

Phase I of the Development Agreement was completed on March 28, 2001 resulting in warrants to purchase 233,853 shares of common stock becoming fully vested. On this date, we recognized an expense of $847,500, based upon the fair market value of the warrants on the date of vesting, using the Black-Scholes method with the following assumptions: a volatility of 80%, a dividend yield of 0%, a risk-free interest rate of 6%, and a life of seven years.

As of March 31, 2002, neither milestone related to Phase II was complete and no value has been assigned to these warrants which have a life of seven years. These warrants will be valued using the Black-Scholes method and will be charged to expense as they vest.

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NOTE 7: RELATED PARTY TRANSACTIONS

In December 1999, we entered into an Intellectual Property License Agreement to obtain the exclusive worldwide rights to certain patents, trademarks, and technology with Aruba International Pty. Ltd., an Australian company, controlled by Bill E. Cham, Ph.D., a founding shareholder of Pre-Merger Lipid and one of our directors. As consideration for the license, we issued Aruba 4,677,060 shares of our common stock valued at $250,000. Under this agreement, we are also obligated to pay Aruba continuing royalty on revenue under the agreement in future years, subject to a minimum annual royalty amount of $500,000. For the three month period ended March 31, 2002 and March 31, 2001 we have accrued an additional $125,000 and $125,000, respectively, related to this agreement. Amounts for both 2002 and 2001 were charged to research and development expense.

We are also required to make a payment of $250,000 upon initiation of human clinical trials utilizing the technology under the patents and 10% of any External Research Funding received by us to further this technology, as defined in the agreement. As of March 31, 2002, no amounts had been expensed relating to human clinical trials or External Research Funding given that we had not yet initiated human clinical trials.

Additionally, in the normal course of business, we have consulted with Dr. Cham, and companies with which he is affiliated, regarding various matters of a research and development nature. The amount expensed under these consultations amounted to approximately $3,000 and $2,500 for the three month period ended March 31, 2002 and March 31, 2001, respectively, for fees charged by Dr. Cham, including travel and similar costs, and have been included in the results of operations.

In November 2001, we entered into a Service Agreement with Karuba International Pty. Ltd., a company controlled by Dr. Cham, requiring us to pay approximately $191,000 a year for consulting services provided. Under the terms of the agreement, the annual obligation to Karuba will increase to approximately $198,000 per year in May 2002. For the three month period ended March 31, 2002, approximately $62,000 was expensed to research and development under this agreement. No payments were made to Karuba during the three month period ended March 31, 2001.

We have also paid approximately $157,000 and $63,000 for the years ended December 31, 2001 and the period from Inception (May 21, 1999) to December 31, 2000, respectively, to MDB Capital Group, LLC, related primarily to services performed and reimbursement of expenses incurred by MDB Capital Group on our behalf. For the three month period ended March 31, 2001, approximately $37,000 was paid to MDB Capital Group. No payments were made to MDB Capital Group, LLC, during the three month period ended March 31, 2002. Mr. Marlett, the Chairman of our Board of Directors, is a manager and majority owner of MDB Capital Group.

In March 2001, we closed a private placement of 1,375,282 shares of common stock at $4.49 per share for gross proceeds of $6,175,000. In connection with the private placement, we paid a commission to MDB Capital Group, LLC of approximately 7% of the gross proceeds, payable in shares of common stock, for services rendered in the private placement. Accordingly, 95,491 shares of common stock at $4.49 per share were issued as commission for the transaction.

In June 2001, Pre-Merger Lipid engaged MDB Capital Group, LLC as its financial advisor in the merger between the Company and Pre-Merger Lipid. The engagement letter commits the Company to pay MDB Capital Group an advisory fee. In December 2001, we paid MDB Capital Group approximately $446,000, which represents a portion of the advisory fee and is based on 5% of the cash and cash equivalents of the Company immediately after the merger as compared to Pre-Merger Lipid’s cash and cash equivalents immediately prior to the merger. The remainder of the advisory fee is based on 5% of the gross sales of the Company’s pre-merger assets during the two-year period after the closing of the merger, the Company’s assets on the two-year anniversary of the merger and the net operating income of the Company derived from the Company’s pre-merger assets during the two-year period after the closing of the merger. We anticipate the remainder of the advisory fee to be approximately $2,000,000. Our adoption of a formalized plan to dispose of all Real Estate segment assets by March 31, 2003 will likely result in the payment of substantially all MDB Capital Group advisory fees by April 2003.

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NOTE 8: RESTRUCTURING

As of December 31, 2001, we recorded restructuring charges of approximately $885,000, which were charged to general and administrative expense. Our recent restructuring initiatives involved strategic decisions to exit the real estate market through the orderly disposition of substantially all of NZ’s assets (see Note 10 of the condensed consolidated financial statements).

In connection with these restructuring initiatives, we have recorded the following:

Severance & related benefits	$	705,000
Lease termination		180,000
	$	885,000

As of March 31, 2002, we have not utilized any of the accruals set up for restructuring purposes.

Severance charges include employee termination costs such as salary and benefits post separation as a result of headcount reductions. Lease termination expenses primarily consist of costs to exit the Phoenix, Arizona facility lease.

We expect the accrued amounts to be paid and the restructuring to be complete by early 2003.

NOTE 9: REPURCHASE OF COMMON STOCK

Pursuant to the merger of the Company and Pre-Merger Lipid, we notified all shareholders who either did not vote or did not vote in favor of the merger of their option of becoming a holder of “dissenting shares” as defined in Chapter 13 (“Chapter 13”) of the California Corporations Code. We determined that in accordance with Section 1300(a) of Chapter 13, the fair market value of a dissenting share as of the day before the first announcement of the terms of the merger was $7.00. In order to pursue dissenters’ rights and receive cash for each dissenting share, the dissenting shareholder was required to make a written demand for purchase of the shares in cash, and the demand must have been received by the President of the Company within 30 days of the mailing of the notice. If the Company and the dissenting shareholder agreed upon the price of the shares, then the Company was required to pay the shareholder the agreed price for the dissenting shares. The dissenting shareholder was also required to surrender their share certificate in order to receive payment of the price.

Through March 31, 2002, pursuant to two such notices from dissenting shareholders, we paid approximately $470,400 to repurchase 67,200 shares of Pre-Merger Lipid common stock, the equivalent of 104,767 shares of our common stock. All repurchased shares were retired.

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NOTE 10: DISCONTINUED OPERATIONS

As a result of the merger between Pre-Merger Lipid and NZ on November 29, 2001, certain real estate assets, including commercial real estate loans were acquired. As part of the merger we announced our intent to conduct an orderly disposition of those assets to fund the ongoing operations of Lipid Sciences. On March 22, 2002, we formalized a plan to discontinue the operations of our real estate assets, including commercial real estate loans. All of those assets were included in the Real Estate segment. The plan identified the major assets to be disposed of, the method of disposal, and the period required for completion of the disposal. We plan to complete the sale of the Real Estate segment assets by the end of the first quarter, 2003. As a result, we have reclassified the results of operations and the assets and liabilities of the discontinued operations for all periods presented. The carrying amounts of the major classes of assets and liabilities included as part of the disposal group as of March 31, 2002, are as follows:

(In thousands)
	Current assets		$	518
	Property and equipment			25,611
	Commercial real estate loans			9,497
	Notes and receivables			15,618
	Investments in joint ventures			2,591
		Total assets held for disposal		53,835
	Current liabilities			1,566
	Long-term debt			14,480
	Long-term deferred taxes			4,629
		Total liabilities held for disposal		20,675
		Net assets held for disposal	$	33,160

The accompanying statements of operations for the periods ended March 31, 2002 and 2001 reflect revenues of $3,366,000 and none from discontinued operations of the Real Estate segment and a gain of $176,000 and none on the disposal of assets.

NOTE 11: INCOME TAXES

The Company’s effective tax benefit rate was 27.89% in the first quarter of 2002 and 13.72% in 2001. The effective tax benefit rate was calculated using an estimate of our expected annual pretax income for 2002. The effective tax benefit rate for 2002 differed from the statutory federal income tax rate primarily due to additional valuation allowance provided.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. We established a valuation allowance at March 31, 2002 due to the uncertainty of realizing future tax benefits from certain of its net operating loss carryforwards and credits.

NOTE 12: SEGMENTS

The Company was previously organized into two segments, Biotechnology and Real Estate. The Biotechnology segment is primarily engaged in the research and development of products focused on treating major medical indications in which a lipid, or fat, component plays a key role. On March 22, 2002, management approved a plan to dispose of the Real Estate segment and intends to focus on Biotechnology in the future. Substantially all of the assets and liabilities of the Real Estate segment are included in the discontinued operations plan formalized by the Company on March 22, 2002 (see Note 10 of the condensed consolidated financial statements).

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The statements in this report that relate to future plans, events or performance are forward-looking statements, which involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements include, but are not necessarily limited to, those relating to:

• our ability to obtain regulatory approval of our products in the United States and internationally;

• the other competing therapies that may be available in the future;

• our plans to develop and market our products;

• our ability to improve our financial performance; and

• effects of the merger between the Company and Pre-Merger Lipid.

These factors, and others, are discussed more fully in our annual report on Form 10-K for 2001 filed with the Securities and Exchange Commission on March 29, 2002. Actual results, events or performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be needed to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We are a development stage biotechnology company engaged in the research and development of products focused on treating major medical conditions in which a lipid, or fat, component plays a key role. Our technology is based on a process of selective, systemic removal of lipids from plasma, that is, blood without red cells. This process is known as plasma delipidation. The process is designed to provide therapeutic benefit by enhancing the body’s natural ability to heal itself. We believe that through the use of this system a patient’s risk of such common disorders as heart attack and stroke will be reduced, and circulation throughout the body will be improved with numerous attendant benefits. Primary activities since incorporation have been establishing offices, recruiting personnel, conducting research and development, performing business and financial planning, and raising capital. Accordingly, the Company is considered to be in the development stage.

On November 29, 2001, Lipid Sciences, Inc., a Delaware corporation merged with and into NZ Corporation, and Arizona corporation. As a result of the merger, the Company was renamed Lipid Sciences, Inc. Pre-Merger Lipid ceased to exist as a separate corporation, and the shareholders of Pre-Merger Lipid became shareholders of the Company. In connection with the merger, Pre-Merger Lipid shareholders received 1.55902 shares of our common stock for each share of Pre-Merger Lipid common stock they held at the time the merger was completed. After the transaction, the Pre-Merger Lipid shareholders owned approximately 75% of the then outstanding stock of the Company and the NZ shareholders owned the remaining shares of the Company’s common stock.

In connection with the merger, we are obligated to issue additional shares of common stock to those individuals and entities who were shareholders of NZ on the day prior to the completion of the merger and who hold perfected stock rights, unless during the 24-month period immediately following the merger, the closing price per share of our common stock equals or exceeds $12.00 per share throughout any period of 20 consecutive trading days in which the aggregate volume of shares traded equals or exceeds 1,500,000 shares. Each perfected right entitles the holder to receive up to one additional share of our common stock. Shareholders had until April 30, 2002 to perfect their rights.

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The merger was accounted for under the purchase method of accounting and was treated as a reverse acquisition because the shareholders of Pre-Merger Lipid owned the majority of our common stock immediately after the merger. Pre-Merger Lipid was considered the acquiror for accounting and financial reporting purposes. Accordingly, all financial information prior to 2001 included in this report reflects Pre-Merger Lipid results.

In the course of our research and development activities, we have sustained continued operating losses and we expect these losses to continue for the foreseeable future as we continue to invest in research and development and begin to allocate significant and increasing resources for clinical testing and related activities. We approved a discontinued operations plan on March 22, 2002, to dispose of substantially all of the real estate and other assets held by the Company before the merger (see Note 10 of the condensed consolidated financial statements). We will use the proceeds from the disposition of these assets for our ongoing operations. We intend to finance our operations through the disposition of these assets, through issuances of equity securities, and receipt of research and development grants. In the longer term, we expect to additionally finance our operations through revenues from product sales and licenses and ultimately, upon achieving profitable operations. If adequate funds are not available to satisfy our requirements we may have to substantially reduce, or eliminate, certain areas of our product development activities, significantly limit our operations, or otherwise modify our business strategy.

Our business was organized into two segments: Biotechnology and Real Estate. Our Biotechnology segment is focused on research and development of products for the treatment of major medical conditions in which a lipid, or fat, component plays a key role. As a result of the merger between Pre-Merger Lipid and NZ on November 29, 2001, certain real estate assets, including commercial real estate loans were acquired. As part of the merger we announced our intent to conduct an orderly disposition of these assets and on March 22, 2002, we formalized a plan to discontinue the operations of our Real Estate segment. The plan identified the major assets to be disposed of, the expected method of disposal, and the period expected to be required for completion of the disposal.

As of December 31, 2001, we recorded restructuring charges of approximately $885,000, which were charged to general and administrative expense. Our recent restructuring initiatives involved strategic decisions to exit the real estate market through the orderly disposition of substantially all of NZ’s assets. As of March 31, 2002, we have not utilized any of the accruals set up for restructuring purposes. We expect the accrued amounts to be paid and the restructuring to be complete by early 2003 (see Note 8 of the condensed consolidated financial statements).

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their “critical accounting policies” in MD&A. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of the Company’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of trends in the industry and information available from other outside sources, as appropriate. We believe that our following accounting policies fit this definition:

Property Sales, Cost of Property Sales and Deferred Revenue

The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 66, “Accounting for Sales of Real Estate.” SFAS No. 66 stipulates certain conditions which must be met to recognize profit from the sale of real estate using the full accrual method. These conditions include minimum down payments and annual investments by the buyer, and reasonable assurance the related receivable is collectible. We recognize revenue from the sale of properties using the full accrual method when the required conditions are met.

Profits from retail land sales are recognized on the installment basis provided minimum down payments are received. Deferred revenue consists principally of retail land sales made after the merger, and rents collected in advance.

The Company capitalizes construction and development costs as required by SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects.” Cost of sales for the recreational lots are determined by allocating development costs pro-rata by acre. Costs associated with financing or leasing projects are capitalized and amortized over the period benefited by those expenditures.

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Property and Equipment

Property includes real estate assets owned by the Company before the merger. Real estate properties are stated at the lower of cost or estimated fair value. All properties are held for sale and are written down to estimated fair value when the Company determines the carrying cost exceeds the estimated selling price, less costs to sell. Management makes this evaluation on a property-by-property basis. The evaluation of fair value and future cash flows from individual properties requires significant judgment. Our estimates are based on historical results adjusted to reflect our best estimate of future market and operating conditions. Our estimates of fair value represent our best estimate based on industry trends and reference to market rates and transactions. It is reasonably possible that a change in economic or market conditions could result in a change in management’s estimate of fair value.

Income Taxes

The Company follows SFAS No.109, “Accounting for Income Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. Our significant accounting policies are more fully described in our audited consolidated financial statements and notes thereto for the year ended December 31, 2001, which appear in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2002.

Results of Continuing Operations – Three Months Ended March 31, 2002 and 2001

Net Revenue. We had no revenues from continuing operations from inception through March 31, 2002. Future revenues will depend on our ability to develop and commercialize our two primary platforms for the treatment of cardiovascular disease (Vascular Lipid Removal System) and lipid-enveloped viruses (Viral Pathogen Inactivation System).

Research and Development Expenses. Research and development expenses include product development, clinical testing, and regulatory expenses. Research and development expenses decreased approximately $118,000, or 4%, to $3,019,000 in the first quarter of 2002 from $3,137,000 for the same period in 2001. The decrease is due primarily to stock compensation benefits related to issuance of stock to our Scientific Advisory Board, a non-cash benefit.

While we allocate and track resources when required pursuant to the terms of development arrangements, our research team typically works on different products concurrently, and our equipment and intellectual property resources often are deployed over a range of products with a view to maximize the benefit of our investment. Accordingly, we have not, and do not intend to, separately track the costs for each of our research projects on a product-by-product basis. For the three months ended March 31, 2002, however, we estimate that the majority of our research and development expense was associated with our two primary platforms for the treatment of cardiovascular disease (Vascular Lipid Removal System) and lipid-enveloped viruses (Viral Pathogen Inactivation System).

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Clinical trials commenced on May 4, 2002. The goal of this human trial is to determine the safety of our plasma delipidation process. In addition, the trial will provide information about how quickly delipidated plasma recombines with cholesterol in the body. Healthy volunteers are being referred to the principal investigator for inclusion into the 10-subject study. Results of the clinical trial, which is being conducted in Australia, are expected by the end of this year. We anticipate our research and development expenses to continue to increase for the foreseeable future as we conduct this study, as well as other clinical trials necessary to apply for regulatory approval to market our products.

Selling, General and Administrative Expenses. General and administrative expenses for 2002 increased approximately $290,000, or 43%, to $967,000 in the first quarter of 2002 from $677,000 for the same period in 2001. The increase is due primarily to expenses to establish administrative management (including recruitment fees), accounting, legal, shareholder and filing fees associated with public company requirements.

Interest and Other Income. Interest and other income for the first quarter of 2002 decreased 88% to $14,000 from $117,000 for the same period in 2001. The decrease is due primarily to lower cash, cash equivalent and short-term investment balances compared to the same period in 2001. Interest income earned on the cash acquired in the merger between Pre-Merger Lipid and the Company is presented as part of income from discontinued operations through March 31, 2002.

Results of Discontinued Operations

During the three months ended March 31, 2002, we disposed of real estate assets, in multiple transactions, for a sales price of approximately $11,260,000 in the aggregate. In these transactions, we received cash of approximately $3,900,000 and a note receivable in the amount of $7,360,000. The note matures June 28, 2002, bears interest at the rate of 5.25%, and is secured by liens on the assets purchased. The real estate assets sold include substantially all of the rural land, the notes receivables from the recreational lot sales program, mineral rights, and urban residential land in New Mexico. Additionally, approximately $5,000,000 was collected in principal payments from commercial real estate notes and other notes receivable.

As of March 31, 2002, the remaining assets in the disposal group were primarily commercial real estate loans, mineral rights, vacant industrial land in New Mexico, five industrial buildings in Arizona and residential lots in New Mexico. As of April 19, 2002, the five industrial buildings were in escrow to a single buyer. The sale is expected to close at the end of May 2002, although the buyer has certain rights to cancel the purchase prior to closing. As of March 31, 2002, a portion of the industrial land in New Mexico is under contract to be sold. The sale is expected to close between September 1, 2002 and March 1, 2003.

Liquidity and Capital Resources

Pre-Merger Lipid financed its operations principally through the sale of common stock to one of its founders and two private placements of equity securities, which have yielded net proceeds of approximately $16,900,000. The merger with the Company resulted in the acquisition of net assets of approximately $45,200,000, net of repurchase of stock and acquisition costs, through March 31, 2002.

The net cash used in continuing operating activities was approximately $200,000, $1,600,000 and $12,700,000 for the three months ended March 31, 2002, March 31, 2001 and the period from Inception (May 21, 1999) to March 31, 2002, respectively, resulting primarily from operating losses incurred as adjusted for non-cash stock compensation charges. The net cash used in investing activities was approximately $100,000, $100,000 and $1,000,000 for the three months ended March 31, 2002, March 31, 2001 and for the period from Inception (May 21, 1999) to March 31, 2002, respectively, primarily attributable to the purchase of capital equipment. Net cash used in financing activities of approximately $500,000 for the three months ended March 31, 2002 was primarily attributable to the repurchase of common stock from dissenting stockholders. Net cash provided by financing activities of approximately $14,300,000 and $24,100,000 for the three months ended March 31, 2001 and for the period from Inception (May 21, 1999) to March 31, 2002 was primarily due to the maturities and sales of short-term investments, the acquisition of NZ Corporation and the sale of equity securities in private placement transactions. Net cash provided by discontinued operations of approximately $5,900,000 and $7,400,000 for the three months ended March 31, 2002 and the period from Inception (May 21, 1999) to March 31, 2002, respectively, was primarily due to the sale of real estate assets.

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In December 1999, we entered into an Intellectual Property License Agreement to obtain the exclusive worldwide rights to certain patents, trademarks, and technology with Aruba International Pty. Ltd., an Australian company, controlled by Bill E. Cham, Ph.D., a founding shareholder of Pre-Merger Lipid and one of our directors. As consideration for the license, we issued Aruba 4,677,060 shares of our common stock valued at $250,000. Under this agreement, we are also obligated to pay Aruba continuing royalty on revenue under the agreement in future years, subject to a minimum annual royalty amount of $500,000. For the three month period ended March 31, 2002 and March 31, 2001, we have accrued an additional $125,000 and $125,000, respectively, related to this agreement. Amounts for both 2002 and 2001 were charged to research and development expense. We are also required to make a payment of $250,000 upon initiation of human clinical trials utilizing the technology under the patents and 10% of any External Research Funding received by us to further this technology, as defined in the agreement. As of March 31, 2002, no amounts had been expensed relating to human clinical trials or External Research Funding given that we had not yet initiated human clinical trials.

In May 2000, we sold a total of 4,925,300 shares of common stock at $2.25 per share in a private placement to accredited investors. Net cash proceeds, after expenses of the placement, were approximately $11,000,000.

In October 2000, we entered into a Development Agreement with SRI International, a California nonprofit public benefit corporation, pursuant to which SRI provides us with various consulting and development services. SRI will assign to us all intellectual property developed during the term of the Development Agreement. The Development Agreement calls for SRI to complete two development phases (as defined in the Development Agreement) during which time SRI will work to develop a medical device to enable us to further develop and commercialize our lipid removal technology.

Phase I was completed on March 28, 2001. Fees for services performed by SRI for Phase I totaled $1,517,000 of which $972,967 was charged to operations in the period ended March 31, 2001.

We also issued SRI warrants to purchase 779,510 shares of common stock at an exercise price of $3.21 per share. The warrants vested with respect to 233,853 shares upon completion of Phase I, with the remaining 545,657 shares vesting upon completion of Phase II. On May 12, 2001, the Development Agreement was amended with respect to the warrants to purchase 545,657 shares of common stock related to Phase II. This amendment splits Phase II into two development milestones with warrants to purchase 272,829 shares vesting at the completion of each milestone. If either development milestone is discontinued at the option of the Company, all 545,657 warrants will vest at the completion of the remaining milestone.

Phase I of the Development Agreement was completed on March 28, 2001 resulting in warrants to purchase 233,853 shares of common stock becoming fully vested. On this date, we recognized an expense of $847,500, based upon the fair market value of the warrants on the date of vesting, using the Black-Scholes method with the following assumptions: a volatility of 80%, a dividend yield of 0%, a risk-free interest rate of 6%, and a life of seven years.

Phase II was initiated upon completion of Phase I. Fees for Phase II of the development program are limited to $6,300,000. For the year ended December 31, 2001, $2,499,603 was charged to operations of which $122,135 is included in accounts payable at December 31, 2001. For the period ended March 31, 2002, $1,590,994 was charged to operations of which $250,820 is included in accounts payable at March 31, 2002. As of March 31, 2002, neither milestone related to Phase II was complete, consequently no value has been assigned to those warrants which have a life of seven years. These warrants will be valued using the Black-Scholes method and will be charged to expense as they vest.

In March 2001, we closed a private placement of 1,375,282 shares of common stock at $4.49 per share for gross proceeds of $6,175,000. In connection with the private placement, we paid a commission to MDB Capital Group, LLC of approximately 7% of the gross proceeds, payable in shares of common stock, for services rendered in the private placement. Accordingly, 95,491 shares of common stock at $4.49 per share were issued as commission for the transaction.

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In June 2001, Pre-Merger Lipid engaged MDB Capital Group, LLC as its financial advisor in the merger between the Company and Pre-Merger Lipid. The engagement letter commits the Company to pay MDB Capital Group an advisory fee. In December 2001, we paid MDB Capital Group approximately $446,000, which represents a portion of the advisory fee and is based on 5% of the cash and cash equivalents of the Company immediately after the merger as compared to Pre-Merger Lipid’s cash and cash equivalents immediately prior to the merger. The remainder of the advisory fee is based on 5% of the gross sales of the Company’s pre-merger assets during the two-year period after the closing of the merger, the Company’s assets on the two-year anniversary of the merger and the net operating income of the Company derived from the Company’s pre-merger assets during the two-year period after the closing of the merger. We anticipate the remainder of the advisory fee to be approximately $2,000,000. Our adoption of a formalized plan to dispose of all Real Estate segment assets by March 31, 2003 will likely result in the payment of substantially all MDB Capital Group advisory fees by April 2003.

In November 2001, we entered into a Service Agreement with Karuba International Pty. Ltd., a company controlled by Dr. Cham, requiring us to pay approximately $191,000 a year for consulting services provided. Under the terms of the agreement, the annual obligation to Karuba will increase to approximately $198,000 per year in May 2002. For the three month period ended March 31, 2002, approximately $62,000 was expensed to research and development under this agreement. No payments were made to Karuba during the three month period ended March 31, 2001.

As of March 31, 2002, we had cash and cash equivalents equal to approximately $17,900,000. We anticipate that these assets and the cash raised from the disposal of assets included in the discontinued operations plan will provide sufficient working capital for our research and development activities for the next year. After that time, additional capital will be required. We intend to seek capital needed to fund our operations through new collaborations, such as licensing or other arrangements, or through public or private equity or debt financings.

Factors That May Affect Future Results and Financial Condition

If we are unable to obtain adequate funds, we may not be able to develop and market our products.

For the three months ended March 31, 2002, we incurred a net loss of approximately $2,600,000, and since Inception through March 31, 2002, we have incurred an accumulated deficit of approximately $19,200,000. We expect to continue to incur losses for the foreseeable future as we increase funding for development, clinical testing, and other activities related to seeking approval to market our products. For example, the fees for the second development phase under our agreement with SRI International increased to $6,300,000 from approximately $1,500,000 spent for the first phase. In addition, our first human safety study of our technology commenced on May 4, 2002. Conducting this study and the other clinical trials necessary to apply for regulatory approval to sell our products will take a number of years and will require significant amounts of capital.

As of March 31, 2002, we had cash and cash equivalents equal to approximately $17,900,000. We anticipate that these assets and the cash raised from the disposal of assets included in the discontinued operations plan will provide sufficient working capital for our research and development activities for the next year. After the period of disposition of real estate assets, additional capital will be required in amounts that cannot be quantified, but are expected to be significant. If the discontinued operations plan does not yield sufficient capital, we intend to seek capital needed to fund our operations through new collaborations, or through public or private equity or debt financings. If we are unable to obtain financing, our ability to continue our business as planned will be harmed.

Our technology is only in the pre-clinical development stage and may never be approved by the FDA, which would significantly harm our business prospects.

Before obtaining required regulatory approvals for the commercial sale of any of our products, we must demonstrate through pre-clinical studies and clinical trials that our technology is safe and effective for use in at least one medical indication. These studies are expected to take a number of years and may fail to show that our technology is sufficiently safe and effective, in which case our technology will not receive regulatory approval, and we will not be

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able to sell our products. We intend to begin the first human safety study of our technology during the second quarter of 2002.

Our clinical studies may be delayed or unsuccessful.

The ultimate results of clinical studies cannot be predicted with accuracy and can be impacted by many variables. We cannot be sure whether planned clinical trials will begin on time or will be completed on schedule or at all. For example, any of our future clinical studies might be delayed in their initiation, or performance or even halted after initiation because:

• extensive and time-consuming pre-clinical animal studies are required of the Company by the FDA to demonstrate the safety of the process technology;

• the data generated by the pre-clinical animal studies does not indicate to the FDA that there is a sufficient margin of safety and/or the potential clinical benefit from the delipidation cannot be demonstrated in the animal experiments;

• the FDA regulatory requirements for initiating and maintaining an investigational new drug / investigational device exemption application for a clinical study cannot be met;

• the product is not effective, or physicians perceive that the product is not effective;

• patients experience severe side effects during treatment;

• patients die during a clinical study because their disease is too advanced or because they experience medical problems that are not related to the product being studied;

• patients do not enroll in the studies at the rate we expect; or

• the discovery by the sponsor, during the study, of deficiencies in the way the study is being conducted by the study investigators that raises questions as to whether the study is being conducted in conformity with the FDA’s Good Clinical Practice regulations.

If we experience any significant delays in testing or approvals, or if we need to redo or perform more or larger clinical trials than planned, our product development costs will increase and our ability to file, and/or the time line to filing, of a pre-market approval application or other marketing application could be materially and negatively impacted. In addition, if results are not positive or are equivocal, we may need to conduct additional studies, which would increase the total cost of developing these products for commercial marketing and our ability to file, and/or the time line to filing, of a pre-market approval application or other marketing application could be materially and negatively impacted.

We intend to rely on collaborations in order to further develop our products. If these collaborations are unsuccessful, the development of our products could be adversely affected and we may incur significant unexpected costs.

We intend to enter into collaborations with corporate partners, licensors, licensees and others. For example, we have entered into a relationship with SRI International to provide the development of multiple production prototypes, including hardware, software and disposables, based on our technology. We may be unable to maintain or expand our existing collaborations or establish additional collaborations or licensing arrangements necessary to develop our technology or on favorable terms. Any current or future collaborations or licensing arrangements may not be successful.

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If we fail to secure and then enforce patents and other intellectual property rights underlying our technologies, we may be unable to compete effectively.

Our success will depend in part on our ability to obtain patent protection; defend patents once obtained; maintain trade secrets and operate without infringing upon the patents and proprietary rights of others; and if needed, obtain appropriate licenses to patents or proprietary rights held by third-parties with respect to its technology, both in the United States and in foreign countries. We currently have an exclusive license from Aruba International Pty. Ltd. with respect to six issued patents and eight pending patent applications. The issued patents will expire in July 2005, July 2014 and December 2014. There are an additional six pending applications assigned to us. Each of the patents and pending applications relates to a method and/or apparatus for removing lipids from biological fluids and/or biological components. Our patent portfolio is intended to cover products for two major medical applications, the treatment of cardiovascular disease and the removal of lipids from lipid-enveloped viruses, such as HIV, Hepatitis C, Hepatitis B and Herpes Simplex, bacteria and other lipid-containing infectious agents.

Since patent applications in the United States are maintained in secrecy until patents issue and patent applications in certain other countries generally are not published for up to 18 months after they are first filed, and since publication of discoveries in scientific or patent literature often lags behind actual discoveries, we are not certain that we or any licensor was the first creator of inventions covered by pending patent applications or that we or any licensor was the first to file patent applications for these inventions. Further, our patents may be challenged, held unenforceable, invalidated or circumvented, or the rights granted thereunder may not provide significant proprietary protection or commercial advantage to us.

In addition to patents, we rely on trade secrets, know-how, continuing technological innovations, and licensing opportunities to develop and maintain our competitive position. It is our policy to require our employees, certain contractors, consultants, members of the scientific advisory board and parties to collaborative agreements to execute confidentiality agreements upon the commencement of a business relationship with us. We cannot assure you that these agreements will not be breached, that they will provide meaningful protection of our trade secrets or know-how or adequate remedies if there is unauthorized use or disclosure of this information or that our trade secrets or know-how will not otherwise become known or be independently discovered by our competitors.

If we use biological and hazardous materials in a manner that causes injury, we may be liable for damages.

Our research and development activities involve the controlled use of potentially harmful biological materials, such as certain blood products as well as certain organic solvents that may be hazardous materials. We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for damages that result, and any liability could exceed our resources. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations could be significant.

We depend on our license agreement with Aruba.

We have entered into an agreement for an exclusive license to patents, know-how and other intellectual property relating to our foundation technology for removal of lipids from proteins. The licensor is Aruba International Pty. Ltd., a company controlled by Dr. Bill E. Cham, who is a director of the Company. Dr. Cham also controls KAI International, LLC, our largest shareholder. The technology licensed from Aruba currently represents an essential part of the technology owned or licensed by us. Aruba may terminate the license agreement if we fail to perform our obligations under the agreement, including the royalty payments, or if we cease, without intention to resume, all efforts to commercialize the subject matter of the licensed intellectual property.

An economic downturn in the real estate market could adversely affect our ability to complete the disposal of assets included in the discontinued operations plan.

The assets identified in the discontinued operations plan include real estate and loans secured by real estate, particularly in Arizona, New Mexico, California and Utah. While the real estate markets are generally healthy, there

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is no assurance that the markets will continue to be favorable over the disposal period of these assets. A downturn in the real estate market could have an adverse impact on our ability to sell these real estate assets. Additionally, a downturn in the real estate market could adversely affect the ability of our borrowers to repay their loans according to the terms of the loans and/or could adversely affect the value of the collateral for those loans.

Our stock price may be volatile.

There can be no assurance that there will be an active trading market for our common stock or that the market price of the common stock will not decline below its present market price. The market prices for securities of biotechnology companies have been, and are likely to continue to be, highly volatile. Factors that have had, and are expected to continue to have, a significant impact on the market price of our common stock include:

• announcements regarding the results of regulatory approval filings,

• our clinical studies or other testing,

• our technological innovations or new commercial products or those of our competitors,

• government regulations, developments concerning proprietary rights,

• public concern as to safety of our technology, and

• variations in operating results.

We depend on key personnel and will need to hire additional key personnel in the future.

Our ability to operate successfully depends in significant part upon the continued service of certain key scientific, technical, clinical, regulatory and managerial personnel, and our continuing ability to attract and retain additional highly qualified personnel in these areas. Competition for such personnel is intense, especially in the San Francisco Bay Area. There can be no assurance that we can retain such personnel or that we can attract or retain other highly qualified scientific, technical, clinical, regulatory and managerial personnel in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended December 31, 2001.

22

PART II.

ITEM 1. LEGAL PROCEEDINGS

We are from time to time a party to legal proceedings. All of the legal proceedings we are currently involved in are ordinary and routine. The outcomes of the legal proceedings are uncertain until they are completed. We believe that the results of the current proceedings will not have a material adverse effect on our business or financial condition or results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits — See Index to Exhibits.
(b)	Reports on Form 8-K

1. Report on Form 8-K/A announcing that Pre-Merger Lipid dismissed its independent auditors, Ernst & Young LLP, on November 15, 2001, and that our independent auditors, Deloitte & Touche LLP will continue in that role, filed with the SEC on January 31, 2002 under Item 4.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Lipid Sciences, Inc.

Dated: May 14, 2002

By: /s/Barry D. Michaels

Barry D. Michaels

Chief Financial Officer

(Principal Financial Officer

and Duly Authorized Officer)

24

EXHIBIT INDEX

Exhibit
Number	Description
10.1	Employment Agreement with Hana Berger Moran, Ph.D., dated March 4, 2002
10.2	Purchase Agreement for Real and Personal Property among Lipid Sciences, Inc., NZ Corporation, NZ Development Corporation, and NZU, Inc., and NZ Trust, LLC, NZ Snowflake, LLC, NZ Milky Ranch, LLC, NZ Silver Creek, LLC, NZ Joseph City, LLC, NZ New Mexico Land LLC, NZ Uranium, LLC, NZ Travertine, LLC, NZ Oil and Gas, LLC, NZ Minerals, LLC, NZ History and Artifacts, LLC, dated March 28, 2002

25 EX-10.1 3 p66567ex10-1.txt EX-10.1 EXHIBIT 10.1 [LIPID SCIENCES INCORPORATED LOGO] EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), which is effective as of March 4, 2002, is between Lipid Sciences, Inc., an Arizona corporation (the "Company"), and Hana Berger Moran, Ph.D. ("Executive"), who agree as follows. The Company and Executive are hereinafter collectively referred to as the "Parties," and may individually be referred to as a "Party." RECITALS A. The Company desires assurance of the association and services of Executive in order to retain Executive's experience, skills, abilities, background and knowledge, and is willing to engage Executive's services on the terms and conditions set forth in this Agreement; and B. Executive desires to be in the employ of the Company and is willing to accept this employment on the terms and conditions set forth in this Agreement. AGREEMENT 1. EMPLOYMENT. 1.1 The Company will employ Executive, and Executive hereby accepts employment by the Company, upon the terms and conditions set forth in this Agreement, effective as of the first Date of Hire ("Effective Date"), March 4, 2002, for the term of one year from the Effective Date. This agreement will automatically be renewed for the term of one year unless either party gives notice to the other at least 60 days prior to the expiration of the then current term of employment of such party's intention not to renew. 1.2 Executive will be the Vice President Regulatory Affairs . Executive will report to the President and CEO. 1.3 Executive will do and perform all services, acts or things necessary or advisable to oversee the planning and management of regulatory and quality projects in support of the Company's strategic plan, provided, however, that at all times during her employment Executive will be subject to the direction of the President and CEO. Executive's duties will include, but not be limited to, the development of regulatory and quality plans and strategies, organize, review and approve Clinical Investigational Plans and Institutional Review Board submissions, prepare and review FDA applications and other regulatory documents and act as the primary liaison with the FDA and international regulatory authorities. Page 1 of 5 1.4 Unless the Parties otherwise agree in writing, prior to Executive's termination in accordance with this Agreement, Executive will perform the services she is required to perform in accordance with the terms of this Agreement, reporting to the Company's office location and to the President and CEO. 2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION. 2.1 During her employment by the Company, Executive will devote her full business employment, interest, abilities and productive time to the proper and efficient performance of her duties under this Agreement. Executive may not be employed by another company or receive compensation for employment from any other sources. 2.2 During her employment by the Company, Executive may not engage in competition with the Company, either directly or indirectly, in any manner or capacity, as adviser, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any phase of the business of developing, manufacturing and marketing of products that are in the same field of use or which otherwise directly compete with the products or proposed products of the Company. 3. COMPENSATION OF EXECUTIVE. 3.1 The Company will pay Executive a salary of two hundred ten thousand dollars ($210,000) per year ("Base Salary"), payable in regular periodic payments in accordance with Company policy. Such salary will be prorated for any partial year of employment on the basis of a 365-day fiscal year. 3.2 Executive's compensation may be changed from time to time by mutual agreement of Executive, the President and CEO and Board of Directors. 3.3 All of Executive's compensation is subject to customary withholding taxes and any other employment taxes as are commonly required to be collected or withheld by the Company. 3.4 Executive will, in the discretion of the Board and in accordance with Company policy, be entitled to participate in benefits under any employee benefit plan or arrangement made available by the Company now or in the future to its executives and key management employees. 3.5 Executive's performance will be reviewed by the President and CEO on a periodic basis (not less than once each fiscal year). The President and CEO with approval of the Board may, in their sole discretion, award bonuses to Executive as will be appropriate or desirable based on Executive's performance. Executive will be reviewed within twelve months of commencing employment hereunder. 3.6 Subject to approval of the Board of Directors, Executive will also be granted an option to purchase up to one hundred fifty five thousand nine hundred two (155,902) shares of the Company's Common Stock at the fair market value of such shares at the time of the option grant. The terms and conditions of this option will be governed by an agreement which Page 2 of 5 will provide for an initial vesting of nineteen thousand four hundred eighty eight (19,488) shares following the first six (6) continuous months of service with the Company and the remainder over three and one half years at the rate of 1/42nd per month of the total 155,902 shares. 3.7 Executive is entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing Company services, including expenses related to travel, entertainment, parking, and business meetings. These expenses will be accounted for in accordance with the policies and procedures established by the Company. 4. TERMINATION: Either party may terminate this Agreement and Executive's employment without cause, upon thirty (30) days written notice. Upon termination, the Company will be released from any and all obligations under this Agreement, except in the event the Executive's employment is involuntarily terminated by the Company for other than "good cause," then Executive will resign from all positions with the Company, and enter into a consulting arrangement for four (4) months commencing immediately after the termination date. In consideration for such consulting arrangement, Executive will continue to be paid salary and benefits for four (4) months. However, if Executive obtains new full time employment during such four (4) month period, any salary paid pursuant to such arrangement will be offset from amounts due under this Letter Agreement. Executive's obligations under Paragraph 5 of this Agreement will continue beyond her termination of employment. 5. CONFIDENTIAL INFORMATION; NONSOLICITATION. 5.1 Executive recognizes that her employment with the Company will involve contact with information of substantial value to the Company, which is not old and generally known in the trade, and which gives the Company an advantage over its competitors who do not know or use it, including but not limited to, techniques, designs, drawings, processes, inventions, developments, equipment, prototypes, sales and customer information, and business and financial information relating to the business, products, practices and techniques of the Company (hereinafter referred to as "Confidential Information"). Executive will at all times regard and preserve as confidential such Confidential Information obtained by Executive from whatever source and will not, either during her employment with the Company or thereafter, publish or disclose any part of such Confidential Information in any manner at any time, or use the same except on behalf of the Company, without the prior written consent of the Company; provided, however, that Executive may disclose Confidential Information in the best interest of the Company with properly executed Company confidentiality or secrecy agreements with the third party. As a condition of this Agreement, the Executive will sign and return a copy of the Company's Confidential Disclosure Agreement, attached as EXHIBIT A. 5.2 While employed by the Company and for one (1) year thereafter, in order to protect the Company's confidential and proprietary information from unauthorized use, Executive may not, either directly or through others, (i) solicit or attempt to solicit any employee, consultant or independent contractor of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or business entity; or (ii) solicit or attempt to solicit the business of any customer, vendor or distributor of the Company which, at the time of termination or one (1) year immediately prior thereto, was listed on the Company's customer, vendor or distributor list. Page 3 of 5 6. SUCCESSORS. The Company will require any successor (whether direct or indirect, by purchase, merger, or consolidation) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. 7. ASSIGNMENT AND BINDING EFFECT. This Agreement is binding on and inures to the benefit of Executive and Executive's heirs, executors, personal representatives, assigns, administrators and legal representatives. Because of the unique and personal nature of Executive's duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement are assignable by Executive. This Agreement is binding on and inures to the benefit of the Company and its successors, assigns and legal representatives. 8. NOTICES. All notices or demands of any kind required or permitted to be given by the Company or Executive under this Agreement will be given in writing and will be personally delivered (and receipted for) or mailed by certified mail, return receipt requested, postage prepaid. 9. CHOICE OF LAW. This Agreement will be construed and interpreted in accordance with the laws of the State of California, without regard to the conflict of laws provision thereof. 10. INTEGRATION. This Agreement contains the complete, final and exclusive agreement of the Parties relating to the subject matter of this Agreement, and supersedes all prior oral and written employment agreements or arrangements between the Parties. 11. AMENDMENT. This Agreement may not be amended or modified except by a written agreement signed by Executive and the Company. 12. WAIVER. No term, covenant or condition of this Agreement or any breach thereof will be deemed waived, except with the written consent of the Party against whom the wavier in claimed, and any waiver or any such term, covenant, condition or breach will not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach. 13. SEVERABILITY. The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement will not render any other provision of this Agreement unenforceable, invalid or illegal. Such court will have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision which most accurately represents the parties' intention with respect to the invalid or unenforceable term or provision. 14. INTERPRETATION; CONSTRUCTION. The headings set forth in this Agreement are for convenience of reference only and will not be used in interpreting this Agreement. Executive has been encouraged, and has consulted with, her own independent counsel and tax advisors with respect to the terms of this Agreement. The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and Page 4 of 5 revise, this Agreement, and the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement. 15. REPRESENTATIONS AND WARRANTIES. Executive represents and warrants that, to the best of Executive's knowledge, she is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that her execution and performance of this Agreement will not violate or breach any other agreements between Executive and any other person or entity. 16. COUNTERPARTS. This Agreement may be executed in two counterparts, each of which will be deemed an original, all of which together will contribute one and the same instrument. 17. ARBITRATION. If any dispute arises regarding the application, interpretation, or enforcement of this Agreement, including fraud in the inducement, the dispute will be resolved by final and binding arbitration before one arbitrator at the Judicial Arbitration and Mediation Service in Pleasanton, California. The decision of the arbitrator will be final and may not be appealed by either of the Parties. 18. ATTORNEYS' FEES AND COSTS. The prevailing party in any dispute arising out of this Agreement, will be entitled to reimbursement by the losing party of all of its or her attorneys' fees and costs including, but not limited to, arbitrator's fees and expert's fees. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. THE COMPANY: LIPID SCIENCES, INC. By: /s/ Phil Radlick ---------------------------------------- Phil Radlick President and CEO EXECUTIVE: /s/ Hana Berger Moran ---------------------------------------- Hana Berger Moran, Ph.D. Page 5 of 5 EX-10.2 4 p66567ex10-2.txt EX-10.2 EXHIBIT 10.2 PURCHASE AGREEMENT FOR REAL AND PERSONAL PROPERTY This Purchase Agreement entered into this 28th day of March, 2002 ("Agreement'), by and between NZ CORPORATION, an Arizona corporation, NZ DEVELOPMENT CORPORATION, an Arizona corporation, and NZU, INC., a New Mexico corporation, and LIPID SCIENCES, INC., an Arizona corporation (collectively referred to as "Seller") and NZ TRUST, LLC, an Arizona limited liability company, NZ SNOWFLAKE, LLC, an Arizona limited liability company, NZ MILKY RANCH, LLC, an Arizona limited liability company, NZ SILVER CREEK, LLC, an Arizona limited liability company, NZ JOSEPH CITY, LLC, an Arizona limited liability company, NZ NEW MEXICO LAND LLC, an Arizona limited liability company, NZ URANIUM, LLC, an Arizona limited liability company, NZ TRAVERTINE, LLC, an Arizona limited liability company, NZ OIL AND GAS, LLC, an Arizona limited liability company, NZ MINERALS, LLC, an Arizona limited liability company, NZ HISTORY AND ARTIFACTS, LLC, an Arizona limited liability company (collectively referred to as "Buyer") 1. Binding Agreement. This Agreement shall constitute a binding contract between Buyer and Seller for the purchase and sale of all right, title and interest of Seller in and to that certain real and personal property more particularly described in Section 2 hereof (collectively, the "Property" as hereinafter defined). Buyer and Seller hereby agree to do such things, and execute such documents, as shall be necessary or appropriate in order to consummate the transaction contemplated hereby in accordance with the terms hereof. 2. Property. As used herein, the term "Property" shall include all of Seller's right, title and interest in, to and under the following described real and personal property: a. The real property and appurtenant water rights located in Navajo County and Apache County, Arizona, and Cibola, Dona Ana, and McKinley Counties, New Mexico, which is described on Exhibits "A-1," "A-2," "A-3," "A-4" and "A-5" attached hereto (the "Land"), including all of Seller's interest in and to all buildings, fences, fixtures, wells, corrals, chutes, squeeze chutes, pens, holding traps, range improvement practices and other structures and improvements of every kind and nature located on the Land (collectively, the "Improvements") which Land and Improvements shall be collectively known as the Real Property. For purposes of this Agreement, Real Property shall also include: All rights and hereditaments running with and appurtenant to the Land, including, without limitation, all appurtenant easements and rights of way and all of Seller's interest in adjacent highways, roads, streets, rights of way and easements. All ditch and ditch rights, reservoirs and reservoir rights, well and well rights, irrigation grandfathered water rights and surface and groundwater rights appurtenant to or used in connection with the Land and all water tanks, wells, pumps, well equipment, irrigation equipment, pivots, sumps and other pumps, situated on or used in connection with the Land. All zoning and development rights affecting the Land, including, without limitations, all Seller's rights in and under any deed restrictions, property owner's associations or master plan affecting the Real Property. b. All personal property owned by Seller and located on the Land or used in connection therewith, including, without limitation, petrified wood, Indian artifacts and related items, together with certain artifacts, documents, and Indian artwork of historical interest located in Seller's office and storage units in Phoenix, Arizona, and Albuquerque, New Mexico ("Tangible Personal Property"), including, but not limited to, the items more particularly described on Exhibit "B", and all subject to a use agreement permitting Seller to use or display certain items of the Tangible Personal Property. c. Except as to those certain approximately 79,196.93 acres of mineral rights known to the parties as the Acoma Pueblo rights, all minerals whatsoever and all sand and gravel and other construction materials, and other rights and interests thereof owned or leased by Seller ("Mineral Rights"), including, without limitation, those described on Exhibit "C" attached hereto. d. Any leases and other agreements relating to the Mineral Rights or to the use or occupancy of the Land and/or the Improvements or any portion thereof (together with any amendments, extensions, guarantees or modifications to such leases and other agreements), and all claims and other rights related thereto (the "Leases"), including, without limitation, those described in Exhibit "D" attached hereto. e. All of Seller's right, title and interest in and to those certain First American Title Company Trust Agreements 8340, 8398, 6798, 4517 and 7602 ("Trust Agreements"), wherein NZ Development is the beneficiary together with all contractual rights and liabilities arising out of or in anyway connected with the agreements between NZ Development and First United Realty, Inc., an Arizona corporation, including the rights of Seller to that certain Agreement between NZ Development Corporation and First United Service Corporation dated June 3, 1997, and Exclusive Sales Agency Agreement between NZ Development Corporation and First United Service Corporation dated January 1, 2001, all as more particularly described on Exhibit "E" attached hereto. f. All of the right, title and interest held by NZU in and to all of the real property owned by it in McKinley County, New Mexico, described in subsection "a" above and any and all personal property presently owned by it, including the uranium lease known to the parties as the URI lease and certain Federal mining claims ("Uranium Rights"), all as more particularly described on Exhibit "F" attached hereto. 2 g. The names "New Mexico and Arizona Land Company", "NZ Corporation", "NZU", "NZ Development", and "River Meadows Ranch" (including all registrations therefor and any pending applications for registration thereof "hereinafter the Names") and all intellectual property rights of Seller, including, without limitation, all brands, trademarks, logos and literary rights] all as more particularly described on Exhibit G (collectively the "Intellectual Property"), subject, however, to Seller's reservation of the right to continue use of the Names for a period of 5 years from the date hereof for the purpose of winding down its operations and any other lawful purpose. h. Certain oil and gas estates located in Oklahoma, together with the lessor's interest in that certain lease, known to the parties as the Marathon lease, together with certain limited partnership interests all as described on Exhibit H (collectively the "Oil and Gas Interests"). i. All of Seller's legal rights, claims, causes of action (choate and inchoate), if any, relating to the Property, including, without limitation, claims for theft, damage or injury to the Property. 3. Purchase Price. The purchase price for all of the Property shall be Nine Million Two Hundred Thousand Dollars ($9,200,000.00) (the "Purchase Price"). The balance of the Purchase Price (i.e., reduced by the full amount of the "Earnest Money Deposit" (as hereinafter defined) and increased or reduced by such funds as are required to take into account the closing prorations required by this Agreement) shall be due from Buyer at the "Close of Escrow" (as hereinafter defined) and shall be deposited by Buyer with the Escrow Agent on or before the day of Close of Escrow (the "Closing Date") by Buyer depositing in cash or by Federal Reserve Bank Wire Transfer so that Escrow Agent shall have the cash amount of the Purchase Price in immediately available funds the sum of One Million Seven Hundred Forty Thousand Dollars ($1,740,000.00) and simultaneously executing the Promissory Note, Deed of Trust, Security Agreement, Collateral Assignment and UCC-1 documents attached hereto as Exhibit 1-A, 1-B, 1-C, and 1-D. The amounts to be deposited by Buyer at the Close of Escrow pursuant to the preceding sentence are referred to herein as the "Closing Funds." All prorations and adjustments determined and applied following the Close of Escrow shall be credited against the amount due under the Promissory Note. 4. Earnest Money. In consideration of Seller's entering into this Agreement, Buyer shall deposit with Escrow Agent an earnest money deposit in the amount of One Hundred Thousand Dollars ($100,000.00), which amount, together with all interest or other earnings thereon (collectively, the "Earnest Money Deposit"), shall be deposited and maintained by Escrow Agent in a federally insured money market account, shall be applied to the Purchase Price only in the event the transaction contemplated by this Agreement is consummated, except as otherwise expressly provided herein. As used herein, the term "Opening of Escrow" shall refer to the date upon which both a fully executed counterpart of this Agreement and the Earnest Money Deposit have been deposited with Escrow Agent. 3 5. Title Review for Real Property. a. REVIEW AND OBJECTION BY BUYER. Seller shall, at Seller's expense, cause Escrow Agent, as soon as possible, to deliver to Buyer a commitment to insure title (the "Title Report") to the Real Property. Buyer shall be entitled to object, in its sole and absolute discretion, to any matters disclosed by the Title Report by delivering a written notice (a "Title Objection Notice") to Seller and Escrow Agent on or before ten (10) after Buyer's receipt of the Title Report (together with readable copies of all documents referenced therein). Any Title Objection Notice delivered by Buyer pursuant to this Section 5.a shall specify in reasonable detail any matter to which Buyer objects. If Escrow Agent subsequently issues any amendment to the Title Report disclosing any additional title matters, Buyer shall be entitled to object to any such additional matter by delivering a Title Objection Notice to Seller and Escrow Agent on or before ten (10) days after Escrow Agent has delivered to Buyer the amendment to the Title Report (together with readable copies of any additional documents referenced therein). If Buyer fails to deliver a Title Objection Notice objecting to any matter set forth in the Title Report or any subsequent amendment thereto within the allowed time periods described above, then Buyer shall conclusively be deemed to have approved such matters. If the time periods provided in this paragraph do not expire prior to the Closing of Escrow, then the provisions of Section 5.c below shall apply. b. CURE BY SELLER. If Buyer timely delivers any Title Objection Notice, then Seller may, within three (3) business days after receipt of such Title Objection Notice, notify Buyer and Escrow Agent in writing (the "Cure Notice") that Seller will attempt to remove or satisfy such matter objected to by Buyer as soon as possible, and in any event on or before Close of Escrow or such later date as shall be consented to by Buyer in writing (the "Cure Period"). The obtaining of a commitment by Escrow Agent to delete as an exception to coverage on Buyer's title insurance policy or to insure over by endorsement in form reasonably acceptable to Buyer, at Seller's expense, any matter objected to by Buyer shall constitute a cure of such matter for purposes of this Agreement. If Seller does not deliver a Cure Notice, then Buyer shall, within two (2) days after the expiration of the three- (3) business-day period for the delivery of the Cure Notice, notify Seller and Escrow Agent in writing of Buyer's election to either (i) terminate this Agreement, whereupon this Agreement shall terminate and the Earnest Money Deposit shall be refunded to Buyer by Escrow Agent, Escrow Agent shall return to Buyer all documents Buyer deposited with Escrow Agent in connection with the Escrow, Escrow Agent shall return to Seller all documents Seller deposited with Escrow Agent in connection with the Escrow, and neither Party shall have any further right, obligation or liability under this Agreement except for those liabilities and obligations that are specified herein to survive the termination of this Agreement, or (ii) proceed with this transaction and waive Buyer's objection to such matter. Notwithstanding anything contained to the contrary herein, if Seller does not timely deliver a Cure Notice and Buyer fails to timely notify Seller and Escrow Agent of its election to either terminate or proceed with this transaction, then Buyer shall be deemed to have elected to proceed with this Agreement. If Seller delivers a Cure Notice but is thereafter unable to cure the matter(s) which is/are the subject of the Cure Notice within the Cure Period, then Buyer shall, within two (2) days after the expiration of the Cure Period, notify Seller and 4 Escrow Agent in writing of Buyer's election to either (i) terminate this Agreement, whereupon this Agreement shall terminate and the Earnest Money Deposit shall be refunded to Buyer by Escrow Agent, Escrow Agent shall return to Buyer all documents Buyer deposited with Escrow Agent in connection with the Escrow, Escrow Agent shall return to Seller all documents Seller deposited with Escrow Agent in connection with the Escrow, and neither Party shall have any further right, obligation or liability under this Agreement except for those liabilities and obligations that are specified herein to survive the termination of this Agreement, or (ii) proceed with this transaction and waive Buyer's objection to such matter. If the time periods provided in this paragraph do not expire prior to the Close of Escrow, then the provisions of Section 5.c below shall apply. c. The parties acknowledge that a Title Report and/or readable copies of all documents referenced in each Title Report for all or a portion of the Real Property (the "Remaining Portion") may not be available for Buyer's review prior to the scheduled Close of Escrow Date in sufficient time to accommodate the title review periods provided in Section 5.a. In such event, Seller shall provide Buyer with said Title Report and readable copies of all documents referenced therein for the Remaining Portion as soon as such is made available, but in no event later than thirty (30) days following Close of Escrow. Buyer shall have ten (10) days following receipt of said Title Report (together with readable copies of all documents referenced therein) to object to any consensual lien or any material adverse encumbrance, lien, matter or cloud affecting the Real Property. For the purpose of this Agreement, material adverse encumbrance, liens, matter or cloud shall be deemed to be a lien, encumbrance, matter or cloud on title which in the reasonable, good faith opinion of Buyer significantly reduces the value of the Real Property affected by such item. In such event, Buyer shall have the right to deliver to Seller within said ten (10) day period an Objection Notice as provided in subparagraph "a" above. Following receipt of said Objection Notice, Seller shall have the right to cure such objection as provided in subparagraph "b" above. In the event Seller either fails to deliver a Cure Notice or having delivered such Notice, fails to cure the Objection, Buyer may rescind the purchase of the portion of the Real Property affected by such material adverse lien, encumbrance, matter or cloud. In the event of Buyer's election to rescind, the parties shall cooperate in good faith in determining the appropriate reduction in the Purchase Price arising out of such rescission. In the event the parties are unable to agree on the amount of said reduction, either party may apply to the prevailing judge of Maricopa County, Arizona, to appoint an arbitrator which will be authorized by the parties to conduct a binding arbitration of the dispute. 6. Feasibility Contingency. Buyer shall have ten (10) days from the Opening of Escrow (the "Feasibility Period") to determine, in its sole and absolute discretion, whether the condition of the Seller's Property is suitable for Buyer's intended acquisition and use thereof. If Buyer determines that either the condition of the Seller's Property or the leases which encumber the Property are not suitable for Buyer's intended acquisition or use thereof, Buyer shall notify Seller and Escrow Agent in writing of such determination or failure within the Feasibility Period. If Buyer so notifies Seller and Escrow Agent of such determination, Buyer shall be deemed to have rescinded this Agreement, in which event, Escrow Agent shall (i) return to Buyer the Earnest Money Deposit, (iii) return to Buyer all documents Buyer deposited with Escrow Agent in connection with the Escrow, and (iii) return to Seller all documents Seller deposited with 5 Escrow Agent in connection with the Escrow, and thereupon this Agreement shall terminate and neither Party shall have any further right, obligation or liability under this Agreement, except for those liabilities and obligations that are specified herein to survive the termination of this Agreement. If Buyer does not so notify Seller and Escrow Agent in writing of such determination within the Feasibility Period, Buyer's right to rescind this Agreement and have the Earnest Money Deposit returned pursuant to this Section 6 shall terminate. 7. Investigation. Buyer and its representatives, agents, consultants and employees shall have the right, at its own risk, cost and expense, to enter upon, survey, examine, test and otherwise inspect the Property at any reasonable time and upon reasonable notice during the pendency of the Escrow, provided such examination does not unreasonably interfere with Seller's or Seller's tenants' use of the Property. Seller shall cooperate with Buyer in order to facilitate Buyer's access to the Property and information concerning the same consistent with the foregoing provisions of this Section 7. Buyer agrees to give Seller reasonable notice of any invasive tests it intends to conduct upon Seller's Property and obtain Seller's prior approval for the same, which approval shall not be unreasonably withheld. Following any examination of Seller's Property, Buyer shall return the Property to the condition in which it was prior to such examination. Buyer shall indemnify and hold Seller harmless for, from and against any and all defaults, liabilities, causes of action, demands, claims, damage or expenses of any kind, including reasonable attorneys' fees and court costs, arising as a consequence of any examination, test, inspection of or activity upon the Property pursuant to this Section 7 (except for such matters arising as a result of Buyer's discovery of existing conditions) (the "Inspection Indemnity"). The Inspection Indemnity shall survive the Close of Escrow and any termination or cancellation of this Agreement. Seller shall give prompt notice to Buyer if all or any portion of the Property is wholly or partially damaged or condemned prior to Close of Escrow. 8. General Assignment of Rights and Certain Reservations. Seller does hereby agree to assign by a Quit Claim Deed any and all water and other appurtenant real property interests or rights it may have previously reserved in connection with the sale of any real property by Seller to third parties prior to the date of Close of Escrow and all non-appurtenant water rights. Seller does, however, expressly reserve to itself and exclude from the scope of the transaction the following real and personal property: (a) the improved property known as the Plant Ranch House together with approximately 320 acres of land contiguous thereto (except Seller shall convey to Buyer ownership of all petrified wood located on such real property); (b) all of Seller's rights as lessor in and to all grazing leases on the property known to the parties as the Milky Ranch and the Plant Ranch; (c) all of Section 19, Township 16 North, Range 25 East, of the Gila and Salt River Base and Meridian, Apache County, Arizona; (d) Seller's rights as lessee under certain pending and existing Arizona State Grazing Leases and Seller's rights as applicant in connection with certain applications for Arizona State Grazing Leases. 6 (e) Seller's ownership of all grazing rights on any of the Real Property in Apache County. The parties agree that at an appropriate time following Close of Escrow as determined by Seller in the exercise of its discretion, but no later than the date that is one year from the Close of Escrow (however, Buyer may extend such deadline, in Buyer's reasonable discretion), Seller will arrange for the conveyance of said items (a) through (d) to Buyer for $100.00 and shall provide the same title insurance coverage as Seller is providing for the other Real Property. 9. Broker's Commission. Each party represents and warrants to the other that no real estate sales or brokerage commissions or like commissions are or will be due to any party in connection with this transaction. Seller shall indemnify and hold Buyer harmless from and against any claim, demand or suit for any brokerage commission, finder's fee or similar charge in respect of the execution of this Agreement or the transaction contemplated by this Agreement based on any act by or agreement or contract (or alleged act, agreement or contract) of Seller, and for all losses, obligations, costs, expenses and fees (including attorneys' fees) incurred by Buyer on account of or arising from the same. Buyer shall indemnify and hold Seller harmless from and against any claim, demand or suit for any brokerage commission, finder's fee or similar charge in respect of the execution of this Agreement or the transaction contemplated by this Agreement based on any act by or agreement or contract (or alleged act, agreement or contract) of Buyer, and for all losses, obligations, costs, expenses and fees (including attorneys' fees) incurred by Seller on account of or arising from the same. The indemnities contained in this Section 9 shall survive the Close of Escrow or the termination or cancellation of this Agreement. 10. Seller's Closing Items. Prior to Close of Escrow, Seller shall deposit into Escrow the following documents, instruments and other items: a. Special warranty deeds for the Real Property (the "Deeds"); b. A bill of sale which shall convey to Buyer all of Seller's title to all of the Personal Property, both tangible and intangible; c. An assignment of the Leases and security deposits, together with the originally executed Leases, and the security deposits and any prepaid rent (other than that relating to the then current month) shall be paid to Buyer; d. A deed of all of Seller's interest in the Mineral Rights; e. An assignment of all of Seller's interest in the Trust Agreements; f. An assignment of all of Seller's interest in Seller's Intellectual Property; g. A deed and assignment of all of Seller's interest in the Uranium Rights. h. Possession of the Property; 7 i. The Certification of Non-foreign Status as provided in Treas. Reg. 1.1445-2T(b)(2)(iii)(B) or in any other form as may be required by the Internal Revenue Code or the regulations issued thereunder; j. Such other customary items and instruments as shall be required by the Escrow Agent in connection with the issuance of its title insurance policy to Buyer pursuant to this Agreement or as shall be reasonably requested by counsel to Buyer and consistent with the terms of this Agreement; k. Any other documents required by this Agreement to be delivered by Seller or reasonably requested by Buyer to consummate the transaction contemplated hereby; and l. An appropriate affidavit of property value with respect to the Real Property. The documents described in Sections 10.b through 10.l are referred to herein collectively as the "Other Conveyance Documents." All of such documents, instruments and other items shall be duly executed and acknowledged. At Close of Escrow, Escrow Agent shall deliver such documents to Buyer or record them, as appropriate. Upon Close of Escrow, Seller shall convey title (i) to the Real Property, free and clear of all taxes, claims, charges, assessments, easements, restrictions, liens, trusts, mortgages, security interests and agreements, financing statements and encumbrances, except only Permitted Encumbrances. As used herein, the term "Permitted Encumbrances" shall mean only (i) those matters which appear as exceptions to coverage in the Title Report (and any amendment thereto) which are approved, or deemed approved, by Buyer pursuant to Section 5, (ii) all applicable laws, (iii) liens for taxes and assessments not then due and payable, (iv) any liens arising through Buyer or Buyer's employees or agents, (v) all matters that an accurate inspection and/or accurate survey of the Land or the Personal Property would reveal, (vi) matters previously disclosed to Buyer by Seller in writing, and (vii) those matters which appear on Schedule B, Part II, of the Title Report (and any amendment thereto) which are timely disapproved by Buyer in accordance with the terms hereof, with respect to which Seller delivers a Cure Notice, and with respect to which Buyer elects to proceed with this transaction and waive Buyer's objection to such matter notwithstanding Seller's failure to effect such cure within the Cure Period. As disclosed to Buyer, Seller has previously conveyed certain real property (the "Previously Conveyed Property") to the Hopi Indian Tribe and certain third parties. If any deed used to convey the Real Property to Buyer is found to contain a legal description that includes any of the Previously Conveyed Property, Buyer will cooperate with Seller to re-record such deed with a corrected legal description that excludes the Previously Conveyed Property. Seller shall provide Buyer with standard owner's policies of title insurance issued by Escrow Agent in the total amount of $5,000,000 insuring that Buyer (or such Buyer entity as Buyer designates to hold title to the applicable portion of the Real Property) is the owner of the Real Property (or applicable portion thereof) free and clear of all matters other than the Permitted Encumbrance. 11. Buyer's Closing Items. On or before the Close of Escrow, Buyer shall deposit into Escrow the Closing Funds as provided in Section 3. At or before Close of Escrow, Buyer 8 shall execute and acknowledge such of the Other Conveyance Documents as require Buyer's signature, including an assumption of all of Seller's obligations with respect to any matter arising out of ownership of the Property and occurring subsequent to the Close of Escrow, and deliver the same to the Escrow Agent. As a condition to Buyer's obligations to purchase the Property and proceed with the Close of Escrow, Buyer shall have received a written estoppel certificate executed by First American Title Insurance Company ("Trustee"), as the Trustee under the Trust Agreements certifying that, to the best of Trustee's knowledge: (a) the information Trustee has delivered to Buyer regarding the Trust Agreements, including, without limitation, the copies of the Trust Agreements, is true, accurate and correct; (b) the Trust Agreements are in full force and effect and have not been amended or modified; (c) Seller's interest in the Trust Agreements has not been conveyed, assigned or encumbered; and (d) the amount of the outstanding receivables currently held by Trustee under the Trust Agreements and the amount of fee land currently owned by Trustee under the Trust Agreement. 12. Representations and Warranties by Seller. In order to induce Buyer to enter into this Agreement and to purchase the Property, Seller hereby makes the following representations and warranties, each of which is material and shall, together with all covenants, agreements and indemnities set forth in or made pursuant to this Agreement, survive Close of Escrow, notwithstanding any investigation at any time made by or on behalf of Buyer: a. NZ Development Corporation and NZ Corporation are each a corporation duly organized and validly existing under the laws of the State of Arizona. NZU, INC., is a corporation duly organized and validly existing under the laws of the State of New Mexico. Seller has all necessary power and authority and has taken all necessary corporate action to execute, deliver and perform this Agreement and consummate all of the transactions contemplated by this Agreement. b. The execution of this Agreement by Seller and its delivery to Buyer and consummation by Seller of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Seller and the shareholders of Seller. This Agreement is the valid and binding obligation of Seller, enforceable against it in accordance with its terms. c. No consent from any third party is necessary in order for Seller to execute and deliver or perform its obligations under this Agreement. d. Seller has no actual knowledge (as distinguished from constructive or imputed knowledge), of any discharge, spillage, uncontrolled loss, seepage or filtration (a "Spill") of oil, petroleum or chemical liquids or solids, liquid or gaseous products or any hazardous waste or hazardous substance (as those or similar terms are used in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, as amended, or in any other applicable federal, state or local laws, ordinances, rules or regulations relating to protection of public health, safety or the environment, as such laws may be amended from time to time) at, upon, under or within the Real Property. To the best of Seller's knowledge, there is no proceeding or action pending or threatened by any person or governmental agency regarding the environmental condition of the Real Property, nor 9 have there been or are there now any underground storage tanks located on the Real Property. Notwithstanding the foregoing representations in this paragraph, Buyer acknowledges that Seller makes no representation whatsoever with regard to de minimis Spills which one might reasonably expect to occur in connection with the ordinary operation and maintenance of a property like the Real Property. e. To the best of Seller's knowledge, except as disclosed by Seller in writing to Buyer, there is no litigation, condemnation, administrative or other proceeding or hearing either instituted or threatened, or any basis therefor, which might adversely affect the use, operation or value of all or any material portion of the Property or Seller's ability to perform hereunder. f. To the best of Seller's knowledge, except as disclosed by Seller in writing to Buyer, there are no contracts, agreements or arrangements, written or oral, express or implied, affecting or relating to the Property other than this Agreement, matters which will appear in Schedule B of the Title Report, and the matters listed on Exhibit "2" attached hereto, true, correct and complete copies or, in the case of oral agreements, descriptions, of which (i.e., the matters listed on Exhibit "2") have been provided to Buyer, which contracts, agreements and arrangements are, to the best of Seller's knowledge, in full force and effect without any existing, pending or threatened default. g. Except as disclosed to Buyer in writing, no portion of the Property has been sold, conveyed or hypothecated subsequent to February 23, 2002, except in the ordinary course of business. h. To the best of Seller's knowledge, there has been no uranium processing or milling on the Real Property. i. Seller shall maintain the Property until the Close of Escrow in its present condition, ordinary wear and tear excepted. j. Seller is not involved as a debtor in any state or federal bankruptcy, reorganization, arrangement, insolvency proceedings, receivership or any other debtor-creditor proceeding. Seller has not made any assignment for the benefit of creditors generally. k. Seller owns fee title to the Real Property. Except as disclosed to Buyer by Seller in writing, to the best of Seller's knowledge, there are no undisclosed leases, easements, purchase options, right of first refusal, liens (including, without limitation, mechanic's, laborer's or materialmen's liens) or encumbrances that may affect title to the Property. Except as disclosed to Buyer by Seller in writing, to the best of Seller's knowledge, there are no other parties in possession of any portion of the Property, including, without limitation, lessees or trespassers. l. If prior to the Close of Escrow Seller learns that there has been a material change in any information Seller has previously given to Buyer, Seller shall immediately notify Buyer of such change. 10 As used in this Agreement, the phrase "to the best of Seller's knowledge" shall refer to the present actual knowledge of Jerome L. Joseph, R. Randy Stolworthy and J.D. Sphar, and not any knowledge of Seller's other employees, agents, representatives or professionals. It is understood by the parties that warranties and representations made herein to the best of Seller's knowledge are made without special inquiry by Seller. 13. Limited Representations and Warranties by Seller. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE DEED OR THE OTHER CONVEYANCE DOCUMENTS, BUYER IS ACQUIRING THE PROPERTY "AS IS, WHERE IS" WITH ALL FAULTS AND DEFECTS AND WITHOUT WARRANTY OF TITLE OR FITNESS. 14. Representations and Warranties by Buyer. In order to induce Seller to enter into this Agreement and to sell the Property, Buyer hereby makes the following representations and warranties, each of which is material and shall survive Close of Escrow, notwithstanding any investigation at any time made by or on behalf of Seller: a. Buyer has all necessary power and authority to execute, deliver and perform this Agreement and consummate all of the transactions contemplated by this Agreement. This Agreement is the valid and binding obligation of Buyer, enforceable against it in accordance with its terms. b. To the best of Buyer's knowledge, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will: (i) conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any agreement or instrument to which Buyer is a party, (ii) violate any restriction, requirement, covenant or condition to which Buyer is subject, and (iii) constitute a violation of any applicable code, resolution, law, statute, regulation, ordinance, rule, judgment, decree or order. 15. Close of Escrow. Close of Escrow shall be defined as the consummation of the purchase and sale transaction in accordance with this Agreement. Each party's obligation to close escrow is contingent upon the complete discharge of all of the other party's obligations as set forth herein. The Closing Date shall be March 29, 2002, or such earlier date as to which the Parties agree. Upon Close of Escrow, (a) the executed and acknowledged Deed shall be delivered and recorded, and the executed Other Conveyance Documents shall be delivered to Buyer, (b) the Purchase Price shall be paid to Seller as provided in Section 3, net of closing costs and other charges allocable to Seller, and (c) full and unfettered possession of the Real Property, subject only to Permitted Encumbrances, and full and unfettered possession of the balance of Seller's Property, shall be delivered to Buyer. The parties agree that Seller's obligations hereunder are expressly conditioned upon Buyer closing escrow on the entirety of this transaction and acquiring all of Seller's Property. In no event shall Seller have the right to acquire less than all of Seller's Property. 16. Settlement Charges; Prorations and Adjustments. Seller shall pay for the title examination and the title insurance premium for a standard owner's title insurance premium for the Real Property. Buyer shall pay the incremental premium for any ALTA Extended Coverage 11 Owner's Policy and any other endorsements requested by Buyer. The parties acknowledge that no title insurance shall be provided for any personal property. Any recording fees shall be borne equally by Seller and Buyer. Buyer and Seller shall each pay its own legal fees related to the preparation of this Agreement and all documents required to settle the transaction contemplated hereby. All other changes shall be apportioned in the manner customary in the jurisdiction wherein the Property is located. In addition to the foregoing, at Close of Escrow, the following adjustments and prorations shall be computed as of the Closing Date, as follows: a. Real estate and personal property taxes shall be apportioned as of the Closing Date. The proration of the undetermined taxes will be based upon a 365 day year and upon the most recently available tax use, rate and valuation information. b. All special assessments and other similar charges shall be prorated as of the Closing Date. c. All other charges and fees customarily prorated and adjusted in similar transactions. d. Rent under any Leases shall be prorated as of the Closing Date. e. Seller will pay to Buyer at Close of Escrow (or credit on the Purchase Price payable at Close of Escrow) an amount equal to all security deposits which, as of the date of Close of Escrow, Seller is legally required to ultimately refund to tenants under the Leases. A listing of all such security deposits as of the date hereof is included in the rent roll attached hereto as Exhibit "3". 17. Indemnifications. a. Indemnification by Seller. Seller, for a period of three (3) years following Close of Escrow, hereby indemnifies and agrees to defend and hold harmless Buyer and any officer, director, member, manager, employee or agent of Buyer, and their respective successors and assigns, from and against any and all claims, expenses, costs, damages, losses and liabilities (including reasonable attorneys' fees) which may at any time be asserted against or suffered by any indemnitee or the Property, or any part thereof, whether before or after the Closing Date, as a result of, on account of or arising from (a) any breach of any covenant, representation, warranty or agreement on the part of Seller made herein or in any instrument or document delivered pursuant to this Agreement, and/or (b) any obligation, claims, suit, liability, contract, agreement, debt or encumbrance or other occurrence (other than encumbrances expressly approved by Buyer) created, arising or accruing on or prior to the Closing Date and relating to the Property or its operations. b. Indemnification by Buyer. Buyer, for a period of three (3) years following Close of Escrow, hereby indemnifies and agrees to defend and hold harmless Seller and its partners and subsidiaries, and any officer, director, employee or agent of any of them, and their respective successors and assigns, from and against any and all claims, expenses, costs, damages, losses and liabilities (including reasonable attorneys' fees) which may at any time be asserted against or suffered by any indemnitee as a result of, on 12 account of or arising from (a) any breach of any covenant, representation, warranty or agreement on the part of Buyer made herein or in any instrument or document delivered pursuant to this Agreement, and/or (b) any obligation, claims, suit, liability, contract, agreement, debt or encumbrance or other occurrence created, arising or accruing after the Closing Date and relating to the Property or its operations. 18. Remedies/Default. a. Default by Seller. If any warranty or representation of Seller made herein shall prove to be materially untrue prior to Close of Escrow, or if Seller shall fail to perform any of Seller's obligations under this Agreement on or prior to the date for performance provided herein, then Buyer shall be entitled to either (x) seek specific performance of this Agreement or (y) terminate this Agreement by giving notice of such termination to Seller and Escrow Agent, in which latter event the Escrow and this Agreement shall be terminated for all purposes, Escrow Agent shall return the Earnest Money Deposit to Buyer, and Escrow Agent shall return all other funds, documents and other items held in escrow to the Party that deposited same in escrow, and the Parties shall have no further rights or obligations under this Agreement except that Buyer shall remain liable for its obligations under Sections 7 and 9 hereof and Seller shall remain liable for its obligations under Section 9 and such other indemnification obligations as are specifically set forth herein. b. Default by Buyer. If Buyer fails to consummate the purchase and sale contemplated herein when required to do so pursuant to the provisions of this Agreement (a "Buyer Default"), then Seller's sole and exclusive remedy hereunder shall be to terminate this Agreement by giving notice of such termination to Buyer and Escrow Agent, in which event the Escrow and this Agreement shall be terminated for all purposes, whereupon Escrow Agent shall pay the Earnest Money Deposit to Seller and shall return all other funds, documents and other items held in escrow to the Party that deposited same in escrow, and the Parties shall have no further rights or obligations under this Agreement, except that Buyer shall remain liable for its obligations under Sections 7 and 9 hereof and Seller shall remain liable for its obligations under Section 9. Any sums paid to Seller under the foregoing sentence shall be deemed to be liquidated damages paid to Seller by reason of such Buyer Default, and the Parties hereby agree that said amount is a reasonable forecast of just compensation for the harm that may be caused to Seller as a result of such Buyer Default, and that Seller's harm in the event of such a Buyer Default would be incapable of accurate estimation or very difficult to accurately estimate. Seller acknowledges and agrees that Seller shall not be entitled to any additional or other damages or other remedies whatsoever in the event of a default hereunder by Buyer, except as provided in Sections 7 and 9 hereof. 19. Risk of Loss. If all or any material portion of the Property is stolen, misplaced, destroyed, damaged or condemned or if any condemnation proceedings against all or any portion of the Property are commenced prior to Close of Escrow, Buyer may, at its election, rescind this Agreement, in which event, Escrow Agent shall return to Buyer the Earnest Money Deposit, Escrow Agent shall return to Buyer all documents Buyer deposited with Escrow Agent in connection with the Escrow, Escrow Agent shall return to Seller all documents Seller deposited 13 with Escrow Agent in connection with the Escrow, and thereupon this Agreement shall terminate and neither Party shall have any further right, obligation or liability under this Agreement, except for those liabilities and obligations that are specified herein to survive the termination or cancellation of this Agreement. 20. Jurisdiction and Choice of Forum. The Parties acknowledge that any action brought hereunder shall be brought in the Superior Court of Maricopa County, Arizona. 21. Pending Litigation. There is currently pending a lawsuit styled NZ Corporation v. Marlin Maxwell, CV 2001-033, Arizona Superior Court, Apache County ("Maxwell lawsuit"). Seller will continue to prosecute the Maxwell lawsuit to conclusion and pay all costs related thereto and indemnify buyer from any liabilities arising from the lawsuit or any related claim, counterclaim or defense. Seller and Buyer acknowledge that an area of land at what is known as the "Milky Ranch House in Section 19" is not being conveyed to Seller at this time as a result of the Maxwell lawsuit (the "Section 19 Property"). If Seller prevails in the Maxwell lawsuit, Seller will convey any portion of the Section 19 Property not previously conveyed to Buyer. Seller shall have sole authority to prosecute, settle, compromise or otherwise dispose of any claim, defense or counterclaim in the Maxwell lawsuit in any manner it deems necessary in its sole judgment (but Seller shall act in good faith and not take any such action in an attempt to avoid Seller's obligations to prosecute the Maxwell lawsuit); however, Seller shall not agree to any settlement or compromise that gives Maxwell any ownership or rights in any part of the Section 19 Property or an interest in any grazing leases without Buyer's prior written consent. Buyer shall not unreasonably withhold its consent if the settlement or compromise involves granting Maxwell a lease of two years or less on all or any portion of the Section 19 Property. Buyer may give or withhold its consent, in its sole and absolute judgment and discretion, for any settlement or compromise that grants Maxwell any greater interest in the Section 19 Property or the grazing leases. 22. License for Use of Certain Intellectual Property Rights. The parties acknowledge that at Close of Escrow, Buyer shall provide a license to Seller in the form of Exhibit 5 attached hereto and by this reference incorporated herein for the right to use the names New Mexico and Arizona Land Company, NZU, NZ Corporation, NZ Development and such books and records previously owned by said NZ entities to permit Seller to continue to wind down its business. The term of such selections shall be for five (5) years and may be extended, from time to time, at the option of Seller as may be necessary to wind down its affairs. 23. General. Except to the extent inconsistent with the express language of the foregoing provisions of this Agreement, the general provisions set forth in this Section 23 shall govern the interpretation, application, construction and enforcement of this Agreement: a. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND INDEMNITIES. All representations and warranties contained in this Agreement (and in any certificate or other instrument delivered by or on behalf of any Party pursuant hereto or in connection with the transactions contemplated hereby) are true in all material respects on and as of the date so made and will be true in all material respects on and as of the date on which the transaction contemplated hereby is closed (except to the extent expressly made as of a particular date certain) and will survive such Closing Date for a period of one (1) year. 14 If, prior to the Close of Escrow, either Party receives notice or obtains actual knowledge of any information that indicates any of the representations and warranties contained in this Agreement are untrue, then such Party shall promptly advise the other Party in writing of such notice or knowledge. All indemnities contained in this Agreement shall survive the Closing Date. b. NOTICES. All notices shall be: (i) delivered in person; (ii) sent by telecopy; or (iii) mailed, postage prepaid, either by certified or registered mail, return receipt requested or by overnight express carrier, addressed in each case as follows: If to Seller: NZ Corporation Attn: Jerome L. Joseph 333 N. 44th Street Suite 420 Phoenix, AZ 85008 Phone No. 602-952-8836 Fax No. 602-952-8769 With a copy to: K. Bellamy Brown The Cavanagh Law Firm 1850 North Central Avenue Suite 2400 Phoenix, AZ 85004 Phone No. 602-322-4057 Fax No. 602-322-4105 If to Buyer: c/o Robert M. Worsley 601 E. Houston Gilbert, AZ 85234 Phone No. 602-528-3210 Fax No. 602-254-6544 With a copy to: Paul D. Ellsworth, Esq. Paul D. Ellsworth, PLC 4041 E. Grove Mesa, AZ 85206-3201 Phone No. 480-396-3100 Fax No. 480-396-3200 All notices and documents shall be deemed received and effective: (i) if delivered in person, on the day delivered; (ii) if sent by telecopy, on the day sent if a business day, or if such day is not a business day, then on the next business day; (iii) if sent by overnight express carrier, on the next business day immediately following the day sent; or (iv) if sent by registered or certified mail, on the second business day following the day sent. c. SEVERABILITY. The provisions of this Agreement are severable. As such, the invalidity, in whole or in part, of any provision of this Agreement shall not affect the 15 validity or enforceability of any other provision of this Agreement. If any clause or provision of this Agreement is determined to be illegal, invalid, or unenforceable under any present or future law, such clause or provision shall be ineffective, but the remaining provisions of the Agreement will not be affected and shall be construed in the broadest manner to effectuate the purposes of this Agreement. Further, the Parties agree to replace any void or unenforceable provision of this Agreement with a valid and enforceable provision which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision. d. ADDITIONAL ACTS AND DOCUMENTS. Each Party hereto agrees to do all such things and take all such actions, and to make, execute and deliver such other documents and instruments, as shall be reasonably requested to carry out the provisions, intent and purpose of this Agreement. Each Party hereto expressly agrees to deal in good faith with the other in carrying out the provisions, intent and purpose of this Agreement. The provisions of this paragraph shall survive Close of Escrow. The Property includes all of Seller's right, title and interest in and to all property and rights appurtenant to the Property and necessary for the operation, use and/or development of the Property, including, without limitation, all contingent or future rights and interests. If following the Close of Escrow, any such rights have not been conveyed to Buyer, Seller shall, upon request, immediately execute all documents the parties deem necessary or desirable to convey, and to evidence the conveyance of, such rights to Buyer. e. FURTHER ASSURANCES REGARDING ESCROW. The Parties agree to give such joint instructions to the Escrow Agent as shall be necessary to effectuate the applicable express provisions of this Agreement. f. ATTORNEYS' FEES. In the event action is taken by any Party to this Agreement to enforce the terms of this Agreement, the prevailing Party shall be entitled to recover reimbursement for reasonable attorneys' fees, court, arbitration or similar costs, costs of investigation and other related expenses incurred in connection therewith. g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Parties hereto, and their respective successors in interest and assigns, but in no event shall any Party be relieved of its obligations hereunder without the express written consent of each other Party. h. COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in any number of counterparts, all such counterparts shall be deemed to constitute one and the same instrument, and each of said counterparts shall be deemed an original hereof. The executed counterpart signature pages of this Agreement may be combined to create one original of this Agreement. Fax copies of signatures shall be binding on the parties as original signatures. i. TIME. Time is of the essence of this Agreement and each and every provision hereof. Any extension of time granted for the performance of any duty under this Agreement shall not be considered an extension of time for the performance of any other duty under this Agreement. 16 j. WAIVER. Failure of any Party to exercise any right or option arising out of a breach of this Agreement shall not be deemed a waiver of any right or option with respect to any subsequent or different breach, or the continuance of any existing breach. k. INTEGRATION CLAUSE; ORAL MODIFICATION. This Agreement represents the entire agreement of the Parties with respect to the subject matter hereof, and all agreements entered into prior hereto with respect to the subject matter hereof are revoked and superseded by this Agreement, and no representations, warranties, inducements or oral agreements have been made by any of the Parties except as expressly set forth herein, or in other contemporaneous written agreements. This Agreement may not be changed, modified or rescinded except in writing, signed by all Parties hereto, and any attempt at oral modification of this Agreement shall be void and of no effect. l. CAPTIONS. Captions and section headings used herein are for convenience only and are not a part of this Agreement and shall not be deemed to limit or alter any provisions hereof and shall not be deemed relevant in construing this Agreement. m. GOVERNING LAW. This Agreement shall be deemed to be made under, and shall be construed in accordance with and shall be governed by, the laws of the State of Arizona, applicable to contracts executed within and wholly performable within such State. n. INTERPRETATIONS. To the extent permitted by the context in which used, (i) words in the singular number shall include the plural, words in the masculine gender shall include the feminine and neuter, and vice versa, and (ii) references to "persons" or "parties" in this Agreement shall be deemed to refer to natural persons, corporations, general partnerships, limited partnerships, trusts and all other entities. o. SPECIFIC PERFORMANCE. Seller acknowledges that the remedy of specific performance shall be available and proper in the event Seller fails or refuses to perform its duties hereunder, and that the remedy of money damages is inadequate. p. EXHIBITS. Any Exhibit attached hereto shall be deemed to have been incorporated herein by this reference, with the same force and effect as if fully set forth in the body hereof. q. BUSINESS DAY; TIME FOR PERFORMANCE. Any reference in this Agreement to "business day" shall refer to a Monday, Tuesday, Wednesday, Thursday or Friday on which a majority of the banks (by number) having branch offices in Phoenix, Arizona, are generally open for business in that City. If the date on which an act specified to occur or be performed under this Agreement shall not be a business day, or if the last day on which an election, notice or other act can be made or accomplished under this Agreement shall not be a business day, then the same shall be timely if it occurs or is performed, made or accomplished on the next following business day. r. JOINT AND SEVERAL LIABILITY. The respective obligations and liabilities of Seller and Buyer under this Agreement are and shall be joint and several obligations and liabilities of the entities constituting Seller and Buyer, respectively. 17 s. ADDITIONAL POST CLOSING MATTERS. Seller and Buyer acknowledge that some of the conveyance and other obligations contained in this Agreement may occur following the Close of Escrow. By proceeding with the Close of Escrow, neither Seller nor Buyer shall be deemed to have waived the fulfillment of any obligations by the other party under this Agreement or any rights or remedies under this Agreement unless specifically waived in writing. Seller shall deliver to Buyer copies of all documents described in the exhibits and Title Reports as soon as reasonably possible, but no late than thirty (30) days following the Close of Escrow. The parties further acknowledge that the Close of Escrow will occur with some of the exhibits to this Agreement not yet completed and as to the completed exhibits, without time for Buyer to review and approve the exhibits. Following the Close of Escrow, Seller and Buyer shall cooperate in good faith to approve and complete the exhibits in a form reasonably acceptable to the parties. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 18 IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of March 29, 2002. SELLER: NZ CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ------------------------------------ Name: Jerome L. Joseph Its: Treasurer & CFO NZU, INC., a New Mexico corporation By: /s/ Jerome L. Joseph ------------------------------------ Name: Jerome L. Joseph Its: Treasurer & CFO NZ DEVELOPMENT CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ------------------------------------ Name: Jerome L. Joseph Its: Treasurer & CFO LIPID SCIENCES, INC., an Arizona corporation By: /s/ Barry Michaels ------------------------------------ Name: Barry Michaels Its: Chief Financial Officer "SELLER" 19 BUYER: NZ TRUST, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ SNOWFLAKE, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ MILKY RANCH, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ SILVER CREEK, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager 20 NZ JOSEPH CITY, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ NEW MEXICO LAND, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ URANIUM, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ TRAVERTINE, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager 21 NZ OIL AND GAS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ MINERALS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager NZ HISTORY AND ARTIFACTS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ------------------------------------------ Name: Robert M. Worsley Its: Manager "BUYER" 22 LIST OF EXHIBITS Exhibits A-1, A-2 A-3, A-4 and A-5: Legal Description of Land Exhibit C: Mineral Rights Exhibit D: Leases Exhibit E: Exclusive Sales Agency Agreement Exhibit F: Uranium Rights Exhibit G: Seller's Intellectual Property Exhibit H: Oil and Gas Interests Exhibit 1-A Promissory Note Exhibit 1-B Deed of Trust Exhibit 1-C Security Agreement Exhibit 1-D Collateral Assignment and UCC-1 23 EXHIBIT A-1 LEGAL DESCRIPTION NAVAJO COUNTY HOLDINGS AS OF MARCH 31, 2002

- --------------------------------------------------------------------------------------- TITLE REPORT TAX PARCEL # PARCEL# TWN RGE SECTION ACRES ------------ ------- --- --- ------- ----- 103-02-010 7 14 19N 15E RD UTIL EAS. 14 0.74 103-61-001D-8 16 19N 16E 31 233.85 103-43-001A 9 17 20N 15E W2NE4,E2SE4; 1 160.00 202-01-001 B 8 1 13N 20E 25 640.00 202-05-001 F 6 2 13N 21E NW4 31 166.48 202-05-001 D 8 2 13N 21E SW4 31 156.61 202-05-001 C 9 2 13N 21E SE4 31 156.67 202-05-001-B-0 2 13N 21E NE4 31 160.00 202-27-001 B 4 3 14N 21E E OF SILVER CRK 1 236.70 202-27-001 B 4 3 14N 21E E OF SILVER CRK 13 43.70 110-03-001 B 4 5 15N 21E 11 640.00 103-22-025 B 7 15 19N 16E GRAVEL PIT 27 42.47 107-01-022 7 12 18N 18E S2NE4,NW4,S2 14 491.06 107-19-006 4 13 18N 19E W2, 18 246.46 110-03-004 A 4 5 15N 21E 12 640.00 203-10-011 2 6 14N 22E 6 699.65 6 14N 22E 6 (54.30) 110-04-002 E 7 6 15N 22E 1 483.92 110-04-002 E 7 6 15N 22E 1 160.00 110-04-002 E 7 6 15N 22E 5 641.18 110-04-002 E 7 6 15N 22E 6 707.05 110-04-002 E 7 6 15N 22E 7 718.82 110-04-002 E 7 6 15N 22E 14 640.00 110-04-002 E 7 6 15N 22E E2, 15 320.00 110-04-002 E 7 6 15N 22E W2, 15 320.00 110-04-002 E 7 6 15N 22E W2, 17 320.00

24 110-04-002 E 7 6 15N 22E 18 178.14 110-04-002 E 7 6 15N 22E 19 176.84 110-04-002 E 7 6 15N 22E E OF SILVER CK 29 270.00 110-04-002 E 7 6 15N 22E E OF SILVER CK 30 271.72 110-04-009 3 6 15N 22E 3 640.48 110-04-009 3 6 15N 22E 10 640.00 110-04-009 3 6 15N 22E 11 640.00 110-04-008 0 6 15N 22E 13 640.00 110-09-001A 3 16N 22E 29 640.00 110-09-001C 1 11 16N 22E 19 631.36 110-09-001C 1 11 16N 22E 33 320.00 110-09-001C 1 11 16N 22E 33 320.00 110-09-001B 2 11 16N 22E 13 669.33 110-09-001B 2 11 16N 22E 23 640.00 110-09-001B 2 11 16N 22E 24 655.04 110-09-001B 2 11 16N 22E 25 640.00 110-09-001B 2 11 16N 22E 27 640.00 110-09-001B 2 11 16N 22E 31 630.82 110-09-001B 2 11 16N 22E 35 160.00 110-09-001B 2 11 16N 22E 35 480.00 110-05-001A 1 10 15N 23E 5 640.22 110-05-001A 1 10 15N 23E N2N2 9 160.00 110-05-001A 1 10 15N 23E 11 640.00 110-05-001A 1 10 15N 23E 13 640.00 110-05-001C 9 10 15N 23E 7 725.02 110-05-001C 9 10 15N 23E S2,S2N2 9 480.00 110-05-001C 9 10 15N 23E 17 640.00 110-05-001C 9 10 15N 23E 18 722.72 = = = = = TOTAL ACRES 23,502.75 25 EXHIBIT A-2 LEGAL DESCRIPTION APACHE COUNTY HOLDINGS AS OF MARCH 31, 2002

NZ TAX PARCEL # TWN RGE SECTION ACRES GL # ACRES ------------ --- --- ------- ----- ---- ----- 212-24-001 4 14N 24E 1 640.86 452 640.86 ---------- --------- TOTAL 640.86 640.86 ========== ========= 204-19-001 1 15N 24E 1 642.34 611 642.34 204-19-001 1 15N 24E 2 546.60 611 204-19-001 1 15N 24E 2 39.26 611C 585.86 204-19-001 1 15N 24E 3 29.69 611 204-19-001 1 15N 24E 3 11.00 611C 40.69 204-19-001 1 15N 24E 11 78.20 611 78.20 204-19-001 1 15N 24E 12 160.00 611 204-19-001 1 15N 24E 12 22.00 611C 204-19-001 1 15N 24E 12 453.30 611A 635.30 204-19-001 1 15N 24E 13 160.08 611A 160.08 ---------- --------- TOTAL 2,142.47 2,142.47 ========== ========= 204-27-001 4 16N 24E 1 568.48 603 568.48 204-27-001 4 16N 24E E2, 3 297.03 603 297.03 204-27-001 4 16N 24E E2, 10 320.00 603 320.00 204-27-001 4 16N 24E 11 640.00 603 640.00 204-27-001 4 16N 24E 12 640.00 603 640.00 204-27-001 4 16N 24E 13 640.00 603 640.00 204-27-001 4 16N 24E 15 640.00 611 640.00 204-27-001 4 16N 24E 17 603.25 611 603.25 204-27-001 4 16N 24E 21 2.00 610 204-27-001 4 16N 24E 21 635.57 611 637.57 204-27-001 4 16N 24E 23 640.00 611 640.00 204-27-001 4 16N 24E 25 640.00 611 640.00 204-27-001 4 16N 24E W2, 26 320.00 611 320.00 204-27-001 4 16N 24E 27 640.00 611 640.00 204-27-001 4 16N 24E 35 640.00 611 640.00 ---------- --------- TOTAL 7,866.33 7,866.33 ========== ========= 211-01-001 0 17N 24E 1 645.38 603 645.38 211-01-001 0 17N 24E E2, 11 320.00 603 320.00 211-01-001 0 17N 24E 12 640.00 603 640.00 211-01-001 0 17N 24E 13 640.00 603 640.00 211-01-001 0 17N 24E E2, 14 320.00 603 320.00 211-01-001 0 17N 24E E2, 23 320.00 603 320.00

26 211-01-001 0 17N 24E ALL EXCPTSE4, 24 600.00 603 600.00 211-01-001 0 17N 24E 25 640.00 603 640.00 211-01-001 0 17N 24E E2, 26 320.00 603 320.00 211-01-001 0 17N 24E 34 640.00 603 640.00 211-01-001 0 17N 24E 35 640.00 603 640.00 ---------- --------- TOTAL 5,725.38 5,725.38 ========== ========= 204-20-001 3 15N 25E 3 641.74 611A 641.74 204-20-001 3 15N 25E 4 640.56 611A 640.56 204-20-001 3 15N 25E 5 639.50 611A 639.50 204-20-001 3 15N 25E 6 681.95 611A 681.95 204-20-001 3 15N 25E 7 684.56 611A 684.56 204-20-001 3 15N 25E 8 640.00 611A 640.00 204-20-001 3 15N 25E 9 520.00 611A 204-20-001 3 15N 25E 9 120.00 611B 640.00 204-20-001 3 15N 25E 17 160.00 611A 204-20-001 3 15N 25E 17 480.00 611B 640.00 204-20-001 3 15N 25E 18 528.68 611A 204-20-001 3 15N 25E 18 160.00 611B 688.68 ---------- --------- TOTAL 5,896.99 5,896.99 ========== ========= 204-28-004 16N 25E 26 640.00 640.00 ---------- --------- 640.00 640.00 ========== ========= 204-28-005 16N 25E 34 640.00 640.00 ---------- --------- 640.00 640.00 ========== ========= 204-28-001 7 16N 25E ALL 1 487.58 603 487.58 204-28-001 7 16N 25E ALL 3 511.34 603 511.34 204-28-001 7 16N 25E ALL 4 530.16 603 530.16 204-28-001 7 16N 25E ALL 5 542.56 603 542.56 204-28-001 7 16N 25E SE4,SE4SW4, 6 528.33 603 528.33 204-28-001 7 16N 25E 7 659.94 603 659.94 204-28-001 7 16N 25E 8 640.00 603 640.00 204-28-001 7 16N 25E 9 640.00 603 640.00 204-28-001 7 16N 25E 10 640.00 603 640.00 204-28-001 7 16N 25E 11 640.00 603 640.00 204-28-001 7 16N 25E 12 640.00 603 640.00 204-28-001 7 16N 25E 13 640.00 603 640.00 204-28-001 7 16N 25E 14 640.00 603 640.00 204-28-001 7 16N 25E 15 640.00 603 640.00 204-28-001 7 16N 25E 17 640.00 603 640.00 204-28-001 7 16N 25E 18 664.66 603 664.66 204-28-001 7 16N 25E 21 640.00 603 640.00 204-28-001 7 16N 25E 22 640.00 603 640.00 204-28-001 7 16N 25E 23 640.00 603 640.00 204-28-001 7 16N 25E 24 640.00 603 640.00 204-28-001 7 16N 25E 25 640.00 603 640.00 27 204-28-001 7 16N 25E 27 640.00 603 640.00 204-28-001 7 16N 25E 28 640.00 603 640.00 204-28-001 7 16N 25E 29 640.00 603 640.00 204-28-001 7 16N 25E 30 674.40 603 674.40 204-28-001 7 16N 25E 31 678.80 603 678.80 204-28-001 7 16N 25E 33 640.00 603 640.00 204-28-001 7 16N 25E 35 640.00 603 640.00 ---------- --------- 17,437.77 17,437.77 ---------- --------- 40,989.8 40,989.80 TOTAL ACRES 28 EXHIBIT A-3 LEGAL DESCRIPTION Cibola County Holdings at January 1, 2002

TWN RGE Section Acres Owner Map Parcel # 6N 5W 11 540.00 NZ 2-026-035-264-264 6N 5W 15 640.00 NZ 2-027-034-297-264 6N 5W 21 640.00 NZ 2-028-033-297-292 6N 5W 27 640.00 NZ 2-027-032-264-264 6N 5W 33 640.00 NZ 2-028-031-396-264 6N 5W 35 640.00 NZ 2-026-031-105-297 -------- 3,740.00

29 EXHIBIT A-4 LEGAL DESCRIPTION DONA ANA COUNTY, NEW MEXICO

TWN RGE SEC ACRES TAX PARCEL NUMBER --- --- --- ----- ----------------- 23S 01E 28 190.00 PC03-17509 23S 01E 28 4.96 23S 01E 33 115.00 PC03-17530 -------- 309.96 ========

30 EXHIBIT A-5 LEGAL DESCRIPTION MCKINLEY COUNTY, NEW MEXICO

TWN RGE Section Acres Tax Parcel # --- --- ------- ----- ------------ 17N 12W 33 SE4 160.00 2-070-097-132-132 ------

31 EXHIBIT C MINERAL RIGHTS APACHE COUNTY, AZ

03/31/02 -------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - --- --- --- ----- -------- 12N 24E 01 596.56 --------------------------------- 12N 24E 03 572.32 --------------------------------- 12N 24E 04 559.42 --------------------------------- 12N 24E 05 545.60 --------------------------------- 12N 24E 07 640.08 --------------------------------- 12N 24E 08 320.00 W2W2.E2E2 --------------------------------- 12N 24E 09 640.00 --------------------------------- 12N 24E 10 640.00 --------------------------------- 12N 24E 11 640.00 --------------------------------- 12N 24E 12 640.00 --------------------------------- 12N 24E 13 640.00 --------------------------------- 12N 24E 15 640.00 --------------------------------- 12N 24E 17 640.00 --------------------------------- 12N 24E 19 634.38 --------------------------------- 12N 24E 20 320.00 S2 --------------------------------- 12N 24E 21 640.00 --------------------------------- 12N 24E 29 640.00 --------------------------------- 12N 24E 31 630.82 --------------------------------- 12N 24E 33 640.00 --------------------------------- ---------- 11,219.18 ========== 13N 24E 01 603.92 -------------------------------------- 13N 24E 03 638.88 -------------------------------------- 13N 24E 04 637.94 -------------------------------------- 13N 24E 05 554.90 -------------------------------------- 13N 24E 06 693.85 --------------------------------------

32 13N 24E 07 679.40 -------------------------------------- 13N 24E 09 599.78 -------------------------------------- 13N 24E 11 640.00 -------------------------------------- 13N 24E 13 527.60 -------------------------------------- 13N 24E 15 640.00 -------------------------------------- 13N 24E 17 640.00 -------------------------------------- 13N 24E 19 669.86 -------------------------------------- 13N 24E 21 640.00 -------------------------------------- 13N 24E 23 640.00 -------------------------------------- 13N 24E 24 640.00 -------------------------------------- 13N 24E 25 640.00 -------------------------------------- 13N 24E 27 640.00 -------------------------------------- 13N 24E 29 640.00 -------------------------------------- 13N 24E 31 662.76 -------------------------------------- 13N 24E 33 599.93 -------------------------------------- 13N 24E 34 640.00 -------------------------------------- 13N 24E 35 640.00 -------------------------------------- ---------- 13,908.82 ========== 14N 24E 01 640.86 --------------------------------- 14N 24E 03 2.01 N2 --------------------------------- 14N 24E 04 239.53 N2 --------------------------------- 14N 24E 05 490.29 --------------------------------- 14N 24E 07 705.28 --------------------------------- 14N 24E 08 640.00 --------------------------------- 14N 24E 09 640.00 --------------------------------- 14N 24E 10 442.30 --------------------------------- 14N 24E 11 599.07 --------------------------------- 14N 24E 13 640.00 --------------------------------- 14N 24E 15 640.00 --------------------------------- 14N 24E 17 640.00 --------------------------------- 14N 24E 18 707.04 --------------------------------- 14N 24E 19 668.91 --------------------------------- 14N 24E 20 640.00 --------------------------------- 14N 24E 21 640.00 --------------------------------- 14N 24E 22 640.00 --------------------------------- 14N 24E 23 640.00 --------------------------------- 14N 24E 24 640.00 --------------------------------- 14N 24E 25 640.00 --------------------------------- 33 14N 24E 26 640.00 --------------------------------- 14N 24E 27 640.00 --------------------------------- 14N 24E 28 640.00 --------------------------------- 14N 24E 29 602.64 --------------------------------- 14N 24E 30 708.14 --------------------------------- 14N 24E 31 706.56 --------------------------------- 14N 24E 33 640.00 --------------------------------- 14N 24E 35 640.00 --------------------------------- ---------- 16,752.63 ========== 15N 24E 01 642.34 --------------------------------- 15N 24E 02 643.26 --------------------------------- 15N 24E 03 641.30 --------------------------------- 15N 24E 04 639.10 --------------------------------- 15N 24E 05 636.64 --------------------------------- 15N 24E 06 677.90 --------------------------------- 15N 24E 07 682.86 --------------------------------- 15N 24E 08 640.00 --------------------------------- 15N 24E 09 640.00 --------------------------------- 15N 24E 10 640.00 --------------------------------- 15N 24E 11 640.00 --------------------------------- 15N 24E 12 640.00 --------------------------------- 15N 24E 13 640.00 --------------------------------- 15N 24E 14 640.00 --------------------------------- 15N 24E 15 640.00 --------------------------------- 15N 24E 17 640.00 --------------------------------- 15N 24E 19 689.30 --------------------------------- 15N 24E 21 640.00 --------------------------------- 15N 24E 23 640.00 --------------------------------- 15N 24E 24 640.00 --------------------------------- 15N 24E 25 603.00 --------------------------------- 15N 24E 26 603.90 --------------------------------- 15N 24E 27 640.00 --------------------------------- 15N 24E 28 640.00 --------------------------------- 15N 24E 29 640.00 --------------------------------- 15N 24E 31 49.00 --------------------------------- 15N 24E 33 564.50 --------------------------------- 15N 24E 34 519.92 --------------------------------- 15N 24E 35 640.00 --------------------------------- 34 ---------- 17,833.02 ========== 16N 24E 01 568.48 --------------------------------- 16N 24E 03 297.03 --------------------------------- 16N 24E 10 320.00 --------------------------------- 16N 24E 11 640.00 --------------------------------- 16N 24E 12 640.00 --------------------------------- 16N 24E 13 640.00 --------------------------------- 16N 24E 15 640.00 --------------------------------- 16N 24E 17 611.00 --------------------------------- 16N 24E 19 11.30 --------------------------------- 16N 24E 21 638.00 --------------------------------- 16N 24E 23 640.00 --------------------------------- 16N 24E 25 640.00 --------------------------------- 16N 24E 26 320.00 W2 --------------------------------- 16N 24E 26 160.00 E2 --------------------------------- 16N 24E 27 640.00 --------------------------------- 16N 24E 33 5.80 --------------------------------- 16N 24E 35 640.00 --------------------------------- ---------- 8,051.61 ========== 17N 24E 01 645.38 --------------------------------- 17N 24E 11 320.00 E2 --------------------------------- 17N 24E 12 640.00 --------------------------------- 17N 24E 13 640.00 --------------------------------- 17N 24E 14 320.00 E2 --------------------------------- 17N 24E 23 320.00 E2 --------------------------------- 17N 24E 24 600.00 --------------------------------- 17N 24E 25 640.00 --------------------------------- 17N 24E 26 320.00 E2 --------------------------------- 17N 24E 34 640.00 --------------------------------- 17N 24E 35 640.00 --------------------------------- ---------- 5,725.38 =========== 12N 25E 05 613.36 --------------------------------- 12N 25E 07 415.34 --------------------------------- 12N 25E 09 640.00 --------------------------------- 12N 25E 17 640.00 --------------------------------- 35 ---------- 2,308.70 ========== 13N 25E 01 642.08 -------------------------------------- 13N 25E 03 644.80 -------------------------------------- 13N 25E 05 641.50 -------------------------------------- 13N 25E 07 696.30 -------------------------------------- 13N 25E 09 640.00 -------------------------------------- 13N 25E 11 640.00 -------------------------------------- 13N 25E 12 603.99 -------------------------------------- 13N 25E 13 640.00 -------------------------------------- 13N 25E 14 620.00 -------------------------------------- 13N 25E 15 620.00 -------------------------------------- 13N 25E 17 640.00 -------------------------------------- 13N 25E 18 320.00 E2 -------------------------------------- 13N 25E 19 675.02 -------------------------------------- 13N 25E 21 640.00 -------------------------------------- 13N 25E 23 640.00 -------------------------------------- 13N 25E 25 640.00 -------------------------------------- 13N 25E 26 640.00 -------------------------------------- 13N 25E 27 640.00 -------------------------------------- 13N 25E 29 640.00 -------------------------------------- 13N 25E 31 609.49 -------------------------------------- 13N 25E 33 640.00 -------------------------------------- 13N 25E 35 640.00 -------------------------------------- --------- 13,753.18 ========= 14N 25E 01 640.96 --------------------------------- 14N 25E 03 642.20 --------------------------------- 14N 25E 05 641.64 --------------------------------- 14N 25E 06 120.81 NE4NW4,N2NE4 --------------------------------- 14N 25E 07 706.86 --------------------------------- 14N 25E 09 640.00 --------------------------------- 14N 25E 11 640.00 --------------------------------- 14N 25E 13 640.00 --------------------------------- 14N 25E 14 640.00 --------------------------------- 14N 25E 15 603.60 --------------------------------- 14N 25E 17 640.00 --------------------------------- 14N 25E 18 709.60 --------------------------------- 14N 25E 19 712.00 -------------------------------------- 14N 25E 21 640.00 -------------------------------------- 36 14N 25E 22 640.00 -------------------------------------- 14N 25E 23 640.00 -------------------------------------- 14N 25E 25 603.50 -------------------------------------- 14N 25E 26 640.00 -------------------------------------- 14N 25E 27 640.00 -------------------------------------- 14N 25E 28 480.00 NE4NW4,N2NE4 -------------------------------------- 14N 25E 29 640.00 -------------------------------------- 14N 25E 30 712.42 -------------------------------------- 14N 25E 31 712.80 -------------------------------------- 14N 25E 33 640.00 -------------------------------------- 14N 25E 34 563.22 -------------------------------------- 14N 25E 35 640.00 -------------------------------------- --------- 16,169.61 ========= 15N 25E 01 639.68 --------------------------------- 15N 25E 03 641.74 --------------------------------- 15N 25E 04 640.56 --------------------------------- 15N 25E 05 639.50 --------------------------------- 15N 25E 06 681.95 --------------------------------- 15N 25E 07 684.56 --------------------------------- 15N 25E 08 640.00 --------------------------------- 15N 25E 09 640.00 --------------------------------- 15N 25E 10 160.00 SE4 --------------------------------- 15N 25E 11 640.00 --------------------------------- 15N 25E 12 640.00 --------------------------------- 15N 25E 13 640.00 --------------------------------- 15N 25E 14 640.00 --------------------------------- 15N 25E 15 640.00 --------------------------------- 15N 25E 17 640.00 --------------------------------- 15N 25E 18 688.98 --------------------------------- 15N 25E 19 693.74 --------------------------------- 15N 25E 20 640.00 --------------------------------- 15N 25E 21 640.00 --------------------------------- 15N 25E 22 640.00 --------------------------------- 15N 25E 23 640.00 --------------------------------- 15N 25E 24 640.00 --------------------------------- 15N 25E 25 640.00 --------------------------------- 15N 25E 27 640.00 --------------------------------- 15N 25E 29 640.00 --------------------------------- 15N 25E 30 657.66 --------------------------------- 37 15N 25E 31 701.60 --------------------------------- 15N 25E 32 280.00 --------------------------------- 15N 25E 33 640.00 --------------------------------- 15N 25E 34 320.00 N2 --------------------------------- 15N 25E 35 640.00 --------------------------------- --------- 18,949.97 ========= 16N 25E 01 487.58 --------------------------------- 16N 25E 03 511.34 --------------------------------- 16N 25E 04 530.16 --------------------------------- 16N 25E 05 542.56 --------------------------------- 16N 25E 06 528.33 --------------------------------- 16N 25E 07 659.94 --------------------------------- 16N 25E 08 640.00 --------------------------------- 16N 25E 09 640.00 --------------------------------- 16N 25E 10 640.00 --------------------------------- 16N 25E 11 640.00 --------------------------------- 16N 25E 12 640.00 --------------------------------- 16N 25E 13 640.00 --------------------------------- 16N 25E 14 640.00 --------------------------------- 16N 25E 15 640.00 --------------------------------- 16N 25E 17 640.00 I -------------------------------------- 16N 25E 18 664.66 -------------------------------------- 16N 25E 19 669.28 -------------------------------------- 16N 25E 21 640.00 -------------------------------------- 16N 25E 22 640.00 -------------------------------------- 16N 25E 23 640.00 -------------------------------------- 16N 25E 24 640.00 -------------------------------------- 16N 25E 25 640.00 -------------------------------------- 16N 25E 27 640.00 -------------------------------------- 16N 25E 29 640.00 -------------------------------------- 16N 25E 30 674.40 -------------------------------------- 16N 25E 31 678.80 -------------------------------------- 16N 25E 33 640.00 -------------------------------------- 16N 25E 35 640.00 -------------------------------------- ---------- 17,467.05 ========== ---------- TOTAL 142,139.15 ========== 38 NAVAJO COUNTY 03/31/2002

MINERAL ACRES TWN RGE SEC OWNED COMMENTS 19N 15E 01 311.98 ----------------------------------------------------- 19N 15E 11 160.00 ----------------------------------------------------- 19N 15E 13 561.44 ----------------------------------------------------- 19N 15E 14 0.74 ----------------------------------------------------- 19N 15E 15 356.24 ----------------------------------------------------- 19N 15E 23 267.00 ----------------------------------------------------- ---------- 1,657.40 ========== 20N 15E 01 317.76 ----------------------------------------------------- ---------- 317.76 ========== 21N 15E 01 640.48 ----------------------------------------------------- 21N 15E 03 639.66 ----------------------------------------------------- 21N 15E 11 640.00 ----------------------------------------------------- 21N 15E 13 640.00 ----------------------------------------------------- 21N 15E 15 640.00 ----------------------------------------------------- 21N 15E 23 640.00 ----------------------------------------------------- 21N 15E 25 640.00 ----------------------------------------------------- 21N 15E 27 640.00 ----------------------------------------------------- 21N 15E 35 640.00 ----------------------------------------------------- ---------- 5,760.14 ========== 22N 15E 01 641.98 ----------------------------------------------------- 22N 15E 03 641.40 ----------------------------------------------------- 22N 15E 11 640.00 ----------------------------------------------------- 22N 15E 13 640.00 ----------------------------------------------------- 22N 15E 15 640.00 ----------------------------------------------------- 22N 15E 23 640.00 ----------------------------------------------------- 22N 15E 25 640.00 -----------------------------------------------------

39 22N 15E 27 640.00 ----------------------------------------------------- 22N 15E 35 640.00 ----------------------------------------------------- ---------- 5,763.38 ========== 23N 15E 01 641.18 ----------------------------------------------------- 23N 15E 03 642.46 ----------------------------------------------------- 23N 15E 11 640.00 ----------------------------------------------------- 23N 15E 13 640.00 ----------------------------------------------------- 23N 15E 15 640.00 ----------------------------------------------------- 23N 15E 23 640.00 ----------------------------------------------------- 23N 15E 25 640.00 ----------------------------------------------------- 23N 15E 27 640.00 ----------------------------------------------------- 23N 15E 35 640.00 ----------------------------------------------------- ---------- 5,763.64 ========== 24N 15E 13 640.00 ----------------------------------------------------- 24N 15E 15 640.00 ----------------------------------------------------- 24N 15E 23 640.00 ----------------------------------------------------- 24N 15E 25 640.00 ----------------------------------------------------- 24N 15E 27 640.00 ----------------------------------------------------- 24N 15E 35 640.00 ----------------------------------------------------- ---------- 3,840.00 ========== 14N 16E 04 639.56 ----------------------------------------------------- 14N 16E 06 679.99 ----------------------------------------------------- 14N 16E 08 640.00 ----------------------------------------------------- 14N 16E 10 640.00 ----------------------------------------------------- 14N 16E 12 640.00 ----------------------------------------------------- ---------- 3,239.55 ========== 15N 16E 1 357.32 ----------------------------------------------------- 15N 16E 3 360.68 ----------------------------------------------------- 15N 16E 5 104.27 ----------------------------------------------------- 15N 16E 7 224.60 ----------------------------------------------------- 15N 16E 9 320.00 ----------------------------------------------------- 15N 16E 11 320.00 ----------------------------------------------------- 15N 16E 12 318.72 ----------------------------------------------------- 15N 16E 34 640.00 ----------------------------------------------------- ---------- 2,645.59 ========== ----------------------------------------------------- 16N 16E 21 545.00 ----------------------------------------------------- 40 16N 16E 22 211.55 ----------------------------------------------------- 16N 16E 23 320.00 ----------------------------------------------------- 16N 16E 24 334.23 ----------------------------------------------------- 16N 16E 25 332.81 ----------------------------------------------------- 16N 16E 27 320.00 ----------------------------------------------------- 16N 16E 29 21.00 ----------------------------------------------------- 16N 16E 33 320.00 ----------------------------------------------------- 16N 16E 34 320.00 ----------------------------------------------------- 16N 16E 35 320.00 ----------------------------------------------------- ---------- 3,044.59 ========== 18N 16E 01 21.95 ----------------------------------------------------- ----------- 21.95 =========== ----------------------------------------------------- 19N 16E 05 447.44 ----------------------------------------------------- 19N 16E 07 629.40 ----------------------------------------------------- 19N 16E 12 3.00 ----------------------------------------------------- 19N 16E 13 30.65 ----------------------------------------------------- 19N 16E 17 640.00 ----------------------------------------------------- 19N 16E 19 343.42 ----------------------------------------------------- 19N 16E 23 29.57 ----------------------------------------------------- 19N 16E 25 10.33 ----------------------------------------------------- 19N 16E 27 400.00 ----------------------------------------------------- 19N 16E 29 369.20 ----------------------------------------------------- 19N 16E 31 619.94 ----------------------------------------------------- 19N 16E 33 204.05 ----------------------------------------------------- 19N 16E 35 64.82 ----------------------------------------------------- ---------- 3,791.82 ========== ----------------------------------------------------- 20N 16E 31 80.29 ----------------------------------------------------- ---------- 80.29 ========== 21N 16E 01 640.58 ----------------------------------------------------- 21N 16E 03 640.82 ----------------------------------------------------- 21N 16E 05 639.58 ----------------------------------------------------- 21N 16E 07 639.52 ----------------------------------------------------- 21N 16E 09 640.00 ----------------------------------------------------- 21N 16E 11 640.00 ----------------------------------------------------- 21N 16E 13 640.00 ----------------------------------------------------- 21N 16E 15 640.00 ----------------------------------------------------- 21N 16E 17 640.00 ----------------------------------------------------- 41 21N 16E 19 640.70 ----------------------------------------------------- 21N 16E 21 640.00 ----------------------------------------------------- 21N 16E 23 640.00 ----------------------------------------------------- 21N 16E 25 640.00 ----------------------------------------------------- 21N 16E 27 640.00 ----------------------------------------------------- 21N 16E 29 640.00 ----------------------------------------------------- 21N 16E 31 641.19 ----------------------------------------------------- 21N 16E 33 640.00 ----------------------------------------------------- 21N 16E 35 640.00 ----------------------------------------------------- ---------- 11,522.39 ========== 22N 16E 01 639.84 ----------------------------------------------------- 22N 16E 03 640.94 ----------------------------------------------------- 22N 16E 05 639.58 ----------------------------------------------------- 22N 16E 07 635.10 ----------------------------------------------------- 22N 16E 09 640.00 ----------------------------------------------------- 22N 16E 11 640.00 ----------------------------------------------------- 22N 16E 13 640.00 ----------------------------------------------------- 22N 16E 15 640.00 ----------------------------------------------------- 22N 16E 17 640.00 ----------------------------------------------------- 22N 16E 19 638.78 ----------------------------------------------------- 22N 16E 21 640.00 ----------------------------------------------------- 22N 16E 23 640.00 ----------------------------------------------------- 22N 16E 25 640.00 ----------------------------------------------------- 22N 16E 27 640.00 ----------------------------------------------------- 22N 16E 29 640.00 ----------------------------------------------------- 22N 16E 31 642.52 ----------------------------------------------------- 22N 16E 33 640.00 ----------------------------------------------------- 22N 16E 35 640.00 ----------------------------------------------------- ---------- 11,516.76 ========== 23N 16E 01 639.20 ----------------------------------------------------- 23N 16E 03 640.70 ----------------------------------------------------- 23N 16E 05 642.06 ----------------------------------------------------- 23N 16E 07 633.10 ----------------------------------------------------- 23N 16E 09 640.00 ----------------------------------------------------- 23N 16E 11 640.00 ----------------------------------------------------- 23N 16E 13 640.00 ----------------------------------------------------- 23N 16E 15 640.00 ----------------------------------------------------- 23N 16E 17 640.00 ----------------------------------------------------- 23N 16E 19 634.30 ----------------------------------------------------- 23N 16E 21 640.00 ----------------------------------------------------- 23N 16E 23 640.00 ----------------------------------------------------- 23N 16E 25 640.00 ----------------------------------------------------- 23N 16E 27 640.00 ----------------------------------------------------- 23N 16E 29 640.00 ----------------------------------------------------- 42 23N 16E 31 632.38 ----------------------------------------------------- 23N 16E 33 640.00 ----------------------------------------------------- 23N 16E 35 640.00 ----------------------------------------------------- ---------- 11,501.74 ========== 24N 16E 13 640.00 ----------------------------------------------------- 24N 16E 15 640.00 ----------------------------------------------------- 24N 16E 17 640.00 ----------------------------------------------------- 24N 16E 19 637.22 ----------------------------------------------------- 24N 16E 21 640.00 ----------------------------------------------------- 24N 16E 23 640.00 ----------------------------------------------------- 24N 16E 25 640.00 ----------------------------------------------------- 24N 16E 27 640.00 ----------------------------------------------------- 24N 16E 29 640.00 ----------------------------------------------------- 24N 16E 31 633.22 ----------------------------------------------------- 24N 16E 33 640.00 ----------------------------------------------------- 24N 16E 35 640.00 ----------------------------------------------------- ---------- 7,670.44 ========== 14N 17E 01 640.00 14N 17E 02 40.00 NWSE 14N 17E 03 640.00 14N 17E 05 640.00 14N 17E 06 705.35 14N 17E 07 640.00 14N 17E 09 640.00 ----------------------------------------------------- 14N 17E 10 640.00 14N 17E 11 640.00 ----------------------------------------------------- 14N 17E 14 640.00 Oil, gas, geo thermal & pet. wood reserved 14N 17E 17 640.00 ----------------------------------------------------- 14N 17E 18 703.30 14N 17E 21 320.00 ----------------------------------------------------- 14N 17E 29 320.00 ----------------------------------------------------- ---------- 7,848.65 ========== 15N 17E 05 317.67 ----------------------------------------------------- 15N 17E 07 351.32 ----------------------------------------------------- 15N 17E 08 320.00 ----------------------------------------------------- 15N 17E 09 320.00 ----------------------------------------------------- 15N 17E 10 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 17E 12 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 17E 14 640.00 Oil, gas, geo thermal & pet. wood reserved 15N 17E 17 320.00 ----------------------------------------------------- 15N 17E 19 353.04 ----------------------------------------------------- 43 15N 17E 31 640.00 ----------------------------------------------------- ---------- 4,542.03 ========== 16N 17E 19 348.83 ----------------------------------------------------- 16N 17E 21 320.00 ----------------------------------------------------- 16N 17E 22 320.00 ----------------------------------------------------- 16N 17E 24 320.00 ----------------------------------------------------- 16N 17E 23 320.00 16N 17E 26 320.00 ----------------------------------------------------- 16N 17E 29 320.00 ----------------------------------------------------- 16N 17E 31 349.74 ----------------------------------------------------- 16N 17E 33 320.00 ----------------------------------------------------- 16N 17E 34 320.00 ----------------------------------------------------- ---------- 3,258.57 ========== ---------------------------------------------------- 17N 17E 14 260.00 98 sold in Aztec Trade;E1/2,SW,W1/2NW ---------------------------------------------------- ---------- 260.00 ========== ----------------------------------------------------- 18N 17E 05 72.61 ----------------------------------------------------- 18N 17E 09 47.12 ----------------------------------------------------- 18N 17E 11 158.20 ----------------------------------------------------- 18N 17E 26 485.74 ----------------------------------------------------- ---------- 763.67 ========== ----------------------------------------------------- 19N 17E 05 30.21 ----------------------------------------------------- 19N 17E 07 31.95 ----------------------------------------------------- 19N 17E 25 11.00 ----------------------------------------------------- 19N 17E 31 29.64 ----------------------------------------------------- ---------- 102.80 ========== ----------------------------------------------------- 20N 17E 13 33.93 ----------------------------------------------------- 20N 17E 23 33.54 ----------------------------------------------------- 20N 17E 27 32.38 ----------------------------------------------------- 20N 17E 33 35.91 ----------------------------------------------------- ---------- 135.76 ========== 21N 17E 01 641.66 ----------------------------------------------------- 45 21N 17E 03 639.18 ----------------------------------------------------- 21N 17E 05 639.10 ----------------------------------------------------- 21N 17E 07 629.34 ----------------------------------------------------- 21N 17E 09 640.00 ----------------------------------------------------- 21N 17E 11 640.00 ----------------------------------------------------- 21N 17E 13 640.00 ----------------------------------------------------- 21N 17E 15 640.00 ----------------------------------------------------- 21N 17E 17 640.00 ----------------------------------------------------- 21N 17E 19 634.88 ----------------------------------------------------- 21N 17E 21 640.00 ----------------------------------------------------- 21N 17E 23 640.00 ----------------------------------------------------- 21N 17E 25 640.00 ----------------------------------------------------- 21N 17E 27 640.00 ----------------------------------------------------- 21N 17E 29 640.00 ----------------------------------------------------- 21N 17E 31 638.06 ----------------------------------------------------- 21N 17E 33 640.00 ----------------------------------------------------- 21N 17E 35 640.00 ----------------------------------------------------- ---------- 11,502.22 ========== 22N 17E 01 641.28 ----------------------------------------------------- 22N 17E 03 640.80 ----------------------------------------------------- 22N 17E 05 640.34 ----------------------------------------------------- 22N 17E 07 620.22 ----------------------------------------------------- 22N 17E 09 640.00 ----------------------------------------------------- 22N 17E 11 640.00 ----------------------------------------------------- 22N 17E 13 640.00 ----------------------------------------------------- 22N 17E 15 640.00 ----------------------------------------------------- 22N 17E 17 640.00 ----------------------------------------------------- 22N 17E 19 619.60 ----------------------------------------------------- 22N 17E 21 640.00 ----------------------------------------------------- 22N 17E 23 640.00 ----------------------------------------------------- 22N 17E 25 640.00 ----------------------------------------------------- 22N 17E 27 640.00 ----------------------------------------------------- 22N 17E 29 640.00 ----------------------------------------------------- 22N 17E 31 623.58 ----------------------------------------------------- 22N 17E 33 640.00 ----------------------------------------------------- 22N 17E 35 640.00 ----------------------------------------------------- ---------- 11,465.82 ========== 23N 17E 01 640.90 ----------------------------------------------------- 23N 17E 03 639.84 ----------------------------------------------------- 23N 17E 05 640.02 ----------------------------------------------------- 23N 17E 07 614.48 ----------------------------------------------------- 23N 17E 09 640.00 ----------------------------------------------------- 23N 17E 11 640.00 ----------------------------------------------------- 45 23N 17E 13 640.00 ----------------------------------------------------- 23N 17E 15 640.00 ----------------------------------------------------- 23N 17E 17 640.00 ----------------------------------------------------- 23N 17E 19 614.54 ----------------------------------------------------- 23N 17E 21 640.00 ----------------------------------------------------- 23N 17E 23 640.00 ----------------------------------------------------- 23N 17E 25 640.00 ----------------------------------------------------- 23N 17E 27 640.00 ----------------------------------------------------- 23N 17E 29 640.00 ----------------------------------------------------- 23N 17E 31 616.72 ----------------------------------------------------- 23N 17E 33 640.00 ----------------------------------------------------- 23N 17E 35 640.00 ----------------------------------------------------- ---------- 11,446.50 ========== 24N 17E 13 640.00 ----------------------------------------------------- 24N 17E 15 640.00 ----------------------------------------------------- 24N 17E 17 640.00 ----------------------------------------------------- 24N 17E 19 611.46 ----------------------------------------------------- 24N 17E 21 640.00 ----------------------------------------------------- 24N 17E 23 640.00 ----------------------------------------------------- 24N 17E 25 640.00 ----------------------------------------------------- 24N 17E 27 640.00 ----------------------------------------------------- 24N 17E 29 640.00 ----------------------------------------------------- 24N 17E 31 614.54 ----------------------------------------------------- 24N 17E 33 640.00 ----------------------------------------------------- 24N 17E 35 640.00 ----------------------------------------------------- ---------- 7,626.00 ========== 14N 18E 02 80.00 N1/2SW 14N 18E 11 640.00 14N 18E 13 160.00 ----------------------------------------------------- ---------- 880.00 ========== 15N 18E 04 642.98 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 06 661.29 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 08 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 10 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 12 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 14 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 18 666.22 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 18E 30 669.94 ----------------------------------------------------- ---------- 5,200.43 ========== 46 16N 18E 04 734.50 ---------------------------------------------------------- 16N 18E 06 789.06 ---------------------------------------------------------- 16N 18E 08 640.00 ---------------------------------------------------------- 16N 18E 10 640.00 ---------------------------------------------------------- 16N 18E 12 640.00 ---------------------------------------------------------- 16N 18E 14 640.00 ---------------------------------------------------------- 16N 18E 18 669.26 ---------------------------------------------------------- 16N 18E 20 640.00 ---------------------------------------------------------- 16N 18E 22 640.00 ---------------------------------------------------------- 16N 18E 26 640.00 ---------------------------------------------------------- 16N 18E 28 640.00 ---------------------------------------------------------- 16N 18E 30 666.08 ---------------------------------------------------------- 16N 18E 34 640.00 ---------------------------------------------------------- ---------- 8,618.90 ========== ----------------------------------------------------- 17N 18E 18 636.80 ----------------------------------------------------- 17N 18E 20 640.00 ----------------------------------------------------- 17N 18E 26 640.00 ----------------------------------------------------- 17N 18E 28 640.00 ----------------------------------------------------- 17N 18E 30 638.16 ----------------------------------------------------- 17N 18E 34 640.00 ----------------------------------------------------- ---------- 3,834.96 ========== ----------------------------------------------------- 18N 18E 07 99.76 ----------------------------------------------------- 18N 18E 08 34.30 ----------------------------------------------------- 18N 18E 09 239.58 ----------------------------------------------------- 18N 18E 11 320.27 ----------------------------------------------------- 18N 18E 13 123.66 ----------------------------------------------------- 18N 18E 14 560.00 ----------------------------------------------------- 18N 18E 15 47.60 ----------------------------------------------------- ---------- 1,425.17 ========== ----------------------------------------------------- 20N 18E 05 70.41 ----------------------------------------------------- 20N 18E 07 221.99 ----------------------------------------------------- ---------- 292.40 ========== 21N 18E 01 640.48 ----------------------------------------------------- 21N 18E 03 641.62 ----------------------------------------------------- 21N 18E 05 639.30 ----------------------------------------------------- 21N 18E 07 626.58 ----------------------------------------------------- 47 21N 18E 09 640.00 ----------------------------------------------------- 21N 18E 11 640.00 ----------------------------------------------------- 21N 18E 13 640.00 ----------------------------------------------------- 21N 18E 15 640.00 ----------------------------------------------------- 21N 18E 17 640.00 ----------------------------------------------------- 21N 18E 19 632.32 ----------------------------------------------------- 21N 18E 21 640.00 ----------------------------------------------------- 21N 18E 23 640.00 ----------------------------------------------------- 21N 18E 25 640.00 ----------------------------------------------------- 21N 18E 27 640.00 ----------------------------------------------------- 21N 18E 29 640.00 ----------------------------------------------------- 21N 18E 31 638.08 ----------------------------------------------------- 21N 18E 33 640.00 ----------------------------------------------------- 21N 18E 35 640.00 ----------------------------------------------------- ---------- 11,498.38 ========== 22N 18E 01 640.54 ---------------------------------------------------------- 22N 18E 03 641.78 ---------------------------------------------------------- 22N 18E 05 637.74 ---------------------------------------------------------- 22N 18E 07 618.32 ---------------------------------------------------------- 22N 18E 09 640.00 ---------------------------------------------------------- 22N 18E 11 640.00 ---------------------------------------------------------- 22N 18E 13 640.00 ---------------------------------------------------------- 22N 18E 15 640.00 ---------------------------------------------------------- 22N 18E 17 640.00 ---------------------------------------------------------- 22N 18E 19 621.60 ---------------------------------------------------------- 22N 18E 21 640.00 ---------------------------------------------------------- 22N 18E 23 640.00 ---------------------------------------------------------- 22N 18E 25 640.00 ---------------------------------------------------------- 22N 18E 27 640.00 ---------------------------------------------------------- 22N 18E 29 640.00 ---------------------------------------------------------- 22N 18E 31 623.42 ---------------------------------------------------------- 22N 18E 33 640.00 ---------------------------------------------------------- 22N 18E 35 640.00 ---------------------------------------------------------- ---------- 11,463.40 ========== 23N 18E 01 641.18 ----------------------------------------------------- 23N 18E 03 638.18 ----------------------------------------------------- 23N 18E 05 639.84 ----------------------------------------------------- 23N 18E 07 614.54 ----------------------------------------------------- 23N 18E 09 640.00 ----------------------------------------------------- 23N 18E 11 640.00 ----------------------------------------------------- 23N 18E 13 640.00 ----------------------------------------------------- 23N 18E 15 640.00 ----------------------------------------------------- 48 23N 18E 17 640.00 ----------------------------------------------------- 23N 18E 19 617.12 ----------------------------------------------------- 23N 18E 21 640.00 ----------------------------------------------------- 23N 18E 23 640.00 ----------------------------------------------------- 23N 18E 25 640.00 ----------------------------------------------------- 23N 18E 27 640.00 ----------------------------------------------------- 23N 18E 29 640.00 ----------------------------------------------------- 23N 18E 31 618.14 ----------------------------------------------------- 23N 18E 33 640.00 ----------------------------------------------------- 23N 18E 35 640.00 ----------------------------------------------------- ---------- 11,449.00 ========== 24N 18E 13 640.00 ----------------------------------------------------- 24N 18E 15 640.00 ----------------------------------------------------- 24N 18E 17 640.00 ----------------------------------------------------- 24N 18E 19 615.84 ----------------------------------------------------- 24N 18E 21 640.00 ----------------------------------------------------- 24N 18E 23 640.00 ----------------------------------------------------- 24N 18E 25 640.00 ----------------------------------------------------- 24N 18E 27 640.00 ----------------------------------------------------- 24N 18E 29 640.00 ----------------------------------------------------- 24N 18E 31 611.90 ----------------------------------------------------- 24N 18E 33 640.00 ----------------------------------------------------- 24N 18E 35 640.00 ----------------------------------------------------- ---------- 7,627.74 ========== 13N 19E 08 640.00 ----------------------------------------------------- 13N 19E 21 640.00 ----------------------------------------------------- 13N 19E 27 320.00 E1/2 ----------------------------------------------------- ---------- 1,600.00 ========== 15N 06 635.82 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 15N 10 640.00 ----------------------------------------------------- 15N 23 640.00 ----------------------------------------------------- 15N 19E 25 640.00 ----------------------------------------------------- 15N 19E 35 640.00 ----------------------------------------------------- ---------- 3,195.82 ========== 16N 19E 08 640.00 ----------------------------------------------------- 16N 19E 10 640.00 ----------------------------------------------------- 49 16N 19E 12 640.00 ----------------------------------------------------- 16N 19E 14 640.00 ----------------------------------------------------- 16N 19E 18 635.48 ----------------------------------------------------- 16N 19E 20 640.00 ----------------------------------------------------- 16N 19E 22 640.00 ----------------------------------------------------- 16N 19E 28 640.00 ----------------------------------------------------- 16N 19E 30 629.56 ----------------------------------------------------- ---------- 5,745.04 ========== 17N 19E 04 9.08 ----------------------------------------------------- 17N 19E 06 663.83 ----------------------------------------------------- ---------- 672.91 ========== 18N 19E 18 312.60 ----------------------------------------------------- 18N 19E 20 480.00 ----------------------------------------------------- ---------- 792.60 ========== 12N 20E 04 382.64 ----------------------------------------------------- ---------- 382.64 ========== 13N 20E 10 640.00 ----------------------------------------------------- 13N 20E 20 640.00 ----------------------------------------------------- 13N 20E 22 320.00 S2 ----------------------------------------------------- 13N 20E 24 580.35 ----------------------------------------------------- 13N 20E 25 640.00 ----------------------------------------------------- 13N 20E 26 640.00 ----------------------------------------------------- 13N 20E 28 640.00 ----------------------------------------------------- 13N 20E 30 639.64 ----------------------------------------------------- 13N 20E 34 640.00 ----------------------------------------------------- ---------- 5,379.99 ========== 14N 20E 04 480.00 14N 20E 05 640.00 14N 20E 07 640.00 ----------------------------------------------------- 14N 20E 08 640.00 14N 20E 09 640.00 14N 20E 19 640.00 ----------------------------------------------------- 14N 20E 20 640.00 ----------------------------------------------------- 14N 20E 22 640.00 ----------------------------------------------------- 50 14N 20E 26 640.00 ----------------------------------------------------- 14N 20E 28 640.00 ----------------------------------------------------- 14N 20E 30 321.04 14N 20E 31 640.00 ----------------------------------------------------- 14N 20E 34 640.00 ----------------------------------------------------- ---------- 7,841.04 ========== 15N 20E 04 639.72 ----------------------------------------------------- 15N 20E 06 637.96 ----------------------------------------------------- 15N 20E 08 640.00 ----------------------------------------------------- 15N 20E 09 640.00 ----------------------------------------------------- 15N 20E 17 640.00 ----------------------------------------------------- 15N 20E 18 643.04 ----------------------------------------------------- 15N 20E 19 640.00 ----------------------------------------------------- 15N 20E 21 640.00 ----------------------------------------------------- 15N 20E 29 640.00 ----------------------------------------------------- 15N 20E 31 640.00 ----------------------------------------------------- 15N 20E 33 640.00 ----------------------------------------------------- ---------- 7,040.72 ========== 16N 20E 06 678.24 ----------------------------------------------------- 16N 20E 10 640.00 ----------------------------------------------------- 16N 20E 20 640.00 ----------------------------------------------------- 16N 20E 30 634.58 ----------------------------------------------------- ---------- 2,592.82 ========== 17N 20E 18 638.68 ----------------------------------------------------- 17N 20E 20 640.00 ----------------------------------------------------- 17N 20E 30 629.08 ----------------------------------------------------- ---------- 1,907.76 ========== 12N 21E 04 320.00 ----------------------------------------------------- 12N 21E 12 80.00 ----------------------------------------------------- ---------- 400.00 ========== 13N 21E 31 640.00 ----------------------------------------------------- ---------- 640.00 ========== 51 14N 21E 01 230.00 14N 21E 13 40.00 ----------------------------------------------------- ---------- 270.00 ========== 15N 21E 12 640.00 ----------------------------------------------------- ---------- 640.00 ========== 16N 21E 26 640.00 ---------- 640.00 ========== 17N 21E 01 639.45 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 03 480.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 09 130.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 11 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 12 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 13 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 14 480.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 15 25.16 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 23 106.02 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 24 640.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- 17N 21E 25 437.14 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- ---------- 4,857.77 ========== ----------------------------------------------------- 18N 21E 35 285.00 Oil, gas, geo thermal & pet. wood reserved ----------------------------------------------------- ---------- 285.00 ========== 11N 22E 01 640.80 ----------------------------------------------------- 11N 22E 03 330.13 ----------------------------------------------------- 11N 22E 05 563.36 ----------------------------------------------------- 11N 22E 08 640.00 ----------------------------------------------------- ---------- 2,174.29 ========== 12N 22E 01 437.84 ----------------------------------------------------- 12N 22E 03 415.20 ----------------------------------------------------- 12N 22E 05 393.20 ----------------------------------------------------- 12N 22E 07 1013.64 ----------------------------------------------------- 12N 22E 09 640.00 ----------------------------------------------------- 12N 22E 11 597.73 ----------------------------------------------------- 12N 22E 15 640.00 ----------------------------------------------------- 52 12N 22E 17 640.00 ----------------------------------------------------- 12N 22E 19 854.16 ----------------------------------------------------- 12N 22E 21 640.00 ----------------------------------------------------- 12N 22E 23 640.00 ----------------------------------------------------- 12N 22E 25 640.00 ----------------------------------------------------- 12N 22E 27 640.00 ----------------------------------------------------- 12N 22E 29 640.00 ----------------------------------------------------- 12N 22E 31 772.07 ----------------------------------------------------- 12N 22E 33 480.00 ----------------------------------------------------- 12N 22E 35 640.00 ----------------------------------------------------- ---------- 10,723.84 ========== 13N 22E 01 638.88 ----------------------------------------------------- 13N 22E 03 640.18 ----------------------------------------------------- 13N 22E 05 642.72 ----------------------------------------------------- 13N 22E 06 615.07 ----------------------------------------------------- 13N 22E 07 699.84 ----------------------------------------------------- 13N 22E 09 640.00 ----------------------------------------------------- 13N 22E 11 640.00 ----------------------------------------------------- 13N 22E 12 640.00 ----------------------------------------------------- 13N 22E 13 640.00 ----------------------------------------------------- 13N 22E 14 640.00 ----------------------------------------------------- 13N 22E 15 640.00 ----------------------------------------------------- 13N 22E 17 640.00 ----------------------------------------------------- 13N 22E 19 616.18 ----------------------------------------------------- 13N 22E 21 640.00 ----------------------------------------------------- 13N 22E 22 640.00 E2 ----------------------------------------------------- 13N 22E 23 640.00 ----------------------------------------------------- 13N 22E 24 640.00 ----------------------------------------------------- 13N 22E 25 640.00 ----------------------------------------------------- 13N 22E 26 640.00 ----------------------------------------------------- 13N 22E 27 640.00 ----------------------------------------------------- 13N 22E 29 640.00 ----------------------------------------------------- 13N 22E 31 648.00 ----------------------------------------------------- 13N 22E 33 640.00 ----------------------------------------------------- 13N 22E 35 640.00 ----------------------------------------------------- ---------- 15,380.87 ========== 14N 22E 01 677.92 14N 22E 03 667.58 14N 22E 04 661.28 ----------------------------------------------------- 14N 22E 05 655.18 ----------------------------------------------------- 14N 22E 06 699.65 ----------------------------------------------------- 14N 22E 07 695.68 ----------------------------------------------------- 14N 22E 08 640.00 ----------------------------------------------------- 14N 22E 09 640.00 ----------------------------------------------------- 53 14N 22E 11 640.00 ----------------------------------------------------- 14N 22E 12 640.00 ----------------------------------------------------- 14N 22E 13 640.00 ----------------------------------------------------- 14N 22E 14 640.00 ----------------------------------------------------- 14N 22E 15 640.00 ----------------------------------------------------- 14N 22E 17 640.00 ----------------------------------------------------- 14N 22E 18 590.45 ----------------------------------------------------- 14N 22E 19 705.42 ----------------------------------------------------- 14N 22E 20 640.00 ----------------------------------------------------- 14N 22E 21 640.00 ----------------------------------------------------- 14N 22E 22 600.00 ----------------------------------------------------- 14N 22E 23 555.00 ----------------------------------------------------- 14N 22E 24 640.00 ----------------------------------------------------- 14N 22E 25 640.00 ----------------------------------------------------- 14N 22E 26 640.00 ----------------------------------------------------- 14N 22E 27 640.00 ----------------------------------------------------- 14N 22E 28 640.00 ----------------------------------------------------- 14N 22E 29 640.00 ----------------------------------------------------- 14N 22E 30 709.28 ----------------------------------------------------- 14N 22E 31 713.82 ----------------------------------------------------- 14N 22E 33 640.00 ----------------------------------------------------- 14N 22E 34 640.00 ----------------------------------------------------- 14N 22E 35 640.00 ----------------------------------------------------- ---------- 20,091.26 ========== 15N 22E 01 643.92 15N 22E 03 640.48 ----------------------------------------------------- 15N 22E 05 641.18 ----------------------------------------------------- 15N 22E 06 707.05 ----------------------------------------------------- 15N 22E 07 718.82 ----------------------------------------------------- 15N 22E 09 640.00 ----------------------------------------------------- 15N 22E 10 640.00 ----------------------------------------------------- 15N 22E 11 640.00 ----------------------------------------------------- 15N 22E 13 640.00 ----------------------------------------------------- 15N 22E 14 640.00 ----------------------------------------------------- 15N 22E 15 640.00 ----------------------------------------------------- 15N 22E 17 640.00 ----------------------------------------------------- 15N 22E 20 640.00 ----------------------------------------------------- 15N 22E 21 640.00 ----------------------------------------------------- 15N 22E 22 640.00 ----------------------------------------------------- 15N 22E 23 640.00 ----------------------------------------------------- 15N 22E 24 640.00 ----------------------------------------------------- 15N 22E 25 640.00 ----------------------------------------------------- 15N 22E 26 640.00 ----------------------------------------------------- 15N 22E 27 640.00 ----------------------------------------------------- 15N 22E 28 640.00 ----------------------------------------------------- 54 15N 22E 31 691.20 ---------------------------------------------------------- 15N 22E 33 640.00 ---------------------------------------------------------- 15N 22E 34 640.00 ---------------------------------------------------------- 15N 22E 35 640.00 ---------------------------------------------------------- ----------- 16,202.65 =========== 16N 22E 01 637.20 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 22E 02 636.86 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 22E 03 637.41 N2,Oil, gas, geo thermal & pet. wood reserv ---------------------------------------------------------- 16N 22E 04 638.08 N2,Oil, gas, geo thermal & pet. wood reserv ---------------------------------------------------------- 16N 22E 05 638.30 N2,Oil, gas, geo thermal & pet. wood reserv ---------------------------------------------------------- 16N 22E 07 631.94 ---------------------------------------------------------- 16N 22E 09 640.00 ---------------------------------------------------------- 16N 22E 10 640.00 ---------------------------------------------------------- 16N 22E 11 640.00 ---------------------------------------------------------- 16N 22E 12 657.94 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 22E 13 669.33 ---------------------------------------------------------- 16N 22E 14 640.00 ---------------------------------------------------------- 16N 22E 15 640.00 ---------------------------------------------------------- 16N 22E 19 631.36 ---------------------------------------------------------- 16N 22E 21 640.00 ---------------------------------------------------------- 16N 22E 22 640.00 ---------------------------------------------------------- 16N 22E 23 640.00 ---------------------------------------------------------- 16N 22E 24 655.04 ---------------------------------------------------------- 16N 22E 25 640.00 ---------------------------------------------------------- 16N 22E 27 640.00 ---------------------------------------------------------- 16N 22E 31 630.82 ---------------------------------------------------------- 16N 22E 33 640.00 ---------------------------------------------------------- 16N 22E 35 640.00 ---------------------------------------------------------- ----------- 14,744.28 =========== 17N 22E 01 641.48 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 02 642.54 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 03 641.78 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 04 639.74 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 05 641.06 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 06 677.31 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 07 668.78 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 08 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 09 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 10 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 11 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 12 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 13 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 55 17N 22E 14 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 15 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 17 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 18 663.98 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 19 657.42 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 20 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 21 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 22 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 23 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 24 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 25 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 26 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 27 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 28 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 29 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 30 651.58 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 31 644.70 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 32 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 33 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 34 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 22E 35 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- ----------- 21,890.37 =========== ---------------------------------------------------------- 18N 22E 13 620.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 14 241.63 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 15 66.47 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 21 320.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 22 479.85 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 23 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 24 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 25 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 26 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 27 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 28 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 29 435.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 31 597.52 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 32 480.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 33 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 34 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 22E 35 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- ------------------- 9,000.47 =================== 11N 23E 05 639.24 ---------------------------------------------------------- 56 ----------- 639.24 =========== 12N 23E 01 522.06 ---------------------------------------------------------- 12N 23E 03 494.58 ---------------------------------------------------------- 12N 23E 05 465.90 ---------------------------------------------------------- 12N 23E 07 654.98 ---------------------------------------------------------- 12N 23E 08 640.00 ---------------------------------------------------------- 12N 23E 09 640.00 ---------------------------------------------------------- 12N 23E 10 480.00 ---------------------------------------------------------- 12N 23E 11 640.00 ---------------------------------------------------------- 12N 23E 12 600.00 ---------------------------------------------------------- 12N 23E 13 640.00 ---------------------------------------------------------- 12N 23E 14 640.00 ---------------------------------------------------------- 12N 23E 15 640.00 ---------------------------------------------------------- 12N 23E 17 640.00 ---------------------------------------------------------- 12N 23E 18 618.06 ---------------------------------------------------------- 12N 23E 19 660.22 ---------------------------------------------------------- 12N 23E 21 640.00 ---------------------------------------------------------- 12N 23E 22 640.00 ---------------------------------------------------------- 12N 23E 23 600.00 ---------------------------------------------------------- 12N 23E 25 640.00 ---------------------------------------------------------- 12N 23E 26 640.00 ---------------------------------------------------------- 12N 23E 27 640.00 ---------------------------------------------------------- 12N 23E 29 640.00 ---------------------------------------------------------- 12N 23E 31 664.06 ---------------------------------------------------------- 12N 23E 33 640.00 ---------------------------------------------------------- 12N 23E 35 640.00 ---------------------------------------------------------- ----------- 15,359.86 =========== 13N 23E 01 640.58 ---------------------------------------------------------- 13N 23E 03 642.46 ---------------------------------------------------------- 13N 23E 04 322.08 ---------------------------------------------------------- 13N 23E 05 641.92 ---------------------------------------------------------- 13N 23E 06 691.50 ---------------------------------------------------------- 13N 23E 07 680.78 ---------------------------------------------------------- 13N 23E 09 640.00 ---------------------------------------------------------- 13N 23E 11 640.00 ---------------------------------------------------------- 13N 23E 12 640.00 ---------------------------------------------------------- 13N 23E 13 640.00 ---------------------------------------------------------- 13N 23E 14 640.00 ---------------------------------------------------------- 13N 23E 15 640.00 ---------------------------------------------------------- 13N 23E 17 640.00 ---------------------------------------------------------- 13N 23E 18 673.18 ---------------------------------------------------------- 13N 23E 19 665.92 ---------------------------------------------------------- 13N 23E 20 640.00 ---------------------------------------------------------- 13N 23E 21 640.00 ---------------------------------------------------------- 13N 23E 22 240.00 ---------------------------------------------------------- 57 13N 23E 23 640.00 ---------------------------------------------------------- 13N 23E 24 640.00 ---------------------------------------------------------- 13N 23E 25 640.00 ---------------------------------------------------------- 13N 23E 27 640.00 ---------------------------------------------------------- 13N 23E 28 640.00 ---------------------------------------------------------- 13N 23E 29 640.00 ---------------------------------------------------------- 13N 23E 30 656.38 ---------------------------------------------------------- 13N 23E 31 645.66 ---------------------------------------------------------- 13N 23E 33 640.00 ---------------------------------------------------------- 13N 23E 34 400.00 ---------------------------------------------------------- 13N 23E 35 640.00 ---------------------------------------------------------- ----------- 17,780.46 =========== 14N 23E 01 645.02 ---------------------------------------------------------- 14N 23E 03 658.60 ---------------------------------------------------------- 14N 23E 04 664.22 ---------------------------------------------------------- 14N 23E 05 669.42 ---------------------------------------------------------- 14N 23E 06 757.39 ---------------------------------------------------------- 14N 23E 07 713.76 ---------------------------------------------------------- 14N 23E 08 640.00 ---------------------------------------------------------- 14N 23E 09 640.00 ---------------------------------------------------------- 14N 23E 10 640.00 ---------------------------------------------------------- 14N 23E 11 640.00 ---------------------------------------------------------- 14N 23E 12 480.00 ---------------------------------------------------------- 14N 23E 13 640.00 ---------------------------------------------------------- 14N 23E 15 640.00 ---------------------------------------------------------- 14N 23E 17 630.00 ---------------------------------------------------------- 14N 23E 18 710.74 ---------------------------------------------------------- 14N 23E 19 705.94 ---------------------------------------------------------- 14N 23E 20 640.00 ---------------------------------------------------------- 14N 23E 21 640.00 ---------------------------------------------------------- 14N 23E 22 480.00 ---------------------------------------------------------- 14N 23E 23 640.00 ---------------------------------------------------------- 14N 23E 24 640.00 ---------------------------------------------------------- 14N 23E 25 640.00 ---------------------------------------------------------- 14N 23E 26 640.00 ---------------------------------------------------------- 14N 23E 27 640.00 ---------------------------------------------------------- 14N 23E 28 640.00 ---------------------------------------------------------- 14N 23E 29 640.00 ---------------------------------------------------------- 14N 23E 30 700.58 ---------------------------------------------------------- 14N 23E 31 697.18 ---------------------------------------------------------- 14N 23E 33 640.00 ---------------------------------------------------------- 14N 23E 35 640.00 ---------------------------------------------------------- ----------- 19,392.85 =========== 15N 23E 03 321.69 ---------------------------------------------------------- 58 15N 23E 05 640.22 ---------------------------------------------------------- 15N 23E 07 725.02 ---------------------------------------------------------- 15N 23E 09 640.00 ---------------------------------------------------------- 15N 23E 11 640.00 ---------------------------------------------------------- 15N 23E 13 640.00 ---------------------------------------------------------- 15N 23E 15 640.00 ---------------------------------------------------------- 15N 23E 17 640.00 ---------------------------------------------------------- 15N 23E 18 722.72 ---------------------------------------------------------- 15N 23E 19 722.50 ---------------------------------------------------------- 15N 23E 20 640.00 ---------------------------------------------------------- 15N 23E 21 640.00 ---------------------------------------------------------- 15N 23E 22 640.00 ---------------------------------------------------------- 15N 23E 23 640.00 ---------------------------------------------------------- 15N 23E 25 640.00 ---------------------------------------------------------- 15N 23E 26 480.00 ---------------------------------------------------------- 15N 23E 27 640.00 ---------------------------------------------------------- 15N 23E 28 160.00 ---------------------------------------------------------- 15N 23E 29 640.00 ---------------------------------------------------------- 15N 23E 30 722.82 ---------------------------------------------------------- 15N 23E 31 720.62 ---------------------------------------------------------- 15N 23E 33 640.00 ---------------------------------------------------------- 15N 23E 34 240.00 ---------------------------------------------------------- 15N 23E 35 640.00 ---------------------------------------------------------- ----------- 14,415.59 =========== ---------------------------------------------------------- 16N 23E 03 321.29 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 04 628.38 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 05 631.90 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 07 724.26 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 08 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 09 617.50 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 10 307.70 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 16N 23E 15 624.30 ---------------------------------------------------------- ----------- 4,495.33 =========== 17N 23E 01 645.50 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 03 641.32 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 05 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 07 639.66 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 08 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 09 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 11 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 13 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 14 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 15 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 59 17N 23E 17 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 18 637.20 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 19 637.62 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 21 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 22 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 23 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 24 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 25 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 26 600.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 27 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 17N 23E 29 640.00 Oil, gas, geo thermal & pet. wood reserved* ---------------------------------------------------------- 17N 23E 31 638.72 Oil, gas, geo thermal & pet. wood reserved* ---------------------------------------------------------- 17N 23E 33 640.00 Oil, gas, geo thermal & pet. wood reserved* ---------------------------------------------------------- ----------- 14,680.02 =========== ---------------------------------------------------------- 18N 23E 07 125.00 Oil, gas, geo thermal & pet. wood reserved* ---------------------------------------------------------- 18N 23E 09 10.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 11 10.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 13 590.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 15 580.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 17 590.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 18 633.26 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 19 633.36 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 20 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 21 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 23 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 25 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 26 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 27 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 28 320.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 29 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 30 633.86 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 31 634.28 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 32 480.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 33 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 34 320.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- 18N 23E 35 640.00 Oil, gas, geo thermal & pet. wood reserved ---------------------------------------------------------- ----------- 11,319.76 =========== ----------- TOTAL 452,555.08 =========== 60

MOHAVE COUNTY, AZ 3/31/2002 MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 17N 18W 01 560.00 --------------- 17N 18W 13 193.29 --------------- -------------------------- 753.29 ========================== 18N 18W 01 624.72 --------------- 18N 18W 25 640.00 --------------- -------------------------- 1,264.72 ========================== 19N 18W 01 641.12 --------------- 19N 18W 03 644.36 --------------- 19N 18W 05 647.04 --------------- 19N 18W 07 633.72 --------------- 19N 18W 09 640.00 --------------- 19N 18W 11 640.00 --------------- 19N 18W 13 640.00 --------------- 19N 18W 15 640.00 --------------- 19N 18W 21 640.00 --------------- 19N 18W 23 640.00 --------------- 19N 18W 25 640.00 --------------- 19N 18W 27 640.00 --------------- 19N 18W 33 640.00 --------------- 19N 18W 35 640.00 --------------- -------------------------- 8,966.24 ========================== 20N 18W 01 657.32 --------------- 20N 18W 05 651.88 --------------- 20N 18W 07 631.80 --------------- 20N 18W 15 640.00 --------------- 20N 18W 17 640.00 --------------- 20N 18W 19 634.20 --------------- 20N 18W 21 640.00 ---------------

61 20N 18W 23 640.00 --------------- 20N 18W 25 640.00 --------------- 20N 18W 27 640.00 --------------- 20N 18W 29 640.00 --------------- 20N 18W 31 634.28 --------------- 20N 18W 33 640.00 --------------- 20N 18W 35 640.00 --------------- -------------------------- 8,969.48 ========================== 21N 18W 01 641.60 --------------- 21N 18W 03 640.60 --------------- 21N 18W 05 640.48 --------------- 21N 18W 07 477.87 --------------- 21N 18W 09 640.00 --------------- 21N 18W 11 640.00 --------------- 21N 18W 13 640.00 --------------- 21N 18W 15 580.00 --------------- 21N 18W 17 640.00 --------------- 21N 18W 19 618.16 --------------- 21N 18W 21 640.00 --------------- 21N 18W 23 559.93 --------------- 21N 18W 25 640.00 --------------- 21N 18W 27 640.00 --------------- 21N 18W 29 640.00 --------------- 21N 18W 31 639.84 --------------- 21N 18W 33 640.00 --------------- 21N 18W 35 619.68 --------------- -------------------------- 11,178.16 ========================== --------------- 17N 19W 35 80.00 --------------- -------------------------- 80.00 ========================== 19N 19W 01 649.16 --------------- 19N 19W 03 649.88 --------------- 19N 19W 11 640.00 --------------- -------------------------- 1,939.04 ========================== 62 20N 19W 01 646.64 --------------- 20N 19W 03 645.44 --------------- 20N 19W 09 640.00 --------------- 20N 19W 11 640.00 --------------- 20N 19W 13 640.00 --------------- 20N 19W 15 640.00 --------------- 20N 19W 23 640.00 --------------- 20N 19W 25 640.00 --------------- 20N 19W 27 640.00 --------------- 20N 19W 35 640.00 --------------- -------------------------- 6,412.08 ========================== 21N 19W 01 640.36 --------------- 21N 19W 03 640.64 --------------- 21N 19W 13 640.00 --------------- 21N 19W 15 640.00 --------------- 21N 19W 21 640.00 --------------- 21N 19W 23 640.00 --------------- 21N 19W 25 640.00 --------------- 21N 19W 27 640.00 --------------- 21N 19W 29 637.64 --------------- 21N 19W 33 640.00 --------------- 21N 19W 35 640.00 --------------- -------------------------- 7,038.64 ========================== -------------------------- TOTAL 46,601.65 ==========================

COCONINO COUNTY, AZ - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 21N 07E 33 10.00_ ---------------------- 10.00 ======================

63 19N 15E 07 35.81_ 19N 15E 17 49.55_ ---------------------- 85.36 ====================== 21N 15E 05 640.42_ 21N 15E 07 636.18_ 21N 15E 09 640.00_ 21N 15E 17 640.00_ 21N 15E 19 637.34_ 21N 15E 21 640.00_ 21N 15E 29 640.00_ 21N 15E 31 638.88_ 21N 15E 33 640.00_ ---------------------- 5752.82 ====================== 22N 15E 05 638.54_ 22N 15E 07 637.76_ 22N 15E 09 640.00_ 22N 15E 17 640.00_ 22N 15E 19 639.58_ 22N 15E 21 640.00_ 22N 15E 29 640.00_ 22N 15E 31 640.08_ 22N 15E 33 640.00_ ---------------------- 5755.96 ====================== 23N 15E 05 638.30_ 23N 15E 07 637.66_ 23N 15E 09 640.00_ 23N 15E 17 640.00_ 23N 15E 19 640.13_ 23N 15E 21 640.00_ 23N 15E 29 640.00_ 23N 15E 31 640.50_ 23N 15E 33 640.00_ ---------------------- 5756.59 ====================== 24N 15E 17 640.00_ 24N 15E 19 634.98_ 24N 15E 21 640.00_ 64 24N 15E 29 640.00_ 24N 15E 31 635.42_ 24N 15E 33 640.00_ ----------------------- 3,830.40 ======================= ----------------------- TOTAL 21,191.13 =======================

CATRON COUNTY, NEW MEXICO 3/31/2002 - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - ----------------------------------------------------------------------------------------- 01N 12W 3 480.54 Lots 1-4,S2N2SW4 -------------------------------------------- 01N 12W 4 637.54 Lots 1-4,S2N2 -------------------------------------------- 01N 12W 7 386.44 Lots 1-4,W2E2,NE4SE4,S2SE4NE4 -------------------------------------------- --------------- 1,504.52 =============== 03N 14W 22 640.00 -------------------------------------------- 03N 14W 23 640.00 -------------------------------------------- 03N 14W 35 640.00 -------------------------------------------- --------------- 1,920.00 =============== 02N 15W 10 640.00 -------------------------------------------- 02N 15W 13 640.00 -------------------------------------------- 02N 15W 14 640.00 -------------------------------------------- 02N 15W 17 640.00 160 Ac. Oil & Gas only -------------------------------------------- 02N 15W 20 320.00 N2 -------------------------------------------- 02N 15W 21 640.00 -------------------------------------------- 02N 15W 23 640.00 -------------------------------------------- 02N 15W 24 640.00 --------------------------------------------

65 02N 15W 25 640.00 -------------------------------------------- 02N 15W 26 640.00 -------------------------------------------- 02N 15W 28 480.00 N2,SW4 -------------------------------------------- 02N 15W 29 280.00 SE4,S2SW4,NE4SW4 -------------------------------------------- 02N 15W 30 121.06 Lots 1,3,NE4NW4 -------------------------------------------- 02N 15W 34 320.00 E2 -------------------------------------------- 02N 15W 35 640.00 -------------------------------------------- --------------- 7,921.06 =============== --------------- Total Catron 11,345.58 ===============

CIBOLA COUNTY, NM 3/31/2002 - -------------------------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------------------------- 05N 04W 24 480.00 --------------------------------------------- -------------- 480.00 ============== 06N 04W 01 636.80 06N 04W 03 624.56 06N 04W 05 629.52 06N 04W 07 622.64 06N 04W 09 640.00 06N 04W 11 640.00 06N 04W 13 640.00 06N 04W 15 640.00 06N 04W 17 640.00 06N 04W 19 619.20 06N 04W 21 640.00 06N 04W 23 640.00 06N 04W 25 640.00 06N 04W 27 640.00 06N 04W 29 640.00 06N 04W 31 622.60

66 06N 04W 33 640.00 06N 04W 35 640.00 ------------------------------------------------------- ------------------ 11,435.32 ================== 07N 04W 01 640.40 ------------------------------------------------------- 07N 04W 03 640.80 ------------------------------------------------------- 07N 04W 05 639.06 ------------------------------------------------------- 07N 04W 07 631.60 ------------------------------------------------------- 07N 04W 09 640.00 ------------------------------------------------------- 07N 04W 11 560.00 ------------------------------------------------------- 07N 04W 13 640.00 ------------------------------------------------------- 07N 04W 15 640.00 ------------------------------------------------------- 07N 04W 17 640.00 ------------------------------------------------------- 07N 04W 19 626.40 ------------------------------------------------------- 07N 04W 21 640.00 ------------------------------------------------------- 07N 04W 23 640.00 ------------------------------------------------------- 07N 04W 25 640.00 ------------------------------------------------------- 07N 04W 27 640.00 ------------------------------------------------------- 07N 04W 29 640.00 ------------------------------------------------------- 07N 04W 31 622.60 ------------------------------------------------------- 07N 04W 33 640.00 ------------------------------------------------------- 07N 04W 35 640.00 ------------------------------------------------------- ------------------ 11,400.86 ================== 04N 05W 10 640.00 ------------------------------------------------------- ------------------ 640.00 ================== 05N 05W 10 640.00 ------------------------------------------------------- ------------------ 640.00 ================== 06N 05W 01 646.00 ------------------------------------------------------- 06N 05W 03 651.84 ------------------------------------------------------- 06N 05W 05 645.60 ------------------------------------------------------- 67 06N 05W 07 641.60 ------------------------------------------------------- 06N 05W 09 640.00 ------------------------------------------------------- 06N 05W 11 640.00 ------------------------------------------------------- 06N 05W 13 640.00 ------------------------------------------------------- 06N 05W 15 640.00 ------------------------------------------------------- 06N 05W 17 640.00 ------------------------------------------------------- 06N 05W 19 639.60 ------------------------------------------------------- 06N 05W 21 640.00 ------------------------------------------------------- 06N 05W 23 640.00 ------------------------------------------------------- 06N 05W 25 640.00 ------------------------------------------------------- 06N 05W 27 640.00 ------------------------------------------------------- 06N 05W 29 640.00 ------------------------------------------------------- 06N 05W 31 647.92 ------------------------------------------------------- 06N 05W 33 640.00 ------------------------------------------------------- 06N 05W 35 640.00 ------------------------------------------------------- ------------------ 11,552.56 ================== 07N 05W 01 644.00 ------------------------------------------------------- 07N 05W 03 644.00 ------------------------------------------------------- 07N 05W 05 646.40 ------------------------------------------------------- 07N 05W 07 627.20 ------------------------------------------------------- 07N 05W 09 640.00 ------------------------------------------------------- 07N 05W 11 640.00 ------------------------------------------------------- 07N 05W 13 640.00 ------------------------------------------------------- 07N 05W 15 640.00 ------------------------------------------------------- 07N 05W 17 640.00 ------------------------------------------------------- 07N 05W 19 628.40 ------------------------------------------------------- 07N 05W 21 640.00 ------------------------------------------------------- 07N 05W 23 640.00 ------------------------------------------------------- 07N 05W 25 640.00 ------------------------------------------------------- 07N 05W 27 640.00 ------------------------------------------------------- 07N 05W 29 640.00 ------------------------------------------------------- 07N 05W 31 631.20 ------------------------------------------------------- 07N 05W 33 640.00 ------------------------------------------------------- 07N 05W 35 640.00 ------------------------------------------------------- ------------------ 11,501.20 ================== 04N 06W 10 640.00 Oil & Gas only ------------------------------------------------------- 04N 06W 12 280.00 Oil & Gas only [NE4,N2NW4,SE4NW4] ------------------------------------------------------- ------------------ 920.00 ================== 06N 06W 01 638.40 ------------------------------------------------------- 06N 06W 03 639.84 ------------------------------------------------------- 68 06N 06W 05 642.00 ------------------------------------------------------- 06N 06W 07 634.40 ------------------------------------------------------- 06N 06W 09 640.00 ------------------------------------------------------- 06N 06W 11 640.00 ------------------------------------------------------- 06N 06W 13 640.00 ------------------------------------------------------- 06N 06W 15 640.00 ------------------------------------------------------- 06N 06W 17 640.00 ------------------------------------------------------- 06N 06W 19 638.00 ------------------------------------------------------- 06N 06W 21 640.00 ------------------------------------------------------- 06N 06W 23 640.00 ------------------------------------------------------- 06N 06W 25 640.00 ------------------------------------------------------- 06N 06W 27 640.00 ------------------------------------------------------- 06N 06W 29 640.00 ------------------------------------------------------- 06N 06W 31 631.84 ------------------------------------------------------- 06N 06W 33 640.00 ------------------------------------------------------- 06N 06W 35 640.00 ------------------------------------------------------- ------------------ 11,504.48 ================== ------------------------------------------------------- 07N 06W 01 640.48 ------------------------------------------------------- 07N 06W 03 641.04 ------------------------------------------------------- 07N 06W 05 641.20 ------------------------------------------------------- 07N 06W 07 628.40 ------------------------------------------------------- 07N 06W 09 640.00 ------------------------------------------------------- 07N 06W 11 640.00 ------------------------------------------------------- 07N 06W 13 640.00 ------------------------------------------------------- 07N 06W 15 640.00 ------------------------------------------------------- 07N 06W 17 640.00 ------------------------------------------------------- 07N 06W 19 633.84 ------------------------------------------------------- 07N 06W 21 640.00 ------------------------------------------------------- 07N 06W 23 640.00 ------------------------------------------------------- 07N 06W 25 640.00 ------------------------------------------------------- 07N 06W 27 640.00 ------------------------------------------------------- 07N 06W 29 640.00 ------------------------------------------------------- 69 07N 06W 31 632.40 ------------------------------------------------------- 07N 06W 33 640.00 ------------------------------------------------------- 07N 06W 35 640.00 ------------------------------------------------------- ------------------ 11,497.36 ================== ------------------------------------------------------- 08N 13W 03 630.88 ------------------------------------------------------- 08N 13W 04 633.42 ------------------------------------------------------- 08N 13W 05 636.36 ------------------------------------------------------- 08N 13W 06 630.08 ------------------------------------------------------- 08N 13W 07 629.16 ------------------------------------------------------- 08N 13W 08 640.00 ------------------------------------------------------- 08N 13W 09 640.00 ------------------------------------------------------- 08N 13W 10 640.00 ------------------------------------------------------- 08N 13W 17 640.00 ------------------------------------------------------- 08N 13W 18 628.40 ------------------------------------------------------- 08N 13W 19 629.00 ------------------------------------------------------- ------------------ 6,977.30 ================== 09N 13W 06 638.57 ------------------------------------------------------- 09N 13W 08 640.00 ------------------------------------------------------- 09N 13W 10 640.00 ------------------------------------------------------- 09N 13W 14 640.00 ------------------------------------------------------- 09N 13W 18 636.64 ------------------------------------------------------- 09N 13W 20 640.00 ------------------------------------------------------- 09N 13W 30 637.76 ------------------------------------------------------- ------------------ 4,472.97 ================== 06N 14W 01 640.40 ------------------------------------------------------- 06N 14W 03 640.80 ------------------------------------------------------- 06N 14W 05 641.36 ------------------------------------------------------- 06N 14W 07 612.52 ------------------------------------------------------- 06N 14W 09 640.00 ------------------------------------------------------- 06N 14W 11 640.00 ------------------------------------------------------- 06N 14W 13 640.00 ------------------------------------------------------- 06N 14W 15 640.00 ------------------------------------------------------- 06N 14W 17 640.00 ------------------------------------------------------- 70 06N 14W 19 610.08 ------------------------------------------------------- 06N 14W 21 640.00 ------------------------------------------------------- 06N 14W 23 640.00 ------------------------------------------------------- 06N 14W 25 640.00 ------------------------------------------------------- 06N 14W 27 640.00 ------------------------------------------------------- 06N 14W 29 640.00 ------------------------------------------------------- 06N 14W 31 612.60 ------------------------------------------------------- 06N 14W 33 640.00 ------------------------------------------------------- 06N 14W 35 640.00 ------------------------------------------------------- ------------------ 11,437.76 ================== 07N 14W 01 639.52 ------------------------------------------------------- 07N 14W 03 641.68 ------------------------------------------------------- 07N 14W 05 640.88 ------------------------------------------------------- 07N 14W 07 624.08 ------------------------------------------------------- 07N 14W 09 640.00 ------------------------------------------------------- 07N 14W 11 640.00 ------------------------------------------------------- 07N 14W 13 640.00 ------------------------------------------------------- 07N 14W 15 640.00 ------------------------------------------------------- 07N 14W 17 640.00 ------------------------------------------------------- 07N 14W 19 619.56 ------------------------------------------------------- 07N 14W 21 640.00 ------------------------------------------------------- 07N 14W 23 640.00 ------------------------------------------------------- 07N 14W 25 640.00 ------------------------------------------------------- 07N 14W 27 640.00 ------------------------------------------------------- 07N 14W 29 640.00 ------------------------------------------------------- 07N 14W 31 614.48 ------------------------------------------------------- 07N 14W 33 640.00 ------------------------------------------------------- 07N 14W 35 640.00 ------------------------------------------------------- ------------------ 11,460.20 ================== 08N 14W 01 633.00 ------------------------------------------------------- 08N 14W 03 642.24 ------------------------------------------------------- 08N 14W 05 651.08 ------------------------------------------------------- 08N 14W 07 637.20 ------------------------------------------------------- 08N 14W 09 640.00 ------------------------------------------------------- 08N 14W 11 640.00 ------------------------------------------------------- 08N 14W 13 640.00 ------------------------------------------------------- 08N 14W 15 640.00 ------------------------------------------------------- 71 08N 14W 17 640.00 ------------------------------------------------------- 08N 14W 19 634.48 ------------------------------------------------------- 08N 14W 21 640.00 ------------------------------------------------------- 08N 14W 23 640.00 ------------------------------------------------------- 08N 14W 25 640.00 ------------------------------------------------------- 08N 14W 27 640.00 ------------------------------------------------------- 08N 14W 29 640.00 ------------------------------------------------------- 08N 14W 31 628.32 ------------------------------------------------------- 08N 14W 33 640.00 ------------------------------------------------------- 08N 14W 35 640.00 ------------------------------------------------------- ------------------ 11,506.32 ================== 09N 14W 10 640.00 ------------------------------------------------------- 09N 14W 12 640.00 ------------------------------------------------------- 09N 14W 14 320.00 N2 ------------------------------------------------------- 09N 14W 24 640.00 ------------------------------------------------------- 09N 14W 26 480.00 E2E2,W2 ------------------------------------------------------- 09N 14W 28 480.00 N2,SE4 ------------------------------------------------------- 09N 14W 34 320.00 E2 ------------------------------------------------------- ------------------ 3,520.00 ================== 10N 14W 22 640.00 ------------------------------------------------------- 10N 14W 28 640.00 ------------------------------------------------------- 10N 14W 34 640.00 ------------------------------------------------------- ------------------ 1,920.00 ================== 07N 15W 01 640.84 ------------------------------------------------------- 07N 15W 03 640.80 ------------------------------------------------------- 07N 15W 05 640.00 ------------------------------------------------------- 07N 15W 09 640.00 ------------------------------------------------------- 07N 15W 11 640.00 ------------------------------------------------------- 07N 15W 13 640.00 ------------------------------------------------------- 07N 15W 15 640.00 ------------------------------------------------------- 07N 15W 17 640.00 ------------------------------------------------------- 07N 15W 21 640.00 ------------------------------------------------------- 07N 15W 23 640.00 ------------------------------------------------------- 07N 15W 25 640.00 ------------------------------------------------------- 72 07N 15W 27 640.00 ------------------------------------------------------- 07N 15W 29 640.00 ------------------------------------------------------- 07N 15W 33 640.00 ------------------------------------------------------- 07N 15W 35 640.00 ------------------------------------------------------- ------------------ 9,601.64 ================== 08N 15W 01 657.12 ------------------------------------------------------- 08N 15W 03 659.80 ------------------------------------------------------- 08N 15W 05 664.52 ------------------------------------------------------- 08N 15W 07 650.24 ------------------------------------------------------- 08N 15W 09 640.00 ------------------------------------------------------- 08N 15W 11 640.00 ------------------------------------------------------- 08N 15W 13 640.00 ------------------------------------------------------- 08N 15W 15 640.00 ------------------------------------------------------- 08N 15W 17 640.00 ------------------------------------------------------- 08N 15W 19 648.36 ------------------------------------------------------- 08N 15W 21 640.00 ------------------------------------------------------- 08N 15W 23 640.00 ------------------------------------------------------- 08N 15W 25 640.00 ------------------------------------------------------- 08N 15W 27 640.00 ------------------------------------------------------- 08N 15W 29 640.00 ------------------------------------------------------- 08N 15W 31 646.48 ------------------------------------------------------- 08N 15W 33 640.00 ------------------------------------------------------- 08N 15W 35 640.00 ------------------------------------------------------- ------------------ 11,606.52 ================== 09N 15W 10 640.00 ------------------------------------------------------- 09N 15W 12 640.00 ------------------------------------------------------- ------------------ 1,280.00 ================== ------------------ TOTAL CIBOLA 145,354.49 ================== 73

MCKINLEY COUNTY, NM - ------------------------------------------------------------------------------------------ MINERAL ACRES TWN RGE SEC OWNED COMMENTS - ------------------------------------------------------------------------------------------- 14N 12W 01 640.68 ------------------------------------ 14N 12W 03 640.92 ------------------------------------ 14N 12W 05 640.40 ------------------------------------ 14N 12W 07 648.32 ------------------------------------ 14N 12W 09 640.00 ------------------------------------ 14N 12W 11 640.00 ------------------------------------ 14N 12W 13 640.00 ------------------------------------ 14N 12W 15 640.00 ------------------------------------ 14N 12W 17 640.00 ------------------------------------ 14N 12W 19 653.80 ------------------------------------ 14N 12W 23 640.00 ------------------------------------ 14N 12W 25 640.00 ------------------------------------ 14N 12W 27 640.00 ------------------------------------ 14N 12W 29 640.00 ------------------------------------ 14N 12W 31 658.04 ------------------------------------ 14N 12W 33 640.00 ------------------------------------ 14N 12W 35 640.00 ------------------------------------ --------------------------- 10,922.16 =========================== 15N 12W 01 639.20 ------------------------------------ 15N 12W 03 636.24 ------------------------------------ 15N 12W 11 640.00 ------------------------------------ 15N 12W 13 640.00 ------------------------------------ 15N 12W 15 640.00 ------------------------------------ 15N 12W 17 640.00 ------------------------------------ 15N 12W 23 640.00 ------------------------------------ 15N 12W 33 640.00 ------------------------------------ 15N 12W 35 640.00 ------------------------------------ --------------------------- 5,755.44 =========================== 16N 12W 01 325.32 ------------------------------------ 16N 12W 03 635.20 ------------------------------------ 16N 12W 05 622.00 ------------------------------------ 16N 12W 07 643.60 ------------------------------------ 16N 12W 09 640.00 ------------------------------------

74 16N 12W 11 320.00 W2 ------------------------------------ 16N 12W 13 160.00 SW4 ------------------------------------ 16N 12W 15 480.00 ------------------------------------ 16N 12W 17 640.00 ------------------------------------ 16N 12W 19 643.28 ------------------------------------ 16N 12W 21 560.00 ------------------------------------ 16N 12W 23 640.00 ------------------------------------ 16N 12W 25 640.00 ------------------------------------ 16N 12W 27 640.00 ------------------------------------ 16N 12W 29 640.00 ------------------------------------ 16N 12W 33 640.00 ------------------------------------ 16N 12W 35 320.00 ------------------------------------ --------------------------- 9,189.40 =========================== 17N 12W 01 640.36 ------------------------------------ 17N 12W 03 641.36 ------------------------------------ 17N 12W 05 640.48 ------------------------------------ 17N 12W 07 638.32 ------------------------------------ 17N 12W 09 640.00 ------------------------------------ 17N 12W 11 640.00 ------------------------------------ 17N 12W 13 640.00 ------------------------------------ 17N 12W 15 640.00 ------------------------------------ 17N 12W 17 640.00 ------------------------------------ 17N 12W 19 639.24 ------------------------------------ 17N 12W 21 320.00 N2 ------------------------------------ 17N 12W 23 640.00 ------------------------------------ 17N 12W 25 640.00 ------------------------------------ 17N 12W 29 320.00 W2 ------------------------------------ 17N 12W 31 640.32 ------------------------------------ 17N 12W 33 160.00 SE1/4 ------------------------------------ 17N 12W 35 480.00 ------------------------------------ --------------------------- 9,600.08 =========================== 20N 12W 01 644.12 ------------------------------------ 20N 12W 03 643.32 ------------------------------------ 20N 12W 05 241.37 NE4;S2SE4 ------------------------------------ 20N 12W 07 633.04 ------------------------------------ 75 20N 12W 09 640.00 ------------------------------------ 20N 12W 11 640.00 ------------------------------------ 20N 12W 13 640.00 ------------------------------------ 20N 12W 15 640.00 ------------------------------------ 20N 12W 17 520.00 S2;S2NW4;E2NE4;SW4,NE4 ------------------------------------ 20N 12W 19 632.44 ------------------------------------ 20N 12W 21 640.00 ------------------------------------ 20N 12W 23 640.00 ------------------------------------ 20N 12W 25 640.00 ------------------------------------ 20N 12W 27 640.00 ------------------------------------ 20N 12W 29 640.00 ------------------------------------ 20N 12W 31 633.68 ------------------------------------ 20N 12W 33 640.00 ------------------------------------ 20N 12W 35 640.00 ------------------------------------ --------------------------- 10,987.97 =========================== 14N 13W 01 640.80 ------------------------------------ 14N 13W 03 642.36 ------------------------------------ 14N 13W 05 640.60 ------------------------------------ 14N 13W 07 640.64 ------------------------------------ 14N 13W 09 640.00 ------------------------------------ 14N 13W 11 640.00 ------------------------------------ 14N 13W 13 640.00 ------------------------------------ 14N 13W 15 640.00 ------------------------------------ 14N 13W 17 640.00 ------------------------------------ 14N 13W 19 641.89 ------------------------------------ 14N 13W 21 640.00 ------------------------------------ 14N 13W 23 640.00 ------------------------------------ 14N 13W 25 640.00 ------------------------------------ 14N 13W 27 640.00 ------------------------------------ 14N 13W 29 640.00 ------------------------------------ --------------------------- 9,606.29 =========================== 15N 13W 01 641.00 ------------------------------------ 15N 13W 03 641.24 ------------------------------------ 15N 13W 05 641.16 ------------------------------------ 15N 13W 09 640.00 ------------------------------------ 76 15N 13W 11 640.00 ------------------------------------ 15N 13W 13 640.00 ------------------------------------ 15N 13W 19 645.60 ------------------------------------ 15N 13W 21 640.00 ------------------------------------ 15N 13W 25 640.00 ------------------------------------ 15N 13W 27 640.00 ------------------------------------ 15N 13W 29 640.00 ------------------------------------ 15N 13W 31 650.00 ------------------------------------ 15N 13W 33 640.00 ------------------------------------ 15N 13W 35 640.00 ------------------------------------ --------------------------- 8,979.00 =========================== 16N 13W 01 598.60 ------------------------------------ 16N 13W 03 593.20 ------------------------------------ 16N 13W 05 593.00 ------------------------------------ 16N 13W 07 631.61 ------------------------------------ 16N 13W 09 640.00 ------------------------------------ 16N 13W 11 640.00 ------------------------------------ 16N 13W 13 640.00 ------------------------------------ 16N 13W 15 640.00 ------------------------------------ 16N 13W 17 640.00 ------------------------------------ 16N 13W 19 632.04 ------------------------------------ 16N 13W 21 640.00 ------------------------------------ 16N 13W 23 640.00 ------------------------------------ 16N 13W 25 640.00 ------------------------------------ 16N 13W 27 640.00 ------------------------------------ 16N 13W 29 640.00 ------------------------------------ 16N 13W 31 628.00 ------------------------------------ 16N 13W 33 640.00 ------------------------------------ 16N 13W 35 640.00 ------------------------------------ --------------------------- 11,356.45 =========================== 14N 14W 01 642.00 ------------------------------------ 14N 14W 03 645.40 ------------------------------------ 14N 14W 05 644.04 ------------------------------------ 14N 14W 09 640.00 ------------------------------------ 14N 14W 11 640.00 ------------------------------------ 77 14N 14W 13 640.00 ------------------------------------ 14N 14W 15 640.00 ------------------------------------ 14N 14W 23 640.00 ------------------------------------ --------------------------- 5,131.44 =========================== ------------------------------------ 15N 14W 03 640.12 ------------------------------------ 15N 14W 05 641.36 ------------------------------------ 15N 14W 07 479.68 ------------------------------------ 15N 14W 09 640.00 ------------------------------------ 15N 14W 13 640.00 ------------------------------------ 15N 14W 15 640.00 ------------------------------------ 15N 14W 17 640.00 ------------------------------------ 15N 14W 19 480.84 ------------------------------------ 15N 14W 21 320.00 W2 ------------------------------------ 15N 14W 25 640.00 ------------------------------------ 15N 14W 27 640.00 ------------------------------------ 15N 14W 29 640.00 ------------------------------------ 15N 14W 31 317.14 S2 ------------------------------------ 15N 14W 33 320.00 S2 ------------------------------------ 15N 14W 35 640.00 ------------------------------------ --------------------------- 8,319.14 =========================== 16N 14W 01 593.00 ------------------------------------ 16N 14W 03 595.20 ------------------------------------ 16N 14W 05 591.20 ------------------------------------ 16N 14W 07 639.32 ------------------------------------ 16N 14W 09 640.00 ------------------------------------ 16N 14W 11 640.00 ------------------------------------ 16N 14W 13 640.00 ------------------------------------ 16N 14W 15 320.00 N2 ------------------------------------ 16N 14W 17 640.00 ------------------------------------ 16N 14W 19 639.72 ------------------------------------ 16N 14W 21 640.00 ------------------------------------ 16N 14W 23 640.00 ------------------------------------ 16N 14W 25 640.00 ------------------------------------ 16N 14W 27 640.00 ------------------------------------ 16N 14W 29 640.00 ------------------------------------ 78 16N 14W 31 320.44 ------------------------------------ 16N 14W 33 480.00 W2,NE4 ------------------------------------ 16N 14W 35 640.00 ------------------------------------ --------------------------- 10,578.88 =========================== 15N 15W 01 640.60 ------------------------------------ 15N 15W 03 639.24 ------------------------------------ 15N 15W 05 640.96 ------------------------------------ 15N 15W 07 641.87 ------------------------------------ 15N 15W 09 640.00 ------------------------------------ 15N 15W 11 640.00 ------------------------------------ 15N 15W 13 640.00 ------------------------------------ 15N 15W 15 640.00 ------------------------------------ 15N 15W 17 487.30 ------------------------------------ 15N 15W 21 640.00 ------------------------------------ 15N 15W 23 640.00 ------------------------------------ --------------------------- 6,889.97 =========================== 16N 15W 01 591.36 ------------------------------------ 16N 15W 03 593.00 ------------------------------------ 16N 15W 05 592.04 ------------------------------------ 16N 15W 07 635.72 ------------------------------------ 16N 15W 09 640.00 ------------------------------------ 16N 15W 11 640.00 ------------------------------------ 16N 15W 13 320.00 E2 ------------------------------------ 16N 15W 15 640.00 ------------------------------------ 16N 15W 17 480.00 N2,SE4 ------------------------------------ 16N 15W 19 478.08 ------------------------------------ 16N 15W 21 640.00 ------------------------------------ 16N 15W 23 640.00 ------------------------------------ 16N 15W 27 160.00 NW4 ------------------------------------ 16N 15W 29 640.00 ------------------------------------ 16N 15W 31 631.20 ------------------------------------ 16N 15W 33 640.00 ------------------------------------ 16N 15W 35 640.00 ------------------------------------ --------------------------- 9,601.40 =========================== 79 11N 20W 24 320.00 W2 ------------------------------------ --------------------------- 320.00 =========================== --------------------------- Total McKinley 117,237.62 ===========================

DONA ANA COUNTY, NM - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 23S 01E 28 190.00 23S 01E 28 4.96 -------------- 23S 01E 33 115.00 -------------- ------------------------- Total Dona Ana 309.96 =========================

SAN JUAN COUNTY, NM - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 21N 12W 17 640.00 ---------------- 21N 12W 19 639.72 ---------------- 21N 12W 21 640.00 ---------------- 21N 12W 27 640.00 ---------------- 21N 12W 29 640.00 ---------------- 21N 12W 31 560.52 ---------------- 21N 12W 33 640.00 ---------------- 21N 12W 35 640.00 ---------------- --------------------- Total San Juan 5,040.24 =====================

80

SOCORRO COUNTY , NM - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 04N 03W 24 480.00 S2,NE4 --------------------- 480.00 ===================== 03N 04W 04 318.58 Lots 3,4,S2NW4,SW4 -------------------------- 03N 04W 22 640.00 -------------------------- 03N 04W 24 320.00 E2 --------------------- 1278.58 ===================== 03N 06W 04 480.00 S2,S2N2 --------------------- 480.00 ===================== 03N 06W 04 160.00 NW4; Oil & Gas Only --------------------- 160.00 ===================== --------------------- Total Socorro 2,398.58 =====================

VALENCIA COUNTY, NM - -------------------------------------------------------------------------------- MINERAL ACRES TWN RGE SEC OWNED COMMENTS - -------------------------------------------------------------------------------- 06N 01W 07 484.32 06N 01W 19 641.28 06N 01W 31 563.40 W2 & NE4 & W2SE4 ---------------------------- 1,689.00 ============================ 06N 02W 01 640.24 06N 02W 03 642.16 06N 02W 05 643.20 06N 02W 07 644.40 06N 02W 09 640.00 06N 02W 11 640.00 06N 02W 13 640.00

81 06N 02W 15 640.00 06N 02W 17 640.00 06N 02W 19 642.96 06N 02W 21 640.00 06N 02W 23 640.00 06N 02W 25 640.00 06N 02W 27 640.00 06N 02W 29 640.00 06N 02W 33 640.00 06N 02W 35 480.00 NW4 &S2 ---------------------------- 10,732.96 ============================ 06N 03W 01 637.92 06N 03W 03 635.60 06N 03W 05 636.32 06N 03W 07 639.92 06N 03W 09 640.00 06N 03W 11 640.00 06N 03W 13 640.00 06N 03W 15 640.00 06N 03W 17 640.00 06N 03W 19 640.08 06N 03W 21 640.00 06N 03W 23 640.00 06N 03W 25 640.00 06N 03W 27 640.00 06N 03W 29 640.00 06N 03W 31 646.24 06N 03W 33 640.00 06N 03W 35 640.00 ---------------------------- 11,516.08 ============================ 07N 02W 31 621.14 07N 02W 33 617.96 07N 02W 35 617.32 ---------------------------- 1,856.42 ============================ 07N 03W 03 633.41 07N 03W 05 642.24 07N 03W 07 635.05 82 07N 03W 09 640.00 07N 03W 15 637.36 07N 03W 17 640.00 07N 03W 19 633.04 07N 03W 21 640.00 07N 03W 27 635.36 07N 03W 29 640.00 07N 03W 31 636.40 07N 03W 33 640.00 07N 03W 35 622.56 ---------------------------- 8,275.42 ============================ 08N 03W 03 631.72 08N 03W 05 666.72 08N 03W 07 624.64 08N 03W 09 640.00 08N 03W 15 613.20 08N 03W 17 640.00 08N 03W 19 622.96 08N 03W 21 640.00 08N 03W 27 629.20 08N 03W 29 640.00 08N 03W 31 626.96 08N 03W 33 640.00 ---------------------------- 7,615.40 ============================ ---------------------------- Total Valencia 41,685.28 ============================ 83 EXHIBIT D LEASES NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS ( AFTER HOPI SALE) APACHE COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage 452 Seibert Cattle\J Siebert 14N 24E 1, ALL 640.86 452 Seibert Cattle\J Siebert 14N 25E 6, LOTS 1,2,3 120.00 ---------------- 760.86 611 Keith Plant 15N 25E 9, NE4 120.00 611 Keith Plant 15N 25E 13,S2, NE4 480.00 611 Keith Plant 15N 25E 14, SE4 160.00 611 Keith Plant 15N 25E 15 40.00 611 Keith Plant 15N 25E 17, NE4, S2 480.00 611 Keith Plant 15N 25E 18,SW4 160.00 611 Keith Plant 15N 25E 20 640.00 611 Keith Plant 15N 25E 21 640.00 611 Keith Plant 15N 25E 22, exc NW4NE4, NE4NE4,SE4NE4 560.00 611 Keith Plant 15N 25E 23 640.00 611 Keith Plant 15N 25E 24 640.00 611 Keith Plant 15N 25E 25 640.00 611 Keith Plant 15N 25E 27 640.00 611 Keith Plant 15N 25E 32, NE of US180 42.56 611 Keith Plant 15N 25E 34, N2 320.00 611 Keith Plant 15N 25E 35 640.00 ---------------- 6,842.56 986 Dan & Sybil Heap 15N 24E 2 79.26 986 Dan & Sybil Heap 15N 24E 3 591.00 986 Dan & Sybil Heap 15N 24E 4 639.10 986 Dan & Sybil Heap 15N 24E 5 636.64 986 Dan & Sybil Heap 15N 24E 6 677.90 986 Dan & Sybil Heap 15N 24E 7 682.86 986 Dan & Sybil Heap 15N 24E 8 640.00 986 Dan & Sybil Heap 15N 24E 9 640.00 986 Dan & Sybil Heap 15N 24E 10 640.00 986 Dan & Sybil Heap 15N 24E 11 513.00

84 NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS APACHE COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage 986 Dan & Sybil Heap 15N 24E 12 22.00 986 Dan & Sybil Heap 15N 24E 13 400.00 986 Dan & Sybil Heap 15N 24E 14 640.00 986 Dan & Sybil Heap 15N 24E 15 640.00 986 Dan & Sybil Heap 15N 24E 17 640.00 986 Dan & Sybil Heap 15N 24E 19 689.30 986 Dan & Sybil Heap 15N 24E 21 640.00 986 Dan & Sybil Heap 15N 24E 23 640.00 986 Dan & Sybil Heap 15N 24E 24 639.90 986 Dan & Sybil Heap 15N 24E 25 640.00 986 Dan & Sybil Heap 15N 24E 26 640.00 986 Dan & Sybil Heap 15N 24E 27 640.00 986 Dan & Sybil Heap 15N 24E 28 640.00 986 Dan & Sybil Heap 15N 24E 29 640.00 986 Dan & Sybil Heap 15N 24E 35 640.00 986 Dan & Sybil Heap 15N 25E 31 701.60 986 Dan & Sybil Heap 15N 25E 32 221.53 986 Dan & Sybil Heap 14N 25E 5 641.64 ---------------- 16,095.73 Joseph Stradling 15N 24E 1 642.34 Joseph Stradling 15N 24E 2 546.60 Joseph Stradling 15N 24E 3; NE OF US 180 29.69 Joseph Stradling 15N 24E 11 80.00 Joseph Stradling 15N 24E 12 160.00 Joseph Stradling 16N 24E 15 640.00 Joseph Stradling 16N 24E 17;NE OF US 180 603.25 Joseph Stradling 16N 24E 21;NE OF US 180 635.58 Joseph Stradling 16N 24E 23 640.00 Joseph Stradling 16N 24E 25 640.00 Joseph Stradling 16N 24E 26;W2 320.00 Joseph Stradling 16N 24E 27 640.00 Joseph Stradling 16N 24E 33;NE OF US 180 5.20 Joseph Stradling 16N 24E 35 640.00 ---------------- 6,222.66

85 NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS APACHE COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage ---------------- TOTAL APACHE COUNTY, AZ GRAZING ACRES 29,921.81

NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS CIBOLA COUNTY, NM G\L # Leasee Twnshp Range Section Acreage 9410 Bierbros Development 6N 5W 11 540.00 9410 Bierbros Development 6N 5W 15 640.00 9410 Bierbros Development 6N 5W 21 640.00 9410 Bierbros Development 6N 5W 27 640.00 9410 Bierbros Development 6N 5W 33 640.00 9410 Bierbros Development 6N 5W 35 640.00 ---------------- TOTAL CIBOLA COUNTY, NM GRAZING ACRES 3,740.00

NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS NAVAJO COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage 18; W2 exc 18.81 AND 13.75 AC 428 Hansen Brothers 18N 19E AC r.o.w. 246.46 624 F Bar Cattle\Jed Flake 15N 22E 1 643.92 624 F Bar Cattle\Jed Flake 15N 22E 3 640.48 624 F Bar Cattle\Jed Flake 15N 22E 10 640.00 624 F Bar Cattle\Jed Flake 15N 22E 11 640.00 624 F Bar Cattle\Jed Flake 15N 22E 13 640.00 624 F Bar Cattle\Jed Flake 15N 22E 14 640.00 624 F Bar Cattle\Jed Flake 15N 22E 15; E2 320.00 624 F Bar Cattle\Jed Flake 15N 23E 5 640.22 624 F Bar Cattle\Jed Flake 15N 23E 7 725.02 624 F Bar Cattle\Jed Flake 15N 23E 9 640.00

86 NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS NAVAJO COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage 624 F Bar Cattle\Jed Flake 15N 23E 11 640.00 624 F Bar Cattle\Jed Flake 15N 23E 13 640.00 624 F Bar Cattle\Jed Flake 15N 23E 17 640.00 624 F Bar Cattle\Jed Flake 15N 23E 18 722.72 624 F Bar Cattle\Jed Flake 15N 23E 19 722.50 624 F Bar Cattle\Jed Flake 15N 23E 20 640.00 624 F Bar Cattle\Jed Flake 15N 23E 21 640.00 624 F Bar Cattle\Jed Flake 15N 23E 22 640.00 624 F Bar Cattle\Jed Flake 15N 23E 23 640.00 624 F Bar Cattle\Jed Flake 15N 23E 29 640.00 624 F Bar Cattle\Jed Flake 16N 22E 13 669.33 624 F Bar Cattle\Jed Flake 16N 22E 23 640.00 624 F Bar Cattle\Jed Flake 16N 22E 24 655.04 624 F Bar Cattle\Jed Flake 16N 22E 25 640.00 624 F Bar Cattle\Jed Flake 16N 22E 27 640.00 624 F Bar Cattle\Jed Flake 16N 22E 33 640.00 624 F Bar Cattle\Jed Flake 16N 22E 35 640.00 ---------------- 17,259.23 9585 Malcolm Pace 15N 22E 15;W2 320.00 621 Bar J Bar\Keith Flake 15N 21E 11 640.00 621 Bar J Bar\Keith Flake 15N 21E 12 640.00 621 Bar J Bar\Keith Flake 15N 22E 5 641.18 621 Bar J Bar\Keith Flake 15N 22E 6 707.05 621 Bar J Bar\Keith Flake 15N 22E 7 718.82 621 Bar J Bar\Keith Flake 15N 22E 17;W2 320.00 621 Bar J Bar\Keith Flake 16N 22E 19 631.36 621 Bar J Bar\Keith Flake 16N 22E 31 630.82 ---------------- 4,929.23

87 NZ CORPORATION SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS NAVAJO COUNTY, AZ

G\L # Leasee Twnshp Range Section Acreage 474 J-P Cattle Co\Dee & Johnson 14N 22E 6 699.65 474 J-P Cattle Co\Dee & Johnson 15N 22E 22 640.00 474 J-P Cattle Co\Dee & Johnson 15N 22E 26 640.00 474 J-P Cattle Co\Dee & Johnson 15N 22E 29;E OF Silver Creek 620.00 ---------------- 2,599.65 9901 Byron Stucky 15N 23E 25 640.00 474A Dee Johnson INV 04/02 14N 21E 1; E of Silver Creek 160.00 476A Glen Flake INV 05/02 14N 21E 13; E of Silver Creek 100.00 2000-1 A&J Palmer INV 03/02 13N 20E 25 640.00 2000-1 A&J Palmer INV 03/02 13N 21E 31 633.11 ---------------- 1,273.11 444 Seibert Cattle\John Seibert 18N 18E 14;S2NE4, NW4,S2 491.06 ---------------- 491.06 ---------------- TOTAL NAVAJO COUNTY, AZ GRAZING ACRES 28,018.74 ================

ROYALTY AGREEMENTS

NAME TYPE COUNTY ---- ---- ------ Eterna-Tec Corp. Kaolinite Mohave County CA Properties, Inc. Limestone Cibola County

88 EXHIBIT E EXCLUSIVE SALES AGENCY AGREEMENT Sales Agreements - Sales agency agreement with First United Service, Trust 7602 dated 2/13/87 - Sales agency agreement with First United Service, Trust 8398 dated 1/1/01 - Agreement with First United Service dated June 3, 1997 Trust Agreements - Trust agreement with First American Title Insurance Company, Trust 6798 dated 3/7/80 - Trust agreement with First American Title Insurance Company, Trust 7602 dated 2/27/87 - Trust agreement with First American Title Insurance Company, Trust 8340 dated 11/12/97 - Trust agreement with First American Title Insurance Company, Trust 8398 dated 1/28/99 - Trust agreement with First American Title Insurance Company, Trust 4517 89 EXHIBIT F URANIUM RIGHTS MINERAL LAND LEASES

NAME ACRES LOCATION ---- ----- -------- Uranium Resources Inc. 959.24 Hosta Butte, McKinley County

ROYALTY AGREEMENTS

NAME TYPE COUNTY ---- ---- ------ Uranium Resources Inc. Uranium Hosta Butte, McKinley County

90 EXHIBIT G SELLER'S INTELLECTUAL PROPERTY - - The service mark "NZ," Registration No. 2472780 was registered with the United States Patent and Trademark Office on July 24, 2001. - - The service mark "New Mexico and Arizona Land Company," Registration No. 2470944 was registered with the United States Patent and Trademark Office on July 31, 2001. - - The service mark "NZ"(stylized), Registration No. 2477161 was registered with the United States Patent and Trademark Office on August 14, 2001. - - The brand registered with the Arizona Department of Agriculture as Brand No. 13492 91 EXHIBIT H OIL AND GAS INTERESTS Limited partnership interests in the following New Mexico partnerships: Chace Limited XIX Chace Limited XX Chace Limited XXI Chace Limited XXII Chace 47-19 Joint Venture The following mineral rights in Oklahoma, together with associated leases to Marathon Oil. NZ CORPORATION MINERAL HOLDINGS VARIOUS SECTIONS IN OKLAHOMA 12/31/2001

ORIGINAL MINERAL SURFACE MINERAL SURFACE ACRES ACRES ACRES ACRES ACRES TWN RGE SEC ACQUIRED SOLD SOLD RETAINED RETAINED 5N 9W 4 60.00 0.00 0.00 60.00 0.00 11N 23W 10 14.00 0.00 0.00 14.00 0.00 12N 23W 35 14.90 0.00 0.00 14.90 0.00 12N 25W 25 5.00 0.00 0.00 5.00 0.00 12N 25W 26 10.00 0.00 0.00 10.00 0.00 12N 25W 30 5.00 0.00 0.00 5.00 0.00 12N 25W 35 20.00 0.00 0.00 20.00 0.00 12N 26W 36 21.25 0.00 0.00 21.25 0.00 13N 9W 27 93.75 93.75 0.00 0.00 0.00 15N 13W 32 93.00 0.00 0.00 93.00 0.00 336.90 93.75 0.00 243.15 0.00

92 EXHIBIT 1-A PROMISSORY NOTE DATE: March 28, 2002 MAKERS: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY c/o Robert M. Worsley _________________________________ _____________, Arizona 85________ Facsimile Number (602) __________ PAYEE: NZ CORPORATION, AN ARIZONA CORPORATION NZ DEVELOPMENT CORPORATION, AN ARIZONA CORPORATION NZU CORPORATION, A NEW MEXICO CORPORATION 333 North 44th Street, Suite 420 Phoenix, Arizona 85008 Facsimile Number (602) 952-8769 ORIGINAL PRINCIPAL AMOUNT OF LOAN: Seven Million Three Hundred Sixty Thousand and No/100 Dollars ($7,360,000) FOR VALUE RECEIVED, Makers promise and agree to pay to Payee, at the mailing address of Payee, or at such other place as the holder hereof ("Holder") may from time-to-time designate, the principal sum of Seven Million Three Hundred Sixty Thousand and No/100 Dollars ($7,360,000) with Interest (as defined herein) commencing as provided herein on the unpaid amount of said sum at the Base Rate (as defined herein) or the Default Rate (as defined herein), whichever is applicable, as follows: 1. INTEREST RATE. a. Commencing on March 30, 2002, and so long as no Event of Default (as defined herein) exists, the unpaid balance of this Note shall accrue interest ("Interest") at the rate of five and one-quarter percent (5.25%) per annum ("Base Rate"). b. During any Event of Default under this Note or any security for this Note, the unpaid balance of this Note shall accrue Interest at the rate of ten percent (10%) per annum ("Default 93 Rate"). Interest shall accrue at the Default Rate from the date of an Event of Default, without notice to Makers, if Borrower does not cure an Event of Default as provided in this Note. c. The Interest provided herein shall be calculated on the basis of a 365-day year and if not paid as provided below by the tenth (10th) day of each month, the due and unpaid Interest shall be compounded effective on the first (1st) day of each such month. 2. PAYMENTS. a. So long as no Event of Default exists, no monthly payments shall be made until the Maturity Date (as defined herein) of this Note. b. If not sooner paid, all accrued and unpaid Interest and all unpaid principal of this Note shall be paid on June 28, 2002 ("Maturity Date"). Provided there is not an existing Event of Default under this Note, Makers shall have the right to three (3) separate thirty (30) day extensions of the Maturity Date by giving notice to Holder not later than ten (10) business days prior to the then applicable Maturity Date ("Notice Date") of Makers' election to extend the Maturity Date and by paying to Holder a principal reduction payment of not less than $100,000.00 on the Notice Date(s) for each thirty day extension. 3. LATE PAYMENT CHARGE. Makers shall pay to Holder a late charge ("Late Payment Charge") equal to five percent (5%) of any payment not received by the Holder within five (10) days after said payment is due, including the unpaid balance of this Note as of the Maturity Date. 4. REASONABLENESS OF CHARGES. Makers acknowledge that upon the occurrence of an Event of Default, the damages to the Holder would be extremely difficult to ascertain, including the Holder's lost profit and loss of use of the funds evidenced hereby and expenses incurred in connection with such default, and that the accrual of Interest at the Default Rate and the Late Payment Charge are reasonable estimates of the loss to the Holder incurred by virtue of an Event of Default. 5. LEGAL LIMITS. a. Makers agree to an effective rate of interest which is the rate stated herein plus any additional rate of interest resulting from any other payments in the nature of interest, including without limitation, any loan fees or other charges to the extent that such charges may be deemed includable in interest for any purpose. b. All agreements between Makers and Payee are hereby expressly limited so that in no event whatsoever, whether by reason of deferment in accordance with this Note or under any agreement or by virtue of acceleration or maturity of the loan evidenced by this Note, or otherwise, shall the amount paid or agreed to be paid to Payee for the loan, use, forbearance or detention of the money to be loaned under this Note or to compensate Payee for damages to be suffered by reason of a late payment or default under this Note, exceed the maximum permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of this Note, or of any provision in the security for this Note at the time performance of such provision shall be due, shall involve exceeding the limit of validity prescribed by law, from the date of this Note, the obligations to be fulfilled shall be reduced to the limit of such validity. This provision shall never be superseded or waived and shall control every other provision of all agreements between Makers and Payee. 6. PREPAYMENT. The unpaid principal balance of this Note may be prepaid in whole or in part without penalty at any time upon one business day's prior notice. 94 7. FORM OF PAYMENTS. Payments of $100,000.00 or less may be paid by company check but all other Principal and Interest payments shall be payable in lawful money of the United States of America by wire transfer in immediately available funds. 8. CREDITING OF PAYMENTS. Each payment hereunder shall be credited first to costs of collection, second to late fees, third to accrued Interest and then to principal. 9. EVENTS OF DEFAULT AND REMEDIES. a. The existence or occurrence of either one or both of the following events shall constitute an event of default ("Event of Default") under this Note: (i) The failure by Makers to make any payment of principal, Interest, Late Payment Charge or any other cost or expense due under this Note in accordance with the terms of this Note; or, (ii) The occurrence of any event of default under any security for this Note, including the Deed of Trust (as defined herein). b. Upon the occurrence of any Event of Default and the failure of Makers to cure such default within five (5) days after notice thereof if monetary and within thirty (30) days after notice thereof if non-monetary (unless the Event of Default cannot be cured within thirty (30) days and Makers commence a cure within the thirty (30) days and diligently prosecutes the cure until it is complete, in which event, Makers shall have a reasonable amount of time after the thirty (30) days to cure a non-monetary default): (i) the entire unpaid principal balance, any unpaid Interest, and any other amounts owing under this Note shall, at the option of the Holder and without further notice or demand of any kind to Makers or any other person, immediately become due and payable; and, (ii) the Holder shall have and may exercise any and all rights and remedies available at law or in equity and also any and all rights and remedies provided in any security for this Note. c. The remedies of the Holder, as provided in this Note and in any security for this Note, shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of the Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of any right, remedy or recourse, such waiver or release to be effected only through a written document executed by the Holder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event. 10. SECURITY. This Note is secured by, among other things, and is entitled to the benefits of a deed of trust, assignment of rents and leases and security agreement ("Deed of Trust"), a Security Agreement, and a Collateral Assignment of Member's Interest in Limited Liability Company (collectively referred to as the "Security Documents"), all dated the date of this Note. The provisions of the Deed of Trust are incorporated herein by reference as if set forth in full, and the covenants and conditions of this Note shall control if there is a conflict between them and the covenants and conditions contained in the Deed of Trust. 11. ATTORNEYS' FEES. In the Event of Default under this Note or in the event the Holder seeks legal advice in order to enforce the provisions of this Note after an Event of Default, Makers agree to pay a reasonable sum to Holder for Holderss.s attorneys' fees. If any action is brought to enforce or interpret the provisions of this Note, the prevailing party shall be entitled to a reasonable sum for attorneys' fees. 12. GOVERNING LAW AND SEVERABILITY. This Note is made pursuant to, and shall be construed and governed by, the laws of the State of Arizona. If any provision of this Note or any 95 security for this Note is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall affect only those provisions so construed or interpreted and shall not affect the remaining provisions of this Note or any security for this Note. 13. TIME OF ESSENCE. Time is of the essence of this Note, provided that if the date on which any payment of performance is due under this Note falls on a day that is not a business day, then the payment and performance shall be due on the next following business day. 14. PAYMENT WITHOUT OFFSET. Principal and Interest shall be paid without deduction or offset. 15. CALENDAR DAYS. Unless otherwise provided in this Note to the contrary, calendar days, and not business days, shall be used in calculating any time periods set forth in this Note. 16. NOTICES. Any notices which any party may be required, or may desire, to give, unless otherwise specified, shall be in writing and shall be (i) hand-delivered, effective upon receipt, (ii) transmitted by telecopier, effective upon receipt, with the original mailed the same date by first class mail, postage prepaid, (iii) sent by United States Express Mail or by private overnight courier, effective upon receipt, or (iv) served by certified mail, postage prepaid, return receipt requested and addressed to such party at the address set forth above, or to such other address(es) or addressee(s) as the party to be served with notice may have furnished in writing to the other party, effective three (3) days after mailing. 17. ASSIGNMENT. Payee or any other Holder of this Note may assign all or a portion of its rights, title and interest in this Note and security to any person, firm, corporation or other entity without the consent of Makers. 18. RELATIONSHIP. The relationship of the parties hereto is that of borrower and lender and it is expressly understood and agreed that nothing contained in this Note or in any security for this Note shall be interpreted or construed to make Makers and Payee partners, joint venturers or participants in any other legal relationship except for borrower and lender. 19. WAIVER. Except as otherwise expressly provided to the contrary in this Note, the Deed of Trust or other loan documents relating to this Note, Makers for themselves and for their successors, transferees and assigns and all guarantors, endorsers and signers, hereby waives all valuation and appraisement privileges, presentment and demand for payment, protest, notice of protest and nonpayment, dishonor and notice of dishonor, bringing of suit, lack of diligence or delays in collection or enforcement of this Note and notice of the intention to accelerate, the release of any party liable, the release of any security for this Note, the taking of any additional security and any other indulgence or forbearance. Makers agree that this Note and any or all payments coming due hereunder may be extended or renewed from time to time without in any way affecting or diminishing Makers' liability under this Note. The acceptance by Holder of a partial amount of a payment due from Makers to Holder under this Note shall not constitute a waiver of the requirement of Makers to make a full payment to Holder, and it shall not constitute a waiver by Holder of the time of the essence provision of this Note. 20. HEADINGS. The subject headings of the paragraphs of this Note are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. 21. JOINT AND SEVERAL LIABILITY. All persons or entities identified as one of the Makers are jointly and severally liable for all of the Makers' obligations hereunder; any breach, default or 96 Event of Default by any of the persons or entities identified as one of the Makers shall be deemed to be a breach, default or Event of Default of all Makers. 22. NOTE NON-NEGOTIABLE. Except for endorsement, sale or transfer to a parent or wholly owned subsidiary of Payee, this Note is otherwise non-negotiable. 23. CARRYBACK FINANCING. This Note represents payment obligations of Makers under the Purchase Agreement for Real and Personal Property, dated March 28, 2002, between Payee, as seller and Makers, as buyer, and is subject to the terms of such agreement. IN WITNESS WHEREOF, Makers have executed this Note as of the date set forth above. MAKERS: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager 97 NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager SIGNATURES CONTINUED ON FOLLOWING PAGE 98 NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ------------------------------------------------- Robert M. Worsley Its: Manager NOTARY ON FOLLOWING PAGE 99 STATE OF ARIZONA ) ) ss. County of Maricopa ) The foregoing instrument was acknowledged before me this 28th day of March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf of each of the following entities: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY. /s/ Yvonne E. Ulrich -------------------------------- Notary Public My commission expires: March 25, 2004 100 EXHIBIT 1-B AFTER RECORDING, RETURN TO: K. Bellamy Brown, Esq. THE CAVANAGH LAW FIRM, P.A. 1850 N. Central Ave., Suite 2400 Phoenix, Arizona 85004 DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT DATE: March 28, 2002 TRUSTOR: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY Attention: Robert Worsley --------------------------------- --------------------------------- Facsimile Number (___) BENEFICIARY: NZ CORPORATION, AN ARIZONA CORPORATION NZ DEVELOPMENT CORPORATION, AN ARIZONA CORPORATION NZU CORPORATION, A NEW MEXICO CORPORATION 333 North 44th Street, Suite 420 Phoenix, Arizona 85008 Facsimile Number (602) 952-8769 TRUSTEE: K. BELLAMY BROWN, ESQ. Attorney at Law THE CAVANAGH LAW FIRM, LP 1850 North Central Ave. Suite 2400 Phoenix, AZ 85004 Facsimile Number (602) 322-4000 101 ORIGINAL PRINCIPAL INDEBTEDNESS SECURED: Seven Million Three Hundred Sixty Thousand and No/100 Dollars ($7,360,000) evidenced by that certain Promissory Note of even date herewith executed by Trustor as the Maker and payable to Beneficiary as the Payee (the "Note"). LEGAL DESCRIPTION OF REAL PROPERTY: That certain real property more particularly described in Exhibit "A" attached hereto and by this reference incorporated herein ("Property"). Trustor, in consideration of the loan described herein, irrevocably grants, bargains, conveys, transfers and assigns the Property to Trustee, its successors and assigns, in trust, with power of sale and right of entry and possession, together with all structures and improvements now existing or hereafter erected on the Property, all easements, rights and appurtenances thereto or used in connection therewith, all leases, lease guarantees, rents, royalties, issues, profits, revenues, income and other benefits thereof or arising from the use or enjoyment of all or any portion thereof (subject to the rights given below to Trustor to collect and apply such rents, royalties, issues, profits, revenues, income and other benefits), all water rights and water stock, all solar rights, all rights held by Trustor as the declarant under any covenants, conditions and restrictions against the Property, all tangible property and rights relating to the Property or the operation thereof, or used in connection therewith, including without limitation (if owned by Trustor or if Trustor has an interest therein) all goods, instruments, documents, chattel paper, contract rights, accounts, general intangibles, inventory, furniture, equipment and fixtures, trade names and trademarks, licenses, permits, franchises, all fixtures, machinery, equipment, building materials, appliances and goods of every nature whatsoever now or hereafter located in, or on, attached or affixed to, or used or intended to be used in connection with, the Property, including, but without limitation, all heating, lighting, laundry, incinerating, gas, electric and power equipment, engines, pipes, pumps, tanks, motors, conduits, switchboards, plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating, ventilating and communications apparatus, air conditioning apparatus, elevators and related machinery and equipment, pool and pool operation and maintenance equipment, shades, awnings, blinds, curtains, drapes, attached floor coverings, including rugs and carpeting, television, radio and music cable antennae and systems, screens, storm doors and windows, stoves, refrigerators, dishwashers and other installed appliances, attached cabinets, partitions, ducts and compressors, and trees, plants and other items of landscaping, all of which, including replacements and additions (including abandonment) thereto, shall, to the fullest extent permitted by law and for the purposes of this Deed of Trust, be deemed conclusively to be real property and conveyed by this Deed of Trust, and all proceeds and products of any and all thereof, and Trustor agrees to execute and deliver, from time to time, such further instruments and documents as may be required by Beneficiary to confirm the lien of this Deed of Trust on any of the foregoing; all of the foregoing property referred to in this paragraph, together with the Property, are collectively referred to hereafter as the "Property"; This Deed of Trust is given for the purpose of securing, in such order of priority as Beneficiary may elect: (a) Payment in full of the Note and any extensions, renewals or modifications thereof, including payment of principal and interest pursuant to the terms of the Note in graduated, adjusted or graduated and adjusted payments, if the Note calls for graduation, adjustment or graduation and adjustment of payments, respectively, and including payment of interest as adjusted pursuant to the terms of the Note, if the Note calls for any adjustments in the rate at which interest accrues and including payment of amounts respecting interest added to principal, if the Note provides for the addition of accrued and unpaid interest to principal, and the performance and discharge of each and every obligation of Trustor set forth in the Note. (b) Payment of such additional sums, with interest thereon, as may hereafter be borrowed from Beneficiary by the then record owner or owners of the Property when evidenced by another promissory note or notes which recite that they are so secured. (c) Performance of each agreement of Trustor herein contained or incorporated herein by reference including those contained in that certain Loan Agreement between Beneficiary and Trustor dated the same date as this Deed of Trust, and other documents executed by Trustor in connection with the loan evidenced by the Note, which documents are hereby incorporated by reference. 102 (d) Payment and performance of all obligations under this Deed of Trust. (e) All interest and charges on all obligations secured hereby including, without limit, late charges and loan fees. COVENANTS OF TRUSTOR To ensure payment of the Note and all amounts due thereunder and to protect the security of this Deed of Trust, Trustor covenants and agrees as follows: 1. PERFORMANCE OF OBLIGATIONS SECURED. Trustor shall promptly pay when due the principal and interest evidenced by the Note, and any late charges and other fees provided for in the Note or provided for herein, and shall further perform fully and in a timely manner all other obligations of Trustor contained in this Deed of Trust or in the Note. All sums payable by Trustor hereunder shall be paid without demand, counterclaim, offset, deduction or defense, and Trustor waives all rights now or hereinafter conferred by law or otherwise to any such demand, counterclaim, offset, deduction or defense. 2. INSURANCE. Trustor shall keep the Property insured with an all-risk policy insuring against loss or damage by fire with extended coverage and against any other risks or hazards (to the extent insurable) and which, in the opinion of Beneficiary, should be insured against, in an amount not less than the full insurable value thereof on a replacement cost basis, with an inflation guard endorsement, with a company or companies and in such form and with such endorsements as may be approved or required by Beneficiary, including, if applicable, boiler explosion coverage and sprinkler leakage coverage. All losses under said insurance shall be payable to Beneficiary and shall be applied in the manner provided in Paragraph 3 herein. Trustor also shall carry comprehensive general public liability insurance for not less than $1,000,000 per occurrence in such form and with such companies as are reasonably satisfactory to Beneficiary. Trustor also shall carry insurance against flood if required by the Federal Flood Disaster Protection Act of 1973 and regulations issued thereunder. All hazard, flood and rent loss insurance policies shall be endorsed with a standard noncontributory mortgagee clause in favor of and in form acceptable to Beneficiary, and may be canceled or modified only upon not less than ten (10) days' prior written notice to Beneficiary. All of the above-mentioned insurance policies or certificates of such insurance satisfactory to Beneficiary, together with receipts for the payment of premiums thereon, shall be delivered to and held by Beneficiary, which delivery shall constitute assignment to Beneficiary of all return premiums to be held as additional security hereunder. All renewal and replacement policies shall be delivered to Beneficiary at least thirty (30) days before the expiration of the expiring policies. Beneficiary shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or payment or defense of lawsuits, and Trustor hereby expressly assumes full responsibility therefor and all liability, if any, with respect thereto. 3. CONDEMNATION AND INSURANCE PROCEEDS. a. Payment of Proceeds. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of or damage or injury to the Property, or any part thereof, or for conveyance in lieu of condemnation, are hereby assigned to and shall be paid to Beneficiary and to be applied in accordance with the provisions of Subparagraph (3b) herein. In addition, all causes of action, whether accrued before or after the date of this Deed of Trust, of all types for damages or injury to the Property, or in connection with or affecting the Property or any part thereof, including without limitation causes of action arising in tort or contract and causes of action for fraud or concealment of a material fact, are hereby assigned to Beneficiary as additional security, and the proceeds thereof shall be paid to Beneficiary. Beneficiary may at its option appear in and prosecute in its own name any action or proceeding to enforce any such cause of action and may make any compromise or settlement thereof. Trustor, immediately upon obtaining knowledge of any casualty damage to the Property or damage in any other manner in excess of $25,000 or knowledge of the institution of any proceedings relating to condemnation or other taking of or damage or injury to the Property or any portion thereof, shall immediately notify Beneficiary in writing of such occurrence. Beneficiary may participate in any such proceedings and may join Trustor in adjusting any loss covered by insurance. 103 b. Application of Proceeds. All compensation, awards, proceeds, damages, claims, insurance recoveries, rights of action and payments which Trustor may receive or to which Trustor may become entitled with respect to the Property in the event of any damage or injury to or a partial condemnation or other partial taking of the Property shall be paid over to Beneficiary and shall be applied first toward reimbursement of all costs and expenses of Beneficiary in connection with recovery of the same, and then shall be applied, as follows: 1) Beneficiary shall consent to the application of such payments to the restoration of the Property so damaged if and only if Trustor fulfills all of the following conditions, a breach of any one of which shall constitute an Event of Default under this Deed of Trust: (i) that no default or Event of Default which has not been cured within the applicable cure period is then outstanding under this Deed of Trust or the Note; (ii) Beneficiary is satisfied that the insurance or award proceeds shall be sufficient to fully restore and rebuild the Property free and clear of all liens except the liens of any Senior Encumbrance or of this Deed of Trust, or, in the event that such proceeds are in Beneficiary's reasonable judgment insufficient to restore and rebuild the Property, then Trustor shall deposit promptly with Beneficiary funds which, together with the insurance or award proceeds, shall be sufficient in Beneficiary's sole judgment to restore and rebuild the Property; (iii) construction and completion of restoration and rebuilding of the Property shall be completed in accordance with plans and specifications and drawings submitted to and approved by Beneficiary, which plans and specifications and drawings shall not be substantially modified, changed or revised without Beneficiary's prior written consent, said consent not to be unreasonably withheld; and, (v) any and all monies which are made available for restoration and rebuilding hereunder shall be disbursed through Beneficiary, the Trustee or a title insurance company satisfactory to Beneficiary, in accord with standard construction lending practice, including, if requested by Beneficiary, monthly lien waivers and title insurance endorsements, and the provision of payment and performance bonds by Trustor, or in any other manner approved by Beneficiary in Beneficiary's sole discretion; or, 2) If less than all of conditions (i) through (v) in Subparagraph (1) above are satisfied, then such payments shall be applied in the sole and absolute discretion of Beneficiary: (i) to the payment or prepayment with any applicable prepayment premium of any indebtedness secured by this Deed of Trust in such order as Beneficiary may determine; or, (ii) to the reimbursement of Trustor's expenses incurred in the rebuilding and restoration of the Property. In the event Beneficiary elects under this Subparagraph (2) to make any monies available to restore the Property, then all of conditions (i) through (v) in Subparagraph (1) above shall apply, except such conditions which Beneficiary, in its sole discretion, may waive. After restoration of the Property as provided in 3(b)(1) above, such payments shall be applied to the payment or prepayment of any indebtedness secured by this Deed of Trust. c. Inadequate Insurance. If any material part of the Property is damaged or destroyed and the loss is not adequately covered by insurance proceeds collected or in the process of collection, Trustor shall deposit, within ten (10) days of the Beneficiary's request therefor, the amount of the loss not so covered. d. Condemnation Award and Insurance Proceeds. All compensation, awards, proceeds, damages, claims, insurance recoveries, rights of action and payments which Trustor may receive or to which Trustor may become entitled with respect to the Property in the event of a total condemnation or other total taking of the Property shall be paid over to Beneficiary and shall be applied first toward reimbursement of all costs and expenses of Beneficiary in connection with recovery of the same, and then shall be applied to the payment or prepayment (with any applicable prepayment premium) of any indebtedness secured hereby in such order as Beneficiary may determine, until the indebtedness secured hereby has been paid and satisfied in full. Any surplus remaining after payment and satisfaction of the indebtedness secured hereby shall be paid to Trustor as its interest may then appear. e. No Waiver. Any application of such amounts or any portion thereof to any indebtedness secured hereby shall not be construed to cure or waive any default or notice of default hereunder or invalidate any act done pursuant to any such default or notice. 4. TAXES, LIENS AND OTHER ITEMS. Trustor shall pay at least ten days before delinquency, all taxes, bonds, assessments, special assessments, common area charges, fees, liens, charges, fines, penalties, impositions and any and all other items which are attributable to or affect the Property and which may attain a priority over this Deed of Trust, by making payment directly to the payee thereof, unless Trustor shall be required to make payment to 104 Beneficiary on account of such items pursuant to Paragraph 5 herein. Trustor shall discharge any lien which has attained or may attain priority over this Deed of Trust within thirty (30) days from the date that Trustor receives notice of same. In the event of the passage after the date of this Deed of Trust of any law deducting from the value of real property for the purposes of taxation any lien thereon, or changing in any way the laws for the taxation of deeds of trust or debts secured by deeds of trust for state, federal or any other purposes, or the manner of the collection of any such taxes, so as to affect this Deed of Trust, the holder of this Deed of Trust and of the debt which it secures shall have the right to declare the principal sum and the interest due on a date to be specified by not less than thirty (30) days written notice to be given to Trustor by Beneficiary; provided, however, that such election shall be ineffective if Trustor is permitted by law to pay the whole of such tax in addition to all other payments required hereunder and if, prior to such specified date, does pay such taxes and agrees to pay any such tax when hereafter levied or assessed against the Property, and such agreement shall constitute a modification of this Deed of Trust. 5. IMPOUND ACCOUNT. Upon any Event of Default under this Deed of Trust, whether or not subsequently cured, Trustor agrees to pay to Beneficiary, if Beneficiary so requests, in addition to any other payments required hereunder or under the Note, the monthly installments, as estimated by Beneficiary, of all taxes, assessments and insurance premiums (together with ground rents if the Property includes a leasehold estate) for the purpose of building up a fund to insure payment when due or before delinquency of any or all of the taxes, assessments and insurance premiums (and rents if applicable) required to be paid with respect to the Property. If the amounts paid to Beneficiary under the provisions of this Paragraph 5 are insufficient to discharge the obligations of Trustor to pay such premiums, taxes and assessments (and rents if applicable) as the same become due or delinquent, Trustor shall pay to Beneficiary, upon its demand, such additional sums as are necessary to discharge Trustor's obligations to pay such amounts. All moneys paid to Beneficiary under this Paragraph 5 may be intermingled with other moneys of or paid to Beneficiary but a separate account called "Impound Account" shall be maintained therefor. Disbursements shall be made against such account for the payment by Beneficiary of the foregoing amounts, whether before or after they become due and payable. In the event of a default in the payment of any moneys due on the Note or default in the performance of any of the covenants and obligations of this Deed of Trust, then the balance remaining from moneys paid to Beneficiary under the provisions of this Paragraph 5 may, at the option of Beneficiary, be applied to the payment of principal and/ or interest upon the Note after being applied to any of the purposes for which the Impound Account was established. Beneficiary will make such reports of the Impound Account as are required by law. If Beneficiary sells or assigns this Deed of Trust, Beneficiary shall have the right to transfer all amounts deposited under this Paragraph 5 to the purchaser or assignee, and Beneficiary shall thereupon be released and have no further liability hereunder for the application of such deposits, and Trustor shall look solely to such purchaser or assignee for such application and for all responsibility relating to such deposits. 6. MAINTENANCE AND PRESERVATION OF THE PROPERTY. Trustor shall: (i) keep the Property in good condition and repair; (ii) not remove or demolish the Property or any part thereof without Beneficiary's prior written consent; (iii) except for any Improvements described in the Loan Agreement, not alter, restore or add to the Property without Beneficiary's prior written consent; (iv) complete or restore promptly and in good and workmanlike manner the Property pursuant to Section 3(b) or any part thereof which may be damaged or destroyed; (v) not suffer violation of any, and shall comply with all: (a) laws, ordinances, regulations and standards; (b) all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character; and, (c) requirements of insurance companies and any bureau or agency which establishes standards of insurability, which laws, covenants or requirements affect the Property and pertain to acts committed or conditions existing therein, including (but without limit) such work or alteration, improvement or demolition as laws, covenants or requirements mandate; (vi) not alter the occupancy or use of all or any part of the Property without the prior written consent of Beneficiary; (vii) as required by Beneficiary, perform the lessor's covenants under the leases affecting the Property in which Trustor holds the lessor's interest, and not to cause or permit a modification or termination of any lease that would impair the value of the leases to the lessor, or the interest of the lessor or Beneficiary in the leases; (viii) not commit or permit waste of the Property; (ix) do all other acts which from the character or use of the Property may be reasonably necessary to maintain and preserve its value; (x) not create any deed of trust or encumbrance upon the Property subsequent hereto, without the prior written consent of Beneficiary; (xi) make no further assignment of rents of the Property without Beneficiary's prior written consent; and, (xii) execute and, where appropriate, acknowledge all further documents, instruments and other papers as Beneficiary or Trustee deems necessary or appropriate to preserve, continue, perfect and enjoy the security of this Deed of Trust and perform Trustor's obligations, including, without limit, statements of the amount secured hereby then owing and statements of no offset. 105 7. CONSTRUCTION OF IMPROVEMENTS. If Trustor shall commence any alteration or construction of improvements on the Property, Trustor agrees, anything in this Deed of Trust to the contrary notwithstanding: (i) to complete same in accordance with plans and specifications satisfactory to Beneficiary; (ii) to allow Beneficiary to inspect the Property at all times during construction; (iii) to replace any work or materials unsatisfactory to Beneficiary within thirty (30) days after written notice from Beneficiary of such fact; (iv) to immediately discharge or bond over any mechanic or materialman's lien; and (v) that work shall not cease on the construction of such improvements for any reason whatsoever (except for acts of God or force majeure) for a period of fifteen (15) or more calendar days. Trustor shall comply with all laws affecting the Property and pertaining to any alterations or improvements to be made thereon. 8. PROTECTION OF BENEFICIARY'S SECURITY. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Beneficiary's interest in the Property, including, but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Beneficiary at its option, upon notice to Trustor, may make such appearances, disburse such sums and take such action as is necessary to protect Beneficiary's interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the Property to make repairs. Any amounts disbursed by Beneficiary pursuant to this Paragraph 8, or any other provision of this Deed of Trust, with interest thereon, shall become additional indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and Beneficiary agree to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof, and shall bear interest from the date of disbursement at the Default Rate set forth in the Note, unless payment of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate permissible under applicable law. Trustor recognizes that its failure to pay such sums when due will require Beneficiary to incur additional expense in servicing the loan secured hereby, in loss to the Beneficiary in meeting its other financial commitments, and that damages caused thereby would be extremely difficult and impractical to ascertain. Trustor agrees that the accrual of interest at the Default Rate on such sums is a reasonable estimate of the damage to Beneficiary in the event of Trustor's failure to pay such sums. Nothing contained in this Paragraph 8 shall require Beneficiary to incur any expense or take any action hereunder. Likewise, in the event that Trustee shall expend any amounts pursuant to any provision of this Deed of Trust, such amounts with interest shall be repaid and become additional indebtedness secured by this Deed of Trust, all in accordance with the foregoing. 9. ACCESS TO TRUSTOR'S BOOKS AND RECORDS. Trustor shall permit and hereby authorize Beneficiary or its agents, at all reasonable times during normal business hours (but not more than once a quarter) subject to 24 hours verbal notice, to have unrestricted access to and to copy its records, books of account, ledgers, journals, contracts, subcontracts, bills and statements relating to the Property, including any supporting or related vouchers or other instruments. If Beneficiary so requires, such records, books, vouchers or other documents shall be made available at Trustor's office to an accountant of Beneficiaryss.s choice for audit, examination, inspection or duplication. 10. USE OF PROPERTY. Except as provided in the Loan Agreement of even date herewith or unless required by applicable law or unless Beneficiary has otherwise agreed in writing, Trustor shall not allow material changes in the use for which the Property was intended at the time this Deed of Trust was executed. Trustor shall not initiate or acquiesce in a change in the zoning classification of the Property without Beneficiary's written consent. 11. PERFORMANCE UNDER SUPERIOR LIENS. a. Performance Required. In the event the lien of this Deed of Trust is subject and subordinate at any time to the lien of any other mortgage(s) or deed(s) of trust (collectively, "Senior Encumbrance"), Trustor agrees to perform and discharge in due course and in accordance with its terms and provisions, all obligations secured by the Senior Encumbrance, including all other agreements or obligations undertaken or created for the purpose of evidencing or securing the obligations evidenced by the note(s) (collectively, "Senior Note") secured by the Senior Encumbrance (together "Senior Encumbrance Obligations"). Any failure on the part of Trustor fully to perform and discharge all such Senior Encumbrance Obligations in accordance with their terms shall constitute a breach and default by Trustor of its obligation to Beneficiary arising under this Deed of Trust, in which 106 event, subject to applicable cure periods, Beneficiary may elect to accelerate and declare the entire principal balance and all accrued and unpaid interest on the Note, and all other sums secured hereby, immediately due and payable. Trustor agrees that Beneficiary may, but need not, perform and/or discharge any Senior Encumbrance Obligations. Trustor hereby warrants to Beneficiary that Trustor's obligation pursuant to any such senior Deed of Trust is fully current and that no default exists with respect thereto. b. Default for Failure to Perform. In addition, in the event that Trustor shall, voluntarily or involuntarily, take or permit to be taken any act, or fail to take any act which results in an acceleration of the due date of the principal balance of the Senior Note or a change in the terms thereof (other than a change in the interest rate pursuant to an adjustment to a variable interest rate set forth in such Senior Note) or in the making of a future advance secured by the Senior Encumbrance (if such advance increases the principal balance of the Senior Note to an amount greater than the principal amount shown on said Senior Note), then, irrespective of whether or not Trustor's act or omission constitutes a default under the Senior Note or Senior Encumbrance and irrespective of the Senior Note holder's actual authority or entitlement to accelerate or change such terms, subject to applicable cure periods, Beneficiary may elect at any time thereafter to accelerate and declare the entire principal balance and all accrued and unpaid interest on the Note, and all other sums secured hereby, immediately due and payable. Without in any manner limiting the aforesaid right of Beneficiary to accelerate in such event, Beneficiary may also elect to perform or discharge the Senior Encumbrance obligations or contest, at Beneficiary's sole discretion, the right and authority of the holder of the Senior Note to take the above-described action. In the event that Beneficiary shall perform or discharge all or part of the Senior Encumbrance Obligations, expenditures thus made by Beneficiary shall be reimbursed by Trustor to Beneficiary on demand. In the event that Beneficiary shall contest the aforesaid action taken by the holder of the Senior Note, Trustor agrees to cooperate with Beneficiary in such contest. 12. ABSOLUTE ASSIGNMENT OF RENTS, ISSUES AND PROFITS. a. Present Assignment. All of Trustor's interest in any leases or other occupancy agreements pertaining to the Property now existing or hereafter entered into, and all of the leases, lease guarantees, rents, royalties, issues, profits, revenue, income and other benefits of the Property existing from the use or enjoyment of all or any portion thereof or from any lease or agreement pertaining to occupancy of any portion of the Property now existing or hereafter entered into (the "Rents and Profits"), whether now due, past due, or to become due, and including all prepaid rents and security deposits, are hereby absolutely, presently and unconditionally assigned, transferred and conveyed to Beneficiary to be applied by Beneficiary in payment of the principal and interest and all other sums payable on the Note and under this Deed of Trust. Beneficiary temporarily waives the right to exercise the rights and powers assigned to Beneficiary herein and agrees not to revoke such waiver until and unless an Event of Default (as defined hereafter) occurs and the cure period has expired. It is understood and agreed that the foregoing assignment of Rents and Profits to Beneficiary shall not be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion thereof, unless and until Beneficiary, in person or by agent, assumes actual possession thereof. Likewise, appointment of a receiver for the Property or any part thereof shall not be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property. Upon the occurrence of any Event of Default hereunder and the expiration of any applicable cure period, this shall constitute a direction to and full authority to each lessee under any lease to pay all Rents and Profits to Beneficiary without proof of the default. Trustor hereby irrevocably authorizes each lessee to rely on and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any Rents and Profits due or to become due. b. Application of Rents. Trustor shall apply the Rents and Profits to the payment of all necessary and reasonable operating costs and expenses of the Property, and debt service on the indebtedness secured hereby, before using the Rents and Profits for Trustor's personal use or any other purpose not for the direct benefit of the Property. c. Performance by Trustor and Assignment of Leases. Trustor shall at all times perform the obligations of lessor under all such leases. Trustor shall at any time or from time to time, upon request of Beneficiary, transfer and assign to Beneficiary in such form as may be satisfactory to Beneficiary, Trustor's interest in any lease, subject to and upon the condition, however, that prior to the occurrence of any Event of Default and the expiration of any cure period hereunder Trustor shall have a license to collect and receive all Rents and 107 Profits under such lease upon accrual, but not prior thereto, as set forth in Subparagraph a above. Whenever requested by Beneficiary, Trustor shall furnish to Beneficiary, as to all tenancies of a term in excess of thirty (30) days: (i) a certificate of Trustor setting forth the names of all lessees under any leases, the terms of their respective leases, the space occupied, the rents payable thereunder, and the dates through which any and all rents have been paid; and, (ii) (upon a best efforts basis) duly executed estoppel certificates from any one or more leases as required by Beneficiary attesting to such facts as Beneficiary may reasonably require. Trustor shall not collect rents for more than one payment period in advance from any tenant without the written consent of Beneficiary. d. Attornment. Each lease for any part of the Property, shall make provision for the attornment of the lessee thereunder to any person succeeding to the interest of Trustor as the result of any foreclosure or transfer in lieu of foreclosure hereunder. e. Direct Creditor. Beneficiary shall be deemed to be the creditor of each lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor-relief proceedings affecting such lessee (without obligation on the part of Beneficiary, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein). Beneficiary shall have the right to assign Trustor's right, title and interest in any leases to any subsequent holder of this Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Property through foreclosure or otherwise. Any subsequent assignee shall have the rights and powers herein provided to Beneficiary. Upon an Event of Default and the expiration of the period of time to cure, Beneficiary shall have the authority, as Trustor's attorney-in-fact, such authority being coupled with an interest and irrevocable, to sign the name of Trustor and to bind Trustor on all papers and documents relating to the operation, leasing and maintenance of the Property. 13. PERSONAL PROPERTY SECURITY INTEREST. a. Security Interest. This Deed of Trust grants a security interest in and covers all property owned by Trustor or in which Trustor has an interest affixed to or located upon the Property, all articles of personal property and all materials delivered to the Property for incorporation or use in any construction being conducted thereon which, to the fullest extent permitted by law, shall be deemed fixtures and a part of the Property. Such personal property shall include the personal property identified in the attached Exhibit B, if any, and: (i) all presently owned and hereafter acquired goods, instruments, documents, chattel paper, contract rights, accounts, general intangibles, inventory, fixtures, furniture, furnishings, machinery, equipment and appliances and all personal property of Trustor now or hereafter attached to or installed or placed in, on or about the Property for use in conjunction with the use and occupancy thereof, together with all accessories, parts and appurtenances thereto and all additions, renewals, improvements, and replacements thereof. (Trustor also hereby assigns to Beneficiary all leases and use agreements of all personal property in the categories above set forth, under which Trustor is the lessee or entitled to use such items, and Trustor agrees to execute to Beneficiary separate assignments of such leases and agreements when requested by Beneficiary, but Beneficiary shall not be obligated thereunder unless it so chooses, and Trustor agrees to fully and timely perform such obligations); (ii) all leases, lease guarantees, income, rents, issues, and profits which, from and after the date hereof, may accrue from said goods, fixtures, furnitures, furnishings, machinery, equipment and appliances, or any part thereof, or which may be received or receivable by Trustor from any use, leasing, or subleasing thereof (provided, that so long as Trustor is not in default hereunder after the expiration of the applicable cure period, Trustor shall have a license to collect said income, rents, issues and profits, subject, however, to any separate and prior assignment of leases and rents); (iii) all presently owned and hereafter acquired general intangibles and rights of every kind and nature of Trustor relating to the Property or the operation thereof, including but not limited to, all governmental permits relating to construction on the Property, all names by which the Property may be operated or known, all rights to carry on business under any such names, and all trade names, trademarks and goodwill in any way relating to the Property; (iv) all presently owned and hereafter acquired reserves, deferred payments, deposits, refunds, and payments, of every kind and nature of Trustor in any way relating to the Property or any of the personal property thereon other than rents, issues and profits previously and separately assigned; (v) all presently owned and hereafter acquired water stock and all solar rights owned by Trustor relating to the Property; and, (vi) all presently owned and hereafter acquired drawings, plans and specifications of Trustor prepared for construction of improvements relating to the Property, and all studies and data related thereto, and all contracts and agreements of the Trustor relating thereto or to the construction of improvements on the Property. 108 b. Security Agreement. To the extent any property covered by this Deed of Trust consists of personal property covered by the Uniform Commercial Code, this Deed of Trust constitutes a Security Agreement and is intended to create a security interest in such personal property in favor of Beneficiary. This Deed of Trust shall be self-operative with respect to said personal property, but Trustor agrees to execute and deliver on demand such security agreement, financing statement and other instruments as Beneficiary may request in order to impose the lien hereof more specifically upon any of said personal property. Further, Trustor will at all times, at its sole cost and expense, keep said personal property insured to the full cash value thereof against loss or damage by fire and other risks which, in the opinion of Beneficiary, should be insured against, under policies of insurance with loss payable to Beneficiary, in form and by companies acceptable to Beneficiary and which shall provide for thirty (30) days minimum cancellation notice to Beneficiary. Each such policy or a certificate thereof shall be delivered to and retained by Beneficiary. Beneficiary is hereby irrevocably appointed Trustor's attorney-in-fact to endorse any check or draft that may be payable to Trustor, alone or jointly with other payees, so that Beneficiary may collect the proceeds payable for any loss under such insurance. Such proceeds, less any expenses incurred by Beneficiary in collection thereof, shall be applied either toward the costs of repair or replacement of the items damaged or destroyed, or, on account of any sums secured hereby, whether or not then due, in the same manner and upon the same terms and conditions as provided in Paragraph 3 above. c. Sale of Personal Property. In the Event of Default, and the expiration of the period of time to cure, Beneficiary may sell such personal property or any part thereof at public or private sale with notice to Trustor as hereinafter provided. The proceeds of sale, after deducting all expenses of Beneficiary in taking, storing, repairing and selling the personal property (including reasonable attorney's fees) shall be applied to such matters, in such amounts, and in such order, as Beneficiary shall determine. At any sale, public or private, of said personal property or any part thereof, Beneficiary may purchase any or all said personal property offered at such sale. Beneficiary shall give Trustor reasonable notice of any sale of any of said personal property. Trustor agrees that notice and demand shall be conclusively deemed to be reasonable and effective if such notice is mailed at least five (5) days prior to sale, by regular or certified mail, postage prepaid, to Trustor at its address above set forth, or to such other address as Trustor may hereafter designate in writing to Beneficiary. d. Creditors' Rights. Beneficiary shall have all the rights and remedies afforded a secured party under the Uniform Commercial Code of the state in which the Property is located and all other legal or equitable remedies provided by law, including, without limitation, the right to the appointment of a receiver. 14. FIXTURE FILING. This Deed of Trust constitutes a financing statement filed as a fixture in the Official Records of the County Recorder of the county in which the Property is located with respect to any and all fixtures included within the term "Property" as used herein and with respect to any goods or other personal property that may now be or hereafter become such fixtures. 15. TRANSFER RESTRICTIONS AND ACCELERATION. Subject to the provisions set forth herein, should Trustor sell, convey, transfer, or assign its interest in, including placing a lien thereon, or lease for a term in excess of one (1) year (except for the leases in effect as of the date of this Deed of Trust), the Property, or any part thereof, or any interest therein, or agree so to do, or suffer Trustor's title or any interest therein to be divested, whether voluntarily or involuntarily, or change, or permit to be changed, the character or the use of the Property, or drill or extract oil, gas or other hydrocarbon substances or any mineral of any kind or character on the Property, or if Trustor is a partnership and the interest of a general partner is assigned or transferred or, if Trustor is a corporation and more than 25% of the corporate stock thereof is sold, transferred or assigned during any eighteen (18) month period (collectively, hereinafter "Sale"), without the written consent of Beneficiary being first obtained, then Beneficiary shall have the right, at its option, subject to applicable law, to accelerate and declare the entire principal balance and all accrued and unpaid interest on the Note, and all other sums secured hereby, immediately due and payable. The provisions of this Paragraph 15 shall be fully applicable to any involuntary Sale and Sale by operation of law as well as any voluntary Sale by Trustor, but an agreement to sell subject to the consent of Beneficiary shall not be deemed to be a Sale. The foregoing right of acceleration is in addition to all other rights of acceleration which Beneficiary may have under this Deed of Trust or the Note. The foregoing shall not apply to the release of the Property under any provision in this Deed of Trust; furniture and fixtures, breakables and supplies, sold or exchanged in the ordinary course of business, provided that items of comparable value and quality are substituted as replacements; any assignment, transfer or conveyance of the Property with the consent of Beneficiary which consent may be 109 withheld by Beneficiary, based upon Beneficiary's review of the transferee's credit worthiness, transferee's experience with projects of the nature secured hereby, the terms of the transfer, and other factors deemed by Beneficiary to be material in evaluating the proposed transferee. Upon the assignment, transfer or conveyance of the Property with Beneficiary's consent, Trustor shall pay to Beneficiary a fee in an amount equal to one percent of the unpaid principal balance of the loan ("Transfer Fee") at the time of the said assignment, transfer or conveyance. 16. FINANCIAL STATEMENTS; OFFSET CERTIFICATES. a. Annual Statement. Trustor shall keep accurate books and records in connection with the Property. Trustor, without expense to Beneficiary, shall, upon receipt of written request from Beneficiary, furnish to Beneficiary an annual statement of the operation of the Property prepared and certified by Trustor, showing, in reasonable detail satisfactory to Beneficiary, total rents received and total expenses together with an annual balance sheet and profits and loss statement, within one hundred twenty (120) days after the close of each fiscal year of Trustor. b. Offset Certificates. Trustor, within five (5) business days upon request in person or within ten (10) days upon request by mail, shall furnish a written statement duly acknowledged of all amounts due on any indebtedness secured hereby, whether for principal or interest on the Note or otherwise, and stating whether any offsets or defenses exist against the indebtedness secured by this Deed of Trust and covering such other matters with respect to any such indebtedness as Beneficiary may reasonably require. If Trustor fails to furnish such a statement, Beneficiary may prepare and furnish such a statement which shall be deemed true and correct and may be relied on by third parties as such. 17 TRUSTEE'S COSTS AND EXPENSES; GOVERNMENTAL CHARGES. Trustor shall pay all costs, fees and expenses of Trustee, its agents and counsel in connection with the performance of its duties under this Deed of Trust, including without limitation the cost of any trustee's sale guaranty or other title insurance coverage ordered in connection with any sale or foreclosure proceedings hereunder, and shall pay all taxes (except federal and state income taxes) or other governmental charges or impositions imposed by any governmental authority on Trustee or Beneficiary by reason of its interest in the Note or this Deed of Trust. 18 NOTIFY LENDER OF DEFAULT. Trustor shall notify Beneficiary in writing within five (5) days of the occurrence of any Event of Default or other event which, upon the giving of notice or the passage of time or both, would constitute an Event of Default. EVENTS OF DEFAULT The existence or occurrence of any one or more of the following events shall constitute an event of default ("Event of Default") hereunder (including, if Trustor consists of more than one person or entity, the occurrence of any of such events with respect to any one or more of such persons or entities): 19 PAYMENT AND PERFORMANCE OBLIGATIONS. Failure to make any payment of principal, interest or late charges on the Note when and as the same shall become due and payable, whether at maturity or by acceleration or as part of any prepayment or otherwise, or default in the performance of any of the covenants or agreements of Trustor contained herein, if any monetary default shall not have been cured within 10 days after notice thereof and any non-monetary default shall not have been cured within 30 days after notice thereof (unless the default cannot be cured within 30 days and Trustor commences a cure within the 30 days and diligently prosecutes the cure until it is complete, in which event, Trustor shall have a reasonable amount of time after the 30 days to cure a non-monetary default). 20 RECEIVERSHIP. The appointment, pursuant to an order of a court of competent jurisdiction, of a trustee, receiver or liquidator of the Property or any part thereof, or of Trustor, or any termination or voluntary suspension of the transaction of business of Trustor, or any attachment, execution or other judicial seizure of all or any substantial portion of Trustor's assets. 21 BANKRUPTCY OR INSOLVENCY. Trustor being insolvent by being unable to pay debts when due or by having liabilities in excess of assets; or Trustor committing an act of bankruptcy, making a general assignment 110 for the benefit of creditors, or the filing by or against Trustor of a voluntary or involuntary petition in bankruptcy or for the appointment of a receiver (and any involuntary petition is not dismissed within 90 days from the filing thereof); or if there commences under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, proceedings affecting the Property or for the composition, extension, arrangement or adjustment of any of Trustor's obligations (and any involuntary petition is not dismissed within 90 days from the filing thereof); or if Trustor's business is discontinued as a going concern or is suspended; or if a writ of attachment, execution, or any similar process is issued or levied against any significant part of Trustor's property that is not released, stayed, bonded or vacated within a reasonable time after its issue or levy; or if Beneficiary shall deem itself insecure with respect to Trustor's performance of any of its obligations to Beneficiary hereunder or otherwise. 22 TERMINATION. If Trustor is other than a natural person or persons, without the prior written consent of Beneficiary in each case, the voluntary or involuntary dissolution or termination of existence of Trustor. 23 TAX EVENT. The imposition of a tax, other than a state or federal income tax, on or payable by Trustee or Beneficiary by reason of its ownership of the Note or this Deed of Trust, and Trustor not promptly paying said tax, or it being illegal for Trustor to pay said tax. 24 MISREPRESENTATION OF FACT. Willful or negligent misrepresentations of material fact by Trustor in any document submitted to Beneficiary in support of the loan represented by the Note or in connection with the Note and this Deed of Trust. 25 OTHER. Any other event occurring which, under this Deed of Trust, or under the Note constitutes a default by Trustor hereunder or thereunder or gives Beneficiary the right to accelerate the maturity of the indebtedness (or any part thereof) secured hereby, including but not limited to a prohibited transfer as described in Paragraph 15 above. REMEDIES Upon the occurrence of any Event of Default, Trustee and Beneficiary shall have the following rights and remedies, subject to Trustee or Beneficiary giving Trustor ten (10) days' written notice for a monetary default and thirty (30) days' written notice for a non-monetary default; provided, however, that Trustor shall have a reasonable amount of time after the 30 days for a cure of a non-monetary default, if the default cannot be cured within 30 days and Trustor commences a cure within 30 days and diligently prosecutes the cure until it is completed: 26 CONCURRENT CURE PERIODS. All notice and cure periods provided in this Deed of Trust, the Note or any other document or instrument evidencing or securing the Note shall run concurrently with any notice or cure periods provided by law. Without limiting the foregoing, Beneficiary shall be entitled to exercise its remedies under this Deed of Trust if any event occurs which, with the giving of notice or the passage of time, or both, would constitute an Event of Default under this Deed of Trust or would entitle Beneficiary to accelerate the indebtedness evidenced by the Note. Furthermore, the recording and mailing to Trustor of a notice or breach and election to sell shall constitute notice of such failure to perform under this Deed of Trust, the Note or any other loan document. 27 ACCELERATION. Beneficiary may declare the entire principal amount of the Note then outstanding (if not then due and payable), and accrued and unpaid interest thereon, and all other sums or payments required thereunder, to be due and payable immediately. 28 ENTRY. Irrespective of whether Beneficiary exercises the option provided in Paragraph 28 herein, Beneficiary in person or by agent or by court-appointed receiver may, without notice to Trustor, enter on, take possession of, manage and operate the Property or any part thereof and do all things necessary or appropriate in Beneficiary's sole discretion in connection therewith, including without limitation making and enforcing, and if the same be subject to modification or cancellation, modifying or cancelling leases upon such terms or conditions as Beneficiary deems proper, obtaining and evicting tenants, and fixing or modifying rents, contracting for and making repairs and alterations, and doing any and all other acts which Beneficiary deems proper to protect the security hereof; and either with or without so taking possession, in its own name or in the name of Trustor, sue for or otherwise collect and receive the Rents and Profits, including those past due and unpaid, and apply the same less costs and expenses of operation and collection, including reasonable attorneys' fees, upon any indebtedness secured 111 hereby, and in such order as Beneficiary may determine. Upon request of Beneficiary, Trustor shall assemble and make available to Beneficiary at the site of the Property any of the Property which has been removed therefrom. The entering upon and taking possession of the Property, or any part thereof, and the collection of any Rents and Profits and the application thereof as aforesaid shall not cure or waive any default theretofore or thereafter occurring or affect any notice or default hereunder or invalidate any act done pursuant to any such default or notice, and, notwithstanding continuance in possession of the Property or any part thereof by Beneficiary, Trustor or a receiver, and the collection, receipt and application of the Rents and Profits, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust or by law or in equity upon or after the occurrence of an Event of Default, including without limitation the right to exercise the power of sale. Any of the actions referred to in this Paragraph 28 may be taken by Beneficiary irrespective of whether any notice of default or election to sell has been given hereunder and without regard to the adequacy of the security for the indebtedness hereby secured. 29 JUDICIAL ACTION. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this instrument as a realty mortgage or to enforce any of the terms hereof, subject to any non-recourse provision in this Deed of Trust. 30 POWER OF SALE. Beneficiary may elect to cause the Property or any part thereof to be sold under the power of sale herein granted in any manner permitted by applicable law. In connection with any sale or sales hereunder, Beneficiary may elect to treat any of the Property which consists of a right in action or which is property that can be severed from the Property or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Sales hereunder of any personal property only shall be conducted in any manner permitted by the Uniform Commercial Code of the state in which the Property is located. Where the Property consists of real property and personal property located on or within the real property, Beneficiary may elect in its discretion to dispose of both the real and personal property together in one sale pursuant to real property law as permitted by the Uniform Commercial Code of the state in which the Property is located. Should Beneficiary elect to sell the Property, or any part thereof, which is real property or which Beneficiary has elected to treat as real property as provided above, Beneficiary or Trustee shall give such notice of default and election to sell as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, and without the necessity of any demand on Trustor, Trustee, at the time and place specified in the notice of sale, shall sell said real property or part thereof at public auction to the highest bidder for cash in lawful money of the United States. Trustee may, and upon request of Beneficiary shall, from time to time, postpone any sale hereunder by public announcement thereof at the time and place notice therefor. If the Property consists of several lots, parcels or items of property, Beneficiary may: (i) designate the order in which such lots, parcels or items shall be offered for sale or sold; or, (ii) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Beneficiary deems in its best interest. Any person, including Trustor, Trustee or Beneficiary, may purchase at any sale hereunder, and Beneficiary shall have the right to purchase at any sale hereunder by crediting upon the bid price the amount of all or any part of the indebtedness hereby secured. Should Beneficiary desire that more than one sale or other disposition of the Property be conducted, Beneficiary may, at its option, cause the same to be conducted simultaneously, or successively, on the same day, or at such different days or times and in such order as Beneficiary may deem to be in its best interests, and no such sale shall terminate or otherwise affect the lien of this Deed of Trust on any part of the Property not sold until all indebtedness secured hereby has been fully paid. In the event Beneficiary elects to dispose of the Property through more than one sale, Trustor agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to Trustee and Beneficiary, their agents and counsel, and to pay all expenses, liabilities and advances made or incurred by Trustee in connection with such sale or sales, together with interest on all such advances made by Trustee at the lower of the rate set forth in the Note or the maximum rate permitted by law to be charged by Trustee. Upon any sale hereunder, Trustee shall execute and deliver to the purchaser or purchasers a deed or deeds conveying the property so sold, but without any covenant or warranty whatsoever, express or implied, whereupon such purchaser or purchasers shall be let into immediate possession; and the recitals in any such deed or deeds of facts, such as default, the giving of notice of default and notice of sale, and other facts affecting the regularity or validity of such sale or disposition, shall be conclusive proof of the truth of such facts and any such deed or deeds shall be conclusive against all persons as to such facts recited therein. 112 31 PROCEEDS OF SALE. The proceeds of any sale made under or by virtue of this Deed of Trust, together with all other sums which then may be held by Trustee or Beneficiary under this Deed of Trust, shall be applied as follows: FIRST: To the payment of costs and expenses of sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to the agents and counsel of Trustee and Beneficiary, and to the payment of all expenses, liabilities and advances made or incurred by Trustee under this Deed of Trust, together with interest on all advances made by Trustee at the lower of the interest rate set forth in the Note or the maximum rate permitted by law to be charged by Trustee. SECOND: To the payment of any and all sums expended by Beneficiary under the terms of this Deed of Trust, not then repaid, with accrued interest at the rate set forth in the Note, and all other sums (except advances of principal and interest thereon) required to be paid by Trustor pursuant to any provisions of this Deed of Trust, or the Note, including without limitation all expenses, liabilities and advances made or incurred by Beneficiary under this Deed of Trust or in connection with the enforcement thereof, together with interest thereon as herein provided. THIRD: To the payment of the entire amount then due, owing or unpaid for principal and interest upon the Note with interest on the unpaid principal at the rate set forth therein from the date of advancement thereof until the same is paid in full. FOURTH: The remainder, if any, to the person or persons legally entitled thereto. 32 WAIVER OF LAWS. To the fullest extent Trustor may do so, Trustor agrees that it will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, extension or redemption, and Trustor, for itself and its representatives, successors and assigns, and for any and all persons ever claiming any interest in the Property, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, exemption, appraisement, stay of execution, notice of intention to mature or declare due the whole or any part of the indebtedness secured hereunder, notice of election to mature or declare due the whole or any part of such indebtedness and all rights to a marshaling of the assets of Trustor, including the Property, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. Trustor shall not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of Beneficiary under the terms of the Deed of Trust to a sale of the Property for the collection of such indebtedness without any prior or different resort for collection, or the right of Beneficiary under the terms of the Deed of Trust to the payment of such indebtedness out of the proceeds of sale of the Property in preference to every other claimant whatever. If any law referred to in this Section and now in force, of which Trustor or its representatives, successors and assigns and such other persons claiming any interest in the Property might take advantage despite this Section, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to preclude the application of this Section. 33 REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or otherwise. No delay or omission of Trustee or Beneficiary to exercise any right or power accruing upon any Event of Default shall impair any right or power or shall be construed to be a waiver of any Event of Default or any acquiescence therein; and every power and remedy given by this Deed of Trust to Trustee or Beneficiary may be exercised from time to time as often as may be deemed expedient by Trustee or Beneficiary. If there exists additional security for the performance of the obligations secured hereby, the holder of the Note, at its sole option, and without limiting or affecting any of its rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever rights and remedies it may have in connection with such other security or in such order as it may determine. Notwithstanding any other provision of this Deed of Trust, Beneficiary shall have all remedies available at law, in equity or otherwise. 113 MISCELLANEOUS 34 SEVERABILITY. In the event any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Deed of Trust, but this Deed of Trust shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 35 CERTAIN CHARGES. Trustor agrees to pay Beneficiary for each statement of Beneficiary (other than for the standard periodic statement of Beneficiary) as to the obligations secured hereby, furnished at Trustor's request, the fees, costs and expenses incurred by Beneficiary in connection with each statement. Trustor further agrees to pay the charges of Beneficiary for any other service rendered Trustor, or on its behalf, connected with this Deed of Trust or the indebtedness secured hereby, including without limitation the delivery to an escrow holder of a request for full or partial reconveyance of this Deed of Trust, transmitting to an escrow holder moneys secured hereby, changing its records pertaining to this Deed of Trust and indebtedness secured hereby to show a new owner of the Property, and replacing an existing policy of insurance held hereunder with another such policy. 36 NOTICES. All notices expressly provided hereunder to be given by Beneficiary to Trustor and all notices and demands of any kind or nature whatsoever which Trustor may be required or may desire to give to or serve on Beneficiary shall be in writing and shall be (i) hand-delivered, effective upon receipt, (ii) transmitted by telecopier, effective upon receipt, with the original mailed the same date by first class mail, postage prepaid, (iii) sent by United States Express Mail or by private overnight courier, effective upon receipt, or (iv) served by certified mail, postage prepaid, return receipt requested and addressed to such party at the address set forth above, or to such other address(es) or addressee(s) as the party to be served with notice may have furnished in writing to the other party, effective three (3) days after mailing. 37 TRUSTOR NOT RELEASED. Extension of the time for payment or modification of the terms of payment of any sums secured by this Deed of Trust granted by Beneficiary to any successor in interest of Trustor shall not operate to release, in any manner, the liability of the original Trustor. Beneficiary shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify the terms of payment of the sums secured by the Deed of Trust by reason of any demand made by the original Trustor. Without affecting the liability of any person, including Trustor, for the payment of any indebtedness secured hereby, or the lien of this Deed of Trust on the remainder of the Property for the full amount of any such indebtedness and liability unpaid, Beneficiary and Trustee are respectively empowered as follows: Beneficiary may from time to time and without notice: (i) release any person liable for the payment of any of the indebtedness; (ii) extend the time or otherwise alter the terms of payment of any of the indebtedness; (iii) accept additional real or personal property of any kind as security thereof, whether evidenced by deeds of trust, mortgages, security agreement or any other instrument of security; or, (iv) alter, substitute or release any property securing the indebtedness. Trustee may, at any time, and from time to time, upon the written request of Beneficiary: (i) consent to the making of any map or plat of the Property or any part thereof; (ii) join in granting any easement or creating any restriction thereon; (iii) join in any subordination or other agreement affecting this Deed of Trust or the lien or charge hereof; or, (iv) reconvey, without any warranty, all or part of the Property. 38 RECONVEYANCE. Upon the payment in full of all sums and the performance of all obligations secured by this Deed of Trust, Beneficiary shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Upon payment of its fees and any other sums owing to it under this Deed of Trust, Trustee shall reconvey the Property without warranty to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. The recitals in such conveyance of any matters of facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 39 STATUTE OF LIMITATIONS. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the fullest extent permitted by law. 40 EFFECT AS DEED OF TRUST. Trustor acknowledges that it is the intent of the parties hereto that this Deed of Trust qualify and operate as a Deed of Trust upon real property pursuant to the laws of the jurisdiction where the Property is located. Trustor agrees that in the event that a court of competent jurisdiction finds that this 114 Deed of Trust is ineffective, unenforceable or void as a Deed of Trust pursuant to the laws of the jurisdiction where the Property is located, this Deed of Trust shall be construed as a realty mortgage wherein Trustor is the mortgagor and Beneficiary is the mortgagee, and may thereby be foreclosed after default or breach hereunder in accordance with and pursuant to the laws of the jurisdiction where the Property is located (as amended at the time of such default or breach). In such event and to effectuate a realty mortgage effective as of the date hereof, Trustor as mortgagor does hereby forever grant, bargain, sell, convey, assign, transfer and mortgage the Property to Beneficiary and its successors and assigns as mortgagee. 41 INTERPRETATION. Wherever used in this Deed of Trust, unless the context otherwise indicates a contrary intent, or unless otherwise specifically provided herein, the word "Trustor" shall mean and include Trustor and any subsequent owner or owners of the Property, and the word "Beneficiary" shall mean and include not only the original Beneficiary hereunder but also any future owners and holders, whether in whole or in part, including pledgees, of the Note secured hereby. In this Deed of Trust whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the neuter includes the feminine and/or masculine, and the singular number includes the plural and conversely. In this Deed of Trust, the use of the word "including" shall not be deemed to limit the generality of the term or clause to which is has reference, whether or not non-limiting language (such as "without limitation," or "but not limited to," or words of similar import) is used with reference thereto, but rather could reasonably fall within the broadest scope of such general statement, term or matter. The captions and headings of the paragraphs of this Deed of Trust are for convenience only and are not to be used to interpret, define or limit the provisions of this Deed of Trust. 42 CONSENT; DELEGATION TO SUB-AGENTS. The granting or withholding of consent by Beneficiary to any transaction as required by the terms hereof shall not be deemed a waiver of the right to require consent to future or successive transactions. Wherever a power of attorney is conferred upon Beneficiary hereunder, it is understood and agreed that such power is conferred with full power of substitution, and Beneficiary may elect in its sole discretion to exercise such power itself or to delegate such power, or any part thereof, to one or more sub-agents. 43 SUCCESSORS AND ASSIGNS. All of the grants, obligations, covenants, agreements, terms, provisions and conditions herein shall run with the land and shall apply to, bind and inure to the benefit of, the heirs, administrators, executors, legal representatives, successors and assigns of Trustor and the successors in trust of Trustee and the endorsees, transferees, successors and assigns of Beneficiary. In the event Trustor is composed of more than one party, the obligations, covenants, agreements, and warranties contained herein as well as the obligations arising therefrom are and shall be joint and several as to each such party. 44 GOVERNING LAW. The loan secured by this Deed of Trust is made pursuant to, and shall be construed and governed by, the laws of the jurisdiction where the Property is located, and that the exercise by Beneficiary of the power of sale by virtue of this Deed of Trust shall be construed and governed by the laws of the jurisdiction where the Property is located. 45 SUBSTITUTION OF TRUSTEE. Beneficiary may remove Trustee at any time or from time to time and appoint a successor trustee, and upon such appointment, all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such successor. Such substitute trustee shall be appointed by written instrument duly recorded in the county or counties where the real property covered hereby is located, which appointment may be executed by any authorized agent of Beneficiary or in any other manner permitted by applicable law. 46 NO WAIVER. No failure or delay by Beneficiary in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver, consent or approval of any kind by Beneficiary shall be effective unless contained in writing, signed and delivered by Beneficiary. No notice to or demand on Trustor in any case shall entitle Trustor to any other notice or demand in similar or other circumstances, nor shall such notice or demand constitute a waiver of the rights of Beneficiary to any other or further actions. 47 BENEFICIARY NOT PARTNER OF TRUSTOR; TRUSTOR TO INDEMNIFY BENEFICIARY. The exercise by Beneficiary of any of its rights, privileges or remedies conferred hereunder or under the Note or under applicable 115 law, shall not be deemed to render Beneficiary a partner or a co-venturer with the Trustor or with any other person. Trustor shall indemnify Beneficiary against any claim by any third party for any injury, damage or liability of any kind arising out of any failure of Trustor to perform its obligations in this transaction, shall notify Beneficiary of any lawsuit based on such claim, and at Beneficiary's election, shall defend Beneficiary therein at Trustor's own expense by counsel satisfactory to Beneficiary or shall pay the Beneficiary's cost and attorneys' fees if Beneficiary chooses to defend itself on any such claim. This paragraph shall not apply to any claim caused by the negligence or willful misconduct of Beneficiary. 48 TIME OF ESSENCE. Time is of the essence of this Deed of Trust and each and all of its terms and provisions. 49 ENTIRE AGREEMENT. This Deed of Trust, the Note, and that certain Purchase Agreement for Real and Personal Property dated March 28, 2002, and any other instruments securing payment of the Note, if any, constitute the entire agreement between Trustor and Beneficiary and none of the foregoing may be modified or amended in any manner other than by supplemental written agreement executed by Trustor and Beneficiary; provided, however, that all written representations of Trustor, and of any partner, principal or agent of Trustor, previously made to Beneficiary shall be deemed to have been made to induce Beneficiary to make the loan secured hereby and to enter into the transaction evidenced hereby and by the Note, and shall survive the execution hereof and the closing pursuant hereto. This Deed of Trust cannot be changed or modified except by written agreement signed by both Trustor and Beneficiary. 50 NO THIRD PARTY BENEFITS. This Deed of Trust, the Note and the other Related Agreements, if any, are made for the sole benefit of Trustor and Beneficiary and their successors and assigns, and convey no other legal interest to any party under or by reason of any of the foregoing. 51 SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT. Any leasehold estate against the Property shall be and is hereby made subject and subordinate in every respect to the lien of this Deed of Trust, and to all the provisions hereof, to all advances made or to be made under this Deed of Trust or the Note, and to any increases, renewals, modifications, or replacements of this Deed of Trust or the Note; provided, however, that (a) any lessee's right to quiet possession of the leasehold estate shall not be disturbed by Beneficiary so long as the lessee is not in default under the lease that creates the leasehold estate, and so long as the lessee shall pay the rent and observe and perform all of the provisions of the lease, unless the lease is otherwise terminated pursuant to its terms, and (b) in the event Beneficiary obtains title to the Property through foreclosure, exercise of power of sale, or other remedy under this Deed of Trust or deed in lieu of foreclosure, the lessee shall continue occupancy of the leasehold estate under the same terms and conditions of the lease and shall attorn to Beneficiary, its successors and assigns, or to the purchaser under a foreclosure or exercise of power of sale, or to the grantee of a deed in lieu of foreclosure, to the same extent and with the same force as if Beneficiary or such other party were the lessor under the leasehold estate. Under such circumstances, however, Beneficiary shall not be (a) liable for any act or omission of the lessor of the leasehold estate; or (b) subject to any offsets or defenses which the lessee might have against the lessor; or (c) bound by any rent or additional rent which the lessee might have paid beyond that due for the current month to the lessor; or (d) bound by any amendment or modifications of the lease made after the date of this Deed of Trust without Beneficiary's prior written consent. 116 IN WITNESS WHEREOF, the undersigned have executed this Deed of Trust as of the date set forth above. TRUSTOR: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager 117 NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager SIGNATURES CONTINUED ON FOLLOWING PAGE 118 NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY By: /s/ Robert M. Worsley ----------------------------------------- Robert M. Worsley Its: Manager NOTARY ON FOLLOWING PAGE 119 STATE OF ARIZONA ) ) ss. County of Maricopa) The foregoing instrument was acknowledged before me this 28th day of March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf of each of the following entities: NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY. /s/ Yvonne E. Ulrich -------------------------------- Notary Public My Commission expires: March 25, 2004 120 EXHIBIT 1-C SECURITY AGREEMENT THIS SECURITY AGREEMENT is made and delivered as of the 28th day of March, 2002, collectively by all of the following companies: NZ Trust, LLC, an Arizona limited liability company NZ Snowflake, LLC, an Arizona limited liability company NZ Milky Ranch, LLC, an Arizona limited liability company NZ Silver Creek, LLC, an Arizona limited liability company NZ Joseph City, LLC, an Arizona limited liability company NZ New Mexico Land, LLC, an Arizona limited liability company NZ Uranium, LLC, an Arizona limited liability company NZ Travertine, LLC, an Arizona limited liability company NZ Oil and Gas, LLC, an Arizona limited liability company NZ Minerals, LLC, an Arizona limited liability company NZ History and Artifacts, LLC, an Arizona limited liability company, which together shall hereafter be referred to collectively as "BORROWER", to and for the benefit of NZ Corporation, an Arizona corporation, NZ Development Corporation, an Arizona corporation, and NZU Corporation, a New Mexico corporation (collectively referred to hereinafter as "LENDER"). R E C I T A L S: A. Lender has agreed to make a loan to Borrower in the amount of $7,360,000.00 (the "LOAN") pursuant to and in accordance with the terms, provisions and conditions set forth in that certain Purchase Agreement for Real and Personal Property dated March 28, 2002, by and between Borrower and Lender (the "LOAN AGREEMENT"). Borrower is executing a certain Promissory Note of even date herewith (the "NOTE") payable to the order of Lender to evidence the Loan. The Note is secured by, among other things, a certain Deed of Trust of even date herewith (the "DEED OF TRUST") made by Borrower for the benefit of Lender covering the real estate described in EXHIBIT A attached hereto (the "PROPERTY"). All capitalized terms which are not defined herein shall have the meanings ascribed thereto in the Loan Agreement. B. A condition precedent to Lender's extension of the Loan to Borrower is the execution and delivery by Borrower of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. CREATION OF SECURITY INTEREST. Borrower hereby grants to Lender a security interest in and mortgages the property owned by Borrower (specifically excluding therefrom any property owned by any tenant of the Property) and described as follows (hereinafter referred to collectively as the "COLLATERAL"): 121 (a) All apparatus, machinery, devices, fixtures, communication devices, systems and equipment, fittings, appurtenances, equipment, appliances, furniture, furnishings, appointments, accessories, landscaping, plants and all other items of personal property located at the Property or used in the operation or maintenance of the Property or any business or operation conducted thereon. All fixtures and equipment now or hereafter installed for use in the operation of the buildings, structures and improvements now or hereafter on the Property, including but not limited to, all lighting, heating, cooling, ventilating, air-conditioning, plumbing, sprinkling, incinerating, refrigerating, air-cooling, lifting, fire extinguishing, cleaning, entertaining, security, communicating and electrical and power systems, and the machinery, appliances, fixtures and equipment pertaining thereto, all awnings, ovens, stoves, refrigerators, dishwashers, disposals, carpeting, switchboards, engines, motors, tanks, pumps, screens, storm doors and windows, shades, floor coverings, ranges, washers, dryers, disposals, cabinets, furniture, partitions, conduits, ducts and compressors, and all elevators and escalators and the machinery and appliances, fixtures and equipment pertaining thereto. (b) Any and all revenues, receivables and income now owned or hereafter acquired and arising from or out of the Property and/or the businesses and operations conducted thereon. (c) Any and all other personal property of any kind, nature or description, whether tangible or intangible, (including without limitation, any and all goods, accounts, management, maintenance, service and other contract rights, franchises, licenses, permits, chattel paper, money, documents, instruments and general intangibles) of Borrower arising from, relating to or used in connection with the operation or maintenance of the Property, whether now owned or hereafter acquired, or in which Borrower now has or shall hereafter acquire any right, title or interest whatsoever (whether by bill of sale, lease, conditional sales contract, or other title retention document or otherwise), and all bank, savings, checking, money market and other depositary accounts of Borrower, and the balances therein, whether now or hereafter maintained with Lender or any other institution. (d) Any and all additions and accessories to all of the foregoing and any and all proceeds (including proceeds of insurance, eminent domain or other governmental takings and tort claims), renewals, replacements and substitutions of all of the foregoing. (e) All property listed on EXHIBIT B attached hereto and incorporated herein by this reference. (f) All of the books and records pertaining to the foregoing. 2. SECURED OBLIGATIONS. The security interest created herein is given as security for the payment of all indebtedness and the performance and observance of all covenants, conditions, agreements, representations, warranties and other liabilities and obligations of Borrower or any other obligor to or benefitting Lender which are evidenced, secured or created 122 by the Loan Agreement, this Agreement, the Note or any of the other Loan Documents, together with all amendments and modifications hereof and thereof (collectively, the "OBLIGATIONS"). 3. BORROWER'S COVENANTS. Borrower covenants and agrees as follows: (a) The Collateral shall be kept at the Property and will be used only in the conduct of Borrower's business and operation of the buildings, structures and improvements now or at any time hereafter on the Property. (b) The Collateral shall not be misused, wasted or allowed to deteriorate, except for the ordinary wear and tear resulting from its use. (c) The Collateral shall at all times be insured against loss, damage, theft, and such other risks as Lender may require in such amounts, with such companies, under such policies, in such form and for such periods as shall be reasonably satisfactory to Lender, and each policy shall provide that the loss thereunder and the proceeds payable thereunder shall be payable to Lender as its interest may appear. (d) The Collateral shall not be used in violation of any applicable law or regulation. (e) The Collateral may be examined and inspected by Lender at any reasonable time, wherever located. (f) Any of the Collateral which becomes worn out or is damaged shall be promptly replaced with items of equal or greater value and utility. (g) Borrower shall not sell, transfer, lease or otherwise dispose of any of the Collateral or any interest therein or offer to do so other than in the ordinary course of Borrower's business without the prior written consent of Lender (which shall not be unreasonably withheld), or permit anything to be done that may impair the value of any of the Collateral or the security intended to be afforded by this Agreement. (h) Borrower shall pay all taxes and assessments upon the Collateral or for its use or operation prior to any delinquency thereof. (i) Borrower shall sign and execute alone or with Lender any financing statement or other document or procure any documents and pay all costs, expenses and fees, including reasonable attorneys' fees, necessary to protect the security interest under this Agreement against the rights, interests or claims of third persons. (j) Borrower shall reimburse Lender for all costs, expenses and fees, including, without limitation, court costs and reasonable attorneys' fees, incurred by or for Lender for any action taken by or for Lender to remedy an Event of Default of Borrower hereunder or under the other Loan Documents, together with interest accruing 123 thereon at the Default Rate commencing on the date that is ten days from the date demand for payment is made by Lender until repaid to Lender. (k) Borrower shall (i) from time to time promptly execute and deliver to Lender all such other assignments, certificates, supplemental writings, and financing statements, and do all other reasonable acts or things as Lender may request in order to more fully evidence and perfect the security interest created herein; (ii) punctually and properly perform all of its agreements and obligations under the Loan Agreement, the Note, the Deed of Trust and the other Loan Documents; (iii) pay the indebtedness secured hereby in accordance with the terms thereof and in accordance with the terms of the Loan Agreement, the Note, the Deed of Trust and the other Loan Documents; (iv) promptly furnish Lender with any information or writings which Lender may request concerning the Collateral; (v) allow Lender to inspect all records of Borrower relating to the Collateral, the Property, the Obligations and the business and operation of Borrower with respect to the Collateral or the Property, and to make and take away copies of such records; (vi) promptly notify Lender of any material adverse change in any facts or circumstances warranted or represented by Borrower in this Agreement or in any other writing furnished by Borrower to Lender in connection with the Collateral, the Obligations or the business and operation of Borrower or the Property; (vii) promptly notify Lender of any claim, action or proceeding affecting title to the Collateral, or any part thereof, or the security interest created herein, and, at the request of Lender, appear in and defend, at Borrower's expense, any such action or proceeding; and (viii) promptly, after being requested by Lender, pay to Lender the amount of all expenses, including reasonable attorneys' fees and other legal expenses, incurred by Lender in enforcing the security interest created herein, together with interest thereon at the Default Rate commencing on the date that is ten days after the date demand for payment is made by Lender until the date repaid to Lender. (l) Borrower shall not, without the prior written consent of Lender, create any other security interest in, mortgage, pledge, or otherwise encumber the Collateral, or any part thereof, or permit the same to be or become subject to any lien, attachment, execution, sequestration, other legal or equitable process, or any encumbrance of any kind or character, however, Borrower shall have the right to contest by appropriate proceedings the validity or amount of any such lien if and only if Borrower shall, within thirty days after the filing thereof, place a bond with the Lender in an amount, form, content and issued by a surety reasonably acceptable to the Lender for the payment of any such lien. (m) Should any part of the Collateral ever be in any manner converted by its issuer or maker into another type of property or any money or other proceeds ever be paid or delivered to Borrower as a result of Borrower's rights in the Collateral, then all such property, money and other proceeds shall become part of the Collateral, and Borrower covenants to forthwith pay or deliver to Lender all of the same which is susceptible of delivery and, at the same time, if Lender deems it necessary and so requests, Borrower will properly endorse or assign the same. With respect to any of such property of a kind requiring any additional security agreement, financing statement or other writing to 124 perfect a security interest therein in favor of Lender, Borrower will forthwith execute and deliver to Lender whatever Lender shall deem necessary or proper for such purpose. (n) Should any covenant, duty or agreement of Borrower fail to be performed in accordance with its terms hereunder, Lender may after an Event of Default, but shall never be obligated to, perform or attempt to perform such covenant, duty or agreement on behalf of Borrower, and any amount expended by Lender in such performance or attempted performance shall become a part of the indebtedness secured hereby, and, upon demand of Lender, Borrower agrees to pay such amount promptly to Lender, together with interest accrued thereon at the Default Rate commencing on the date that is ten days after the date demand for payment is made by Lender until repaid to Lender. 4. DEFAULT. An "EVENT OF DEFAULT" shall occur under this Agreement upon the occurrence of (a) a breach by Borrower of any of the covenants, agreements, representations, warranties or other provisions hereof which is not cured or waived within the applicable grace or cure period, if any, set forth in the Loan Agreement, or (b) any other Event of Default described in the Loan Agreement or any of the other Loan Documents. 5. LENDER'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default, Lender shall have available to it the following rights and remedies: (a) Right to Assign. Lender may assign this Agreement and, if Lender does assign this Agreement, the assignee shall be entitled to the performance of all of Borrower's agreements and obligations under this Agreement, and the assignee shall be entitled to all the rights and remedies of Lender under this Agreement. Borrower expressly agrees that it will assert no claims or defenses it may have against Lender against the assignee except those available to it pursuant to this Agreement. (b) Right to Discharge Borrower's Obligations. Lender may, at its option, discharge taxes, liens or security interests or other encumbrances at any time levied or placed on the Collateral, may remedy or cure any default of Borrower under the terms of any lease, rental agreement, or other document which in any way pertains to or affects Borrower's title to or interest in any of the Collateral, may pay for insurance on the Collateral, and may pay for the maintenance and preservation of the Collateral, and Borrower agrees to reimburse Lender, on demand, for any payment made or any expense incurred by Lender, including reasonable attorneys' fees, pursuant to the foregoing authorization, together with interest at the Default Rate from the date so paid or incurred by Lender until repaid to Lender, which payments, expenses and interest shall be secured by this Agreement and by the Deed of Trust and the other Loan Documents. (c) Rights as Secured Creditor. Upon the occurrence of an Event of Default, Lender, in its sole and absolute discretion, and to the fullest extent permitted under applicable law, may: (a) exercise any one or more of the rights and remedies afforded to secured parties under the Uniform Commercial Code in force in the State(s) in which the Collateral is located, together with any and all other rights and remedies otherwise provided and available to Lender at law or in equity; (b) enter, with process of law, any 125 premises where the Collateral (or the books and records of Borrower related thereto) is or may be located, and without charge or liability to Lender therefor seize and remove the Collateral (and copies of Borrower's books and records in any way relating to the Collateral) from said premises and/or remain upon said premises and use the same (together with said books and records) for the purpose of collecting, preparing and liquidating the Collateral, all without cost to Lender; and (c) sell or otherwise dispose of the Collateral at public or private sale or auction for cash or credit (which sale or auction may, at the option of Lender, occur on the premises where the Collateral is located or elsewhere, at no cost to Lender) and from the proceeds of such sale or disposal retain (i) all costs and charges incurred by Lender in taking and causing the removal and sale or disposal of the Collateral, including reasonable attorneys' fees; and (ii) an amount equal to all other Obligations; provided, however, that Borrower shall be credited with the net proceeds of such sale only when such proceeds are actually received by Lender. (d) Assembly of Collateral; Injunctive Relief. Upon the occurrence of an Event of Default and after giving effect to any applicable notice and cure periods, Borrower, immediately upon demand by Lender, shall assemble the Collateral and make it available to Lender at a place or places to be designated by Lender. Borrower hereby acknowledges and agrees that if Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, no remedy of law shall provide adequate relief to Lender, and that Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of posting of bond, surety or other security. (e) Notice of Collateral Disposition. Any notice required to be given by Lender of a sale, lease or other disposition of the Collateral or any other intended action by Lender, deposited in the United States mail, postage prepaid and duly addressed to Borrower at Borrower's address set forth in the Deed of Trust not less than ten days prior to such proposed action, shall constitute commercially reasonable and fair notice to Borrower thereof. (f) Matters Regarding Sale of Collateral. Borrower agrees that Lender may, if Lender deems it reasonable, postpone or adjourn any sale of Collateral from time to time by an announcement at the time and place of sale or by announcement at the time and place of such postponed or adjourned sale, without being required to give a new notice of sale. Borrower also waives and releases any cause of action and claim against Lender as a result of Lender's possession, collection or sale of the Collateral, any liability or penalty for failure of Lender to comply with any requirement imposed on Lender relating to notice of sale, holding of sale, or reporting of sale of the Collateral, and any right of Borrower to redeem the Collateral from such sale. At any sale or sales made pursuant to this Agreement or in a suit to foreclose the same, the Collateral, at the option of Lender or its assigns, may be sold (i) in its entirety or separately, at the same or at different times, and (ii) separate or together with any foreclosure sale of the collateral covered by the Deed of Trust in accordance with Section 9-504 of the Uniform Commercial Code, and the Collateral need not be present at the time or place of sale. At any such sale, Lender or the holder of the indebtedness hereby secured may bid for and 126 purchase any of the property sold, notwithstanding that such sale is conducted by Lender or its attorneys, agents, or assigns, and no irregularity in the manner of sale or of giving notice shall operate to preclude Lender from recovering the Obligations. (g) Replevin. If Lender seeks possession of the Collateral through replevin or other court action, Borrower hereby irrevocably waives (i) any bond, surety or security required as an incident to such possession, and (ii) any demand by Lender for possession of the Collateral prior to the commencement of any such suit or action. (h) Enforcement Standards. Lender shall have the right at all times to enforce the provisions of this Agreement in strict accordance with the terms hereof, notwithstanding any conduct or custom on the part of Lender in refraining from so doing at any time or times. The failure of Lender at any time or times to enforce its rights under said provisions strictly in accordance with the same shall not be construed or operate as a waiver of any of the rights and remedies granted Lender hereunder or as having created a custom in any way or manner contrary to the specific provisions of this Agreement or as having in any way or manner modified the same. All rights and remedies of Lender are cumulative and concurrent, and the exercise of one right or remedy by Lender shall not be deemed a waiver or release of any other right or remedy. 6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that: (a) Borrower has authority to execute and deliver this Agreement; (b) no financing statement covering the Collateral, or any part thereof, has been filed and remains in effect; (c) no other security agreement covering the Collateral, or any part thereof, has been made and no security interest, other than the one herein created, has attached or been perfected in the Collateral or in any part thereof; (d) all information supplied and statements made in any financial or credit statements or application for credit prior to the execution of this Agreement are true and correct in all material respects as of the date hereof; and (e) at the time Lender's security interest attaches to any of the Collateral or its proceeds, Borrower will be the lawful owner with the right to transfer any interest therein, and Borrower will make such further assurances as to prove title to the Collateral in Lender as may be required and will defend the Collateral and its proceeds against the lawful claims and demands of all persons whomsoever. The delivery at any time by Borrower to Lender of the Collateral shall constitute a representation and warranty by Borrower that, with respect to such Collateral, and each item thereof, Borrower is owner of the Collateral and the matters heretofore represented and warranted in this Paragraph 6 are true and correct. Further, Borrower, upon the request of Lender, agrees to amend this Agreement and any and all financing statements filed in connection therewith for the purpose of 127 setting forth in said Agreement and said financing statements an accurate and itemized list of the Collateral now generally described herein and in said financing statements and to include in said accurate and itemized list an identification of the Collateral by make, model, serial number and other appropriate descriptive data. 7. SUBROGATION. If the Obligations, or any part thereof, are renewed or extended, or applied toward the payment of any indebtedness secured by any deed of trust, mortgage, pledge, security agreement or other lien, Lender shall be and is hereby subrogated to all of the rights, titles, security interests and other liens securing the indebtedness so renewed, extended or paid. 8. FURTHER AGREEMENTS. (a) "Borrower" and "Lender" as used in this Agreement include the legal representatives, successors and assigns of those parties. (b) Neither Borrower nor Lender shall be bound by any amendment not expressed in writing and signed by the party to be bound thereby. (c) It is expressly intended, understood and agreed: (i) that this Agreement is made and entered into for the sole protection and benefit of Lender and Borrower, and their successors and assigns and no other person or persons shall have any right of action hereunder or rights to the proceeds of the Loan at any time; (ii) that the proceeds of the Loan do not constitute a trust fund for the benefit of any third party; and (iii) that no third party shall under any circumstances be entitled to any equitable lien on any undisbursed proceeds of the Loan at any time. The relationship between Lender and Borrower is solely that of a lender and borrower, and nothing contained herein, or in the Loan Agreement, the Note, the Deed of Trust or any of the other Loan Documents shall in any manner be construed as making the parties hereto partners, joint venturers or as creating any relationship other than lender and borrower. (d) Except with respect to the creation, perfection, priority and enforcement of the liens and security interests created hereby, which shall be construed in accordance with and governed by the laws of the State of Arizona, the validity and interpretation of this Agreement shall be construed in accordance with and governed by the laws of the State of Illinois. In the event that any provision of this Agreement is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Borrower and Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Agreement and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. (e) To the extent permitted by law, Borrower hereby waives any and all rights to require marshalling of assets. 128 (f) All notices, demands, requests and other correspondence which are required or permitted to be given hereunder shall be deemed sufficiently given when delivered or mailed in the manner and to the address of Borrower or Lender, as the case may be, as specified in the Loan Agreement. (g) This Agreement shall inure to the benefit of Lender and its successors and assigns and shall be binding upon Borrower and its successors and assigns. (h) BORROWER AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE LOAN AGREEMENT, THE DEED OF TRUST, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP BETWEEN BORROWER AND LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN DESCRIBED HEREIN AND IN THE OTHER LOAN DOCUMENTS. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. LENDER: NZ CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ---------------------------------- Its: Treasurer ------------------------------- NZ DEVELOPMENT CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ---------------------------------- Its: Treasurer ------------------------------- SIGNATURES CONTINUED ON FOLLOWING PAGE 129 NZU, INC., a New Mexico corporation By: /s/ Jerome L. Joseph ---------------------------------- Its: Treasurer BORROWER: NZ TRUST, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ SNOWFLAKE, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ MILKY RANCH, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager SIGNATURES CONTINUED ON FOLLOWING PAGE 130 NZ SILVER CREEK, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ JOSEPH CITY, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ NEW MEXICO LAND, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ URANIUM, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager SIGNATURES CONTINUED ON FOLLOWING PAGE 131 NZ TRAVERTINE, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ OIL AND GAS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ MINERALS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NZ HISTORY AND ARTIFACTS, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ---------------------------------- Robert M. Worsley Its: Manager NOTARY ON FOLLOWING PAGE 132 STATE OF ARIZONA ) ) ss. County of Maricopa ) The foregoing instrument was acknowledged before me this 28th day of March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf of each of the following entities: NZ Trust, LLC, an Arizona limited liability company NZ Snowflake, LLC, an Arizona limited liability company NZ Milky Ranch, LLC, an Arizona limited liability company NZ Silver Creek, LLC, an Arizona limited liability company NZ Joseph City, LLC, an Arizona limited liability company NZ New Mexico Land, LLC, an Arizona limited liability company NZ Uranium, LLC, an Arizona limited liability company NZ Travertine, LLC, an Arizona limited liability company NZ Oil and Gas, LLC, an Arizona limited liability company NZ Minerals, LLC, an Arizona limited liability company NZ History and Artifacts, LLC, an Arizona limited liability company. /s/ Yvonne E. Ulrich ----------------------------- Notary Public My commission expires: March 25, 2004 STATE OF Arizona ) )ss. County of Maricopa ) SUBSCRIBED AND SWORN TO before me this 29th day of March, 2002, by Joe Joseph as treasurer of the NZ Corporation, NZ Development Corporation, and NZU, Inc. /s/ Norma J. Oswalt --------------------------------- Notary Public My commission expires: 10-14-2003 133 EXHIBIT 1-D PLEDGE AND COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST AND SECURITY AGREEMENT THIS PLEDGE AND COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST AND SECURITY AGREEMENT (the "SECURITY AGREEMENT") is made this 28th day of March, 2002, by and between NZ Corporation, an Arizona corporation, NZ Development Corporation, an Arizona corporation, and NZU Corporation, a New Mexico corporation (collectively "SECURED PARTY"), and New Mexico and Arizona Land Company, LLC, an Arizona limited liability company ("PLEDGOR"). RECITALS A. Pledgor is the sole member of the Company (defined hereinbelow) which Company is indebted to Secured Party in the sum of $7,360,000.00 plus interest thereon, pursuant to the terms of that certain Promissory Note of even date hereof, as described in more detail in Section 3, hereinbelow. B. As security for the indebtedness, Pledgor is willing and has agreed to give Secured Party a security interest in certain assets hereinafter described. COVENANTS NOW, THEREFORE, intending to be legally bound and for good and valuable consideration, including granting of credit to the Company and the mutual promises and covenants of the parties, the receipt, sufficiency and adequacy of which are hereby acknowledged by all parties, and the performance of the terms and conditions herein set forth, it is agreed as follows: 1. INCORPORATION OF RECITALS. The parties hereto agree that the recitals set forth above are true and correct and are incorporated herein by reference. 2. SECURITY INTEREST. As security for the payment of the indebtedness more particularly described in Section 3 of this Security Agreement, Pledgor does hereby pledge, grant, assign, convey, transfer and set over to Secured Party all of Pledgor's rights and proceeds in the following described property and does hereby grant to Secured Party a security interest in and to the following described property ("COLLATERAL"): (a) All of Pledgor's right, title and interest as a member and otherwise in and to, without limitation, all distributions, profits and property due to or payable in respect of Pledgor's interest in the following limited liability companies and any certificates representing the membership interest therein: 134 NZ Trust, LLC, an Arizona limited liability company NZ Snowflake, LLC, an Arizona limited liability company NZ Milky Ranch, LLC, an Arizona limited liability company NZ Silver Creek, LLC, an Arizona limited liability company NZ Joseph City, LLC, an Arizona limited liability company NZ New Mexico Land, LLC, an Arizona limited liability company NZ Uranium, LLC, an Arizona limited liability company NZ Travertine, LLC, an Arizona limited liability company NZ Oil and Gas, LLC, an Arizona limited liability company NZ Minerals, LLC, an Arizona limited liability company, and NZ History and Artifacts, LLC, an Arizona limited liability company. The above identified limited liability companies are collectively referred to herein as the "COMPANY"; (b) All proceeds (including insurance proceeds) or products attributable to or arising from any of the foregoing Collateral; (c) All other property substituted for any of such property described above, including the proceeds of all such Collateral. 3. INDEBTEDNESS SECURED HEREBY. The security interest granted herein by Pledgor secures and shall secure: (a) Payment of any and all obligations, liabilities and indebtedness owed by the Company to Secured Party by virtue of that certain Promissory Note (the "PROMISSORY NOTE") of even date hereof, in the principal amount of $7,360,000.00, plus interest thereon, between the Company and Secured Party in which the parties provided for payment by the Company to Secured Party of the purchase price of certain real and personal property sold by Secured Party to the Company; (b) Performance under (i) that certain Deed of Trust Deed Of Trust, Assignment Of Rents And Leases And Security Agreement of even date hereof and (ii) that certain Security Agreement of even date hereof (collectively the "SECURITY DOCUMENTS"), which together serve as security for the Promissory Note. (b) Payment of all costs and expenses incurred by Secured Party in enforcing or protecting its rights with respect to the Collateral, or the indebtedness secured by the Collateral, including, but not limited to, reasonable attorney's fees. For purposes of this Security Agreement, all such sums and performance obligations secured by the Collateral shall be referred to herein as "Indebtedness." 135 4. PLEDGOR'S REPRESENTATIONS TO SECURED PARTY. Pledgor hereby represents the following facts to be true and correct as of the date hereof: (a) Pledgor is the true and lawful owner of the Collateral, free and clear of any lien or encumbrance, except for the security interest created by this Agreement; (b) Pledgor is the sole member in each of limited liability companies comprising the Company; (c) Pledgor has a good right and full power and authority to grant a security interest in the Collateral; (d) There are no advances, liens, security interests or encumbrances against the Collateral. (e) This Security Agreement, the pledge of the Collateral pursuant hereto and the filing of a financing statement in connection therewith create a valid and perfected first priority security interest in the Collateral securing the payment of the Indebtedness, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken; (f) The execution and performance by Pledgor of this Agreement have been duly authorized by all necessary entity action of the Company and do not and will not (i) contravene the Company's organizational governance documents, (ii) violate any provision of any law, rule, or regulation, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease, or instrument to which Pledgor or the Company is a party or by which either of Pledgor or the Company or their properties may be bound or affected. (g) This Agreement is a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally. (h) No consent of any other person or entity and no authorization, approval or action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the pledge by Pledgor of the Collateral pursuant to this Agreement, for the grant by Pledgor of the security interest granted hereby or for the execution, delivery or performance of this Agreement by Pledgor, (ii) for the perfection or maintenance of the pledge and security interest created hereby (including the first priority nature of such pledge and security interest), or (iii) for the exercise by Secured Party of the voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement (except as may be required in connection with the disposition of any portion of the Collateral by laws affecting the offer and sale of securities generally). (i) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. (j) The pledge of the Collateral hereunder will not result in any termination of the Company under its limited liability company operating agreement or the limited liability company act of the state of the Company's formation. 136 5. PLEDGOR'S WARRANTIES AND COVENANTS OF PLEDGOR TO SECURED PARTY. Pledgor hereby warrants, covenants and agrees that, until the Indebtedness secured hereby shall have been paid in full or unless it shall have received a prior written consent of the Secured Party: (a) Protection and Use of Collateral. Pledgor will keep the Collateral free from any adverse lien, security interest, or encumbrance (other than the security interest granted herein, and the lien of ad valorem taxes not yet delinquent) and in good order and repair and will not waste or destroy the Collateral or any part thereof; Pledgor will not use the Collateral in violation of any regulations, statute or ordinance or of any judgments, citations, decrees or orders of any judicial or administrative authority; (b) Sale or Impairment of Collateral. Pledgor will not sell or offer to sell or otherwise transfer, dispose of or encumber the Collateral or any interest therein, or otherwise dispose of any material asset, for less than its reasonable fair market value in such manner as to materially diminish the value of the Collateral, or in any other manner impair any of its assets so as to substantially diminish the value of the Collateral; (c) Indemnification. Pledgor will and does hereby agree to indemnify and hold Secured Party harmless against all claims arising out of or in connection with Pledgor's ownership or use of the Collateral; (d) Execute Additional Documents. Pledgor will authorize or sign and execute alone or with Secured Party any UCC-1 or other financing statement or any other document or procure any document and pay all necessary costs to protect the security interest under this Security Agreement against the interest of third persons. Pledgor will pay the cost of filing the same in all public offices wherever filing is deemed by Secured Party to be necessary and desirable. Secured Party is hereby appointed Pledgor's attorney-in-fact to do all acts and things which Secured Party may deem necessary to perfect and/or continue the perfection of the security interest created by this Security Agreement and to protect the Collateral. Pledgor further agrees to pay all costs and fees for filing any termination statements; (e) Payment by Company. Pledgor will and does hereby authorize and direct the Company to make all distributions in respect to the Collateral directly to the Secured Party until further notice by the Secured Party is delivered to the Company. (f) Pledge of Collateral. The pledge of the Collateral and grant of security interest hereunder will not immediately result in Secured party being deemed a member of the Company for any purpose, including for any required capital contribution assessment purpose under the Company's limited liability company operating agreement. If there is an Event of Default or the Indebtedness is not otherwise satisfied, to the extent that the Collateral is transferred to Secured party in satisfaction of the Indebtedness, Secured Party shall become the sole member of the Company with rights to vote to amend the Company's limited liability company operating agreement or remove the manager(s) of the Company. 6. PLEDGOR'S USE OF COLLATERAL. Prior to payment in full of the Indebtedness, Pledgor may use the Collateral in the ordinary course of Pledgor's business; provided, upon the occurrence of an event of default, Pledgor's right to use the Collateral shall terminate until further written notice from the Secured Party. 137 (a) So long as no Default or Event of Default shall have occurred and be continuing: (i) Pledgor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Security Documents. (ii) Pledgor shall be entitled to receive and retain any and all periodic cash distributions paid in respect of the Collateral, provided, however, that any and all distributions received after and during the continuance of a Default or an Event of Default shall be received in trust for the benefit of Secured Party, be segregated from the other property or funds of Pledgor, and be forthwith delivered to Secured Party in the same form as so received (with any necessary endorsement or assignment) and Secured Party shall apply such funds to the payment of the Indebtedness. (b) Upon the occurrence and during the continuance of a Default or an Event of Default: (i) All rights of Pledgor to exercise or refrain from exercising the voting and other consensual rights which Pledgor would otherwise be entitled to exercise pursuant to Section 6(a)(i) and to receive the distributions which it would otherwise be authorized to receive and retain pursuant to Section 6(a)(ii) shall cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Collateral such distributions. (ii) All distributions which are received by Pledgor contrary to the provisions of paragraph (i) of this Section 6(b) shall be received in trust for the benefit of Secured Party, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Secured Party as Collateral in the same form as so received (with any necessary endorsement or assignment). 7. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT," whenever used in this Security Agreement, shall mean any one or more of the following events or conditions: (a) The occurrence of an Event of Default under any provision of this Security Agreement; (b) The occurrence of an Event of Default under either of the Security Documents and/or the Promissory Note; 138 (c) The loss or destruction which is not fully insured, or the unauthorized sale, transfer or disposition (without the prior written consent of Secured Party) or the unauthorized encumbrance of any of the Collateral. 8. REMEDIES. Secured Party shall have the following remedies hereunder: (a) Acceleration and Foreclosure, Etc. Upon the happening of any Event of Default specified in Section 7 above, and at any time thereafter, at the option of Secured Party, any and all Indebtedness secured hereby shall become immediately due and payable without demand or any notice to Pledgor or any other person obligated thereon and Secured Party shall have and may exercise any and all of the rights and remedies of a secured party under the Uniform Commercial Code as adopted in the State of Arizona, and as otherwise contractually granted herein or under any other applicable law or under any other agreement executed by Pledgor in favor of Secured Party, including, without limitation, the right and power to sell, or otherwise dispose of or utilize such portion of the Collateral or any part or parts thereof in any manner consistent with Chapter 9 of the Arizona Uniform Commercial Code after default by Pledgor, and to apply the proceeds thereof toward payment of any costs and expenses and reasonable attorneys' fees and legal expenses thereby incurred by Secured Party and toward payment of the obligations in such order or manner as Secured Party may elect. (b) Waiver of Notice, Etc. Pledgor agrees that if such notice of default is mailed, postage prepaid, or sent by facsimile, charges prepaid, to Pledgor, at least fifteen (15) days before the time of the proposed sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement of giving notice, and a proposed sale may take place anytime after such fifteen-day (15) period (but not more than thirty (30) days thereafter) without the necessity of sending another notice to Pledgor. Secured Party may postpone and reschedule any proposed sale at its option without the necessity of giving Pledgor further notice of such fact as long as the rescheduled sale occurs within thirty (30) days of the originally scheduled sale. (c) Method of Sale of Collateral Approved. All recitals in any instrument of assignment or any other document or paper executed by Secured Party incident to sale, transfer, assignment or other disposition or utilization of the Collateral or any part thereof hereunder shall be sufficient to establish full legal propriety of the sale or other action taken by Secured Party or of any fact, condition or thing incident thereto and all prerequisites of such sale or other action shall be presumed conclusively to have been performed or to have occurred. 9. SECURED PARTY'S POWERS AND DUTIES WITH RESPECT TO COLLATERAL. (a) Secured Party shall be in no way liable to Pledgor or responsible for any diminution in the value of the Collateral from any cause whatsoever. (b) Pledgor agrees to pay all taxes, charges, transfer fees and assessments against the Collateral and to do all things necessary to preserve and maintain the value and collectibility thereof, and on the failure of Pledgor to so do, Secured Party may, after giving Pledgor written notice 139 of its intention to do so, make such payments and advance such sums on account thereof as Secured Party, in Secured Party's discretion, deems desirable. Pledgor agrees to reimburse Secured Party immediately upon demand for all such payments and advances plus interest thereon at the rate of eighteen percent (18%) per annum or at such lesser rate as may be the maximum rate allowed by applicable law, repayment of all of which is secured by this Security Agreement and the Collateral. (c) Secured Party, or any of its agents, shall have the right to call at reasonable times at the Pledgor's place or places of business at intervals to be determined by Secured Party, and without hindrance or delay, to inspect, audit, check, and make extracts from the books, records, journals, orders, receipts, correspondence, and other data relating to the Pledgor's operations. 10. GENERAL AUTHORITY. Effective immediately, but exercisable by Secured Party only upon the occurrence of an Event of Default, Pledgor hereby irrevocably appoints Secured Party as Pledgor's true and lawful attorney-in-fact with full power of substitution, in Secured Party's name or Pledgor's name or otherwise, for Secured Party's sole use and benefit, but at Pledgor's cost and expense, to exercise at any time and from time to time all or any of the following powers with respect to all or any of the Collateral: (a) To demand, sue for collection, receive and give acquittance for any and all monies due or to become due upon and by virtue thereof; (b) To receive, take, endorse, assign and deliver any and all checks, notes, drafts, documents and other property taken or received by Secured Party in connection therewith; and (c) To extend the time of payment and to make any allowance or other adjustments with reference thereto. Provided, however, the exercise by Secured Party of or failure to so exercise any such authority shall in no manner affect Pledgor's liability to Secured Party hereunder or in connection with the Indebtedness; and provided further, that Secured Party shall be under no obligation or duty to exercise any of the powers hereby conferred upon it, and it shall have no liability for any act or failure to act in connection with any of the Collateral. Secured Party shall not be bound to take any steps necessary to preserve rights in any instrument, contract or lease against prior parties. 140 9. SECURITY INTEREST ABSOLUTE. Until all obligations are paid in full, all rights of Secured Party and the pledge and security interest hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional, irrespective of: (a) Any lack of validity, regularity, or enforceability of the Promissory Note, Security Documents or any other agreement or instrument relating thereto; (b) Any change in the time, manner, or place of payment of, or in any other term of, all or any of the Indebtedness, or any other amendment or waiver of or any consent to any departure from the Promissory Note or Security Documents, including, without limitation, any increase in Indebtedness resulting from the extension of additional credit to Pledgor or otherwise; (c) Any taking, exchange, release, or nonperfection of any other Collateral, or any taking, release, or amendment or waiver of or consent to departure from any of the Indebtedness; (d) Any manner of application of Collateral, or proceeds thereof, to all or any of the Indebtedness, or any manner of sale or other disposition of any Collateral for all or any of the Indebtedness or any other assets of Pledgor; (e) Any change or restructuring of the structure or existence of the Company; or (f) Any other circumstance which might otherwise constitute a defense available to, or a discharge of, Pledgor or a third-party grantor of a security interest. 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. All agreements, representations and warranties contained herein or made in writing by or on behalf of Pledgor in connection with the transactions contemplated hereby shall survive the execution and delivery of this Security Agreement, any investigation at any time made by Secured Party or on its behalf, and the acquisition and disposition of the Indebtedness. All statements contained in any certificate or other instrument delivered by or on behalf of Pledgor pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations and warranties by Pledgor hereunder. 11. DEALINGS WITH PLEDGOR. It is expressly understood and agreed that, notwithstanding anything else contained in this Security Agreement to the contrary, Secured Party may, for all purposes hereof deal solely with Pledgor in connection therewith, and nothing herein shall be construed so as to require dealings with, consent of, or notice to any other parties or persons. 12. AGREEMENT NOT EXCLUSIVE REMEDY. This Security Agreement shall not prejudice the right of Secured Party, and its option, to enforce collection of the Indebtedness by suit or in any lawful manner. If Secured Party has additional security, then it may resort to such other security for the payment of the Indebtedness 141 secured hereby. No right or remedy in this Security Agreement or in any instrument evidencing the Indebtedness is intended to be exclusive of any other right or remedy, but every such right or remedy shall be cumulative and shall be in addition to every other right or remedy herein or therein conferred, or now or hereafter existing, by contract, at law or in equity or by statute. 13. NON-WAIVER PROVISION. No delay or omission by Secured Party to exercise any right or remedy shall impair any such right or remedy or any other right or remedy or shall be construed to be a waiver of any Event of Default or an acquiescence therein; and every right and remedy herein conferred or now or hereafter existing by contract or at law or in equity or by statute may be exercised separately or concurrently and in such order and as often as may be deemed expedient by Secured Party. Not limiting the generality of the foregoing, pursuit or exercise of any right or remedy conferred herein, or by law or in equity or by statute, shall not be, and shall not be considered to be, an election against, waiver or relinquishment of, any other right or remedy. 14. SEVERABILITY. The invalidity or unenforceability of any of the rights or remedies herein provided in any jurisdiction shall not in any way affect the right to the enforcement in such jurisdiction or elsewhere of any of the other rights or remedies herein provided. 15. APPLICABLE LAW. This Security Agreement is being delivered and is intended to be performed in the State of Arizona and shall be construed and enforced in accordance with and governed by the substantive law of Arizona. 16. BINDING AGREEMENT. This Security Agreement shall be binding upon and inure to the benefit of the successors, representatives and assigns of the parties hereto. 17. ENTIRE AGREEMENT. This Security Agreement contains the entire Security Agreement between Secured Party and Pledgor and supersedes all prior agreements and understandings relating to the subject matter hereof. Notwithstanding the prior sentence, the parties hereto recognize the existence of that certain Purchase Agreement for Real and Personal Property dated March 28, 2002 (the "PURCHASE AGREEMENT"), executed by and between Secured party and the Company, and acknowledge that the Purchase Agreement grants certain limited rights of rescission to the Company. To the extent that the Company duly exercises any such right, this Security Agreement shall be subject to such change. It may not be changed or terminated orally but may only be changed by an agreement in writing signed by the party or parties against whom enforcement of any waiver, change, modification, extension, discharge or termination is sought. 18. CAPTIONS. The captions of this Security Agreement are for the purpose of reference only and shall not limit or otherwise affect any of the terms hereof. 142 19. NOTICES. All notices, certificates, requests, consents and other communications hereunder shall be in writing and shall be mailed by first class registered or certified mail, postage prepaid, or by facsimile, charges prepaid, as follows: (a) If to Secured Party, to the following address: 333 North 44th Street, Suite 420 Phoenix, Arizona 85008 and K. Bellamy Brown, Esq. The Cavanagh Law Firm, P.C. 1850 N. Central Avenue, Suite 2400 Phoenix, AZ 85004-4527 (b) If to Pledgor, to the following address: c/o Robert M. Worsley 601 East Houston Gilbert, Arizona 85234 and Paul D. Ellsworth, Esq. 4041 East Grove Mesa, Arizona 85206 or (c) A such other address as either party may designate by written notice to the other party in accordance herewith. 143 IN WITNESS WHEREOF, this Pledge and Collateral Assignment of Limited Liability Company Interest and Security Agreement has been executed and delivered as of the date first above written. DATED: March 28, 2002 PLEDGOR: NEW MEXICO AND ARIZONA LAND COMPANY, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley ----------------------------------- Robert M. Worsley Its: Manager DATED: March 28, 2002 SECURED PARTY: NZ CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ----------------------------------- Its: Treasurer NZ DEVELOPMENT CORPORATION, an Arizona corporation By: /s/ Jerome L. Joseph ----------------------------------- Its: Treasurer NZU, INC., a New Mexico corporation 144 By: /s/ Jerome L. Joseph ----------------------------------- Its: Treasurer STATE OF Arizona ) ---------------------------- )ss. County of Maricopa ) -------------------------- SUBSCRIBED AND SWORN TO before me this 28th day of March, 2002, by Robert M. Worsley as manager of the New Mexico and Arizona Land Company, LLC. /s/ Yvonne E. Ulrich 0 ---------------------------- Notary Public My commission expires: March 25, 2004 - -------------------- STATE OF Arizona ) ---------------------------- )ss. County of Maricopa ) --------------------------- SUBSCRIBED AND SWORN TO before me this 29th day of March, 2002, by Jerome Joseph as treasurer of the NZ Corporation, NZ Development Corporation, and NZU, Inc. /s/ Norma J. Oswalt ------------------------------ Notary Public My commission expires: 10-14-2003 - ---------------------------- 145 LIMITED LIABILITY COMPANY CONSENT AND AUTHORIZATION DATED: March 28, 2002 To induce NZ Corporation, NZ Development Corporation, and NZU Corporation (collectively "SECURED PARTY") to enter into both of the Promissory Note referenced in Section 3 of the foregoing Collateral Assignment of Limited Liability Company Interest and Security Agreement (herein called the "Security Agreement"), with the Company (as defined in the Security Agreement) pursuant to the foregoing Security Agreement, the undersigned hereby certifies, represents and agrees that on this date and as of the date which the Security Agreement bears: 1. The undersigned is the sole member of all the limited liability companies constituting the Company, whose full and exact names and address are as follows: New Mexico and Arizona Land Company, LLC 601 East Houston Gilbert, Arizona 85234 2. The undersigned has full power and authority in the name and on behalf of the said New Mexico and Arizona Land Company, LLC to execute and deliver the Security Agreement, any other financial agreement between the said Company and Secured Party, and such instruments, documents and other writings as may be desirable to carry out the purposes and intent of said Security Agreement or agreements; and to secure any indebtedness of the Pledgor to Secured Party by assignment, pledge, mortgage, transfer and/or delivery of any property or assets of the said New Mexico and Arizona Land Company, LLC; and 3. Robert M. Worsley, manager of the New Mexico and Arizona Land Company, LLC, is hereby requested, authorized and empowered to and on behalf and in the name of company to execute and deliver any and all documents identified and set forth in said Security Agreement. 4. The undersigned hereby consents to the pledge and collateral assignment of all of the membership interests in the Company as described in the Security Agreement. NEW MEXICO AND ARIZONA LAND COMPANY, LLC, an Arizona limited liability company By: /s/ Robert M. Worsley --------------------------------------- Robert M. Worsley Its: Manager NOTARY ON FOLLOWING PAGE 146 STATE OF Arizona ) ---------------------------- )ss. County of Maricopa ) --------------------------- SUBSCRIBED AND SWORN TO before me this 28th day of March, 2002, by Robert M. Worsley as manager of the New Mexico and Arizona Land Company, LLC. /s/ Yvonne E. 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EX-10.1

                                                                  EXHIBIT 10.1
[LIPID SCIENCES INCORPORATED LOGO]

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (the "Agreement"), which is effective as of
March 4, 2002, is between Lipid Sciences, Inc., an Arizona corporation (the
"Company"), and Hana Berger Moran, Ph.D. ("Executive"), who agree as follows.
The Company and Executive are hereinafter collectively referred to as the
"Parties," and may individually be referred to as a "Party."

                                    RECITALS

      A. The Company desires assurance of the association and services of
Executive in order to retain Executive's experience, skills, abilities,
background and knowledge, and is willing to engage Executive's services on the
terms and conditions set forth in this Agreement; and

      B. Executive desires to be in the employ of the Company and is willing to
accept this employment on the terms and conditions set forth in this Agreement.

                                    AGREEMENT

      1. EMPLOYMENT.

            1.1 The Company will employ Executive, and Executive hereby accepts
employment by the Company, upon the terms and conditions set forth in this
Agreement, effective as of the first Date of Hire ("Effective Date"), March 4,
2002, for the term of one year from the Effective Date. This agreement will
automatically be renewed for the term of one year unless either party gives
notice to the other at least 60 days prior to the expiration of the then current
term of employment of such party's intention not to renew.

            1.2 Executive will be the Vice President Regulatory Affairs .
Executive will report to the President and CEO.

            1.3 Executive will do and perform all services, acts or things
necessary or advisable to oversee the planning and management of regulatory and
quality projects in support of the Company's strategic plan, provided, however,
that at all times during her employment Executive will be subject to the
direction of the President and CEO. Executive's duties will include, but not be
limited to, the development of regulatory and quality plans and strategies,
organize, review and approve Clinical Investigational Plans and Institutional
Review Board submissions, prepare and review FDA applications and other
regulatory documents and act as the primary liaison with the FDA and
international regulatory authorities.


                                  Page 1 of 5

            1.4 Unless the Parties otherwise agree in writing, prior to
Executive's termination in accordance with this Agreement, Executive will
perform the services she is required to perform in accordance with the terms of
this Agreement, reporting to the Company's office location and to the President
and CEO.

      2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.

            2.1 During her employment by the Company, Executive will devote her
full business employment, interest, abilities and productive time to the proper
and efficient performance of her duties under this Agreement. Executive may not
be employed by another company or receive compensation for employment from any
other sources.

            2.2 During her employment by the Company, Executive may not engage
in competition with the Company, either directly or indirectly, in any manner or
capacity, as adviser, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any phase of the business of
developing, manufacturing and marketing of products that are in the same field
of use or which otherwise directly compete with the products or proposed
products of the Company.

      3. COMPENSATION OF EXECUTIVE.

            3.1 The Company will pay Executive a salary of two hundred ten
thousand dollars ($210,000) per year ("Base Salary"), payable in regular
periodic payments in accordance with Company policy. Such salary will be
prorated for any partial year of employment on the basis of a 365-day fiscal
year.

            3.2 Executive's compensation may be changed from time to time by
mutual agreement of Executive, the President and CEO and Board of Directors.

            3.3 All of Executive's compensation is subject to customary
withholding taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company.

            3.4 Executive will, in the discretion of the Board and in accordance
with Company policy, be entitled to participate in benefits under any employee
benefit plan or arrangement made available by the Company now or in the future
to its executives and key management employees.

            3.5 Executive's performance will be reviewed by the President and
CEO on a periodic basis (not less than once each fiscal year). The President and
CEO with approval of the Board may, in their sole discretion, award bonuses to
Executive as will be appropriate or desirable based on Executive's performance.
Executive will be reviewed within twelve months of commencing employment
hereunder.

            3.6 Subject to approval of the Board of Directors, Executive will
also be granted an option to purchase up to one hundred fifty five thousand nine
hundred two (155,902) shares of the Company's Common Stock at the fair market
value of such shares at the time of the option grant. The terms and conditions
of this option will be governed by an agreement which


                                  Page 2 of 5

will provide for an initial vesting of nineteen thousand four hundred eighty
eight (19,488) shares following the first six (6) continuous months of service
with the Company and the remainder over three and one half years at the rate of
1/42nd per month of the total 155,902 shares.

            3.7 Executive is entitled to receive prompt reimbursement of all
reasonable expenses incurred by Executive in performing Company services,
including expenses related to travel, entertainment, parking, and business
meetings. These expenses will be accounted for in accordance with the policies
and procedures established by the Company.

      4. TERMINATION: Either party may terminate this Agreement and Executive's
employment without cause, upon thirty (30) days written notice. Upon
termination, the Company will be released from any and all obligations under
this Agreement, except in the event the Executive's employment is involuntarily
terminated by the Company for other than "good cause," then Executive will
resign from all positions with the Company, and enter into a consulting
arrangement for four (4) months commencing immediately after the termination
date. In consideration for such consulting arrangement, Executive will continue
to be paid salary and benefits for four (4) months. However, if Executive
obtains new full time employment during such four (4) month period, any salary
paid pursuant to such arrangement will be offset from amounts due under this
Letter Agreement. Executive's obligations under Paragraph 5 of this Agreement
will continue beyond her termination of employment.

      5. CONFIDENTIAL INFORMATION; NONSOLICITATION.

            5.1 Executive recognizes that her employment with the Company will
involve contact with information of substantial value to the Company, which is
not old and generally known in the trade, and which gives the Company an
advantage over its competitors who do not know or use it, including but not
limited to, techniques, designs, drawings, processes, inventions, developments,
equipment, prototypes, sales and customer information, and business and
financial information relating to the business, products, practices and
techniques of the Company (hereinafter referred to as "Confidential
Information"). Executive will at all times regard and preserve as confidential
such Confidential Information obtained by Executive from whatever source and
will not, either during her employment with the Company or thereafter, publish
or disclose any part of such Confidential Information in any manner at any time,
or use the same except on behalf of the Company, without the prior written
consent of the Company; provided, however, that Executive may disclose
Confidential Information in the best interest of the Company with properly
executed Company confidentiality or secrecy agreements with the third party. As
a condition of this Agreement, the Executive will sign and return a copy of the
Company's Confidential Disclosure Agreement, attached as EXHIBIT A.

            5.2 While employed by the Company and for one (1) year thereafter,
in order to protect the Company's confidential and proprietary information from
unauthorized use, Executive may not, either directly or through others, (i)
solicit or attempt to solicit any employee, consultant or independent contractor
of the Company to terminate his or her relationship with the Company in order to
become an employee, consultant or independent contractor to or for any other
person or business entity; or (ii) solicit or attempt to solicit the business of
any customer, vendor or distributor of the Company which, at the time of
termination or one (1) year immediately prior thereto, was listed on the
Company's customer, vendor or distributor list.


                                  Page 3 of 5

      6. SUCCESSORS. The Company will require any successor (whether direct or
indirect, by purchase, merger, or consolidation) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

      7. ASSIGNMENT AND BINDING EFFECT. This Agreement is binding on and inures
to the benefit of Executive and Executive's heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of
the unique and personal nature of Executive's duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement are
assignable by Executive. This Agreement is binding on and inures to the benefit
of the Company and its successors, assigns and legal representatives.

      8. NOTICES. All notices or demands of any kind required or permitted to be
given by the Company or Executive under this Agreement will be given in writing
and will be personally delivered (and receipted for) or mailed by certified
mail, return receipt requested, postage prepaid.

      9. CHOICE OF LAW. This Agreement will be construed and interpreted in
accordance with the laws of the State of California, without regard to the
conflict of laws provision thereof.

      10. INTEGRATION. This Agreement contains the complete, final and exclusive
agreement of the Parties relating to the subject matter of this Agreement, and
supersedes all prior oral and written employment agreements or arrangements
between the Parties.

      11. AMENDMENT. This Agreement may not be amended or modified except by a
written agreement signed by Executive and the Company.

      12. WAIVER. No term, covenant or condition of this Agreement or any breach
thereof will be deemed waived, except with the written consent of the Party
against whom the wavier in claimed, and any waiver or any such term, covenant,
condition or breach will not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.

      13. SEVERABILITY. The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
will not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court will have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the parties' intention with respect to the
invalid or unenforceable term or provision.

      14. INTERPRETATION; CONSTRUCTION. The headings set forth in this Agreement
are for convenience of reference only and will not be used in interpreting this
Agreement. Executive has been encouraged, and has consulted with, her own
independent counsel and tax advisors with respect to the terms of this
Agreement. The Parties acknowledge that each Party and its counsel has reviewed
and revised, or had an opportunity to review and


                                  Page 4 of 5

revise, this Agreement, and the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party will not be
employed in the interpretation of this Agreement.

      15. REPRESENTATIONS AND WARRANTIES. Executive represents and warrants
that, to the best of Executive's knowledge, she is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the terms
and covenants contained in this Agreement, and that her execution and
performance of this Agreement will not violate or breach any other agreements
between Executive and any other person or entity.

      16. COUNTERPARTS. This Agreement may be executed in two counterparts, each
of which will be deemed an original, all of which together will contribute one
and the same instrument.

      17. ARBITRATION. If any dispute arises regarding the application,
interpretation, or enforcement of this Agreement, including fraud in the
inducement, the dispute will be resolved by final and binding arbitration before
one arbitrator at the Judicial Arbitration and Mediation Service in Pleasanton,
California. The decision of the arbitrator will be final and may not be appealed
by either of the Parties.

      18. ATTORNEYS' FEES AND COSTS. The prevailing party in any dispute arising
out of this Agreement, will be entitled to reimbursement by the losing party of
all of its or her attorneys' fees and costs including, but not limited to,
arbitrator's fees and expert's fees.

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

THE COMPANY:                         LIPID SCIENCES, INC.


                                     By:      /s/ Phil Radlick
                                        ----------------------------------------
                                              Phil Radlick
                                              President and CEO


EXECUTIVE:                                    /s/ Hana Berger Moran
                                        ----------------------------------------
                                              Hana Berger Moran, Ph.D.


                                  Page 5 of 5

EX-10.2

                                                                    EXHIBIT 10.2

                               PURCHASE AGREEMENT

                                       FOR

                           REAL AND PERSONAL PROPERTY

      This Purchase Agreement entered into this 28th day of March, 2002
("Agreement'), by and between NZ CORPORATION, an Arizona corporation, NZ
DEVELOPMENT CORPORATION, an Arizona corporation, and NZU, INC., a New Mexico
corporation, and LIPID SCIENCES, INC., an Arizona corporation (collectively
referred to as "Seller") and NZ TRUST, LLC, an Arizona limited liability
company, NZ SNOWFLAKE, LLC, an Arizona limited liability company, NZ MILKY
RANCH, LLC, an Arizona limited liability company, NZ SILVER CREEK, LLC, an
Arizona limited liability company, NZ JOSEPH CITY, LLC, an Arizona limited
liability company, NZ NEW MEXICO LAND LLC, an Arizona limited liability company,
NZ URANIUM, LLC, an Arizona limited liability company, NZ TRAVERTINE, LLC, an
Arizona limited liability company, NZ OIL AND GAS, LLC, an Arizona limited
liability company, NZ MINERALS, LLC, an Arizona limited liability company, NZ
HISTORY AND ARTIFACTS, LLC, an Arizona limited liability company (collectively
referred to as "Buyer")

      1. Binding Agreement. This Agreement shall constitute a binding contract
between Buyer and Seller for the purchase and sale of all right, title and
interest of Seller in and to that certain real and personal property more
particularly described in Section 2 hereof (collectively, the "Property" as
hereinafter defined). Buyer and Seller hereby agree to do such things, and
execute such documents, as shall be necessary or appropriate in order to
consummate the transaction contemplated hereby in accordance with the terms
hereof.

      2. Property. As used herein, the term "Property" shall include all of
Seller's right, title and interest in, to and under the following described real
and personal property:

            a. The real property and appurtenant water rights located in Navajo
      County and Apache County, Arizona, and Cibola, Dona Ana, and McKinley
      Counties, New Mexico, which is described on Exhibits "A-1," "A-2," "A-3,"
      "A-4" and "A-5" attached hereto (the "Land"), including all of Seller's
      interest in and to all buildings, fences, fixtures, wells, corrals,
      chutes, squeeze chutes, pens, holding traps, range improvement practices
      and other structures and improvements of every kind and nature located on
      the Land (collectively, the "Improvements") which Land and Improvements
      shall be collectively known as the Real Property. For purposes of this
      Agreement, Real Property shall also include:

                  All rights and hereditaments running with and appurtenant to
            the Land, including, without limitation, all appurtenant easements
            and rights of way and all of Seller's interest in adjacent highways,
            roads, streets, rights of way and easements.

                  All ditch and ditch rights, reservoirs and reservoir rights,
            well and well rights, irrigation grandfathered water rights and
            surface and groundwater rights appurtenant to or used in connection
            with the Land and all water tanks, wells, pumps, well equipment,
            irrigation equipment, pivots, sumps and other pumps, situated on or
            used in connection with the Land.

                  All zoning and development rights affecting the Land,
            including, without limitations, all Seller's rights in and under any
            deed restrictions, property owner's associations or master plan
            affecting the Real Property.

            b. All personal property owned by Seller and located on the Land or
      used in connection therewith, including, without limitation, petrified
      wood, Indian artifacts and related items, together with certain artifacts,
      documents, and Indian artwork of historical interest located in Seller's
      office and storage units in Phoenix, Arizona, and Albuquerque, New Mexico
      ("Tangible Personal Property"), including, but not limited to, the items
      more particularly described on Exhibit "B", and all subject to a use
      agreement permitting Seller to use or display certain items of the
      Tangible Personal Property.

            c. Except as to those certain approximately 79,196.93 acres of
      mineral rights known to the parties as the Acoma Pueblo rights, all
      minerals whatsoever and all sand and gravel and other construction
      materials, and other rights and interests thereof owned or leased by
      Seller ("Mineral Rights"), including, without limitation, those described
      on Exhibit "C" attached hereto.

            d. Any leases and other agreements relating to the Mineral Rights or
      to the use or occupancy of the Land and/or the Improvements or any portion
      thereof (together with any amendments, extensions, guarantees or
      modifications to such leases and other agreements), and all claims and
      other rights related thereto (the "Leases"), including, without
      limitation, those described in Exhibit "D" attached hereto.

            e. All of Seller's right, title and interest in and to those certain
      First American Title Company Trust Agreements 8340, 8398, 6798, 4517 and
      7602 ("Trust Agreements"), wherein NZ Development is the beneficiary
      together with all contractual rights and liabilities arising out of or in
      anyway connected with the agreements between NZ Development and First
      United Realty, Inc., an Arizona corporation, including the rights of
      Seller to that certain Agreement between NZ Development Corporation and
      First United Service Corporation dated June 3, 1997, and Exclusive Sales
      Agency Agreement between NZ Development Corporation and First United
      Service Corporation dated January 1, 2001, all as more particularly
      described on Exhibit "E" attached hereto.

            f. All of the right, title and interest held by NZU in and to all of
      the real property owned by it in McKinley County, New Mexico, described in
      subsection "a" above and any and all personal property presently owned by
      it, including the uranium lease known to the parties as the URI lease and
      certain Federal mining claims ("Uranium Rights"), all as more particularly
      described on Exhibit "F" attached hereto.


                                       2

            g. The names "New Mexico and Arizona Land Company", "NZ
      Corporation", "NZU", "NZ Development", and "River Meadows Ranch"
      (including all registrations therefor and any pending applications for
      registration thereof "hereinafter the Names") and all intellectual
      property rights of Seller, including, without limitation, all brands,
      trademarks, logos and literary rights] all as more particularly described
      on Exhibit G (collectively the "Intellectual Property"), subject, however,
      to Seller's reservation of the right to continue use of the Names for a
      period of 5 years from the date hereof for the purpose of winding down its
      operations and any other lawful purpose.

            h. Certain oil and gas estates located in Oklahoma, together with
      the lessor's interest in that certain lease, known to the parties as the
      Marathon lease, together with certain limited partnership interests all as
      described on Exhibit H (collectively the "Oil and Gas Interests").

            i. All of Seller's legal rights, claims, causes of action (choate
      and inchoate), if any, relating to the Property, including, without
      limitation, claims for theft, damage or injury to the Property.

      3. Purchase Price. The purchase price for all of the Property shall be
Nine Million Two Hundred Thousand Dollars ($9,200,000.00) (the "Purchase
Price"). The balance of the Purchase Price (i.e., reduced by the full amount of
the "Earnest Money Deposit" (as hereinafter defined) and increased or reduced by
such funds as are required to take into account the closing prorations required
by this Agreement) shall be due from Buyer at the "Close of Escrow" (as
hereinafter defined) and shall be deposited by Buyer with the Escrow Agent on or
before the day of Close of Escrow (the "Closing Date") by Buyer depositing in
cash or by Federal Reserve Bank Wire Transfer so that Escrow Agent shall have
the cash amount of the Purchase Price in immediately available funds the sum of
One Million Seven Hundred Forty Thousand Dollars ($1,740,000.00) and
simultaneously executing the Promissory Note, Deed of Trust, Security Agreement,
Collateral Assignment and UCC-1 documents attached hereto as Exhibit 1-A, 1-B,
1-C, and 1-D. The amounts to be deposited by Buyer at the Close of Escrow
pursuant to the preceding sentence are referred to herein as the "Closing
Funds." All prorations and adjustments determined and applied following the
Close of Escrow shall be credited against the amount due under the Promissory
Note.

      4. Earnest Money. In consideration of Seller's entering into this
Agreement, Buyer shall deposit with Escrow Agent an earnest money deposit in the
amount of One Hundred Thousand Dollars ($100,000.00), which amount, together
with all interest or other earnings thereon (collectively, the "Earnest Money
Deposit"), shall be deposited and maintained by Escrow Agent in a federally
insured money market account, shall be applied to the Purchase Price only in the
event the transaction contemplated by this Agreement is consummated, except as
otherwise expressly provided herein. As used herein, the term "Opening of
Escrow" shall refer to the date upon which both a fully executed counterpart of
this Agreement and the Earnest Money Deposit have been deposited with Escrow
Agent.


                                       3

      5. Title Review for Real Property.

            a. REVIEW AND OBJECTION BY BUYER. Seller shall, at Seller's expense,
      cause Escrow Agent, as soon as possible, to deliver to Buyer a commitment
      to insure title (the "Title Report") to the Real Property. Buyer shall be
      entitled to object, in its sole and absolute discretion, to any matters
      disclosed by the Title Report by delivering a written notice (a "Title
      Objection Notice") to Seller and Escrow Agent on or before ten (10) after
      Buyer's receipt of the Title Report (together with readable copies of all
      documents referenced therein). Any Title Objection Notice delivered by
      Buyer pursuant to this Section 5.a shall specify in reasonable detail any
      matter to which Buyer objects. If Escrow Agent subsequently issues any
      amendment to the Title Report disclosing any additional title matters,
      Buyer shall be entitled to object to any such additional matter by
      delivering a Title Objection Notice to Seller and Escrow Agent on or
      before ten (10) days after Escrow Agent has delivered to Buyer the
      amendment to the Title Report (together with readable copies of any
      additional documents referenced therein). If Buyer fails to deliver a
      Title Objection Notice objecting to any matter set forth in the Title
      Report or any subsequent amendment thereto within the allowed time periods
      described above, then Buyer shall conclusively be deemed to have approved
      such matters. If the time periods provided in this paragraph do not expire
      prior to the Closing of Escrow, then the provisions of Section 5.c below
      shall apply.

            b. CURE BY SELLER. If Buyer timely delivers any Title Objection
      Notice, then Seller may, within three (3) business days after receipt of
      such Title Objection Notice, notify Buyer and Escrow Agent in writing (the
      "Cure Notice") that Seller will attempt to remove or satisfy such matter
      objected to by Buyer as soon as possible, and in any event on or before
      Close of Escrow or such later date as shall be consented to by Buyer in
      writing (the "Cure Period"). The obtaining of a commitment by Escrow Agent
      to delete as an exception to coverage on Buyer's title insurance policy or
      to insure over by endorsement in form reasonably acceptable to Buyer, at
      Seller's expense, any matter objected to by Buyer shall constitute a cure
      of such matter for purposes of this Agreement. If Seller does not deliver
      a Cure Notice, then Buyer shall, within two (2) days after the expiration
      of the three- (3) business-day period for the delivery of the Cure Notice,
      notify Seller and Escrow Agent in writing of Buyer's election to either
      (i) terminate this Agreement, whereupon this Agreement shall terminate and
      the Earnest Money Deposit shall be refunded to Buyer by Escrow Agent,
      Escrow Agent shall return to Buyer all documents Buyer deposited with
      Escrow Agent in connection with the Escrow, Escrow Agent shall return to
      Seller all documents Seller deposited with Escrow Agent in connection with
      the Escrow, and neither Party shall have any further right, obligation or
      liability under this Agreement except for those liabilities and
      obligations that are specified herein to survive the termination of this
      Agreement, or (ii) proceed with this transaction and waive Buyer's
      objection to such matter. Notwithstanding anything contained to the
      contrary herein, if Seller does not timely deliver a Cure Notice and Buyer
      fails to timely notify Seller and Escrow Agent of its election to either
      terminate or proceed with this transaction, then Buyer shall be deemed to
      have elected to proceed with this Agreement. If Seller delivers a Cure
      Notice but is thereafter unable to cure the matter(s) which is/are the
      subject of the Cure Notice within the Cure Period, then Buyer shall,
      within two (2) days after the expiration of the Cure Period, notify Seller
      and


                                       4

      Escrow Agent in writing of Buyer's election to either (i) terminate this
      Agreement, whereupon this Agreement shall terminate and the Earnest Money
      Deposit shall be refunded to Buyer by Escrow Agent, Escrow Agent shall
      return to Buyer all documents Buyer deposited with Escrow Agent in
      connection with the Escrow, Escrow Agent shall return to Seller all
      documents Seller deposited with Escrow Agent in connection with the
      Escrow, and neither Party shall have any further right, obligation or
      liability under this Agreement except for those liabilities and
      obligations that are specified herein to survive the termination of this
      Agreement, or (ii) proceed with this transaction and waive Buyer's
      objection to such matter. If the time periods provided in this paragraph
      do not expire prior to the Close of Escrow, then the provisions of Section
      5.c below shall apply.

            c. The parties acknowledge that a Title Report and/or readable
      copies of all documents referenced in each Title Report for all or a
      portion of the Real Property (the "Remaining Portion") may not be
      available for Buyer's review prior to the scheduled Close of Escrow Date
      in sufficient time to accommodate the title review periods provided in
      Section 5.a. In such event, Seller shall provide Buyer with said Title
      Report and readable copies of all documents referenced therein for the
      Remaining Portion as soon as such is made available, but in no event later
      than thirty (30) days following Close of Escrow. Buyer shall have ten (10)
      days following receipt of said Title Report (together with readable copies
      of all documents referenced therein) to object to any consensual lien or
      any material adverse encumbrance, lien, matter or cloud affecting the Real
      Property. For the purpose of this Agreement, material adverse encumbrance,
      liens, matter or cloud shall be deemed to be a lien, encumbrance, matter
      or cloud on title which in the reasonable, good faith opinion of Buyer
      significantly reduces the value of the Real Property affected by such
      item. In such event, Buyer shall have the right to deliver to Seller
      within said ten (10) day period an Objection Notice as provided in
      subparagraph "a" above. Following receipt of said Objection Notice, Seller
      shall have the right to cure such objection as provided in subparagraph
      "b" above. In the event Seller either fails to deliver a Cure Notice or
      having delivered such Notice, fails to cure the Objection, Buyer may
      rescind the purchase of the portion of the Real Property affected by such
      material adverse lien, encumbrance, matter or cloud. In the event of
      Buyer's election to rescind, the parties shall cooperate in good faith in
      determining the appropriate reduction in the Purchase Price arising out of
      such rescission. In the event the parties are unable to agree on the
      amount of said reduction, either party may apply to the prevailing judge
      of Maricopa County, Arizona, to appoint an arbitrator which will be
      authorized by the parties to conduct a binding arbitration of the dispute.

      6. Feasibility Contingency. Buyer shall have ten (10) days from the
Opening of Escrow (the "Feasibility Period") to determine, in its sole and
absolute discretion, whether the condition of the Seller's Property is suitable
for Buyer's intended acquisition and use thereof. If Buyer determines that
either the condition of the Seller's Property or the leases which encumber the
Property are not suitable for Buyer's intended acquisition or use thereof, Buyer
shall notify Seller and Escrow Agent in writing of such determination or failure
within the Feasibility Period. If Buyer so notifies Seller and Escrow Agent of
such determination, Buyer shall be deemed to have rescinded this Agreement, in
which event, Escrow Agent shall (i) return to Buyer the Earnest Money Deposit,
(iii) return to Buyer all documents Buyer deposited with Escrow Agent in
connection with the Escrow, and (iii) return to Seller all documents Seller
deposited with


                                       5

Escrow Agent in connection with the Escrow, and thereupon this Agreement shall
terminate and neither Party shall have any further right, obligation or
liability under this Agreement, except for those liabilities and obligations
that are specified herein to survive the termination of this Agreement. If Buyer
does not so notify Seller and Escrow Agent in writing of such determination
within the Feasibility Period, Buyer's right to rescind this Agreement and have
the Earnest Money Deposit returned pursuant to this Section 6 shall terminate.

      7. Investigation. Buyer and its representatives, agents, consultants and
employees shall have the right, at its own risk, cost and expense, to enter
upon, survey, examine, test and otherwise inspect the Property at any reasonable
time and upon reasonable notice during the pendency of the Escrow, provided such
examination does not unreasonably interfere with Seller's or Seller's tenants'
use of the Property. Seller shall cooperate with Buyer in order to facilitate
Buyer's access to the Property and information concerning the same consistent
with the foregoing provisions of this Section 7. Buyer agrees to give Seller
reasonable notice of any invasive tests it intends to conduct upon Seller's
Property and obtain Seller's prior approval for the same, which approval shall
not be unreasonably withheld. Following any examination of Seller's Property,
Buyer shall return the Property to the condition in which it was prior to such
examination. Buyer shall indemnify and hold Seller harmless for, from and
against any and all defaults, liabilities, causes of action, demands, claims,
damage or expenses of any kind, including reasonable attorneys' fees and court
costs, arising as a consequence of any examination, test, inspection of or
activity upon the Property pursuant to this Section 7 (except for such matters
arising as a result of Buyer's discovery of existing conditions) (the
"Inspection Indemnity"). The Inspection Indemnity shall survive the Close of
Escrow and any termination or cancellation of this Agreement. Seller shall give
prompt notice to Buyer if all or any portion of the Property is wholly or
partially damaged or condemned prior to Close of Escrow.

      8. General Assignment of Rights and Certain Reservations. Seller does
hereby agree to assign by a Quit Claim Deed any and all water and other
appurtenant real property interests or rights it may have previously reserved in
connection with the sale of any real property by Seller to third parties prior
to the date of Close of Escrow and all non-appurtenant water rights. Seller
does, however, expressly reserve to itself and exclude from the scope of the
transaction the following real and personal property:

      (a)   the improved property known as the Plant Ranch House together with
            approximately 320 acres of land contiguous thereto (except Seller
            shall convey to Buyer ownership of all petrified wood located on
            such real property);

      (b)   all of Seller's rights as lessor in and to all grazing leases on the
            property known to the parties as the Milky Ranch and the Plant
            Ranch;

      (c)   all of Section 19, Township 16 North, Range 25 East, of the Gila and
            Salt River Base and Meridian, Apache County, Arizona;

      (d)   Seller's rights as lessee under certain pending and existing Arizona
            State Grazing Leases and Seller's rights as applicant in connection
            with certain applications for Arizona State Grazing Leases.


                                       6

      (e)   Seller's ownership of all grazing rights on any of the Real Property
            in Apache County.

            The parties agree that at an appropriate time following Close of
Escrow as determined by Seller in the exercise of its discretion, but no later
than the date that is one year from the Close of Escrow (however, Buyer may
extend such deadline, in Buyer's reasonable discretion), Seller will arrange for
the conveyance of said items (a) through (d) to Buyer for $100.00 and shall
provide the same title insurance coverage as Seller is providing for the other
Real Property.

      9. Broker's Commission. Each party represents and warrants to the other
that no real estate sales or brokerage commissions or like commissions are or
will be due to any party in connection with this transaction. Seller shall
indemnify and hold Buyer harmless from and against any claim, demand or suit for
any brokerage commission, finder's fee or similar charge in respect of the
execution of this Agreement or the transaction contemplated by this Agreement
based on any act by or agreement or contract (or alleged act, agreement or
contract) of Seller, and for all losses, obligations, costs, expenses and fees
(including attorneys' fees) incurred by Buyer on account of or arising from the
same. Buyer shall indemnify and hold Seller harmless from and against any claim,
demand or suit for any brokerage commission, finder's fee or similar charge in
respect of the execution of this Agreement or the transaction contemplated by
this Agreement based on any act by or agreement or contract (or alleged act,
agreement or contract) of Buyer, and for all losses, obligations, costs,
expenses and fees (including attorneys' fees) incurred by Seller on account of
or arising from the same. The indemnities contained in this Section 9 shall
survive the Close of Escrow or the termination or cancellation of this
Agreement.

      10. Seller's Closing Items. Prior to Close of Escrow, Seller shall deposit
into Escrow the following documents, instruments and other items:

            a. Special warranty deeds for the Real Property (the "Deeds");

            b. A bill of sale which shall convey to Buyer all of Seller's title
      to all of the Personal Property, both tangible and intangible;

            c. An assignment of the Leases and security deposits, together with
      the originally executed Leases, and the security deposits and any prepaid
      rent (other than that relating to the then current month) shall be paid to
      Buyer;

            d. A deed of all of Seller's interest in the Mineral Rights;

            e. An assignment of all of Seller's interest in the Trust
      Agreements;

            f. An assignment of all of Seller's interest in Seller's
      Intellectual Property;

            g. A deed and assignment of all of Seller's interest in the Uranium
      Rights.

            h. Possession of the Property;


                                       7

            i. The Certification of Non-foreign Status as provided in Treas.
      Reg. 1.1445-2T(b)(2)(iii)(B) or in any other form as may be required by
      the Internal Revenue Code or the regulations issued thereunder;

            j. Such other customary items and instruments as shall be required
      by the Escrow Agent in connection with the issuance of its title insurance
      policy to Buyer pursuant to this Agreement or as shall be reasonably
      requested by counsel to Buyer and consistent with the terms of this
      Agreement;

            k. Any other documents required by this Agreement to be delivered by
      Seller or reasonably requested by Buyer to consummate the transaction
      contemplated hereby; and

            l. An appropriate affidavit of property value with respect to the
      Real Property.

The documents described in Sections 10.b through 10.l are referred to herein
collectively as the "Other Conveyance Documents." All of such documents,
instruments and other items shall be duly executed and acknowledged. At Close of
Escrow, Escrow Agent shall deliver such documents to Buyer or record them, as
appropriate.

      Upon Close of Escrow, Seller shall convey title (i) to the Real Property,
free and clear of all taxes, claims, charges, assessments, easements,
restrictions, liens, trusts, mortgages, security interests and agreements,
financing statements and encumbrances, except only Permitted Encumbrances. As
used herein, the term "Permitted Encumbrances" shall mean only (i) those matters
which appear as exceptions to coverage in the Title Report (and any amendment
thereto) which are approved, or deemed approved, by Buyer pursuant to Section 5,
(ii) all applicable laws, (iii) liens for taxes and assessments not then due and
payable, (iv) any liens arising through Buyer or Buyer's employees or agents,
(v) all matters that an accurate inspection and/or accurate survey of the Land
or the Personal Property would reveal, (vi) matters previously disclosed to
Buyer by Seller in writing, and (vii) those matters which appear on Schedule B,
Part II, of the Title Report (and any amendment thereto) which are timely
disapproved by Buyer in accordance with the terms hereof, with respect to which
Seller delivers a Cure Notice, and with respect to which Buyer elects to proceed
with this transaction and waive Buyer's objection to such matter notwithstanding
Seller's failure to effect such cure within the Cure Period.

      As disclosed to Buyer, Seller has previously conveyed certain real
property (the "Previously Conveyed Property") to the Hopi Indian Tribe and
certain third parties. If any deed used to convey the Real Property to Buyer is
found to contain a legal description that includes any of the Previously
Conveyed Property, Buyer will cooperate with Seller to re-record such deed with
a corrected legal description that excludes the Previously Conveyed Property.

      Seller shall provide Buyer with standard owner's policies of title
insurance issued by Escrow Agent in the total amount of $5,000,000 insuring that
Buyer (or such Buyer entity as Buyer designates to hold title to the applicable
portion of the Real Property) is the owner of the Real Property (or applicable
portion thereof) free and clear of all matters other than the Permitted
Encumbrance.

      11. Buyer's Closing Items. On or before the Close of Escrow, Buyer shall
deposit into Escrow the Closing Funds as provided in Section 3. At or before
Close of Escrow, Buyer


                                       8

shall execute and acknowledge such of the Other Conveyance Documents as require
Buyer's signature, including an assumption of all of Seller's obligations with
respect to any matter arising out of ownership of the Property and occurring
subsequent to the Close of Escrow, and deliver the same to the Escrow Agent. As
a condition to Buyer's obligations to purchase the Property and proceed with the
Close of Escrow, Buyer shall have received a written estoppel certificate
executed by First American Title Insurance Company ("Trustee"), as the Trustee
under the Trust Agreements certifying that, to the best of Trustee's knowledge:
(a) the information Trustee has delivered to Buyer regarding the Trust
Agreements, including, without limitation, the copies of the Trust Agreements,
is true, accurate and correct; (b) the Trust Agreements are in full force and
effect and have not been amended or modified; (c) Seller's interest in the Trust
Agreements has not been conveyed, assigned or encumbered; and (d) the amount of
the outstanding receivables currently held by Trustee under the Trust Agreements
and the amount of fee land currently owned by Trustee under the Trust Agreement.

      12. Representations and Warranties by Seller. In order to induce Buyer to
enter into this Agreement and to purchase the Property, Seller hereby makes the
following representations and warranties, each of which is material and shall,
together with all covenants, agreements and indemnities set forth in or made
pursuant to this Agreement, survive Close of Escrow, notwithstanding any
investigation at any time made by or on behalf of Buyer:

            a. NZ Development Corporation and NZ Corporation are each a
      corporation duly organized and validly existing under the laws of the
      State of Arizona. NZU, INC., is a corporation duly organized and validly
      existing under the laws of the State of New Mexico. Seller has all
      necessary power and authority and has taken all necessary corporate action
      to execute, deliver and perform this Agreement and consummate all of the
      transactions contemplated by this Agreement.

            b. The execution of this Agreement by Seller and its delivery to
      Buyer and consummation by Seller of the transactions contemplated hereby
      have been duly authorized by all necessary action on the part of Seller
      and the shareholders of Seller. This Agreement is the valid and binding
      obligation of Seller, enforceable against it in accordance with its terms.

            c. No consent from any third party is necessary in order for Seller
      to execute and deliver or perform its obligations under this Agreement.

            d. Seller has no actual knowledge (as distinguished from
      constructive or imputed knowledge), of any discharge, spillage,
      uncontrolled loss, seepage or filtration (a "Spill") of oil, petroleum or
      chemical liquids or solids, liquid or gaseous products or any hazardous
      waste or hazardous substance (as those or similar terms are used in the
      Comprehensive Environmental Response, Compensation and Liability Act of
      1980, as amended, the Resource Conservation and Recovery Act of 1976, as
      amended, or in any other applicable federal, state or local laws,
      ordinances, rules or regulations relating to protection of public health,
      safety or the environment, as such laws may be amended from time to time)
      at, upon, under or within the Real Property. To the best of Seller's
      knowledge, there is no proceeding or action pending or threatened by any
      person or governmental agency regarding the environmental condition of the
      Real Property, nor


                                       9

      have there been or are there now any underground storage tanks located on
      the Real Property. Notwithstanding the foregoing representations in this
      paragraph, Buyer acknowledges that Seller makes no representation
      whatsoever with regard to de minimis Spills which one might reasonably
      expect to occur in connection with the ordinary operation and maintenance
      of a property like the Real Property.

            e. To the best of Seller's knowledge, except as disclosed by Seller
      in writing to Buyer, there is no litigation, condemnation, administrative
      or other proceeding or hearing either instituted or threatened, or any
      basis therefor, which might adversely affect the use, operation or value
      of all or any material portion of the Property or Seller's ability to
      perform hereunder.

            f. To the best of Seller's knowledge, except as disclosed by Seller
      in writing to Buyer, there are no contracts, agreements or arrangements,
      written or oral, express or implied, affecting or relating to the Property
      other than this Agreement, matters which will appear in Schedule B of the
      Title Report, and the matters listed on Exhibit "2" attached hereto, true,
      correct and complete copies or, in the case of oral agreements,
      descriptions, of which (i.e., the matters listed on Exhibit "2") have been
      provided to Buyer, which contracts, agreements and arrangements are, to
      the best of Seller's knowledge, in full force and effect without any
      existing, pending or threatened default.

            g. Except as disclosed to Buyer in writing, no portion of the
      Property has been sold, conveyed or hypothecated subsequent to February
      23, 2002, except in the ordinary course of business.

            h. To the best of Seller's knowledge, there has been no uranium
      processing or milling on the Real Property.

            i. Seller shall maintain the Property until the Close of Escrow in
      its present condition, ordinary wear and tear excepted.

            j. Seller is not involved as a debtor in any state or federal
      bankruptcy, reorganization, arrangement, insolvency proceedings,
      receivership or any other debtor-creditor proceeding. Seller has not made
      any assignment for the benefit of creditors generally.

            k. Seller owns fee title to the Real Property. Except as disclosed
      to Buyer by Seller in writing, to the best of Seller's knowledge, there
      are no undisclosed leases, easements, purchase options, right of first
      refusal, liens (including, without limitation, mechanic's, laborer's or
      materialmen's liens) or encumbrances that may affect title to the
      Property. Except as disclosed to Buyer by Seller in writing, to the best
      of Seller's knowledge, there are no other parties in possession of any
      portion of the Property, including, without limitation, lessees or
      trespassers.

            l. If prior to the Close of Escrow Seller learns that there has been
      a material change in any information Seller has previously given to Buyer,
      Seller shall immediately notify Buyer of such change.


                                       10

As used in this Agreement, the phrase "to the best of Seller's knowledge" shall
refer to the present actual knowledge of Jerome L. Joseph, R. Randy Stolworthy
and J.D. Sphar, and not any knowledge of Seller's other employees, agents,
representatives or professionals. It is understood by the parties that
warranties and representations made herein to the best of Seller's knowledge are
made without special inquiry by Seller.

      13. Limited Representations and Warranties by Seller. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, THE DEED OR THE OTHER CONVEYANCE
DOCUMENTS, BUYER IS ACQUIRING THE PROPERTY "AS IS, WHERE IS" WITH ALL FAULTS AND
DEFECTS AND WITHOUT WARRANTY OF TITLE OR FITNESS.

      14. Representations and Warranties by Buyer. In order to induce Seller to
enter into this Agreement and to sell the Property, Buyer hereby makes the
following representations and warranties, each of which is material and shall
survive Close of Escrow, notwithstanding any investigation at any time made by
or on behalf of Seller:

            a. Buyer has all necessary power and authority to execute, deliver
      and perform this Agreement and consummate all of the transactions
      contemplated by this Agreement. This Agreement is the valid and binding
      obligation of Buyer, enforceable against it in accordance with its terms.

            b. To the best of Buyer's knowledge, neither the execution of this
      Agreement nor the consummation of the transactions contemplated hereby
      will: (i) conflict with, or result in a breach of, the terms, conditions
      or provisions of, or constitute a default under, any agreement or
      instrument to which Buyer is a party, (ii) violate any restriction,
      requirement, covenant or condition to which Buyer is subject, and (iii)
      constitute a violation of any applicable code, resolution, law, statute,
      regulation, ordinance, rule, judgment, decree or order.

      15. Close of Escrow. Close of Escrow shall be defined as the consummation
of the purchase and sale transaction in accordance with this Agreement. Each
party's obligation to close escrow is contingent upon the complete discharge of
all of the other party's obligations as set forth herein. The Closing Date shall
be March 29, 2002, or such earlier date as to which the Parties agree. Upon
Close of Escrow, (a) the executed and acknowledged Deed shall be delivered and
recorded, and the executed Other Conveyance Documents shall be delivered to
Buyer, (b) the Purchase Price shall be paid to Seller as provided in Section 3,
net of closing costs and other charges allocable to Seller, and (c) full and
unfettered possession of the Real Property, subject only to Permitted
Encumbrances, and full and unfettered possession of the balance of Seller's
Property, shall be delivered to Buyer. The parties agree that Seller's
obligations hereunder are expressly conditioned upon Buyer closing escrow on the
entirety of this transaction and acquiring all of Seller's Property. In no event
shall Seller have the right to acquire less than all of Seller's Property.

      16. Settlement Charges; Prorations and Adjustments. Seller shall pay for
the title examination and the title insurance premium for a standard owner's
title insurance premium for the Real Property. Buyer shall pay the incremental
premium for any ALTA Extended Coverage


                                       11

Owner's Policy and any other endorsements requested by Buyer. The parties
acknowledge that no title insurance shall be provided for any personal property.
Any recording fees shall be borne equally by Seller and Buyer. Buyer and Seller
shall each pay its own legal fees related to the preparation of this Agreement
and all documents required to settle the transaction contemplated hereby. All
other changes shall be apportioned in the manner customary in the jurisdiction
wherein the Property is located. In addition to the foregoing, at Close of
Escrow, the following adjustments and prorations shall be computed as of the
Closing Date, as follows:

            a. Real estate and personal property taxes shall be apportioned as
      of the Closing Date. The proration of the undetermined taxes will be based
      upon a 365 day year and upon the most recently available tax use, rate and
      valuation information.

            b. All special assessments and other similar charges shall be
      prorated as of the Closing Date.

            c. All other charges and fees customarily prorated and adjusted in
      similar transactions.

            d. Rent under any Leases shall be prorated as of the Closing Date.

            e. Seller will pay to Buyer at Close of Escrow (or credit on the
      Purchase Price payable at Close of Escrow) an amount equal to all security
      deposits which, as of the date of Close of Escrow, Seller is legally
      required to ultimately refund to tenants under the Leases. A listing of
      all such security deposits as of the date hereof is included in the rent
      roll attached hereto as Exhibit "3".

      17. Indemnifications.

            a. Indemnification by Seller. Seller, for a period of three (3)
      years following Close of Escrow, hereby indemnifies and agrees to defend
      and hold harmless Buyer and any officer, director, member, manager,
      employee or agent of Buyer, and their respective successors and assigns,
      from and against any and all claims, expenses, costs, damages, losses and
      liabilities (including reasonable attorneys' fees) which may at any time
      be asserted against or suffered by any indemnitee or the Property, or any
      part thereof, whether before or after the Closing Date, as a result of, on
      account of or arising from (a) any breach of any covenant, representation,
      warranty or agreement on the part of Seller made herein or in any
      instrument or document delivered pursuant to this Agreement, and/or (b)
      any obligation, claims, suit, liability, contract, agreement, debt or
      encumbrance or other occurrence (other than encumbrances expressly
      approved by Buyer) created, arising or accruing on or prior to the Closing
      Date and relating to the Property or its operations.

            b. Indemnification by Buyer. Buyer, for a period of three (3) years
      following Close of Escrow, hereby indemnifies and agrees to defend and
      hold harmless Seller and its partners and subsidiaries, and any officer,
      director, employee or agent of any of them, and their respective
      successors and assigns, from and against any and all claims, expenses,
      costs, damages, losses and liabilities (including reasonable attorneys'
      fees) which may at any time be asserted against or suffered by any
      indemnitee as a result of, on


                                       12

      account of or arising from (a) any breach of any covenant, representation,
      warranty or agreement on the part of Buyer made herein or in any
      instrument or document delivered pursuant to this Agreement, and/or (b)
      any obligation, claims, suit, liability, contract, agreement, debt or
      encumbrance or other occurrence created, arising or accruing after the
      Closing Date and relating to the Property or its operations.

      18. Remedies/Default.

            a. Default by Seller. If any warranty or representation of Seller
      made herein shall prove to be materially untrue prior to Close of Escrow,
      or if Seller shall fail to perform any of Seller's obligations under this
      Agreement on or prior to the date for performance provided herein, then
      Buyer shall be entitled to either (x) seek specific performance of this
      Agreement or (y) terminate this Agreement by giving notice of such
      termination to Seller and Escrow Agent, in which latter event the Escrow
      and this Agreement shall be terminated for all purposes, Escrow Agent
      shall return the Earnest Money Deposit to Buyer, and Escrow Agent shall
      return all other funds, documents and other items held in escrow to the
      Party that deposited same in escrow, and the Parties shall have no further
      rights or obligations under this Agreement except that Buyer shall remain
      liable for its obligations under Sections 7 and 9 hereof and Seller shall
      remain liable for its obligations under Section 9 and such other
      indemnification obligations as are specifically set forth herein.

            b. Default by Buyer. If Buyer fails to consummate the purchase and
      sale contemplated herein when required to do so pursuant to the provisions
      of this Agreement (a "Buyer Default"), then Seller's sole and exclusive
      remedy hereunder shall be to terminate this Agreement by giving notice of
      such termination to Buyer and Escrow Agent, in which event the Escrow and
      this Agreement shall be terminated for all purposes, whereupon Escrow
      Agent shall pay the Earnest Money Deposit to Seller and shall return all
      other funds, documents and other items held in escrow to the Party that
      deposited same in escrow, and the Parties shall have no further rights or
      obligations under this Agreement, except that Buyer shall remain liable
      for its obligations under Sections 7 and 9 hereof and Seller shall remain
      liable for its obligations under Section 9. Any sums paid to Seller under
      the foregoing sentence shall be deemed to be liquidated damages paid to
      Seller by reason of such Buyer Default, and the Parties hereby agree that
      said amount is a reasonable forecast of just compensation for the harm
      that may be caused to Seller as a result of such Buyer Default, and that
      Seller's harm in the event of such a Buyer Default would be incapable of
      accurate estimation or very difficult to accurately estimate. Seller
      acknowledges and agrees that Seller shall not be entitled to any
      additional or other damages or other remedies whatsoever in the event of a
      default hereunder by Buyer, except as provided in Sections 7 and 9 hereof.

      19. Risk of Loss. If all or any material portion of the Property is
stolen, misplaced, destroyed, damaged or condemned or if any condemnation
proceedings against all or any portion of the Property are commenced prior to
Close of Escrow, Buyer may, at its election, rescind this Agreement, in which
event, Escrow Agent shall return to Buyer the Earnest Money Deposit, Escrow
Agent shall return to Buyer all documents Buyer deposited with Escrow Agent in
connection with the Escrow, Escrow Agent shall return to Seller all documents
Seller deposited


                                       13

with Escrow Agent in connection with the Escrow, and thereupon this Agreement
shall terminate and neither Party shall have any further right, obligation or
liability under this Agreement, except for those liabilities and obligations
that are specified herein to survive the termination or cancellation of this
Agreement.

      20. Jurisdiction and Choice of Forum. The Parties acknowledge that any
action brought hereunder shall be brought in the Superior Court of Maricopa
County, Arizona.

      21. Pending Litigation. There is currently pending a lawsuit styled NZ
Corporation v. Marlin Maxwell, CV 2001-033, Arizona Superior Court, Apache
County ("Maxwell lawsuit"). Seller will continue to prosecute the Maxwell
lawsuit to conclusion and pay all costs related thereto and indemnify buyer from
any liabilities arising from the lawsuit or any related claim, counterclaim or
defense. Seller and Buyer acknowledge that an area of land at what is known as
the "Milky Ranch House in Section 19" is not being conveyed to Seller at this
time as a result of the Maxwell lawsuit (the "Section 19 Property"). If Seller
prevails in the Maxwell lawsuit, Seller will convey any portion of the Section
19 Property not previously conveyed to Buyer. Seller shall have sole authority
to prosecute, settle, compromise or otherwise dispose of any claim, defense or
counterclaim in the Maxwell lawsuit in any manner it deems necessary in its sole
judgment (but Seller shall act in good faith and not take any such action in an
attempt to avoid Seller's obligations to prosecute the Maxwell lawsuit);
however, Seller shall not agree to any settlement or compromise that gives
Maxwell any ownership or rights in any part of the Section 19 Property or an
interest in any grazing leases without Buyer's prior written consent. Buyer
shall not unreasonably withhold its consent if the settlement or compromise
involves granting Maxwell a lease of two years or less on all or any portion of
the Section 19 Property. Buyer may give or withhold its consent, in its sole and
absolute judgment and discretion, for any settlement or compromise that grants
Maxwell any greater interest in the Section 19 Property or the grazing leases.

      22. License for Use of Certain Intellectual Property Rights. The parties
acknowledge that at Close of Escrow, Buyer shall provide a license to Seller in
the form of Exhibit 5 attached hereto and by this reference incorporated herein
for the right to use the names New Mexico and Arizona Land Company, NZU, NZ
Corporation, NZ Development and such books and records previously owned by said
NZ entities to permit Seller to continue to wind down its business. The term of
such selections shall be for five (5) years and may be extended, from time to
time, at the option of Seller as may be necessary to wind down its affairs.

      23. General. Except to the extent inconsistent with the express language
of the foregoing provisions of this Agreement, the general provisions set forth
in this Section 23 shall govern the interpretation, application, construction
and enforcement of this Agreement:

            a. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND INDEMNITIES. All
      representations and warranties contained in this Agreement (and in any
      certificate or other instrument delivered by or on behalf of any Party
      pursuant hereto or in connection with the transactions contemplated
      hereby) are true in all material respects on and as of the date so made
      and will be true in all material respects on and as of the date on which
      the transaction contemplated hereby is closed (except to the extent
      expressly made as of a particular date certain) and will survive such
      Closing Date for a period of one (1) year.


                                       14

      If, prior to the Close of Escrow, either Party receives notice or obtains
      actual knowledge of any information that indicates any of the
      representations and warranties contained in this Agreement are untrue,
      then such Party shall promptly advise the other Party in writing of such
      notice or knowledge. All indemnities contained in this Agreement shall
      survive the Closing Date.

            b. NOTICES. All notices shall be: (i) delivered in person; (ii) sent
      by telecopy; or (iii) mailed, postage prepaid, either by certified or
      registered mail, return receipt requested or by overnight express carrier,
      addressed in each case as follows:

         If to Seller:              NZ Corporation
                                    Attn:  Jerome L. Joseph
                                    333 N. 44th Street
                                    Suite 420
                                    Phoenix, AZ  85008
                                    Phone No. 602-952-8836
                                    Fax No. 602-952-8769

         With a copy to:            K. Bellamy Brown
                                    The Cavanagh Law Firm
                                    1850 North Central Avenue
                                    Suite 2400
                                    Phoenix, AZ  85004
                                    Phone No. 602-322-4057
                                    Fax No. 602-322-4105

         If to Buyer:               c/o Robert M. Worsley
                                    601 E. Houston
                                    Gilbert, AZ  85234
                                    Phone No. 602-528-3210
                                    Fax No. 602-254-6544

         With a copy to:            Paul D. Ellsworth, Esq.
                                    Paul D. Ellsworth, PLC
                                    4041 E. Grove
                                    Mesa, AZ  85206-3201
                                    Phone No. 480-396-3100
                                    Fax No. 480-396-3200

      All notices and documents shall be deemed received and effective: (i) if
      delivered in person, on the day delivered; (ii) if sent by telecopy, on
      the day sent if a business day, or if such day is not a business day, then
      on the next business day; (iii) if sent by overnight express carrier, on
      the next business day immediately following the day sent; or (iv) if sent
      by registered or certified mail, on the second business day following the
      day sent.

            c. SEVERABILITY. The provisions of this Agreement are severable. As
      such, the invalidity, in whole or in part, of any provision of this
      Agreement shall not affect the


                                       15

      validity or enforceability of any other provision of this Agreement. If
      any clause or provision of this Agreement is determined to be illegal,
      invalid, or unenforceable under any present or future law, such clause or
      provision shall be ineffective, but the remaining provisions of the
      Agreement will not be affected and shall be construed in the broadest
      manner to effectuate the purposes of this Agreement. Further, the Parties
      agree to replace any void or unenforceable provision of this Agreement
      with a valid and enforceable provision which will achieve, to the extent
      possible, the economic, business and other purposes of the void or
      unenforceable provision.

            d. ADDITIONAL ACTS AND DOCUMENTS. Each Party hereto agrees to do all
      such things and take all such actions, and to make, execute and deliver
      such other documents and instruments, as shall be reasonably requested to
      carry out the provisions, intent and purpose of this Agreement. Each Party
      hereto expressly agrees to deal in good faith with the other in carrying
      out the provisions, intent and purpose of this Agreement. The provisions
      of this paragraph shall survive Close of Escrow. The Property includes all
      of Seller's right, title and interest in and to all property and rights
      appurtenant to the Property and necessary for the operation, use and/or
      development of the Property, including, without limitation, all contingent
      or future rights and interests. If following the Close of Escrow, any such
      rights have not been conveyed to Buyer, Seller shall, upon request,
      immediately execute all documents the parties deem necessary or desirable
      to convey, and to evidence the conveyance of, such rights to Buyer.

            e. FURTHER ASSURANCES REGARDING ESCROW. The Parties agree to give
      such joint instructions to the Escrow Agent as shall be necessary to
      effectuate the applicable express provisions of this Agreement.

            f. ATTORNEYS' FEES. In the event action is taken by any Party to
      this Agreement to enforce the terms of this Agreement, the prevailing
      Party shall be entitled to recover reimbursement for reasonable attorneys'
      fees, court, arbitration or similar costs, costs of investigation and
      other related expenses incurred in connection therewith.

            g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
      inure to the benefit of the Parties hereto, and their respective
      successors in interest and assigns, but in no event shall any Party be
      relieved of its obligations hereunder without the express written consent
      of each other Party.

            h. COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
      any number of counterparts, all such counterparts shall be deemed to
      constitute one and the same instrument, and each of said counterparts
      shall be deemed an original hereof. The executed counterpart signature
      pages of this Agreement may be combined to create one original of this
      Agreement. Fax copies of signatures shall be binding on the parties as
      original signatures.

            i. TIME. Time is of the essence of this Agreement and each and every
      provision hereof. Any extension of time granted for the performance of any
      duty under this Agreement shall not be considered an extension of time for
      the performance of any other duty under this Agreement.


                                       16

            j. WAIVER. Failure of any Party to exercise any right or option
      arising out of a breach of this Agreement shall not be deemed a waiver of
      any right or option with respect to any subsequent or different breach, or
      the continuance of any existing breach.

            k. INTEGRATION CLAUSE; ORAL MODIFICATION. This Agreement represents
      the entire agreement of the Parties with respect to the subject matter
      hereof, and all agreements entered into prior hereto with respect to the
      subject matter hereof are revoked and superseded by this Agreement, and no
      representations, warranties, inducements or oral agreements have been made
      by any of the Parties except as expressly set forth herein, or in other
      contemporaneous written agreements. This Agreement may not be changed,
      modified or rescinded except in writing, signed by all Parties hereto, and
      any attempt at oral modification of this Agreement shall be void and of no
      effect.

            l. CAPTIONS. Captions and section headings used herein are for
      convenience only and are not a part of this Agreement and shall not be
      deemed to limit or alter any provisions hereof and shall not be deemed
      relevant in construing this Agreement.

            m. GOVERNING LAW. This Agreement shall be deemed to be made under,
      and shall be construed in accordance with and shall be governed by, the
      laws of the State of Arizona, applicable to contracts executed within and
      wholly performable within such State.

            n. INTERPRETATIONS. To the extent permitted by the context in which
      used, (i) words in the singular number shall include the plural, words in
      the masculine gender shall include the feminine and neuter, and vice
      versa, and (ii) references to "persons" or "parties" in this Agreement
      shall be deemed to refer to natural persons, corporations, general
      partnerships, limited partnerships, trusts and all other entities.

            o. SPECIFIC PERFORMANCE. Seller acknowledges that the remedy of
      specific performance shall be available and proper in the event Seller
      fails or refuses to perform its duties hereunder, and that the remedy of
      money damages is inadequate.

            p. EXHIBITS. Any Exhibit attached hereto shall be deemed to have
      been incorporated herein by this reference, with the same force and effect
      as if fully set forth in the body hereof.

            q. BUSINESS DAY; TIME FOR PERFORMANCE. Any reference in this
      Agreement to "business day" shall refer to a Monday, Tuesday, Wednesday,
      Thursday or Friday on which a majority of the banks (by number) having
      branch offices in Phoenix, Arizona, are generally open for business in
      that City. If the date on which an act specified to occur or be performed
      under this Agreement shall not be a business day, or if the last day on
      which an election, notice or other act can be made or accomplished under
      this Agreement shall not be a business day, then the same shall be timely
      if it occurs or is performed, made or accomplished on the next following
      business day.

            r. JOINT AND SEVERAL LIABILITY. The respective obligations and
      liabilities of Seller and Buyer under this Agreement are and shall be
      joint and several obligations and liabilities of the entities constituting
      Seller and Buyer, respectively.


                                       17

            s. ADDITIONAL POST CLOSING MATTERS. Seller and Buyer acknowledge
      that some of the conveyance and other obligations contained in this
      Agreement may occur following the Close of Escrow. By proceeding with the
      Close of Escrow, neither Seller nor Buyer shall be deemed to have waived
      the fulfillment of any obligations by the other party under this Agreement
      or any rights or remedies under this Agreement unless specifically waived
      in writing. Seller shall deliver to Buyer copies of all documents
      described in the exhibits and Title Reports as soon as reasonably
      possible, but no late than thirty (30) days following the Close of Escrow.
      The parties further acknowledge that the Close of Escrow will occur with
      some of the exhibits to this Agreement not yet completed and as to the
      completed exhibits, without time for Buyer to review and approve the
      exhibits. Following the Close of Escrow, Seller and Buyer shall cooperate
      in good faith to approve and complete the exhibits in a form reasonably
      acceptable to the parties.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       18

      IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of
March 29, 2002.

                                    SELLER:

                                    NZ CORPORATION,
                                    an Arizona corporation


                                    By:  /s/ Jerome L. Joseph
                                       ------------------------------------
                                    Name: Jerome L. Joseph
                                    Its: Treasurer & CFO


                                    NZU, INC., a New Mexico corporation

                                    By:  /s/ Jerome L. Joseph
                                       ------------------------------------
                                    Name: Jerome L. Joseph
                                    Its: Treasurer & CFO


                                    NZ DEVELOPMENT CORPORATION,
                                    an Arizona corporation

                                    By:  /s/ Jerome L. Joseph
                                       ------------------------------------
                                    Name: Jerome L. Joseph
                                    Its: Treasurer & CFO


                                    LIPID SCIENCES, INC.,
                                    an Arizona corporation

                                    By: /s/ Barry Michaels
                                       ------------------------------------
                                    Name: Barry Michaels
                                    Its: Chief Financial Officer

                                                                        "SELLER"


                                       19

                             BUYER:

                             NZ TRUST, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ SNOWFLAKE, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ MILKY RANCH, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ SILVER CREEK, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                                       20

                             NZ JOSEPH CITY, LLC, an Arizona limited
                             liability company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ NEW MEXICO LAND, LLC, an Arizona limited
                             liability company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ URANIUM, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ TRAVERTINE, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                                       21

                             NZ OIL AND GAS, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ MINERALS, LLC, an Arizona limited liability
                             company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager


                             NZ HISTORY AND ARTIFACTS, LLC, an Arizona limited
                             liability company

                             By: /s/ Robert M. Worsley
                                ------------------------------------------
                             Name: Robert M. Worsley
                             Its: Manager

                                                                         "BUYER"


                                       22

LIST OF EXHIBITS

                        
Exhibits A-1, A-2
A-3, A-4 and A-5:          Legal Description of Land
Exhibit C:                 Mineral Rights
Exhibit D:                 Leases
Exhibit E:                 Exclusive Sales Agency Agreement
Exhibit F:                 Uranium Rights
Exhibit G:                 Seller's Intellectual Property
Exhibit H:                 Oil and Gas Interests
Exhibit 1-A                Promissory Note
Exhibit 1-B                Deed of Trust
Exhibit 1-C                Security Agreement
Exhibit 1-D                Collateral Assignment and UCC-1




                                       23

                                   EXHIBIT A-1

                                LEGAL DESCRIPTION

                     NAVAJO COUNTY HOLDINGS AS OF MARCH 31, 2002



- ---------------------------------------------------------------------------------------
                        TITLE REPORT
    TAX PARCEL #           PARCEL#         TWN   RGE                 SECTION      ACRES
    ------------           -------         ---   ---                 -------      -----
                                                                  
       103-02-010  7                   14  19N   15E        RD UTIL EAS.  14       0.74

       103-61-001D-8                   16  19N   16E                      31     233.85

       103-43-001A 9                   17  20N   15E
                                                         W2NE4,E2SE4; 1          160.00

      202-01-001 B 8                    1  13N   20E                      25     640.00
      202-05-001 F 6                    2  13N   21E                  NW4 31     166.48
      202-05-001 D 8                    2  13N   21E                  SW4 31     156.61

      202-05-001 C 9                    2  13N   21E                  SE4 31     156.67

      202-05-001-B-0                    2  13N   21E                  NE4 31     160.00



      202-27-001 B 4                    3  14N   21E     E OF SILVER CRK  1      236.70

      202-27-001 B 4                    3  14N   21E     E OF SILVER CRK  13      43.70

      110-03-001 B 4                    5  15N   21E                      11     640.00

      103-22-025 B 7                   15  19N   16E           GRAVEL PIT  27    42.47

       107-01-022  7                   12  18N   18E         S2NE4,NW4,S2 14     491.06

       107-19-006  4                   13  18N   19E                  W2, 18     246.46

      110-03-004 A 4                    5  15N   21E                      12     640.00

       203-10-011  2                    6  14N   22E                       6     699.65
                                        6  14N   22E                       6     (54.30)

      110-04-002 E 7                    6  15N   22E                       1     483.92
      110-04-002 E 7                    6  15N   22E                       1     160.00
      110-04-002 E 7                    6  15N   22E                       5     641.18
      110-04-002 E 7                    6  15N   22E                       6     707.05
      110-04-002 E 7                    6  15N   22E                       7     718.82
      110-04-002 E 7                    6  15N   22E                      14     640.00
      110-04-002 E 7                    6  15N   22E                  E2, 15     320.00
      110-04-002 E 7                    6  15N   22E                  W2, 15     320.00
      110-04-002 E 7                    6  15N   22E                  W2, 17     320.00



                                       24

                                                                  
      110-04-002 E 7                    6  15N   22E                      18     178.14
      110-04-002 E 7                    6  15N   22E                      19     176.84
      110-04-002 E 7                    6  15N   22E     E OF SILVER CK   29     270.00
      110-04-002 E 7                    6  15N   22E     E OF SILVER CK   30     271.72

       110-04-009  3                    6  15N   22E                       3     640.48
       110-04-009  3                    6  15N   22E                      10     640.00
       110-04-009  3                    6  15N   22E                      11     640.00

       110-04-008  0                    6  15N   22E                      13     640.00

       110-09-001A 3                       16N   22E                      29     640.00

       110-09-001C 1                   11  16N   22E                      19     631.36
       110-09-001C 1                   11  16N   22E                      33     320.00
       110-09-001C 1                   11  16N   22E                      33     320.00

       110-09-001B 2                   11  16N   22E                      13     669.33
       110-09-001B 2                   11  16N   22E                      23     640.00
       110-09-001B 2                   11  16N   22E                      24     655.04
       110-09-001B 2                   11  16N   22E                      25     640.00
       110-09-001B 2                   11  16N   22E                      27     640.00
       110-09-001B 2                   11  16N   22E                      31     630.82
       110-09-001B 2                   11  16N   22E                      35     160.00
       110-09-001B 2                   11  16N   22E                      35     480.00

       110-05-001A 1                   10  15N   23E                       5     640.22
       110-05-001A 1                   10  15N   23E                  N2N2 9     160.00
       110-05-001A 1                   10  15N   23E                      11     640.00
       110-05-001A 1                   10  15N   23E                      13     640.00

       110-05-001C 9                   10  15N   23E                       7     725.02
       110-05-001C 9                   10  15N   23E               S2,S2N2 9     480.00
       110-05-001C 9                   10  15N   23E                      17     640.00
       110-05-001C 9                   10  15N   23E                      18     722.72
                   =                        =     =   =                    =
                                                                 TOTAL ACRES  23,502.75




                                       25

                                   EXHIBIT A-2

                                LEGAL DESCRIPTION

                        APACHE COUNTY HOLDINGS AS OF MARCH 31, 2002


                                                                                          NZ
          TAX PARCEL #    TWN    RGE               SECTION        ACRES    GL #        ACRES
          ------------    ---    ---               -------        -----    ----        -----
                                                                  
         212-24-001  4    14N    24E                     1        640.86    452        640.86
                                                              ----------            ---------
                                                     TOTAL        640.86               640.86
                                                              ==========            =========

         204-19-001  1    15N    24E                     1        642.34    611        642.34
         204-19-001  1    15N    24E                     2        546.60    611
         204-19-001  1    15N    24E                     2         39.26   611C        585.86
         204-19-001  1    15N    24E                     3         29.69    611
         204-19-001  1    15N    24E                     3         11.00   611C         40.69
         204-19-001  1    15N    24E                    11         78.20    611         78.20
         204-19-001  1    15N    24E                    12        160.00    611
         204-19-001  1    15N    24E                    12         22.00   611C
         204-19-001  1    15N    24E                    12        453.30   611A        635.30
         204-19-001  1    15N    24E                    13        160.08   611A        160.08
                                                              ----------            ---------
                                                     TOTAL      2,142.47             2,142.47
                                                              ==========            =========

         204-27-001  4    16N    24E                     1        568.48    603        568.48
         204-27-001  4    16N    24E                E2,  3        297.03    603        297.03
         204-27-001  4    16N    24E                E2, 10        320.00    603        320.00
         204-27-001  4    16N    24E                    11        640.00    603        640.00
         204-27-001  4    16N    24E                    12        640.00    603        640.00
         204-27-001  4    16N    24E                    13        640.00    603        640.00
         204-27-001  4    16N    24E                    15        640.00    611        640.00
         204-27-001  4    16N    24E                    17        603.25    611        603.25
         204-27-001  4    16N    24E                    21          2.00    610
         204-27-001  4    16N    24E                    21        635.57    611        637.57
         204-27-001  4    16N    24E                    23        640.00    611        640.00
         204-27-001  4    16N    24E                    25        640.00    611        640.00
         204-27-001  4    16N    24E                W2, 26        320.00    611        320.00
         204-27-001  4    16N    24E                    27        640.00    611        640.00
         204-27-001  4    16N    24E                    35        640.00    611        640.00
                                                              ----------            ---------
                                                     TOTAL      7,866.33             7,866.33
                                                              ==========            =========

         211-01-001  0    17N    24E                     1        645.38    603        645.38
         211-01-001  0    17N    24E                E2, 11        320.00    603        320.00
         211-01-001  0    17N    24E                    12        640.00    603        640.00
         211-01-001  0    17N    24E                    13        640.00    603        640.00
         211-01-001  0    17N    24E                E2, 14        320.00    603        320.00
         211-01-001  0    17N    24E                E2, 23        320.00    603        320.00



                                       26

                                                                  
         211-01-001  0    17N    24E      ALL EXCPTSE4, 24        600.00    603        600.00
         211-01-001  0    17N    24E                    25        640.00    603        640.00
         211-01-001  0    17N    24E                E2, 26        320.00    603        320.00
         211-01-001  0    17N    24E                    34        640.00    603        640.00
         211-01-001  0    17N    24E                    35        640.00    603        640.00
                                                              ----------            ---------
                                                     TOTAL      5,725.38             5,725.38
                                                              ==========            =========

         204-20-001  3    15N    25E                     3        641.74   611A        641.74
         204-20-001  3    15N    25E                     4        640.56   611A        640.56
         204-20-001  3    15N    25E                     5        639.50   611A        639.50
         204-20-001  3    15N    25E                     6        681.95   611A        681.95
         204-20-001  3    15N    25E                     7        684.56   611A        684.56
         204-20-001  3    15N    25E                     8        640.00   611A        640.00
         204-20-001  3    15N    25E                     9        520.00   611A
         204-20-001  3    15N    25E                     9        120.00   611B        640.00
         204-20-001  3    15N    25E                    17        160.00   611A
         204-20-001  3    15N    25E                    17        480.00   611B        640.00
         204-20-001  3    15N    25E                    18        528.68   611A
         204-20-001  3    15N    25E                    18        160.00   611B        688.68
                                                              ----------            ---------
                                                     TOTAL      5,896.99             5,896.99
                                                              ==========            =========

            204-28-004    16N    25E                    26        640.00               640.00
                                                              ----------            ---------
                                                                  640.00               640.00
                                                              ==========            =========

            204-28-005    16N    25E                    34        640.00               640.00
                                                              ----------            ---------
                                                                  640.00               640.00
                                                              ==========            =========

         204-28-001  7    16N    25E                ALL  1        487.58    603        487.58
         204-28-001  7    16N    25E                ALL  3        511.34    603        511.34
         204-28-001  7    16N    25E                ALL  4        530.16    603        530.16
         204-28-001  7    16N    25E                ALL  5        542.56    603        542.56
         204-28-001  7    16N    25E         SE4,SE4SW4, 6        528.33    603        528.33
         204-28-001  7    16N    25E                     7        659.94    603        659.94
         204-28-001  7    16N    25E                     8        640.00    603        640.00
         204-28-001  7    16N    25E                     9        640.00    603        640.00
         204-28-001  7    16N    25E                    10        640.00    603        640.00
         204-28-001  7    16N    25E                    11        640.00    603        640.00
         204-28-001  7    16N    25E                    12        640.00    603        640.00
         204-28-001  7    16N    25E                    13        640.00    603        640.00
         204-28-001  7    16N    25E                    14        640.00    603        640.00
         204-28-001  7    16N    25E                    15        640.00    603        640.00
         204-28-001  7    16N    25E                    17        640.00    603        640.00
         204-28-001  7    16N    25E                    18        664.66    603        664.66
         204-28-001  7    16N    25E                    21        640.00    603        640.00
         204-28-001  7    16N    25E                    22        640.00    603        640.00
         204-28-001  7    16N    25E                    23        640.00    603        640.00
         204-28-001  7    16N    25E                    24        640.00    603        640.00
         204-28-001  7    16N    25E                    25        640.00    603        640.00




                                       27

                                                                  
         204-28-001  7    16N    25E                    27        640.00    603        640.00
         204-28-001  7    16N    25E                    28        640.00    603        640.00
         204-28-001  7    16N    25E                    29        640.00    603        640.00
         204-28-001  7    16N    25E                    30        674.40    603        674.40
         204-28-001  7    16N    25E                    31        678.80    603        678.80
         204-28-001  7    16N    25E                    33        640.00    603        640.00
         204-28-001  7    16N    25E                    35        640.00    603        640.00
                                                              ----------            ---------
                                                               17,437.77            17,437.77
                                                              ----------            ---------
                                                                40,989.8            40,989.80


                                               TOTAL ACRES


                                       28

                                   EXHIBIT A-3

                                LEGAL DESCRIPTION

                      Cibola County Holdings at January 1, 2002



  TWN   RGE  Section       Acres       Owner        Map Parcel #
                                   
  6N    5W     11          540.00       NZ        2-026-035-264-264
  6N    5W     15          640.00       NZ        2-027-034-297-264
  6N    5W     21          640.00       NZ        2-028-033-297-292
  6N    5W     27          640.00       NZ        2-027-032-264-264
  6N    5W     33          640.00       NZ        2-028-031-396-264
  6N    5W     35          640.00       NZ        2-026-031-105-297
                         --------
                         3,740.00



                                       29

                                   EXHIBIT A-4

                                LEGAL DESCRIPTION

                    DONA ANA COUNTY, NEW MEXICO



     TWN     RGE   SEC       ACRES                TAX PARCEL NUMBER
     ---     ---   ---       -----                -----------------
                                      
     23S     01E    28      190.00                       PC03-17509
     23S     01E    28        4.96
     23S     01E    33      115.00                       PC03-17530
                          --------
                            309.96
                          ========



                                       30

                                   EXHIBIT A-5

                                LEGAL DESCRIPTION

                   MCKINLEY COUNTY, NEW MEXICO



  TWN     RGE   Section       Acres           Tax Parcel #
  ---     ---   -------       -----           ------------
                             
  17N     12W   33  SE4      160.00      2-070-097-132-132
                             ------



                                       31

                                    EXHIBIT C

                                 MINERAL RIGHTS

                        APACHE COUNTY, AZ



                        03/31/02
                        --------
                                     MINERAL
                                       ACRES
TWN     RGE     SEC                    OWNED              COMMENTS
- ---     ---     ---                    -----              --------
                                      
12N     24E     01                     596.56
                                                  ---------------------------------
12N     24E     03                     572.32
                                                  ---------------------------------
12N     24E     04                     559.42
                                                  ---------------------------------
12N     24E     05                     545.60
                                                  ---------------------------------
12N     24E     07                     640.08
                                                  ---------------------------------
12N     24E     08                     320.00     W2W2.E2E2
                                                  ---------------------------------
12N     24E     09                     640.00
                                                  ---------------------------------
12N     24E     10                     640.00
                                                  ---------------------------------
12N     24E     11                     640.00
                                                  ---------------------------------
12N     24E     12                     640.00
                                                  ---------------------------------
12N     24E     13                     640.00
                                                  ---------------------------------
12N     24E     15                     640.00
                                                  ---------------------------------
12N     24E     17                     640.00
                                                  ---------------------------------
12N     24E     19                     634.38
                                                  ---------------------------------
12N     24E     20                     320.00     S2
                                                  ---------------------------------
12N     24E     21                     640.00
                                                  ---------------------------------
12N     24E     29                     640.00
                                                  ---------------------------------
12N     24E     31                     630.82
                                                  ---------------------------------
12N     24E     33                     640.00
                                                  ---------------------------------

                                    ----------
                                    11,219.18
                                    ==========

13N     24E     01                     603.92
                                                  --------------------------------------
13N     24E     03                     638.88
                                                  --------------------------------------
13N     24E     04                     637.94
                                                  --------------------------------------
13N     24E     05                     554.90
                                                  --------------------------------------
13N     24E     06                     693.85
                                                  --------------------------------------



                                       32

                                      
13N     24E     07                     679.40
                                                  --------------------------------------
13N     24E     09                     599.78
                                                  --------------------------------------
13N     24E     11                     640.00
                                                  --------------------------------------
13N     24E     13                     527.60
                                                  --------------------------------------
13N     24E     15                     640.00
                                                  --------------------------------------
13N     24E     17                     640.00
                                                  --------------------------------------
13N     24E     19                     669.86
                                                  --------------------------------------
13N     24E     21                     640.00
                                                  --------------------------------------
13N     24E     23                     640.00
                                                  --------------------------------------
13N     24E     24                     640.00
                                                  --------------------------------------
13N     24E     25                     640.00
                                                  --------------------------------------
13N     24E     27                     640.00
                                                  --------------------------------------
13N     24E     29                     640.00
                                                  --------------------------------------
13N     24E     31                     662.76
                                                  --------------------------------------
13N     24E     33                     599.93
                                                  --------------------------------------
13N     24E     34                     640.00
                                                  --------------------------------------
13N     24E     35                     640.00
                                                  --------------------------------------

                                    ----------
                                    13,908.82
                                    ==========

14N     24E     01                     640.86
                                                  ---------------------------------
14N     24E     03                       2.01     N2
                                                  ---------------------------------
14N     24E     04                     239.53     N2
                                                  ---------------------------------
14N     24E     05                     490.29
                                                  ---------------------------------
14N     24E     07                     705.28
                                                  ---------------------------------
14N     24E     08                     640.00
                                                  ---------------------------------
14N     24E     09                     640.00
                                                  ---------------------------------
14N     24E     10                     442.30
                                                  ---------------------------------
14N     24E     11                     599.07
                                                  ---------------------------------
14N     24E     13                     640.00
                                                  ---------------------------------
14N     24E     15                     640.00
                                                  ---------------------------------
14N     24E     17                     640.00
                                                  ---------------------------------
14N     24E     18                     707.04
                                                  ---------------------------------
14N     24E     19                     668.91
                                                  ---------------------------------
14N     24E     20                     640.00
                                                  ---------------------------------
14N     24E     21                     640.00
                                                  ---------------------------------
14N     24E     22                     640.00
                                                  ---------------------------------
14N     24E     23                     640.00
                                                  ---------------------------------
14N     24E     24                     640.00
                                                  ---------------------------------
14N     24E     25                     640.00
                                                  ---------------------------------




                                       33

                                      
14N     24E     26                     640.00
                                                  ---------------------------------
14N     24E     27                     640.00
                                                  ---------------------------------
14N     24E     28                     640.00
                                                  ---------------------------------
14N     24E     29                     602.64
                                                  ---------------------------------
14N     24E     30                     708.14
                                                  ---------------------------------
14N     24E     31                     706.56
                                                  ---------------------------------
14N     24E     33                     640.00
                                                  ---------------------------------
14N     24E     35                     640.00
                                                  ---------------------------------

                                    ----------
                                    16,752.63
                                    ==========

15N     24E     01                     642.34
                                                  ---------------------------------
15N     24E     02                     643.26
                                                  ---------------------------------
15N     24E     03                     641.30
                                                  ---------------------------------
15N     24E     04                     639.10
                                                  ---------------------------------
15N     24E     05                     636.64
                                                  ---------------------------------
15N     24E     06                     677.90
                                                  ---------------------------------
15N     24E     07                     682.86
                                                  ---------------------------------
15N     24E     08                     640.00
                                                  ---------------------------------
15N     24E     09                     640.00
                                                  ---------------------------------
15N     24E     10                     640.00
                                                  ---------------------------------
15N     24E     11                     640.00
                                                  ---------------------------------
15N     24E     12                     640.00
                                                  ---------------------------------
15N     24E     13                     640.00
                                                  ---------------------------------
15N     24E     14                     640.00
                                                  ---------------------------------
15N     24E     15                     640.00
                                                  ---------------------------------
15N     24E     17                     640.00
                                                  ---------------------------------
15N     24E     19                     689.30
                                                  ---------------------------------
15N     24E     21                     640.00
                                                  ---------------------------------
15N     24E     23                     640.00
                                                  ---------------------------------
15N     24E     24                     640.00
                                                  ---------------------------------
15N     24E     25                     603.00
                                                  ---------------------------------
15N     24E     26                     603.90
                                                  ---------------------------------
15N     24E     27                     640.00
                                                  ---------------------------------
15N     24E     28                     640.00
                                                  ---------------------------------
15N     24E     29                     640.00
                                                  ---------------------------------
15N     24E     31                      49.00
                                                  ---------------------------------
15N     24E     33                     564.50
                                                  ---------------------------------
15N     24E     34                     519.92
                                                  ---------------------------------
15N     24E     35                     640.00
                                                  ---------------------------------




                                       34

                                      
                                    ----------
                                    17,833.02
                                    ==========

16N     24E     01                     568.48
                                                  ---------------------------------
16N     24E     03                     297.03
                                                  ---------------------------------
16N     24E     10                     320.00
                                                  ---------------------------------
16N     24E     11                     640.00
                                                  ---------------------------------
16N     24E     12                     640.00
                                                  ---------------------------------
16N     24E     13                     640.00
                                                  ---------------------------------
16N     24E     15                     640.00
                                                  ---------------------------------
16N     24E     17                     611.00
                                                  ---------------------------------
16N     24E     19                      11.30
                                                  ---------------------------------
16N     24E     21                     638.00
                                                  ---------------------------------
16N     24E     23                     640.00
                                                  ---------------------------------
16N     24E     25                     640.00
                                                  ---------------------------------
16N     24E     26                     320.00     W2
                                                  ---------------------------------
16N     24E     26                     160.00     E2
                                                  ---------------------------------
16N     24E     27                     640.00
                                                  ---------------------------------
16N     24E     33                       5.80
                                                  ---------------------------------
16N     24E     35                     640.00
                                                  ---------------------------------
                                    ----------
                                     8,051.61
                                    ==========

17N     24E     01                     645.38
                                                  ---------------------------------
17N     24E     11                     320.00     E2
                                                  ---------------------------------
17N     24E     12                     640.00
                                                  ---------------------------------
17N     24E     13                     640.00
                                                  ---------------------------------
17N     24E     14                     320.00     E2
                                                  ---------------------------------
17N     24E     23                     320.00     E2
                                                  ---------------------------------
17N     24E     24                     600.00
                                                  ---------------------------------
17N     24E     25                     640.00
                                                  ---------------------------------
17N     24E     26                     320.00     E2
                                                  ---------------------------------
17N     24E     34                     640.00
                                                  ---------------------------------
17N     24E     35                     640.00
                                                  ---------------------------------

                                    ----------
                                     5,725.38
                                   ===========

12N     25E     05                     613.36
                                                  ---------------------------------
12N     25E     07                     415.34
                                                  ---------------------------------
12N     25E     09                     640.00
                                                  ---------------------------------
12N     25E     17                     640.00
                                                  ---------------------------------




                                       35

                                      
                                    ----------
                                     2,308.70
                                    ==========
13N     25E     01                     642.08
                                                  --------------------------------------
13N     25E     03                     644.80
                                                  --------------------------------------
13N     25E     05                     641.50
                                                  --------------------------------------
13N     25E     07                     696.30
                                                  --------------------------------------
13N     25E     09                     640.00
                                                  --------------------------------------
13N     25E     11                     640.00
                                                  --------------------------------------
13N     25E     12                     603.99
                                                  --------------------------------------
13N     25E     13                     640.00
                                                  --------------------------------------
13N     25E     14                     620.00
                                                  --------------------------------------
13N     25E     15                     620.00
                                                  --------------------------------------
13N     25E     17                     640.00
                                                  --------------------------------------
13N     25E     18                     320.00     E2
                                                  --------------------------------------
13N     25E     19                     675.02
                                                  --------------------------------------
13N     25E     21                     640.00
                                                  --------------------------------------
13N     25E     23                     640.00
                                                  --------------------------------------
13N     25E     25                     640.00
                                                  --------------------------------------
13N     25E     26                     640.00
                                                  --------------------------------------
13N     25E     27                     640.00
                                                  --------------------------------------
13N     25E     29                     640.00
                                                  --------------------------------------
13N     25E     31                     609.49
                                                  --------------------------------------
13N     25E     33                     640.00
                                                  --------------------------------------
13N     25E     35                     640.00
                                                  --------------------------------------

                                    ---------
                                    13,753.18
                                    =========

14N     25E     01                     640.96
                                                  ---------------------------------
14N     25E     03                     642.20
                                                  ---------------------------------
14N     25E     05                     641.64
                                                  ---------------------------------
14N     25E     06                     120.81     NE4NW4,N2NE4
                                                  ---------------------------------
14N     25E     07                     706.86
                                                  ---------------------------------
14N     25E     09                     640.00
                                                  ---------------------------------
14N     25E     11                     640.00
                                                  ---------------------------------
14N     25E     13                     640.00
                                                  ---------------------------------
14N     25E     14                     640.00
                                                  ---------------------------------
14N     25E     15                     603.60
                                                  ---------------------------------
14N     25E     17                     640.00
                                                  ---------------------------------
14N     25E     18                     709.60
                                                  ---------------------------------
14N     25E     19                     712.00
                                             --------------------------------------
14N     25E     21                     640.00
                                             --------------------------------------




                                       36

                                      
14N     25E     22                     640.00
                                                  --------------------------------------
14N     25E     23                     640.00
                                                  --------------------------------------
14N     25E     25                     603.50
                                                  --------------------------------------
14N     25E     26                     640.00
                                                  --------------------------------------
14N     25E     27                     640.00
                                                  --------------------------------------
14N     25E     28                     480.00     NE4NW4,N2NE4
                                                  --------------------------------------
14N     25E     29                     640.00
                                                  --------------------------------------
14N     25E     30                     712.42
                                                  --------------------------------------
14N     25E     31                     712.80
                                                  --------------------------------------
14N     25E     33                     640.00
                                                  --------------------------------------
14N     25E     34                     563.22
                                                  --------------------------------------
14N     25E     35                     640.00
                                                  --------------------------------------

                                    ---------
                                    16,169.61
                                    =========

15N     25E     01                     639.68
                                                  ---------------------------------
15N     25E     03                     641.74
                                                  ---------------------------------
15N     25E     04                     640.56
                                                  ---------------------------------
15N     25E     05                     639.50
                                                  ---------------------------------
15N     25E     06                     681.95
                                                  ---------------------------------
15N     25E     07                     684.56
                                                  ---------------------------------
15N     25E     08                     640.00
                                                  ---------------------------------
15N     25E     09                     640.00
                                                  ---------------------------------
15N     25E     10                     160.00     SE4
                                                  ---------------------------------
15N     25E     11                     640.00
                                                  ---------------------------------
15N     25E     12                     640.00
                                                  ---------------------------------
15N     25E     13                     640.00
                                                  ---------------------------------
15N     25E     14                     640.00
                                                  ---------------------------------
15N     25E     15                     640.00
                                                  ---------------------------------
15N     25E     17                     640.00
                                                  ---------------------------------
15N     25E     18                     688.98
                                                  ---------------------------------
15N     25E     19                     693.74
                                                  ---------------------------------
15N     25E     20                     640.00
                                                  ---------------------------------
15N     25E     21                     640.00
                                                  ---------------------------------
15N     25E     22                     640.00
                                                  ---------------------------------
15N     25E     23                     640.00
                                                  ---------------------------------
15N     25E     24                     640.00
                                                  ---------------------------------
15N     25E     25                     640.00
                                                  ---------------------------------
15N     25E     27                     640.00
                                                  ---------------------------------
15N     25E     29                     640.00
                                                  ---------------------------------
15N     25E     30                     657.66
                                                  ---------------------------------




                                       37

                                      
15N     25E     31                     701.60
                                                  ---------------------------------
15N     25E     32                     280.00
                                                  ---------------------------------
15N     25E     33                     640.00
                                                  ---------------------------------
15N     25E     34                     320.00     N2
                                                  ---------------------------------
15N     25E     35                     640.00
                                                  ---------------------------------

                                    ---------
                                    18,949.97
                                    =========

16N     25E     01                     487.58
                                                  ---------------------------------
16N     25E     03                     511.34
                                                  ---------------------------------
16N     25E     04                     530.16
                                                  ---------------------------------
16N     25E     05                     542.56
                                                  ---------------------------------
16N     25E     06                     528.33
                                                  ---------------------------------
16N     25E     07                     659.94
                                                  ---------------------------------
16N     25E     08                     640.00
                                                  ---------------------------------
16N     25E     09                     640.00
                                                  ---------------------------------
16N     25E     10                     640.00
                                                  ---------------------------------
16N     25E     11                     640.00
                                                  ---------------------------------
16N     25E     12                     640.00
                                                  ---------------------------------
16N     25E     13                     640.00
                                                  ---------------------------------
16N     25E     14                     640.00
                                                  ---------------------------------
16N     25E     15                     640.00
                                                  ---------------------------------
16N     25E     17                     640.00
I                                                  --------------------------------------
16N     25E     18                     664.66
                                                  --------------------------------------
16N     25E     19                     669.28
                                                  --------------------------------------
16N     25E     21                     640.00
                                                  --------------------------------------
16N     25E     22                     640.00
                                                  --------------------------------------
16N     25E     23                     640.00
                                                  --------------------------------------
16N     25E     24                     640.00
                                                  --------------------------------------
16N     25E     25                     640.00
                                                  --------------------------------------
16N     25E     27                     640.00
                                                  --------------------------------------
16N     25E     29                     640.00
                                                  --------------------------------------
16N     25E     30                     674.40
                                                  --------------------------------------
16N     25E     31                     678.80
                                                  --------------------------------------
16N     25E     33                     640.00
                                                  --------------------------------------
16N     25E     35                     640.00
                                                  --------------------------------------

                                   ----------
                                    17,467.05
                                   ==========

                                   ----------
TOTAL                              142,139.15
                                   ==========




                                       38

                      NAVAJO COUNTY

                      03/31/2002



                                  MINERAL
                                    ACRES
TWN     RGE     SEC                 OWNED                        COMMENTS

                                  
19N     15E     01                 311.98
                                              -----------------------------------------------------
19N     15E     11                 160.00
                                              -----------------------------------------------------
19N     15E     13                 561.44
                                              -----------------------------------------------------
19N     15E     14                   0.74
                                              -----------------------------------------------------
19N     15E     15                 356.24
                                              -----------------------------------------------------
19N     15E     23                 267.00
                                              -----------------------------------------------------

                               ----------
                                 1,657.40
                               ==========

20N     15E     01                 317.76
                                              -----------------------------------------------------

                               ----------
                                   317.76
                               ==========

21N     15E     01                 640.48
                                              -----------------------------------------------------
21N     15E     03                 639.66
                                              -----------------------------------------------------
21N     15E     11                 640.00
                                              -----------------------------------------------------
21N     15E     13                 640.00
                                              -----------------------------------------------------
21N     15E     15                 640.00
                                              -----------------------------------------------------
21N     15E     23                 640.00
                                              -----------------------------------------------------
21N     15E     25                 640.00
                                              -----------------------------------------------------
21N     15E     27                 640.00
                                              -----------------------------------------------------
21N     15E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 5,760.14
                               ==========

22N     15E     01                 641.98
                                              -----------------------------------------------------
22N     15E     03                 641.40
                                              -----------------------------------------------------
22N     15E     11                 640.00
                                              -----------------------------------------------------
22N     15E     13                 640.00
                                              -----------------------------------------------------
22N     15E     15                 640.00
                                              -----------------------------------------------------
22N     15E     23                 640.00
                                              -----------------------------------------------------
22N     15E     25                 640.00
                                              -----------------------------------------------------



                                       39

                                  
22N     15E     27                 640.00
                                              -----------------------------------------------------
22N     15E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 5,763.38
                               ==========

23N     15E     01                 641.18
                                              -----------------------------------------------------
23N     15E     03                 642.46
                                              -----------------------------------------------------
23N     15E     11                 640.00
                                              -----------------------------------------------------
23N     15E     13                 640.00
                                              -----------------------------------------------------
23N     15E     15                 640.00
                                              -----------------------------------------------------
23N     15E     23                 640.00
                                              -----------------------------------------------------
23N     15E     25                 640.00
                                              -----------------------------------------------------
23N     15E     27                 640.00
                                              -----------------------------------------------------
23N     15E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 5,763.64
                               ==========

24N     15E     13                 640.00
                                              -----------------------------------------------------
24N     15E     15                 640.00
                                              -----------------------------------------------------
24N     15E     23                 640.00
                                              -----------------------------------------------------
24N     15E     25                 640.00
                                              -----------------------------------------------------
24N     15E     27                 640.00
                                              -----------------------------------------------------
24N     15E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 3,840.00
                               ==========

14N     16E     04                 639.56
                                              -----------------------------------------------------
14N     16E     06                 679.99
                                              -----------------------------------------------------
14N     16E     08                 640.00
                                              -----------------------------------------------------
14N     16E     10                 640.00
                                              -----------------------------------------------------
14N     16E     12                 640.00
                                              -----------------------------------------------------

                               ----------
                                 3,239.55
                               ==========

15N     16E     1                  357.32
                                              -----------------------------------------------------
15N     16E     3                  360.68
                                              -----------------------------------------------------
15N     16E     5                  104.27
                                              -----------------------------------------------------
15N     16E     7                  224.60
                                              -----------------------------------------------------
15N     16E     9                  320.00
                                              -----------------------------------------------------
15N     16E     11                 320.00
                                              -----------------------------------------------------
15N     16E     12                 318.72
                                              -----------------------------------------------------
15N     16E     34                 640.00
                                              -----------------------------------------------------

                               ----------
                                 2,645.59
                               ==========

                                              -----------------------------------------------------
16N     16E     21                 545.00
                                              -----------------------------------------------------




                                       40

                                  
16N     16E     22                 211.55
                                              -----------------------------------------------------
16N     16E     23                 320.00
                                              -----------------------------------------------------
16N     16E     24                 334.23
                                              -----------------------------------------------------
16N     16E     25                 332.81
                                              -----------------------------------------------------
16N     16E     27                 320.00
                                              -----------------------------------------------------
16N     16E     29                  21.00
                                              -----------------------------------------------------
16N     16E     33                 320.00
                                              -----------------------------------------------------
16N     16E     34                 320.00
                                              -----------------------------------------------------
16N     16E     35                 320.00
                                              -----------------------------------------------------

                               ----------
                                 3,044.59
                               ==========

18N     16E     01                  21.95
                                              -----------------------------------------------------

                               -----------
                                    21.95
                               ===========

                                              -----------------------------------------------------
19N     16E     05                 447.44
                                              -----------------------------------------------------
19N     16E     07                 629.40
                                              -----------------------------------------------------
19N     16E     12                   3.00
                                              -----------------------------------------------------
19N     16E     13                  30.65
                                              -----------------------------------------------------
19N     16E     17                 640.00
                                              -----------------------------------------------------
19N     16E     19                 343.42
                                              -----------------------------------------------------
19N     16E     23                  29.57
                                              -----------------------------------------------------
19N     16E     25                  10.33
                                              -----------------------------------------------------
19N     16E     27                 400.00
                                              -----------------------------------------------------
19N     16E     29                 369.20
                                              -----------------------------------------------------
19N     16E     31                 619.94
                                              -----------------------------------------------------
19N     16E     33                 204.05
                                              -----------------------------------------------------
19N     16E     35                  64.82
                                              -----------------------------------------------------

                               ----------
                                 3,791.82
                               ==========

                                              -----------------------------------------------------
20N     16E     31                  80.29
                                              -----------------------------------------------------
                               ----------
                                    80.29
                               ==========

21N     16E     01                 640.58
                                              -----------------------------------------------------
21N     16E     03                 640.82
                                              -----------------------------------------------------
21N     16E     05                 639.58
                                              -----------------------------------------------------
21N     16E     07                 639.52
                                              -----------------------------------------------------
21N     16E     09                 640.00
                                              -----------------------------------------------------
21N     16E     11                 640.00
                                              -----------------------------------------------------
21N     16E     13                 640.00
                                              -----------------------------------------------------
21N     16E     15                 640.00
                                              -----------------------------------------------------
21N     16E     17                 640.00
                                              -----------------------------------------------------




                                       41

                                  
21N     16E     19                 640.70
                                              -----------------------------------------------------
21N     16E     21                 640.00
                                              -----------------------------------------------------
21N     16E     23                 640.00
                                              -----------------------------------------------------
21N     16E     25                 640.00
                                              -----------------------------------------------------
21N     16E     27                 640.00
                                              -----------------------------------------------------
21N     16E     29                 640.00
                                              -----------------------------------------------------
21N     16E     31                 641.19
                                              -----------------------------------------------------
21N     16E     33                 640.00
                                              -----------------------------------------------------
21N     16E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,522.39
                               ==========

22N     16E     01                 639.84
                                              -----------------------------------------------------
22N     16E     03                 640.94
                                              -----------------------------------------------------
22N     16E     05                 639.58
                                              -----------------------------------------------------
22N     16E     07                 635.10
                                              -----------------------------------------------------
22N     16E     09                 640.00
                                              -----------------------------------------------------
22N     16E     11                 640.00
                                              -----------------------------------------------------
22N     16E     13                 640.00
                                              -----------------------------------------------------
22N     16E     15                 640.00
                                              -----------------------------------------------------
22N     16E     17                 640.00
                                              -----------------------------------------------------
22N     16E     19                 638.78
                                              -----------------------------------------------------
22N     16E     21                 640.00
                                              -----------------------------------------------------
22N     16E     23                 640.00
                                              -----------------------------------------------------
22N     16E     25                 640.00
                                              -----------------------------------------------------
22N     16E     27                 640.00
                                              -----------------------------------------------------
22N     16E     29                 640.00
                                              -----------------------------------------------------
22N     16E     31                 642.52
                                              -----------------------------------------------------
22N     16E     33                 640.00
                                              -----------------------------------------------------
22N     16E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,516.76
                               ==========

23N     16E     01                 639.20
                                              -----------------------------------------------------
23N     16E     03                 640.70
                                              -----------------------------------------------------
23N     16E     05                 642.06
                                              -----------------------------------------------------
23N     16E     07                 633.10
                                              -----------------------------------------------------
23N     16E     09                 640.00
                                              -----------------------------------------------------
23N     16E     11                 640.00
                                              -----------------------------------------------------
23N     16E     13                 640.00
                                              -----------------------------------------------------
23N     16E     15                 640.00
                                              -----------------------------------------------------
23N     16E     17                 640.00
                                              -----------------------------------------------------
23N     16E     19                 634.30
                                              -----------------------------------------------------
23N     16E     21                 640.00
                                              -----------------------------------------------------
23N     16E     23                 640.00
                                              -----------------------------------------------------
23N     16E     25                 640.00
                                              -----------------------------------------------------
23N     16E     27                 640.00
                                              -----------------------------------------------------
23N     16E     29                 640.00
                                              -----------------------------------------------------




                                       42

                                  
23N     16E     31                 632.38
                                              -----------------------------------------------------
23N     16E     33                 640.00
                                              -----------------------------------------------------
23N     16E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,501.74
                               ==========

24N     16E     13                 640.00
                                              -----------------------------------------------------
24N     16E     15                 640.00
                                              -----------------------------------------------------
24N     16E     17                 640.00
                                              -----------------------------------------------------
24N     16E     19                 637.22
                                              -----------------------------------------------------
24N     16E     21                 640.00
                                              -----------------------------------------------------
24N     16E     23                 640.00
                                              -----------------------------------------------------
24N     16E     25                 640.00
                                              -----------------------------------------------------
24N     16E     27                 640.00
                                              -----------------------------------------------------
24N     16E     29                 640.00
                                              -----------------------------------------------------
24N     16E     31                 633.22
                                              -----------------------------------------------------
24N     16E     33                 640.00
                                              -----------------------------------------------------
24N     16E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 7,670.44
                               ==========

14N     17E     01                 640.00
14N     17E     02                  40.00     NWSE
14N     17E     03                 640.00
14N     17E     05                 640.00
14N     17E     06                 705.35
14N     17E     07                 640.00
14N     17E     09                 640.00
                                              -----------------------------------------------------
14N     17E     10                 640.00
14N     17E     11                 640.00
                                              -----------------------------------------------------
14N     17E     14                 640.00     Oil, gas, geo thermal & pet. wood reserved
14N     17E     17                 640.00
                                              -----------------------------------------------------
14N     17E     18                 703.30
14N     17E     21                 320.00
                                              -----------------------------------------------------
14N     17E     29                 320.00
                                              -----------------------------------------------------

                               ----------
                                 7,848.65
                               ==========

15N     17E     05                 317.67
                                              -----------------------------------------------------
15N     17E     07                 351.32
                                              -----------------------------------------------------
15N     17E     08                 320.00
                                              -----------------------------------------------------
15N     17E     09                 320.00
                                              -----------------------------------------------------
15N     17E     10                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     17E     12                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     17E     14                 640.00     Oil, gas, geo thermal & pet. wood reserved
15N     17E     17                 320.00
                                              -----------------------------------------------------
15N     17E     19                 353.04
                                              -----------------------------------------------------




                                       43

                                  
15N     17E     31                 640.00
                                              -----------------------------------------------------

                               ----------
                                 4,542.03
                               ==========

16N     17E     19                 348.83
                                              -----------------------------------------------------
16N     17E     21                 320.00
                                              -----------------------------------------------------
16N     17E     22                 320.00
                                              -----------------------------------------------------
16N     17E     24                 320.00
                                              -----------------------------------------------------
16N     17E     23                 320.00
16N     17E     26                 320.00
                                              -----------------------------------------------------
16N     17E     29                 320.00
                                              -----------------------------------------------------
16N     17E     31                 349.74
                                              -----------------------------------------------------
16N     17E     33                 320.00
                                              -----------------------------------------------------
16N     17E     34                 320.00
                                              -----------------------------------------------------

                               ----------
                                 3,258.57
                               ==========

                                               ----------------------------------------------------
17N     17E     14                 260.00      98 sold in Aztec Trade;E1/2,SW,W1/2NW
                                               ----------------------------------------------------

                               ----------
                                   260.00
                               ==========

                                              -----------------------------------------------------
18N     17E     05                  72.61
                                              -----------------------------------------------------
18N     17E     09                  47.12
                                              -----------------------------------------------------
18N     17E     11                 158.20
                                              -----------------------------------------------------
18N     17E     26                 485.74
                                              -----------------------------------------------------

                               ----------
                                   763.67
                               ==========

                                              -----------------------------------------------------
19N     17E     05                  30.21
                                              -----------------------------------------------------
19N     17E     07                  31.95
                                              -----------------------------------------------------
19N     17E     25                  11.00
                                              -----------------------------------------------------
19N     17E     31                  29.64
                                              -----------------------------------------------------

                               ----------
                                   102.80
                               ==========

                                              -----------------------------------------------------
20N     17E     13                  33.93
                                              -----------------------------------------------------
20N     17E     23                  33.54
                                              -----------------------------------------------------
20N     17E     27                  32.38
                                              -----------------------------------------------------
20N     17E     33                  35.91
                                              -----------------------------------------------------

                               ----------
                                  135.76
                               ==========

21N     17E     01                 641.66
                                              -----------------------------------------------------




                                       45

                                  
21N     17E     03                 639.18
                                              -----------------------------------------------------
21N     17E     05                 639.10
                                              -----------------------------------------------------
21N     17E     07                 629.34
                                              -----------------------------------------------------
21N     17E     09                 640.00
                                              -----------------------------------------------------
21N     17E     11                 640.00
                                              -----------------------------------------------------
21N     17E     13                 640.00
                                              -----------------------------------------------------
21N     17E     15                 640.00
                                              -----------------------------------------------------
21N     17E     17                 640.00
                                              -----------------------------------------------------
21N     17E     19                 634.88
                                              -----------------------------------------------------
21N     17E     21                 640.00
                                              -----------------------------------------------------
21N     17E     23                 640.00
                                              -----------------------------------------------------
21N     17E     25                 640.00
                                              -----------------------------------------------------
21N     17E     27                 640.00
                                              -----------------------------------------------------
21N     17E     29                 640.00
                                              -----------------------------------------------------
21N     17E     31                 638.06
                                              -----------------------------------------------------
21N     17E     33                 640.00
                                              -----------------------------------------------------
21N     17E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,502.22
                               ==========

22N     17E     01                 641.28
                                              -----------------------------------------------------
22N     17E     03                 640.80
                                              -----------------------------------------------------
22N     17E     05                 640.34
                                              -----------------------------------------------------
22N     17E     07                 620.22
                                              -----------------------------------------------------
22N     17E     09                 640.00
                                              -----------------------------------------------------
22N     17E     11                 640.00
                                              -----------------------------------------------------
22N     17E     13                 640.00
                                              -----------------------------------------------------
22N     17E     15                 640.00
                                              -----------------------------------------------------
22N     17E     17                 640.00
                                              -----------------------------------------------------
22N     17E     19                 619.60
                                              -----------------------------------------------------
22N     17E     21                 640.00
                                              -----------------------------------------------------
22N     17E     23                 640.00
                                              -----------------------------------------------------
22N     17E     25                 640.00
                                              -----------------------------------------------------
22N     17E     27                 640.00
                                              -----------------------------------------------------
22N     17E     29                 640.00
                                              -----------------------------------------------------
22N     17E     31                 623.58
                                              -----------------------------------------------------
22N     17E     33                 640.00
                                              -----------------------------------------------------
22N     17E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,465.82
                               ==========

23N     17E     01                 640.90
                                              -----------------------------------------------------
23N     17E     03                 639.84
                                              -----------------------------------------------------
23N     17E     05                 640.02
                                              -----------------------------------------------------
23N     17E     07                 614.48
                                              -----------------------------------------------------
23N     17E     09                 640.00
                                              -----------------------------------------------------
23N     17E     11                 640.00
                                              -----------------------------------------------------




                                       45

                                  
23N     17E     13                 640.00
                                              -----------------------------------------------------
23N     17E     15                 640.00
                                              -----------------------------------------------------
23N     17E     17                 640.00
                                              -----------------------------------------------------
23N     17E     19                 614.54
                                              -----------------------------------------------------
23N     17E     21                 640.00
                                              -----------------------------------------------------
23N     17E     23                 640.00
                                              -----------------------------------------------------
23N     17E     25                 640.00
                                              -----------------------------------------------------
23N     17E     27                 640.00
                                              -----------------------------------------------------
23N     17E     29                 640.00
                                              -----------------------------------------------------
23N     17E     31                 616.72
                                              -----------------------------------------------------
23N     17E     33                 640.00
                                              -----------------------------------------------------
23N     17E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,446.50
                               ==========

24N     17E     13                 640.00
                                              -----------------------------------------------------
24N     17E     15                 640.00
                                              -----------------------------------------------------
24N     17E     17                 640.00
                                              -----------------------------------------------------
24N     17E     19                 611.46
                                              -----------------------------------------------------
24N     17E     21                 640.00
                                              -----------------------------------------------------
24N     17E     23                 640.00
                                              -----------------------------------------------------
24N     17E     25                 640.00
                                              -----------------------------------------------------
24N     17E     27                 640.00
                                              -----------------------------------------------------
24N     17E     29                 640.00
                                              -----------------------------------------------------
24N     17E     31                 614.54
                                              -----------------------------------------------------
24N     17E     33                 640.00
                                              -----------------------------------------------------
24N     17E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 7,626.00
                               ==========

14N     18E     02                  80.00     N1/2SW
14N     18E     11                 640.00
14N     18E     13                 160.00
                                              -----------------------------------------------------

                               ----------
                                  880.00
                               ==========

15N     18E     04                 642.98     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     06                 661.29     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     08                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     10                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     12                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     14                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     18                 666.22     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N     18E     30                 669.94
                                              -----------------------------------------------------

                               ----------
                                 5,200.43
                               ==========




                                       46

                                  
16N     18E     04                 734.50
                                              ----------------------------------------------------------
16N     18E     06                 789.06
                                              ----------------------------------------------------------
16N     18E     08                 640.00
                                              ----------------------------------------------------------
16N     18E     10                 640.00
                                              ----------------------------------------------------------
16N     18E     12                 640.00
                                              ----------------------------------------------------------
16N     18E     14                 640.00
                                              ----------------------------------------------------------
16N     18E     18                 669.26
                                              ----------------------------------------------------------
16N     18E     20                 640.00
                                              ----------------------------------------------------------
16N     18E     22                 640.00
                                              ----------------------------------------------------------
16N     18E     26                 640.00
                                              ----------------------------------------------------------
16N     18E     28                 640.00
                                              ----------------------------------------------------------
16N     18E     30                 666.08
                                              ----------------------------------------------------------
16N     18E     34                 640.00
                                              ----------------------------------------------------------

                               ----------
                                 8,618.90
                               ==========

                                              -----------------------------------------------------
17N     18E     18                 636.80
                                              -----------------------------------------------------
17N     18E     20                 640.00
                                              -----------------------------------------------------
17N     18E     26                 640.00
                                              -----------------------------------------------------
17N     18E     28                 640.00
                                              -----------------------------------------------------
17N     18E     30                 638.16
                                              -----------------------------------------------------
17N     18E     34                 640.00
                                              -----------------------------------------------------

                               ----------
                                 3,834.96
                               ==========

                                              -----------------------------------------------------
18N     18E     07                  99.76
                                              -----------------------------------------------------
18N     18E     08                  34.30
                                              -----------------------------------------------------
18N     18E     09                 239.58
                                              -----------------------------------------------------
18N     18E     11                 320.27
                                              -----------------------------------------------------
18N     18E     13                 123.66
                                              -----------------------------------------------------
18N     18E     14                 560.00
                                              -----------------------------------------------------
18N     18E     15                  47.60
                                              -----------------------------------------------------

                               ----------
                                 1,425.17
                               ==========

                                              -----------------------------------------------------
20N     18E     05                  70.41
                                              -----------------------------------------------------
20N     18E     07                 221.99
                                              -----------------------------------------------------

                               ----------
                                   292.40
                               ==========

21N     18E     01                 640.48
                                              -----------------------------------------------------
21N     18E     03                 641.62
                                              -----------------------------------------------------
21N     18E     05                 639.30
                                              -----------------------------------------------------
21N     18E     07                 626.58
                                              -----------------------------------------------------




                                       47

                                  
21N     18E     09                 640.00
                                              -----------------------------------------------------
21N     18E     11                 640.00
                                              -----------------------------------------------------
21N     18E     13                 640.00
                                              -----------------------------------------------------
21N     18E     15                 640.00
                                              -----------------------------------------------------
21N     18E     17                 640.00
                                              -----------------------------------------------------
21N     18E     19                 632.32
                                              -----------------------------------------------------
21N     18E     21                 640.00
                                              -----------------------------------------------------
21N     18E     23                 640.00
                                              -----------------------------------------------------
21N     18E     25                 640.00
                                              -----------------------------------------------------
21N     18E     27                 640.00
                                              -----------------------------------------------------
21N     18E     29                 640.00
                                              -----------------------------------------------------
21N     18E     31                 638.08
                                              -----------------------------------------------------
21N     18E     33                 640.00
                                              -----------------------------------------------------
21N     18E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,498.38
                               ==========

22N     18E     01                 640.54
                                              ----------------------------------------------------------
22N     18E     03                 641.78
                                              ----------------------------------------------------------
22N     18E     05                 637.74
                                              ----------------------------------------------------------
22N     18E     07                 618.32
                                              ----------------------------------------------------------
22N     18E     09                 640.00
                                              ----------------------------------------------------------
22N     18E     11                 640.00
                                              ----------------------------------------------------------
22N     18E     13                 640.00
                                              ----------------------------------------------------------
22N     18E     15                 640.00
                                              ----------------------------------------------------------
22N     18E     17                 640.00
                                              ----------------------------------------------------------
22N     18E     19                 621.60
                                              ----------------------------------------------------------
22N     18E     21                 640.00
                                              ----------------------------------------------------------
22N     18E     23                 640.00
                                              ----------------------------------------------------------
22N     18E     25                 640.00
                                              ----------------------------------------------------------
22N     18E     27                 640.00
                                              ----------------------------------------------------------
22N     18E     29                 640.00
                                              ----------------------------------------------------------
22N     18E     31                 623.42
                                              ----------------------------------------------------------
22N     18E     33                 640.00
                                              ----------------------------------------------------------
22N     18E     35                 640.00
                                              ----------------------------------------------------------

                               ----------
                                11,463.40
                               ==========

23N     18E     01                 641.18
                                              -----------------------------------------------------
23N     18E     03                 638.18
                                              -----------------------------------------------------
23N     18E     05                 639.84
                                              -----------------------------------------------------
23N     18E     07                 614.54
                                              -----------------------------------------------------
23N     18E     09                 640.00
                                              -----------------------------------------------------
23N     18E     11                 640.00
                                              -----------------------------------------------------
23N     18E     13                 640.00
                                              -----------------------------------------------------
23N     18E     15                 640.00
                                              -----------------------------------------------------




                                       48

                                  
23N     18E     17                 640.00
                                              -----------------------------------------------------
23N     18E     19                 617.12
                                              -----------------------------------------------------
23N     18E     21                 640.00
                                              -----------------------------------------------------
23N     18E     23                 640.00
                                              -----------------------------------------------------
23N     18E     25                 640.00
                                              -----------------------------------------------------
23N     18E     27                 640.00
                                              -----------------------------------------------------
23N     18E     29                 640.00
                                              -----------------------------------------------------
23N     18E     31                 618.14
                                              -----------------------------------------------------
23N     18E     33                 640.00
                                              -----------------------------------------------------
23N     18E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                11,449.00
                               ==========

24N     18E     13                 640.00
                                              -----------------------------------------------------
24N     18E     15                 640.00
                                              -----------------------------------------------------
24N     18E     17                 640.00
                                              -----------------------------------------------------
24N     18E     19                 615.84
                                              -----------------------------------------------------
24N     18E     21                 640.00
                                              -----------------------------------------------------
24N     18E     23                 640.00
                                              -----------------------------------------------------
24N     18E     25                 640.00
                                              -----------------------------------------------------
24N     18E     27                 640.00
                                              -----------------------------------------------------
24N     18E     29                 640.00
                                              -----------------------------------------------------
24N     18E     31                 611.90
                                              -----------------------------------------------------
24N     18E     33                 640.00
                                              -----------------------------------------------------
24N     18E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 7,627.74
                               ==========

13N     19E     08                 640.00
                                              -----------------------------------------------------
13N     19E     21                 640.00
                                              -----------------------------------------------------
13N     19E     27                 320.00     E1/2
                                              -----------------------------------------------------

                               ----------
                                 1,600.00
                               ==========

15N             06                 635.82     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
15N             10                 640.00
                                              -----------------------------------------------------
15N             23                 640.00
                                              -----------------------------------------------------
15N     19E     25                 640.00
                                              -----------------------------------------------------
15N     19E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                 3,195.82
                               ==========

16N     19E     08                 640.00
                                              -----------------------------------------------------
16N     19E     10                 640.00
                                              -----------------------------------------------------




                                       49

                                  
16N     19E     12                 640.00
                                              -----------------------------------------------------
16N     19E     14                 640.00
                                              -----------------------------------------------------
16N     19E     18                 635.48
                                              -----------------------------------------------------
16N     19E     20                 640.00
                                              -----------------------------------------------------
16N     19E     22                 640.00
                                              -----------------------------------------------------
16N     19E     28                 640.00
                                              -----------------------------------------------------
16N     19E     30                 629.56
                                              -----------------------------------------------------

                               ----------
                                 5,745.04
                               ==========

17N     19E     04                   9.08
                                              -----------------------------------------------------
17N     19E     06                 663.83
                                              -----------------------------------------------------

                               ----------
                                   672.91
                               ==========

18N     19E     18                 312.60
                                              -----------------------------------------------------
18N     19E     20                 480.00
                                              -----------------------------------------------------

                               ----------
                                   792.60
                               ==========

12N     20E     04                 382.64
                                              -----------------------------------------------------

                               ----------
                                   382.64
                               ==========

13N     20E     10                 640.00
                                              -----------------------------------------------------
13N     20E     20                 640.00
                                              -----------------------------------------------------
13N     20E     22                 320.00     S2
                                              -----------------------------------------------------
13N     20E     24                 580.35
                                              -----------------------------------------------------
13N     20E     25                 640.00
                                              -----------------------------------------------------
13N     20E     26                 640.00
                                              -----------------------------------------------------
13N     20E     28                 640.00
                                              -----------------------------------------------------
13N     20E     30                 639.64
                                              -----------------------------------------------------
13N     20E     34                 640.00
                                              -----------------------------------------------------

                               ----------
                                 5,379.99
                               ==========

14N     20E     04                 480.00
14N     20E     05                 640.00
14N     20E     07                 640.00
                                              -----------------------------------------------------
14N     20E     08                 640.00
14N     20E     09                 640.00
14N     20E     19                 640.00
                                              -----------------------------------------------------
14N     20E     20                 640.00
                                              -----------------------------------------------------
14N     20E     22                 640.00
                                              -----------------------------------------------------




                                       50

                                  
14N     20E     26                 640.00
                                              -----------------------------------------------------
14N     20E     28                 640.00
                                              -----------------------------------------------------
14N     20E     30                 321.04
14N     20E     31                 640.00
                                              -----------------------------------------------------
14N     20E     34                 640.00
                                              -----------------------------------------------------
                               ----------
                                 7,841.04
                               ==========

15N     20E     04                 639.72
                                              -----------------------------------------------------
15N     20E     06                 637.96
                                              -----------------------------------------------------
15N     20E     08                 640.00
                                              -----------------------------------------------------
15N     20E     09                 640.00
                                              -----------------------------------------------------
15N     20E     17                 640.00
                                              -----------------------------------------------------
15N     20E     18                 643.04
                                              -----------------------------------------------------
15N     20E     19                 640.00
                                              -----------------------------------------------------
15N     20E     21                 640.00
                                              -----------------------------------------------------
15N     20E     29                 640.00
                                              -----------------------------------------------------
15N     20E     31                 640.00
                                              -----------------------------------------------------
15N     20E     33                 640.00
                                              -----------------------------------------------------

                               ----------
                                 7,040.72
                               ==========

16N     20E     06                 678.24
                                              -----------------------------------------------------
16N     20E     10                 640.00
                                              -----------------------------------------------------
16N     20E     20                 640.00
                                              -----------------------------------------------------
16N     20E     30                 634.58
                                              -----------------------------------------------------

                               ----------
                                 2,592.82
                               ==========

17N     20E     18                 638.68
                                              -----------------------------------------------------
17N     20E     20                 640.00
                                              -----------------------------------------------------
17N     20E     30                 629.08
                                              -----------------------------------------------------

                               ----------
                                 1,907.76
                               ==========

12N     21E     04                 320.00
                                              -----------------------------------------------------
12N     21E     12                  80.00
                                              -----------------------------------------------------

                               ----------
                                   400.00
                               ==========

13N     21E     31                 640.00
                                              -----------------------------------------------------

                               ----------
                                   640.00
                               ==========




                                       51

                                  
14N     21E     01                 230.00
14N     21E     13                  40.00
                                              -----------------------------------------------------

                               ----------
                                   270.00
                               ==========

15N     21E     12                 640.00
                                              -----------------------------------------------------

                               ----------
                                   640.00
                               ==========

16N     21E     26                 640.00

                               ----------
                                    640.00
                               ==========

17N     21E     01                 639.45     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     03                 480.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     09                 130.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     11                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     12                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     13                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     14                 480.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     15                  25.16     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     23                 106.02     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     24                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------
17N     21E     25                 437.14     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------

                               ----------
                                 4,857.77
                               ==========

                                              -----------------------------------------------------
18N     21E     35                 285.00     Oil, gas, geo thermal & pet. wood reserved
                                              -----------------------------------------------------

                               ----------
                                  285.00
                               ==========

11N     22E     01                 640.80
                                              -----------------------------------------------------
11N     22E     03                 330.13
                                              -----------------------------------------------------
11N     22E     05                 563.36
                                              -----------------------------------------------------
11N     22E     08                 640.00
                                              -----------------------------------------------------

                               ----------
                                 2,174.29
                               ==========

12N     22E     01                 437.84
                                              -----------------------------------------------------
12N     22E     03                 415.20
                                              -----------------------------------------------------
12N     22E     05                 393.20
                                              -----------------------------------------------------
12N     22E     07                1013.64
                                              -----------------------------------------------------
12N     22E     09                 640.00
                                              -----------------------------------------------------
12N     22E     11                 597.73
                                              -----------------------------------------------------
12N     22E     15                 640.00
                                              -----------------------------------------------------




                                       52

                                  
12N     22E     17                 640.00
                                              -----------------------------------------------------
12N     22E     19                 854.16
                                              -----------------------------------------------------
12N     22E     21                 640.00
                                              -----------------------------------------------------
12N     22E     23                 640.00
                                              -----------------------------------------------------
12N     22E     25                 640.00
                                              -----------------------------------------------------
12N     22E     27                 640.00
                                              -----------------------------------------------------
12N     22E     29                 640.00
                                              -----------------------------------------------------
12N     22E     31                 772.07
                                              -----------------------------------------------------
12N     22E     33                 480.00
                                              -----------------------------------------------------
12N     22E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                10,723.84
                               ==========

13N     22E     01                 638.88
                                              -----------------------------------------------------
13N     22E     03                 640.18
                                              -----------------------------------------------------
13N     22E     05                 642.72
                                              -----------------------------------------------------
13N     22E     06                 615.07
                                              -----------------------------------------------------
13N     22E     07                 699.84
                                              -----------------------------------------------------
13N     22E     09                 640.00
                                              -----------------------------------------------------
13N     22E     11                 640.00
                                              -----------------------------------------------------
13N     22E     12                 640.00
                                              -----------------------------------------------------
13N     22E     13                 640.00
                                              -----------------------------------------------------
13N     22E     14                 640.00
                                              -----------------------------------------------------
13N     22E     15                 640.00
                                              -----------------------------------------------------
13N     22E     17                 640.00
                                              -----------------------------------------------------
13N     22E     19                 616.18
                                              -----------------------------------------------------
13N     22E     21                 640.00
                                              -----------------------------------------------------
13N     22E     22                 640.00     E2
                                              -----------------------------------------------------
13N     22E     23                 640.00
                                              -----------------------------------------------------
13N     22E     24                 640.00
                                              -----------------------------------------------------
13N     22E     25                 640.00
                                              -----------------------------------------------------
13N     22E     26                 640.00
                                              -----------------------------------------------------
13N     22E     27                 640.00
                                              -----------------------------------------------------
13N     22E     29                 640.00
                                              -----------------------------------------------------
13N     22E     31                 648.00
                                              -----------------------------------------------------
13N     22E     33                 640.00
                                              -----------------------------------------------------
13N     22E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                15,380.87
                               ==========

14N     22E     01                 677.92
14N     22E     03                 667.58
14N     22E     04                 661.28
                                              -----------------------------------------------------
14N     22E     05                 655.18
                                              -----------------------------------------------------
14N     22E     06                 699.65
                                              -----------------------------------------------------
14N     22E     07                 695.68
                                              -----------------------------------------------------
14N     22E     08                 640.00
                                              -----------------------------------------------------
14N     22E     09                 640.00
                                              -----------------------------------------------------




                                       53

                                  
14N     22E     11                 640.00
                                              -----------------------------------------------------
14N     22E     12                 640.00
                                              -----------------------------------------------------
14N     22E     13                 640.00
                                              -----------------------------------------------------
14N     22E     14                 640.00
                                              -----------------------------------------------------
14N     22E     15                 640.00
                                              -----------------------------------------------------
14N     22E     17                 640.00
                                              -----------------------------------------------------
14N     22E     18                 590.45
                                              -----------------------------------------------------
14N     22E     19                 705.42
                                              -----------------------------------------------------
14N     22E     20                 640.00
                                              -----------------------------------------------------
14N     22E     21                 640.00
                                              -----------------------------------------------------
14N     22E     22                 600.00
                                              -----------------------------------------------------
14N     22E     23                 555.00
                                              -----------------------------------------------------
14N     22E     24                 640.00
                                              -----------------------------------------------------
14N     22E     25                 640.00
                                              -----------------------------------------------------
14N     22E     26                 640.00
                                              -----------------------------------------------------
14N     22E     27                 640.00
                                              -----------------------------------------------------
14N     22E     28                 640.00
                                              -----------------------------------------------------
14N     22E     29                 640.00
                                              -----------------------------------------------------
14N     22E     30                 709.28
                                              -----------------------------------------------------
14N     22E     31                 713.82
                                              -----------------------------------------------------
14N     22E     33                 640.00
                                              -----------------------------------------------------
14N     22E     34                 640.00
                                              -----------------------------------------------------
14N     22E     35                 640.00
                                              -----------------------------------------------------

                               ----------
                                20,091.26
                               ==========

15N     22E     01                 643.92
15N     22E     03                 640.48
                                              -----------------------------------------------------
15N     22E     05                 641.18
                                              -----------------------------------------------------
15N     22E     06                 707.05
                                              -----------------------------------------------------
15N     22E     07                 718.82
                                              -----------------------------------------------------
15N     22E     09                 640.00
                                              -----------------------------------------------------
15N     22E     10                 640.00
                                              -----------------------------------------------------
15N     22E     11                 640.00
                                              -----------------------------------------------------
15N     22E     13                 640.00
                                              -----------------------------------------------------
15N     22E     14                 640.00
                                              -----------------------------------------------------
15N     22E     15                 640.00
                                              -----------------------------------------------------
15N     22E     17                 640.00
                                              -----------------------------------------------------
15N     22E     20                 640.00
                                              -----------------------------------------------------
15N     22E     21                 640.00
                                              -----------------------------------------------------
15N     22E     22                 640.00
                                              -----------------------------------------------------
15N     22E     23                 640.00
                                              -----------------------------------------------------
15N     22E     24                 640.00
                                              -----------------------------------------------------
15N     22E     25                 640.00
                                              -----------------------------------------------------
15N     22E     26                 640.00
                                              -----------------------------------------------------
15N     22E     27                 640.00
                                              -----------------------------------------------------
15N     22E     28                 640.00
                                              -----------------------------------------------------




                                       54

                                  
15N     22E     31                 691.20
                                              ----------------------------------------------------------
15N     22E     33                 640.00
                                              ----------------------------------------------------------
15N     22E     34                 640.00
                                              ----------------------------------------------------------
15N     22E     35                 640.00
                                              ----------------------------------------------------------

                              -----------
                                16,202.65
                              ===========

16N     22E     01                 637.20     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
16N     22E     02                 636.86     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
16N     22E     03                 637.41     N2,Oil, gas, geo thermal & pet. wood reserv
                                              ----------------------------------------------------------
16N     22E     04                 638.08     N2,Oil, gas, geo thermal & pet. wood reserv
                                              ----------------------------------------------------------
16N     22E     05                 638.30     N2,Oil, gas, geo thermal & pet. wood reserv
                                              ----------------------------------------------------------
16N     22E     07                 631.94
                                              ----------------------------------------------------------
16N     22E     09                 640.00
                                              ----------------------------------------------------------
16N     22E     10                 640.00
                                              ----------------------------------------------------------
16N     22E     11                 640.00
                                              ----------------------------------------------------------
16N     22E     12                 657.94     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
16N     22E     13                 669.33
                                              ----------------------------------------------------------
16N     22E     14                 640.00
                                              ----------------------------------------------------------
16N     22E     15                 640.00
                                              ----------------------------------------------------------
16N     22E     19                 631.36
                                              ----------------------------------------------------------
16N     22E     21                 640.00
                                              ----------------------------------------------------------
16N     22E     22                 640.00
                                              ----------------------------------------------------------
16N     22E     23                 640.00
                                              ----------------------------------------------------------
16N     22E     24                 655.04
                                              ----------------------------------------------------------
16N     22E     25                 640.00
                                              ----------------------------------------------------------
16N     22E     27                 640.00
                                              ----------------------------------------------------------
16N     22E     31                 630.82
                                              ----------------------------------------------------------
16N     22E     33                 640.00
                                              ----------------------------------------------------------
16N     22E     35                 640.00
                                              ----------------------------------------------------------

                              -----------
                                14,744.28
                              ===========

17N     22E     01                 641.48     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     02                 642.54     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     03                 641.78     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     04                 639.74     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     05                 641.06     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     06                 677.31     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     07                 668.78     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     08                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     09                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     10                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     11                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     12                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     13                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------




                                       55

                                  
17N     22E     14                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     15                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     17                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     18                 663.98     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     19                 657.42     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     20                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     21                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     22                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     23                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     24                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     25                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     26                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     27                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     28                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     29                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     30                 651.58     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     31                 644.70     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     32                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     33                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     34                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
17N     22E     35                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------

                              -----------
                                21,890.37
                              ===========

                                              ----------------------------------------------------------
18N     22E     13                 620.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     14                 241.63     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     15                  66.47     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     21                 320.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     22                 479.85     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     23                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     24                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     25                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     26                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     27                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     28                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     29                 435.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     31                 597.52     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     32                 480.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     33                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     34                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
18N     22E     35                 640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------

                      -------------------
                                 9,000.47
                      ===================

11N     23E     05                 639.24
                                              ----------------------------------------------------------




                                       56

                             
                              -----------
                                   639.24
                              ===========

     12N     23E    01             522.06
                                              ----------------------------------------------------------
     12N     23E    03             494.58
                                              ----------------------------------------------------------
     12N     23E    05             465.90
                                              ----------------------------------------------------------
     12N     23E    07             654.98
                                              ----------------------------------------------------------
     12N     23E    08             640.00
                                              ----------------------------------------------------------
     12N     23E    09             640.00
                                              ----------------------------------------------------------
     12N     23E    10             480.00
                                              ----------------------------------------------------------
     12N     23E    11             640.00
                                              ----------------------------------------------------------
     12N     23E    12             600.00
                                              ----------------------------------------------------------
     12N     23E    13             640.00
                                              ----------------------------------------------------------
     12N     23E    14             640.00
                                              ----------------------------------------------------------
     12N     23E    15             640.00
                                              ----------------------------------------------------------
     12N     23E    17             640.00
                                              ----------------------------------------------------------
     12N     23E    18             618.06
                                              ----------------------------------------------------------
     12N     23E    19             660.22
                                              ----------------------------------------------------------
     12N     23E    21             640.00
                                              ----------------------------------------------------------
     12N     23E    22             640.00
                                              ----------------------------------------------------------
     12N     23E    23             600.00
                                              ----------------------------------------------------------
     12N     23E    25             640.00
                                              ----------------------------------------------------------
     12N     23E    26             640.00
                                              ----------------------------------------------------------
     12N     23E    27             640.00
                                              ----------------------------------------------------------
     12N     23E    29             640.00
                                              ----------------------------------------------------------
     12N     23E    31             664.06
                                              ----------------------------------------------------------
     12N     23E    33             640.00
                                              ----------------------------------------------------------
     12N     23E    35             640.00
                                              ----------------------------------------------------------

                              -----------
                                15,359.86
                              ===========

     13N     23E    01             640.58
                                              ----------------------------------------------------------
     13N     23E    03             642.46
                                              ----------------------------------------------------------
     13N     23E    04             322.08
                                              ----------------------------------------------------------
     13N     23E    05             641.92
                                              ----------------------------------------------------------
     13N     23E    06             691.50
                                              ----------------------------------------------------------
     13N     23E    07             680.78
                                              ----------------------------------------------------------
     13N     23E    09             640.00
                                              ----------------------------------------------------------
     13N     23E    11             640.00
                                              ----------------------------------------------------------
     13N     23E    12             640.00
                                              ----------------------------------------------------------
     13N     23E    13             640.00
                                              ----------------------------------------------------------
     13N     23E    14             640.00
                                              ----------------------------------------------------------
     13N     23E    15             640.00
                                              ----------------------------------------------------------
     13N     23E    17             640.00
                                              ----------------------------------------------------------
     13N     23E    18             673.18
                                              ----------------------------------------------------------
     13N     23E    19             665.92
                                              ----------------------------------------------------------
     13N     23E    20             640.00
                                              ----------------------------------------------------------
     13N     23E    21             640.00
                                              ----------------------------------------------------------
     13N     23E    22             240.00
                                              ----------------------------------------------------------

     


                                       57

                             
     13N     23E    23             640.00
                                              ----------------------------------------------------------
     13N     23E    24             640.00
                                              ----------------------------------------------------------
     13N     23E    25             640.00
                                              ----------------------------------------------------------
     13N     23E    27             640.00
                                              ----------------------------------------------------------
     13N     23E    28             640.00
                                              ----------------------------------------------------------
     13N     23E    29             640.00
                                              ----------------------------------------------------------
     13N     23E    30             656.38
                                              ----------------------------------------------------------
     13N     23E    31             645.66
                                              ----------------------------------------------------------
     13N     23E    33             640.00
                                              ----------------------------------------------------------
     13N     23E    34             400.00
                                              ----------------------------------------------------------
     13N     23E    35             640.00
                                              ----------------------------------------------------------

                              -----------
                                17,780.46
                              ===========

     14N     23E    01             645.02
                                              ----------------------------------------------------------
     14N     23E    03             658.60
                                              ----------------------------------------------------------
     14N     23E    04             664.22
                                              ----------------------------------------------------------
     14N     23E    05             669.42
                                              ----------------------------------------------------------
     14N     23E    06             757.39
                                              ----------------------------------------------------------
     14N     23E    07             713.76
                                              ----------------------------------------------------------
     14N     23E    08             640.00
                                              ----------------------------------------------------------
     14N     23E    09             640.00
                                              ----------------------------------------------------------
     14N     23E    10             640.00
                                              ----------------------------------------------------------
     14N     23E    11             640.00
                                              ----------------------------------------------------------
     14N     23E    12             480.00
                                              ----------------------------------------------------------
     14N     23E    13             640.00
                                              ----------------------------------------------------------
     14N     23E    15             640.00
                                              ----------------------------------------------------------
     14N     23E    17             630.00
                                              ----------------------------------------------------------
     14N     23E    18             710.74
                                              ----------------------------------------------------------
     14N     23E    19             705.94
                                              ----------------------------------------------------------
     14N     23E    20             640.00
                                              ----------------------------------------------------------
     14N     23E    21             640.00
                                              ----------------------------------------------------------
     14N     23E    22             480.00
                                              ----------------------------------------------------------
     14N     23E    23             640.00
                                              ----------------------------------------------------------
     14N     23E    24             640.00
                                              ----------------------------------------------------------
     14N     23E    25             640.00
                                              ----------------------------------------------------------
     14N     23E    26             640.00
                                              ----------------------------------------------------------
     14N     23E    27             640.00
                                              ----------------------------------------------------------
     14N     23E    28             640.00
                                              ----------------------------------------------------------
     14N     23E    29             640.00
                                              ----------------------------------------------------------
     14N     23E    30             700.58
                                              ----------------------------------------------------------
     14N     23E    31             697.18
                                              ----------------------------------------------------------
     14N     23E    33             640.00
                                              ----------------------------------------------------------
     14N     23E    35             640.00
                                              ----------------------------------------------------------

                              -----------
                                19,392.85
                              ===========

     15N     23E    03             321.69
                                              ----------------------------------------------------------

     


                                       58

                             
     15N     23E    05             640.22
                                              ----------------------------------------------------------
     15N     23E    07             725.02
                                              ----------------------------------------------------------
     15N     23E    09             640.00
                                              ----------------------------------------------------------
     15N     23E    11             640.00
                                              ----------------------------------------------------------
     15N     23E    13             640.00
                                              ----------------------------------------------------------
     15N     23E    15             640.00
                                              ----------------------------------------------------------
     15N     23E    17             640.00
                                              ----------------------------------------------------------
     15N     23E    18             722.72
                                              ----------------------------------------------------------
     15N     23E    19             722.50
                                              ----------------------------------------------------------
     15N     23E    20             640.00
                                              ----------------------------------------------------------
     15N     23E    21             640.00
                                              ----------------------------------------------------------
     15N     23E    22             640.00
                                              ----------------------------------------------------------
     15N     23E    23             640.00
                                              ----------------------------------------------------------
     15N     23E    25             640.00
                                              ----------------------------------------------------------
     15N     23E    26             480.00
                                              ----------------------------------------------------------
     15N     23E    27             640.00
                                              ----------------------------------------------------------
     15N     23E    28             160.00
                                              ----------------------------------------------------------
     15N     23E    29             640.00
                                              ----------------------------------------------------------
     15N     23E    30             722.82
                                              ----------------------------------------------------------
     15N     23E    31             720.62
                                              ----------------------------------------------------------
     15N     23E    33             640.00
                                              ----------------------------------------------------------
     15N     23E    34             240.00
                                              ----------------------------------------------------------
     15N     23E    35             640.00
                                              ----------------------------------------------------------

                              -----------
                                14,415.59
                              ===========

                                              ----------------------------------------------------------
     16N     23E    03             321.29     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    04             628.38     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    05             631.90     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    07             724.26     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    08             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    09             617.50     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    10             307.70     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     16N     23E    15             624.30
                                              ----------------------------------------------------------

                              -----------
                                 4,495.33
                              ===========


     17N     23E    01             645.50     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    03             641.32     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    05             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    07             639.66     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    08             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    09             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    11             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    13             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    14             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    15             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------

     


                                       59

                             
     17N     23E    17             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    18             637.20     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    19             637.62     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    21             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    22             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    23             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    24             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    25             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    26             600.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    27             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     17N     23E    29             640.00     Oil, gas, geo thermal & pet. wood reserved*
                                              ----------------------------------------------------------
     17N     23E    31             638.72     Oil, gas, geo thermal & pet. wood reserved*
                                              ----------------------------------------------------------
     17N     23E    33             640.00     Oil, gas, geo thermal & pet. wood reserved*
                                              ----------------------------------------------------------

                              -----------
                                14,680.02
                              ===========

                                              ----------------------------------------------------------
     18N     23E    07             125.00     Oil, gas, geo thermal & pet. wood reserved*
                                              ----------------------------------------------------------
     18N     23E    09              10.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    11              10.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    13             590.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    15             580.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    17             590.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    18             633.26     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    19             633.36     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    20             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    21             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    23             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    25             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    26             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    27             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    28             320.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    29             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    30             633.86     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    31             634.28     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    32             480.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    33             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    34             320.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------
     18N     23E    35             640.00     Oil, gas, geo thermal & pet. wood reserved
                                              ----------------------------------------------------------

                              -----------
                                11,319.76
                              ===========

                              -----------
TOTAL                          452,555.08
                              ===========

     

                                       60



                        MOHAVE COUNTY, AZ

                                          3/31/2002
                                            MINERAL
                                              ACRES
TWN      RGE     SEC                          OWNED         COMMENTS
- --------------------------------------------------------------------------------
                                              
17N      18W     01                          560.00
                                                          ---------------
17N      18W     13                          193.29
                                                          ---------------

                         --------------------------
                                             753.29
                         ==========================

18N      18W     01                          624.72
                                                          ---------------
18N      18W     25                          640.00
                                                          ---------------

                         --------------------------
                                           1,264.72

                         ==========================

19N      18W     01                          641.12
                                                          ---------------
19N      18W     03                          644.36
                                                          ---------------
19N      18W     05                          647.04
                                                          ---------------
19N      18W     07                          633.72
                                                          ---------------
19N      18W     09                          640.00
                                                          ---------------
19N      18W     11                          640.00
                                                          ---------------
19N      18W     13                          640.00
                                                          ---------------
19N      18W     15                          640.00
                                                          ---------------
19N      18W     21                          640.00
                                                          ---------------
19N      18W     23                          640.00
                                                          ---------------
19N      18W     25                          640.00
                                                          ---------------
19N      18W     27                          640.00
                                                          ---------------
19N      18W     33                          640.00
                                                          ---------------
19N      18W     35                          640.00
                                                          ---------------

                         --------------------------
                                           8,966.24

                         ==========================

20N      18W     01                          657.32
                                                          ---------------
20N      18W     05                          651.88
                                                          ---------------
20N      18W     07                          631.80
                                                          ---------------
20N      18W     15                          640.00
                                                          ---------------
20N      18W     17                          640.00
                                                          ---------------
20N      18W     19                          634.20
                                                          ---------------
20N      18W     21                          640.00
                                                          ---------------



                                       61

                                              
20N      18W     23                          640.00
                                                          ---------------
20N      18W     25                          640.00
                                                          ---------------
20N      18W     27                          640.00
                                                          ---------------
20N      18W     29                          640.00
                                                          ---------------
20N      18W     31                          634.28
                                                          ---------------
20N      18W     33                          640.00
                                                          ---------------
20N      18W     35                          640.00
                                                          ---------------

                         --------------------------
                                           8,969.48
                         ==========================

21N      18W     01                          641.60
                                                          ---------------
21N      18W     03                          640.60
                                                          ---------------
21N      18W     05                          640.48
                                                          ---------------
21N      18W     07                          477.87
                                                          ---------------
21N      18W     09                          640.00
                                                          ---------------
21N      18W     11                          640.00
                                                          ---------------
21N      18W     13                          640.00
                                                          ---------------
21N      18W     15                          580.00
                                                          ---------------
21N      18W     17                          640.00
                                                          ---------------
21N      18W     19                          618.16
                                                          ---------------
21N      18W     21                          640.00
                                                          ---------------
21N      18W     23                          559.93
                                                          ---------------
21N      18W     25                          640.00
                                                          ---------------
21N      18W     27                          640.00
                                                          ---------------
21N      18W     29                          640.00
                                                          ---------------
21N      18W     31                          639.84
                                                          ---------------
21N      18W     33                          640.00
                                                          ---------------
21N      18W     35                          619.68
                                                          ---------------

                         --------------------------
                                          11,178.16
                         ==========================

                                                          ---------------
17N      19W     35                           80.00
                                                          ---------------

                         --------------------------
                                              80.00
                         ==========================

19N      19W     01                          649.16
                                                          ---------------
19N      19W     03                          649.88
                                                          ---------------
19N      19W     11                          640.00
                                                          ---------------

                         --------------------------
                                           1,939.04
                         ==========================




                                       62

                                              
20N      19W     01                          646.64
                                                          ---------------
20N      19W     03                          645.44
                                                          ---------------
20N      19W     09                          640.00
                                                          ---------------
20N      19W     11                          640.00
                                                          ---------------
20N      19W     13                          640.00
                                                          ---------------
20N      19W     15                          640.00
                                                          ---------------
20N      19W     23                          640.00
                                                          ---------------
20N      19W     25                          640.00
                                                          ---------------
20N      19W     27                          640.00
                                                          ---------------
20N      19W     35                          640.00
                                                          ---------------

                         --------------------------
                                           6,412.08
                         ==========================

21N      19W     01                          640.36
                                                          ---------------
21N      19W     03                          640.64
                                                          ---------------
21N      19W     13                          640.00
                                                          ---------------
21N      19W     15                          640.00
                                                          ---------------
21N      19W     21                          640.00
                                                          ---------------
21N      19W     23                          640.00
                                                          ---------------
21N      19W     25                          640.00
                                                          ---------------
21N      19W     27                          640.00
                                                          ---------------
21N      19W     29                          637.64
                                                          ---------------
21N      19W     33                          640.00
                                                          ---------------
21N      19W     35                          640.00
                                                          ---------------

                         --------------------------
                                           7,038.64
                         ==========================

                         --------------------------
TOTAL                                     46,601.65
                         ==========================





                               COCONINO COUNTY, AZ
- --------------------------------------------------------------------------------
                                    MINERAL
                                      ACRES
TWN   RGE   SEC                       OWNED             COMMENTS
- --------------------------------------------------------------------------------
                                           
21N   07E   33                        10.00_

                     ----------------------
                                      10.00
                     ======================



                                       63

                                           
19N   15E   07                        35.81_
19N   15E   17                        49.55_

                     ----------------------
                                      85.36
                     ======================

21N   15E   05                       640.42_
21N   15E   07                       636.18_
21N   15E   09                       640.00_
21N   15E   17                       640.00_
21N   15E   19                       637.34_
21N   15E   21                       640.00_
21N   15E   29                       640.00_
21N   15E   31                       638.88_
21N   15E   33                       640.00_

                     ----------------------
                                    5752.82
                     ======================

22N   15E   05                       638.54_
22N   15E   07                       637.76_
22N   15E   09                       640.00_
22N   15E   17                       640.00_
22N   15E   19                       639.58_
22N   15E   21                       640.00_
22N   15E   29                       640.00_
22N   15E   31                       640.08_
22N   15E   33                       640.00_

                     ----------------------
                                    5755.96
                     ======================

23N   15E   05                       638.30_
23N   15E   07                       637.66_
23N   15E   09                       640.00_
23N   15E   17                       640.00_
23N   15E   19                       640.13_
23N   15E   21                       640.00_
23N   15E   29                       640.00_
23N   15E   31                       640.50_
23N   15E   33                       640.00_

                     ----------------------
                                    5756.59
                     ======================

24N   15E   17                       640.00_
24N   15E   19                       634.98_
24N   15E   21                       640.00_




                                       64

            
24N   15E   29                       640.00_
24N   15E   31                       635.42_
24N   15E   33                       640.00_

                     -----------------------
                                   3,830.40
                     =======================

                     -----------------------
TOTAL                             21,191.13
                     =======================





                      CATRON COUNTY,
                      NEW MEXICO
                               3/31/2002
- --------------------------------------------------------------------------------
                                  MINERAL
                                    ACRES
     TWN     RGE   SEC              OWNED                  COMMENTS
- -----------------------------------------------------------------------------------------
                                 
     01N     12W     3             480.54    Lots 1-4,S2N2SW4
                                             --------------------------------------------
     01N     12W     4             637.54    Lots 1-4,S2N2
                                             --------------------------------------------
     01N     12W     7             386.44    Lots 1-4,W2E2,NE4SE4,S2SE4NE4
                                             --------------------------------------------

                          ---------------
                                 1,504.52
                          ===============

     03N     14W    22             640.00
                                             --------------------------------------------
     03N     14W    23             640.00
                                             --------------------------------------------
     03N     14W    35             640.00
                                             --------------------------------------------

                          ---------------
                                 1,920.00
                          ===============


     02N     15W    10             640.00
                                             --------------------------------------------
     02N     15W    13             640.00
                                             --------------------------------------------
     02N     15W    14             640.00
                                             --------------------------------------------
     02N     15W    17             640.00    160 Ac. Oil & Gas only
                                             --------------------------------------------
     02N     15W    20             320.00    N2
                                             --------------------------------------------
     02N     15W    21             640.00
                                             --------------------------------------------
     02N     15W    23             640.00
                                             --------------------------------------------
     02N     15W    24             640.00
                                             --------------------------------------------



                                       65

                                 
     02N     15W    25             640.00
                                             --------------------------------------------
     02N     15W    26             640.00
                                             --------------------------------------------
     02N     15W    28             480.00    N2,SW4
                                             --------------------------------------------
     02N     15W    29             280.00    SE4,S2SW4,NE4SW4
                                             --------------------------------------------
     02N     15W    30             121.06    Lots 1,3,NE4NW4
                                             --------------------------------------------
     02N     15W    34             320.00    E2
                                             --------------------------------------------
     02N     15W    35             640.00
                                             --------------------------------------------

                          ---------------
                                 7,921.06
                          ===============

                          ---------------
Total Catron                    11,345.58
                          ===============






                         CIBOLA COUNTY, NM

                                  3/31/2002
- --------------------------------------------------------------------------------------------------
                                    MINERAL
                                      ACRES
      TWN       RGE   SEC             OWNED                       COMMENTS
- --------------------------------------------------------------------------------------------------
                                         
      05N       04W    24            480.00
                                                     ---------------------------------------------

                              --------------
                                     480.00
                              ==============

      06N       04W    01            636.80
      06N       04W    03            624.56
      06N       04W    05            629.52
      06N       04W    07            622.64
      06N       04W    09            640.00
      06N       04W    11            640.00
      06N       04W    13            640.00
      06N       04W    15            640.00
      06N       04W    17            640.00
      06N       04W    19            619.20
      06N       04W    21            640.00
      06N       04W    23            640.00
      06N       04W    25            640.00
      06N       04W    27            640.00
      06N       04W    29            640.00
      06N       04W    31            622.60



                                       66

                                             
      06N       04W    33                   640.00
      06N       04W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,435.32
                                ==================

      07N       04W    01                   640.40
                                                         -------------------------------------------------------
      07N       04W    03                   640.80
                                                         -------------------------------------------------------
      07N       04W    05                   639.06
                                                         -------------------------------------------------------
      07N       04W    07                   631.60
                                                         -------------------------------------------------------
      07N       04W    09                   640.00
                                                         -------------------------------------------------------
      07N       04W    11                   560.00
                                                         -------------------------------------------------------
      07N       04W    13                   640.00
                                                         -------------------------------------------------------
      07N       04W    15                   640.00
                                                         -------------------------------------------------------
      07N       04W    17                   640.00
                                                         -------------------------------------------------------
      07N       04W    19                   626.40
                                                         -------------------------------------------------------
      07N       04W    21                   640.00
                                                         -------------------------------------------------------
      07N       04W    23                   640.00
                                                         -------------------------------------------------------
      07N       04W    25                   640.00
                                                         -------------------------------------------------------
      07N       04W    27                   640.00
                                                         -------------------------------------------------------
      07N       04W    29                   640.00
                                                         -------------------------------------------------------
      07N       04W    31                   622.60
                                                         -------------------------------------------------------
      07N       04W    33                   640.00
                                                         -------------------------------------------------------
      07N       04W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,400.86
                                ==================

      04N       05W    10                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                            640.00
                                ==================

      05N       05W    10                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                            640.00
                                ==================

      06N       05W    01                   646.00
                                                         -------------------------------------------------------
      06N       05W    03                   651.84
                                                         -------------------------------------------------------
      06N       05W    05                   645.60
                                                         -------------------------------------------------------




                                       67

                                             
      06N       05W    07                   641.60
                                                         -------------------------------------------------------
      06N       05W    09                   640.00
                                                         -------------------------------------------------------
      06N       05W    11                   640.00
                                                         -------------------------------------------------------
      06N       05W    13                   640.00
                                                         -------------------------------------------------------
      06N       05W    15                   640.00
                                                         -------------------------------------------------------
      06N       05W    17                   640.00
                                                         -------------------------------------------------------
      06N       05W    19                   639.60
                                                         -------------------------------------------------------
      06N       05W    21                   640.00
                                                         -------------------------------------------------------
      06N       05W    23                   640.00
                                                         -------------------------------------------------------
      06N       05W    25                   640.00
                                                         -------------------------------------------------------
      06N       05W    27                   640.00
                                                         -------------------------------------------------------
      06N       05W    29                   640.00
                                                         -------------------------------------------------------
      06N       05W    31                   647.92
                                                         -------------------------------------------------------
      06N       05W    33                   640.00
                                                         -------------------------------------------------------
      06N       05W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,552.56
                                ==================

      07N       05W    01                   644.00
                                                         -------------------------------------------------------
      07N       05W    03                   644.00
                                                         -------------------------------------------------------
      07N       05W    05                   646.40
                                                         -------------------------------------------------------
      07N       05W    07                   627.20
                                                         -------------------------------------------------------
      07N       05W    09                   640.00
                                                         -------------------------------------------------------
      07N       05W    11                   640.00
                                                         -------------------------------------------------------
      07N       05W    13                   640.00
                                                         -------------------------------------------------------
      07N       05W    15                   640.00
                                                         -------------------------------------------------------
      07N       05W    17                   640.00
                                                         -------------------------------------------------------
      07N       05W    19                   628.40
                                                         -------------------------------------------------------
      07N       05W    21                   640.00
                                                         -------------------------------------------------------
      07N       05W    23                   640.00
                                                         -------------------------------------------------------
      07N       05W    25                   640.00
                                                         -------------------------------------------------------
      07N       05W    27                   640.00
                                                         -------------------------------------------------------
      07N       05W    29                   640.00
                                                         -------------------------------------------------------
      07N       05W    31                   631.20
                                                         -------------------------------------------------------
      07N       05W    33                   640.00
                                                         -------------------------------------------------------
      07N       05W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,501.20
                                ==================

      04N       06W    10                   640.00       Oil & Gas only
                                                         -------------------------------------------------------
      04N       06W    12                   280.00       Oil & Gas only [NE4,N2NW4,SE4NW4]
                                                         -------------------------------------------------------

                                ------------------
                                            920.00
                                ==================

      06N       06W    01                   638.40
                                                         -------------------------------------------------------
      06N       06W    03                   639.84
                                                         -------------------------------------------------------




                                       68

                                             
      06N       06W    05                   642.00
                                                         -------------------------------------------------------
      06N       06W    07                   634.40
                                                         -------------------------------------------------------
      06N       06W    09                   640.00
                                                         -------------------------------------------------------
      06N       06W    11                   640.00
                                                         -------------------------------------------------------
      06N       06W    13                   640.00
                                                         -------------------------------------------------------
      06N       06W    15                   640.00
                                                         -------------------------------------------------------
      06N       06W    17                   640.00
                                                         -------------------------------------------------------
      06N       06W    19                   638.00
                                                         -------------------------------------------------------
      06N       06W    21                   640.00
                                                         -------------------------------------------------------
      06N       06W    23                   640.00
                                                         -------------------------------------------------------
      06N       06W    25                   640.00
                                                         -------------------------------------------------------
      06N       06W    27                   640.00
                                                         -------------------------------------------------------
      06N       06W    29                   640.00
                                                         -------------------------------------------------------
      06N       06W    31                   631.84
                                                         -------------------------------------------------------
      06N       06W    33                   640.00
                                                         -------------------------------------------------------
      06N       06W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,504.48
                                ==================

                                                         -------------------------------------------------------
      07N       06W    01                   640.48
                                                         -------------------------------------------------------
      07N       06W    03                   641.04
                                                         -------------------------------------------------------
      07N       06W    05                   641.20
                                                         -------------------------------------------------------
      07N       06W    07                   628.40
                                                         -------------------------------------------------------
      07N       06W    09                   640.00
                                                         -------------------------------------------------------
      07N       06W    11                   640.00
                                                         -------------------------------------------------------
      07N       06W    13                   640.00
                                                         -------------------------------------------------------
      07N       06W    15                   640.00
                                                         -------------------------------------------------------
      07N       06W    17                   640.00
                                                         -------------------------------------------------------
      07N       06W    19                   633.84
                                                         -------------------------------------------------------
      07N       06W    21                   640.00
                                                         -------------------------------------------------------
      07N       06W    23                   640.00
                                                         -------------------------------------------------------
      07N       06W    25                   640.00
                                                         -------------------------------------------------------
      07N       06W    27                   640.00
                                                         -------------------------------------------------------
      07N       06W    29                   640.00
                                                         -------------------------------------------------------




                                       69

                                             
      07N       06W    31                   632.40
                                                         -------------------------------------------------------
      07N       06W    33                   640.00
                                                         -------------------------------------------------------
      07N       06W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,497.36
                                ==================

                                                         -------------------------------------------------------
      08N       13W    03                   630.88
                                                         -------------------------------------------------------
      08N       13W    04                   633.42
                                                         -------------------------------------------------------
      08N       13W    05                   636.36
                                                         -------------------------------------------------------
      08N       13W    06                   630.08
                                                         -------------------------------------------------------
      08N       13W    07                   629.16
                                                         -------------------------------------------------------
      08N       13W    08                   640.00
                                                         -------------------------------------------------------
      08N       13W    09                   640.00
                                                         -------------------------------------------------------
      08N       13W    10                   640.00
                                                         -------------------------------------------------------
      08N       13W    17                   640.00
                                                         -------------------------------------------------------
      08N       13W    18                   628.40
                                                         -------------------------------------------------------
      08N       13W    19                   629.00
                                                         -------------------------------------------------------

                                ------------------
                                          6,977.30
                                ==================

      09N       13W    06                   638.57
                                                         -------------------------------------------------------
      09N       13W    08                   640.00
                                                         -------------------------------------------------------
      09N       13W    10                   640.00
                                                         -------------------------------------------------------
      09N       13W    14                   640.00
                                                         -------------------------------------------------------
      09N       13W    18                   636.64
                                                         -------------------------------------------------------
      09N       13W    20                   640.00
                                                         -------------------------------------------------------
      09N       13W    30                   637.76
                                                         -------------------------------------------------------

                                ------------------
                                          4,472.97
                                ==================

      06N       14W    01                   640.40
                                                         -------------------------------------------------------
      06N       14W    03                   640.80
                                                         -------------------------------------------------------
      06N       14W    05                   641.36
                                                         -------------------------------------------------------
      06N       14W    07                   612.52
                                                         -------------------------------------------------------
      06N       14W    09                   640.00
                                                         -------------------------------------------------------
      06N       14W    11                   640.00
                                                         -------------------------------------------------------
      06N       14W    13                   640.00
                                                         -------------------------------------------------------
      06N       14W    15                   640.00
                                                         -------------------------------------------------------
      06N       14W    17                   640.00
                                                         -------------------------------------------------------




                                       70

                                             
      06N       14W    19                   610.08
                                                         -------------------------------------------------------
      06N       14W    21                   640.00
                                                         -------------------------------------------------------
      06N       14W    23                   640.00
                                                         -------------------------------------------------------
      06N       14W    25                   640.00
                                                         -------------------------------------------------------
      06N       14W    27                   640.00
                                                         -------------------------------------------------------
      06N       14W    29                   640.00
                                                         -------------------------------------------------------
      06N       14W    31                   612.60
                                                         -------------------------------------------------------
      06N       14W    33                   640.00
                                                         -------------------------------------------------------
      06N       14W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,437.76
                                ==================

      07N       14W    01                   639.52
                                                         -------------------------------------------------------
      07N       14W    03                   641.68
                                                         -------------------------------------------------------
      07N       14W    05                   640.88
                                                         -------------------------------------------------------
      07N       14W    07                   624.08
                                                         -------------------------------------------------------
      07N       14W    09                   640.00
                                                         -------------------------------------------------------
      07N       14W    11                   640.00
                                                         -------------------------------------------------------
      07N       14W    13                   640.00
                                                         -------------------------------------------------------
      07N       14W    15                   640.00
                                                         -------------------------------------------------------
      07N       14W    17                   640.00
                                                         -------------------------------------------------------
      07N       14W    19                   619.56
                                                         -------------------------------------------------------
      07N       14W    21                   640.00
                                                         -------------------------------------------------------
      07N       14W    23                   640.00
                                                         -------------------------------------------------------
      07N       14W    25                   640.00
                                                         -------------------------------------------------------
      07N       14W    27                   640.00
                                                         -------------------------------------------------------
      07N       14W    29                   640.00
                                                         -------------------------------------------------------
      07N       14W    31                   614.48
                                                         -------------------------------------------------------
      07N       14W    33                   640.00
                                                         -------------------------------------------------------
      07N       14W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,460.20
                                ==================

      08N       14W    01                   633.00
                                                         -------------------------------------------------------
      08N       14W    03                   642.24
                                                         -------------------------------------------------------
      08N       14W    05                   651.08
                                                         -------------------------------------------------------
      08N       14W    07                   637.20
                                                         -------------------------------------------------------
      08N       14W    09                   640.00
                                                         -------------------------------------------------------
      08N       14W    11                   640.00
                                                         -------------------------------------------------------
      08N       14W    13                   640.00
                                                         -------------------------------------------------------
      08N       14W    15                   640.00
                                                         -------------------------------------------------------




                                       71

                                             
      08N       14W    17                   640.00
                                                         -------------------------------------------------------
      08N       14W    19                   634.48
                                                         -------------------------------------------------------
      08N       14W    21                   640.00
                                                         -------------------------------------------------------
      08N       14W    23                   640.00
                                                         -------------------------------------------------------
      08N       14W    25                   640.00
                                                         -------------------------------------------------------
      08N       14W    27                   640.00
                                                         -------------------------------------------------------
      08N       14W    29                   640.00
                                                         -------------------------------------------------------
      08N       14W    31                   628.32
                                                         -------------------------------------------------------
      08N       14W    33                   640.00
                                                         -------------------------------------------------------
      08N       14W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,506.32
                                ==================

      09N       14W    10                   640.00
                                                         -------------------------------------------------------
      09N       14W    12                   640.00
                                                         -------------------------------------------------------
      09N       14W    14                   320.00       N2
                                                         -------------------------------------------------------
      09N       14W    24                   640.00
                                                         -------------------------------------------------------
      09N       14W    26                   480.00       E2E2,W2
                                                         -------------------------------------------------------
      09N       14W    28                   480.00       N2,SE4
                                                         -------------------------------------------------------
      09N       14W    34                   320.00       E2
                                                         -------------------------------------------------------

                                ------------------
                                          3,520.00
                                ==================

      10N       14W    22                   640.00
                                                         -------------------------------------------------------
      10N       14W    28                   640.00
                                                         -------------------------------------------------------
      10N       14W    34                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                          1,920.00
                                ==================


      07N       15W    01                   640.84
                                                         -------------------------------------------------------
      07N       15W    03                   640.80
                                                         -------------------------------------------------------
      07N       15W    05                   640.00
                                                         -------------------------------------------------------
      07N       15W    09                   640.00
                                                         -------------------------------------------------------
      07N       15W    11                   640.00
                                                         -------------------------------------------------------
      07N       15W    13                   640.00
                                                         -------------------------------------------------------
      07N       15W    15                   640.00
                                                         -------------------------------------------------------
      07N       15W    17                   640.00
                                                         -------------------------------------------------------
      07N       15W    21                   640.00
                                                         -------------------------------------------------------
      07N       15W    23                   640.00
                                                         -------------------------------------------------------
      07N       15W    25                   640.00
                                                         -------------------------------------------------------




                                       72

                                             
      07N       15W    27                   640.00
                                                         -------------------------------------------------------
      07N       15W    29                   640.00
                                                         -------------------------------------------------------
      07N       15W    33                   640.00
                                                         -------------------------------------------------------
      07N       15W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                          9,601.64
                                ==================

      08N       15W    01                   657.12
                                                         -------------------------------------------------------
      08N       15W    03                   659.80
                                                         -------------------------------------------------------
      08N       15W    05                   664.52
                                                         -------------------------------------------------------
      08N       15W    07                   650.24
                                                         -------------------------------------------------------
      08N       15W    09                   640.00
                                                         -------------------------------------------------------
      08N       15W    11                   640.00
                                                         -------------------------------------------------------
      08N       15W    13                   640.00
                                                         -------------------------------------------------------
      08N       15W    15                   640.00
                                                         -------------------------------------------------------
      08N       15W    17                   640.00
                                                         -------------------------------------------------------
      08N       15W    19                   648.36
                                                         -------------------------------------------------------
      08N       15W    21                   640.00
                                                         -------------------------------------------------------
      08N       15W    23                   640.00
                                                         -------------------------------------------------------
      08N       15W    25                   640.00
                                                         -------------------------------------------------------
      08N       15W    27                   640.00
                                                         -------------------------------------------------------
      08N       15W    29                   640.00
                                                         -------------------------------------------------------
      08N       15W    31                   646.48
                                                         -------------------------------------------------------
      08N       15W    33                   640.00
                                                         -------------------------------------------------------
      08N       15W    35                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                         11,606.52
                                ==================

      09N       15W    10                   640.00
                                                         -------------------------------------------------------
      09N       15W    12                   640.00
                                                         -------------------------------------------------------

                                ------------------
                                          1,280.00
                                ==================

                                ------------------
TOTAL     CIBOLA                        145,354.49
                                ==================




                                       73



                          MCKINLEY COUNTY, NM
- ------------------------------------------------------------------------------------------
                                             MINERAL
                                               ACRES
   TWN    RGE   SEC                            OWNED               COMMENTS
- -------------------------------------------------------------------------------------------
                                           
   14N    12W   01                           640.68
                                                       ------------------------------------
   14N    12W   03                           640.92
                                                       ------------------------------------
   14N    12W   05                           640.40
                                                       ------------------------------------
   14N    12W   07                           648.32
                                                       ------------------------------------
   14N    12W   09                           640.00
                                                       ------------------------------------
   14N    12W   11                           640.00
                                                       ------------------------------------
   14N    12W   13                           640.00
                                                       ------------------------------------
   14N    12W   15                           640.00
                                                       ------------------------------------
   14N    12W   17                           640.00
                                                       ------------------------------------
   14N    12W   19                           653.80
                                                       ------------------------------------
   14N    12W   23                           640.00
                                                       ------------------------------------
   14N    12W   25                           640.00
                                                       ------------------------------------
   14N    12W   27                           640.00
                                                       ------------------------------------
   14N    12W   29                           640.00
                                                       ------------------------------------
   14N    12W   31                           658.04
                                                       ------------------------------------
   14N    12W   33                           640.00
                                                       ------------------------------------
   14N    12W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                          10,922.16
                        ===========================

   15N    12W   01                           639.20
                                                       ------------------------------------
   15N    12W   03                           636.24
                                                       ------------------------------------
   15N    12W   11                           640.00
                                                       ------------------------------------
   15N    12W   13                           640.00
                                                       ------------------------------------
   15N    12W   15                           640.00
                                                       ------------------------------------
   15N    12W   17                           640.00
                                                       ------------------------------------
   15N    12W   23                           640.00
                                                       ------------------------------------
   15N    12W   33                           640.00
                                                       ------------------------------------
   15N    12W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           5,755.44
                        ===========================

   16N    12W   01                           325.32
                                                       ------------------------------------
   16N    12W   03                           635.20
                                                       ------------------------------------
   16N    12W   05                           622.00
                                                       ------------------------------------
   16N    12W   07                           643.60
                                                       ------------------------------------
   16N    12W   09                           640.00
                                                       ------------------------------------



                                       74

                                        
   16N    12W   11                           320.00    W2
                                                       ------------------------------------
   16N    12W   13                           160.00    SW4
                                                       ------------------------------------
   16N    12W   15                           480.00
                                                       ------------------------------------
   16N    12W   17                           640.00
                                                       ------------------------------------
   16N    12W   19                           643.28
                                                       ------------------------------------
   16N    12W   21                           560.00
                                                       ------------------------------------
   16N    12W   23                           640.00
                                                       ------------------------------------
   16N    12W   25                           640.00
                                                       ------------------------------------
   16N    12W   27                           640.00
                                                       ------------------------------------
   16N    12W   29                           640.00
                                                       ------------------------------------
   16N    12W   33                           640.00
                                                       ------------------------------------
   16N    12W   35                           320.00
                                                       ------------------------------------

                        ---------------------------
                                           9,189.40
                        ===========================

   17N    12W   01                           640.36
                                                       ------------------------------------
   17N    12W   03                           641.36
                                                       ------------------------------------
   17N    12W   05                           640.48
                                                       ------------------------------------
   17N    12W   07                           638.32
                                                       ------------------------------------
   17N    12W   09                           640.00
                                                       ------------------------------------
   17N    12W   11                           640.00
                                                       ------------------------------------
   17N    12W   13                           640.00
                                                       ------------------------------------
   17N    12W   15                           640.00
                                                       ------------------------------------
   17N    12W   17                           640.00
                                                       ------------------------------------
   17N    12W   19                           639.24
                                                       ------------------------------------
   17N    12W   21                           320.00    N2
                                                       ------------------------------------
   17N    12W   23                           640.00
                                                       ------------------------------------
   17N    12W   25                           640.00
                                                       ------------------------------------
   17N    12W   29                           320.00    W2
                                                       ------------------------------------
   17N    12W   31                           640.32
                                                       ------------------------------------
   17N    12W   33                           160.00    SE1/4
                                                       ------------------------------------
   17N    12W   35                           480.00
                                                       ------------------------------------

                        ---------------------------
                                           9,600.08
                        ===========================

   20N    12W   01                           644.12
                                                       ------------------------------------
   20N    12W   03                           643.32
                                                       ------------------------------------
   20N    12W   05                           241.37    NE4;S2SE4
                                                       ------------------------------------
   20N    12W   07                           633.04
                                                       ------------------------------------

   


                                       75

                                        
   20N    12W   09                           640.00
                                                       ------------------------------------
   20N    12W   11                           640.00
                                                       ------------------------------------
   20N    12W   13                           640.00
                                                       ------------------------------------
   20N    12W   15                           640.00
                                                       ------------------------------------
   20N    12W   17                           520.00    S2;S2NW4;E2NE4;SW4,NE4
                                                       ------------------------------------
   20N    12W   19                           632.44
                                                       ------------------------------------
   20N    12W   21                           640.00
                                                       ------------------------------------
   20N    12W   23                           640.00
                                                       ------------------------------------
   20N    12W   25                           640.00
                                                       ------------------------------------
   20N    12W   27                           640.00
                                                       ------------------------------------
   20N    12W   29                           640.00
                                                       ------------------------------------
   20N    12W   31                           633.68
                                                       ------------------------------------
   20N    12W   33                           640.00
                                                       ------------------------------------
   20N    12W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                          10,987.97
                        ===========================

   14N    13W   01                           640.80
                                                       ------------------------------------
   14N    13W   03                           642.36
                                                       ------------------------------------
   14N    13W   05                           640.60
                                                       ------------------------------------
   14N    13W   07                           640.64
                                                       ------------------------------------
   14N    13W   09                           640.00
                                                       ------------------------------------
   14N    13W   11                           640.00
                                                       ------------------------------------
   14N    13W   13                           640.00
                                                       ------------------------------------
   14N    13W   15                           640.00
                                                       ------------------------------------
   14N    13W   17                           640.00
                                                       ------------------------------------
   14N    13W   19                           641.89
                                                       ------------------------------------
   14N    13W   21                           640.00
                                                       ------------------------------------
   14N    13W   23                           640.00
                                                       ------------------------------------
   14N    13W   25                           640.00
                                                       ------------------------------------
   14N    13W   27                           640.00
                                                       ------------------------------------
   14N    13W   29                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           9,606.29
                        ===========================

   15N    13W   01                           641.00
                                                       ------------------------------------
   15N    13W   03                           641.24
                                                       ------------------------------------
   15N    13W   05                           641.16
                                                       ------------------------------------
   15N    13W   09                           640.00
                                                       ------------------------------------

   


                                       76

                                        
   15N    13W   11                           640.00
                                                       ------------------------------------
   15N    13W   13                           640.00
                                                       ------------------------------------
   15N    13W   19                           645.60
                                                       ------------------------------------
   15N    13W   21                           640.00
                                                       ------------------------------------
   15N    13W   25                           640.00
                                                       ------------------------------------
   15N    13W   27                           640.00
                                                       ------------------------------------
   15N    13W   29                           640.00
                                                       ------------------------------------
   15N    13W   31                           650.00
                                                       ------------------------------------
   15N    13W   33                           640.00
                                                       ------------------------------------
   15N    13W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           8,979.00
                        ===========================

   16N    13W   01                           598.60
                                                       ------------------------------------
   16N    13W   03                           593.20
                                                       ------------------------------------
   16N    13W   05                           593.00
                                                       ------------------------------------
   16N    13W   07                           631.61
                                                       ------------------------------------
   16N    13W   09                           640.00
                                                       ------------------------------------
   16N    13W   11                           640.00
                                                       ------------------------------------
   16N    13W   13                           640.00
                                                       ------------------------------------
   16N    13W   15                           640.00
                                                       ------------------------------------
   16N    13W   17                           640.00
                                                       ------------------------------------
   16N    13W   19                           632.04
                                                       ------------------------------------
   16N    13W   21                           640.00
                                                       ------------------------------------
   16N    13W   23                           640.00
                                                       ------------------------------------
   16N    13W   25                           640.00
                                                       ------------------------------------
   16N    13W   27                           640.00
                                                       ------------------------------------
   16N    13W   29                           640.00
                                                       ------------------------------------
   16N    13W   31                           628.00
                                                       ------------------------------------
   16N    13W   33                           640.00
                                                       ------------------------------------
   16N    13W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                          11,356.45
                        ===========================

   14N    14W   01                           642.00
                                                       ------------------------------------
   14N    14W   03                           645.40
                                                       ------------------------------------
   14N    14W   05                           644.04
                                                       ------------------------------------
   14N    14W   09                           640.00
                                                       ------------------------------------
   14N    14W   11                           640.00
                                                       ------------------------------------

   


                                       77

                                        
   14N    14W   13                           640.00
                                                       ------------------------------------
   14N    14W   15                           640.00
                                                       ------------------------------------
   14N    14W   23                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           5,131.44
                        ===========================

                                                       ------------------------------------
   15N    14W   03                           640.12
                                                       ------------------------------------
   15N    14W   05                           641.36
                                                       ------------------------------------
   15N    14W   07                           479.68
                                                       ------------------------------------
   15N    14W   09                           640.00
                                                       ------------------------------------
   15N    14W   13                           640.00
                                                       ------------------------------------
   15N    14W   15                           640.00
                                                       ------------------------------------
   15N    14W   17                           640.00
                                                       ------------------------------------
   15N    14W   19                           480.84
                                                       ------------------------------------
   15N    14W   21                           320.00    W2
                                                       ------------------------------------
   15N    14W   25                           640.00
                                                       ------------------------------------
   15N    14W   27                           640.00
                                                       ------------------------------------
   15N    14W   29                           640.00
                                                       ------------------------------------
   15N    14W   31                           317.14    S2
                                                       ------------------------------------
   15N    14W   33                           320.00    S2
                                                       ------------------------------------
   15N    14W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           8,319.14
                        ===========================

   16N    14W   01                           593.00
                                                       ------------------------------------
   16N    14W   03                           595.20
                                                       ------------------------------------
   16N    14W   05                           591.20
                                                       ------------------------------------
   16N    14W   07                           639.32
                                                       ------------------------------------
   16N    14W   09                           640.00
                                                       ------------------------------------
   16N    14W   11                           640.00
                                                       ------------------------------------
   16N    14W   13                           640.00
                                                       ------------------------------------
   16N    14W   15                           320.00    N2
                                                       ------------------------------------
   16N    14W   17                           640.00
                                                       ------------------------------------
   16N    14W   19                           639.72
                                                       ------------------------------------
   16N    14W   21                           640.00
                                                       ------------------------------------
   16N    14W   23                           640.00
                                                       ------------------------------------
   16N    14W   25                           640.00
                                                       ------------------------------------
   16N    14W   27                           640.00
                                                       ------------------------------------
   16N    14W   29                           640.00
                                                       ------------------------------------

   


                                       78

                                        
   16N    14W   31                           320.44
                                                       ------------------------------------
   16N    14W   33                           480.00    W2,NE4
                                                       ------------------------------------
   16N    14W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                          10,578.88
                        ===========================

   15N    15W   01                           640.60
                                                       ------------------------------------
   15N    15W   03                           639.24
                                                       ------------------------------------
   15N    15W   05                           640.96
                                                       ------------------------------------
   15N    15W   07                           641.87
                                                       ------------------------------------
   15N    15W   09                           640.00
                                                       ------------------------------------
   15N    15W   11                           640.00
                                                       ------------------------------------
   15N    15W   13                           640.00
                                                       ------------------------------------
   15N    15W   15                           640.00
                                                       ------------------------------------
   15N    15W   17                           487.30
                                                       ------------------------------------
   15N    15W   21                           640.00
                                                       ------------------------------------
   15N    15W   23                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           6,889.97
                        ===========================

   16N    15W   01                           591.36
                                                       ------------------------------------
   16N    15W   03                           593.00
                                                       ------------------------------------
   16N    15W   05                           592.04
                                                       ------------------------------------
   16N    15W   07                           635.72
                                                       ------------------------------------
   16N    15W   09                           640.00
                                                       ------------------------------------
   16N    15W   11                           640.00
                                                       ------------------------------------
   16N    15W   13                           320.00    E2
                                                       ------------------------------------
   16N    15W   15                           640.00
                                                       ------------------------------------
   16N    15W   17                           480.00    N2,SE4
                                                       ------------------------------------
   16N    15W   19                           478.08
                                                       ------------------------------------
   16N    15W   21                           640.00
                                                       ------------------------------------
   16N    15W   23                           640.00
                                                       ------------------------------------
   16N    15W   27                           160.00    NW4
                                                       ------------------------------------
   16N    15W   29                           640.00
                                                       ------------------------------------
   16N    15W   31                           631.20
                                                       ------------------------------------
   16N    15W   33                           640.00
                                                       ------------------------------------
   16N    15W   35                           640.00
                                                       ------------------------------------

                        ---------------------------
                                           9,601.40
                        ===========================

   


                                       79

                                        
   11N    20W   24                     320.00          W2
                                                       ------------------------------------

                        ---------------------------
                                             320.00

                        ===========================

                        ---------------------------
Total McKinley                           117,237.62
                        ===========================


   



                               DONA ANA COUNTY, NM
- --------------------------------------------------------------------------------
                                               MINERAL
                                                 ACRES
               TWN  RGE   SEC                      OWNED           COMMENTS
- --------------------------------------------------------------------------------
                                                 
               23S  01E    28                     190.00
               23S  01E    28                       4.96
                                                                --------------
               23S  01E    33                     115.00
                                                                --------------

                               -------------------------
Total Dona Ana                                    309.96
                               =========================





                               SAN JUAN COUNTY, NM
- --------------------------------------------------------------------------------

                                       MINERAL
                                         ACRES
    TWN   RGE   SEC                      OWNED             COMMENTS
- --------------------------------------------------------------------------------
                                            
    21N   12W    17                     640.00
                                                        ----------------
    21N   12W    19                     639.72
                                                        ----------------
    21N   12W    21                     640.00
                                                        ----------------
    21N   12W    27                     640.00
                                                        ----------------
    21N   12W    29                     640.00
                                                        ----------------
    21N   12W    31                     560.52
                                                        ----------------
    21N   12W    33                     640.00
                                                        ----------------
    21N   12W    35                     640.00
                                                        ----------------

                         ---------------------
Total San Juan                        5,040.24
                         =====================



                                       80



                               SOCORRO COUNTY , NM
- --------------------------------------------------------------------------------
                                       MINERAL
                                         ACRES
     TWN     RGE   SEC                   OWNED             COMMENTS
- --------------------------------------------------------------------------------
                                       
     04N     03W   24                   480.00     S2,NE4
                         ---------------------
                                        480.00
                         =====================


     03N     04W   04                   318.58     Lots 3,4,S2NW4,SW4
                                                   --------------------------
     03N     04W   22                   640.00
                                                   --------------------------
     03N     04W   24                   320.00     E2
                         ---------------------
                                       1278.58
                         =====================


     03N     06W   04                   480.00     S2,S2N2
                         ---------------------
                                        480.00
                         =====================

     03N     06W   04                   160.00     NW4; Oil & Gas Only
                         ---------------------
                                        160.00
                         =====================

                         ---------------------
Total Socorro                         2,398.58
                         =====================




                               VALENCIA COUNTY, NM
- --------------------------------------------------------------------------------
                                           MINERAL
                                             ACRES
TWN      RGE     SEC                          OWNED         COMMENTS
- --------------------------------------------------------------------------------
                                            
06N      01W      07                         484.32
06N      01W      19                         641.28
06N      01W      31                         563.40     W2 & NE4 & W2SE4
                       ----------------------------
                                           1,689.00
                       ============================

06N      02W      01                         640.24
06N      02W      03                         642.16
06N      02W      05                         643.20
06N      02W      07                         644.40
06N      02W      09                         640.00
06N      02W      11                         640.00
06N      02W      13                         640.00



                                       81

                                            
06N      02W      15                         640.00
06N      02W      17                         640.00
06N      02W      19                         642.96
06N      02W      21                         640.00
06N      02W      23                         640.00
06N      02W      25                         640.00
06N      02W      27                         640.00
06N      02W      29                         640.00
06N      02W      33                         640.00
06N      02W      35                         480.00     NW4 &S2
                       ----------------------------
                                          10,732.96
                       ============================

06N      03W      01                         637.92
06N      03W      03                         635.60
06N      03W      05                         636.32
06N      03W      07                         639.92
06N      03W      09                         640.00
06N      03W      11                         640.00
06N      03W      13                         640.00
06N      03W      15                         640.00
06N      03W      17                         640.00
06N      03W      19                         640.08
06N      03W      21                         640.00
06N      03W      23                         640.00
06N      03W      25                         640.00
06N      03W      27                         640.00
06N      03W      29                         640.00
06N      03W      31                         646.24
06N      03W      33                         640.00
06N      03W      35                         640.00
                       ----------------------------
                                          11,516.08
                       ============================

07N      02W      31                         621.14
07N      02W      33                         617.96
07N      02W      35                         617.32
                       ----------------------------
                                           1,856.42

                       ============================

07N      03W      03                         633.41
07N      03W      05                         642.24
07N      03W      07                         635.05




                                       82

                                         
07N      03W      09                         640.00
07N      03W      15                         637.36
07N      03W      17                         640.00
07N      03W      19                         633.04
07N      03W      21                         640.00
07N      03W      27                         635.36
07N      03W      29                         640.00
07N      03W      31                         636.40
07N      03W      33                         640.00
07N      03W      35                         622.56
                       ----------------------------
                                           8,275.42
                       ============================


08N      03W      03                         631.72
08N      03W      05                         666.72
08N      03W      07                         624.64
08N      03W      09                         640.00
08N      03W      15                         613.20
08N      03W      17                         640.00
08N      03W      19                         622.96
08N      03W      21                         640.00
08N      03W      27                         629.20
08N      03W      29                         640.00
08N      03W      31                         626.96
08N      03W      33                         640.00
                       ----------------------------
                                           7,615.40
                       ============================

                       ----------------------------
Total Valencia                41,685.28
                       ============================




                                       83

                                    EXHIBIT D

                                     LEASES

NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS ( AFTER HOPI SALE)

                   APACHE COUNTY, AZ



G\L #     Leasee                                         Twnshp    Range   Section                             Acreage
                                                                                                
   452    Seibert Cattle\J Siebert                       14N       24E     1, ALL                                        640.86
   452    Seibert Cattle\J Siebert                       14N       25E     6, LOTS 1,2,3                                 120.00
                                                                                                               ----------------
                                                                                                                         760.86

   611    Keith Plant                                    15N       25E     9, NE4                                        120.00
   611    Keith Plant                                    15N       25E     13,S2, NE4                                    480.00
   611    Keith Plant                                    15N       25E     14, SE4                                       160.00
   611    Keith Plant                                    15N       25E     15                                             40.00
   611    Keith Plant                                    15N       25E     17, NE4, S2                                   480.00
   611    Keith Plant                                    15N       25E     18,SW4                                        160.00
   611    Keith Plant                                    15N       25E     20                                            640.00
   611    Keith Plant                                    15N       25E     21                                            640.00
   611    Keith Plant                                    15N       25E     22, exc NW4NE4, NE4NE4,SE4NE4                 560.00
   611    Keith Plant                                    15N       25E     23                                            640.00
   611    Keith Plant                                    15N       25E     24                                            640.00
   611    Keith Plant                                    15N       25E     25                                            640.00
   611    Keith Plant                                    15N       25E     27                                            640.00
   611    Keith Plant                                    15N       25E     32, NE of US180                                42.56
   611    Keith Plant                                    15N       25E     34, N2                                        320.00
   611    Keith Plant                                    15N       25E     35                                            640.00
                                                                                                               ----------------
                                                                                                                       6,842.56

   986    Dan & Sybil Heap                               15N       24E     2                                              79.26
   986    Dan & Sybil Heap                               15N       24E     3                                             591.00
   986    Dan & Sybil Heap                               15N       24E     4                                             639.10
   986    Dan & Sybil Heap                               15N       24E     5                                             636.64
   986    Dan & Sybil Heap                               15N       24E     6                                             677.90
   986    Dan & Sybil Heap                               15N       24E     7                                             682.86
   986    Dan & Sybil Heap                               15N       24E     8                                             640.00
   986    Dan & Sybil Heap                               15N       24E     9                                             640.00
   986    Dan & Sybil Heap                               15N       24E     10                                            640.00
   986    Dan & Sybil Heap                               15N       24E     11                                            513.00



                                       84

NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   APACHE COUNTY, AZ



G\L #     Leasee                                         Twnshp    Range   Section                             Acreage
                                                                                                
   986    Dan & Sybil Heap                               15N       24E     12                                             22.00
   986    Dan & Sybil Heap                               15N       24E     13                                            400.00
   986    Dan & Sybil Heap                               15N       24E     14                                            640.00
   986    Dan & Sybil Heap                               15N       24E     15                                            640.00
   986    Dan & Sybil Heap                               15N       24E     17                                            640.00
   986    Dan & Sybil Heap                               15N       24E     19                                            689.30
   986    Dan & Sybil Heap                               15N       24E     21                                            640.00
   986    Dan & Sybil Heap                               15N       24E     23                                            640.00
   986    Dan & Sybil Heap                               15N       24E     24                                            639.90
   986    Dan & Sybil Heap                               15N       24E     25                                            640.00
   986    Dan & Sybil Heap                               15N       24E     26                                            640.00
   986    Dan & Sybil Heap                               15N       24E     27                                            640.00
   986    Dan & Sybil Heap                               15N       24E     28                                            640.00
   986    Dan & Sybil Heap                               15N       24E     29                                            640.00
   986    Dan & Sybil Heap                               15N       24E     35                                            640.00
   986    Dan & Sybil Heap                               15N       25E     31                                            701.60
   986    Dan & Sybil Heap                               15N       25E     32                                            221.53
   986    Dan & Sybil Heap                               14N       25E     5                                             641.64
                                                                                                               ----------------
                                                                                                                      16,095.73

          Joseph Stradling                               15N       24E     1                                             642.34
          Joseph Stradling                               15N       24E     2                                             546.60
          Joseph Stradling                               15N       24E     3; NE OF US 180                                29.69
          Joseph Stradling                               15N       24E     11                                             80.00
          Joseph Stradling                               15N       24E     12                                            160.00
          Joseph Stradling                               16N       24E     15                                            640.00
          Joseph Stradling                               16N       24E     17;NE OF US 180                               603.25
          Joseph Stradling                               16N       24E     21;NE OF US 180                               635.58
          Joseph Stradling                               16N       24E     23                                            640.00
          Joseph Stradling                               16N       24E     25                                            640.00
          Joseph Stradling                               16N       24E     26;W2                                         320.00
          Joseph Stradling                               16N       24E     27                                            640.00
          Joseph Stradling                               16N       24E     33;NE OF US 180                                 5.20
          Joseph Stradling                               16N       24E     35                                            640.00
                                                                                                               ----------------
                                                                                                                       6,222.66



                                       85

NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   APACHE COUNTY, AZ


G\L #     Leasee                                         Twnshp    Range   Section                             Acreage
                                                                                                
                                                                                                               ----------------
TOTAL APACHE COUNTY, AZ GRAZING ACRES                                                                                 29,921.81




NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   CIBOLA COUNTY, NM

G\L #     Leasee                                         Twnshp    Range   Section                             Acreage
                                                                                                
  9410    Bierbros Development                           6N        5W      11                                            540.00
  9410    Bierbros Development                           6N        5W      15                                            640.00
  9410    Bierbros Development                           6N        5W      21                                            640.00
  9410    Bierbros Development                           6N        5W      27                                            640.00
  9410    Bierbros Development                           6N        5W      33                                            640.00
  9410    Bierbros Development                           6N        5W      35                                            640.00
                                                                                                               ----------------
TOTAL CIBOLA COUNTY, NM GRAZING ACRES                                                                                  3,740.00


NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   NAVAJO COUNTY, AZ



G\L #     Leasee                                         Twnshp    Range   Section                                 Acreage
                                                                                                
                                                                           18; W2 exc 18.81 AND 13.75 AC
   428    Hansen Brothers                                18N       19E     AC r.o.w.                                     246.46

   624    F Bar Cattle\Jed Flake                         15N       22E     1                                             643.92
   624    F Bar Cattle\Jed Flake                         15N       22E     3                                             640.48
   624    F Bar Cattle\Jed Flake                         15N       22E     10                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       22E     11                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       22E     13                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       22E     14                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       22E     15; E2                                        320.00
   624    F Bar Cattle\Jed Flake                         15N       23E     5                                             640.22
   624    F Bar Cattle\Jed Flake                         15N       23E     7                                             725.02
   624    F Bar Cattle\Jed Flake                         15N       23E     9                                             640.00



                                       86


NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   NAVAJO COUNTY, AZ

G\L #     Leasee                                         Twnshp    Range   Section                                 Acreage
                                                                                                
   624    F Bar Cattle\Jed Flake                         15N       23E     11                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     13                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     17                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     18                                            722.72
   624    F Bar Cattle\Jed Flake                         15N       23E     19                                            722.50
   624    F Bar Cattle\Jed Flake                         15N       23E     20                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     21                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     22                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     23                                            640.00
   624    F Bar Cattle\Jed Flake                         15N       23E     29                                            640.00
   624    F Bar Cattle\Jed Flake                         16N       22E     13                                            669.33
   624    F Bar Cattle\Jed Flake                         16N       22E     23                                            640.00
   624    F Bar Cattle\Jed Flake                         16N       22E     24                                            655.04
   624    F Bar Cattle\Jed Flake                         16N       22E     25                                            640.00
   624    F Bar Cattle\Jed Flake                         16N       22E     27                                            640.00
   624    F Bar Cattle\Jed Flake                         16N       22E     33                                            640.00
   624    F Bar Cattle\Jed Flake                         16N       22E     35                                            640.00
                                                                                                               ----------------
                                                                                                                      17,259.23

  9585    Malcolm Pace                                   15N       22E     15;W2                                         320.00

   621    Bar J Bar\Keith Flake                          15N       21E     11                                            640.00
   621    Bar J Bar\Keith Flake                          15N       21E     12                                            640.00
   621    Bar J Bar\Keith Flake                          15N       22E     5                                             641.18
   621    Bar J Bar\Keith Flake                          15N       22E     6                                             707.05
   621    Bar J Bar\Keith Flake                          15N       22E     7                                             718.82
   621    Bar J Bar\Keith Flake                          15N       22E     17;W2                                         320.00
   621    Bar J Bar\Keith Flake                          16N       22E     19                                            631.36
   621    Bar J Bar\Keith Flake                          16N       22E     31                                            630.82
                                                                                                               ----------------
                                                                                                                       4,929.23



                                       87

NZ CORPORATION

SUMMARY OF GRAZING LEASE LEGAL DESCRIPTIONS

                   NAVAJO COUNTY, AZ



G\L #     Leasee                                         Twnshp    Range   Section                             Acreage
                                                                                             
   474    J-P Cattle Co\Dee & Johnson                    14N       22E     6                                             699.65
   474    J-P Cattle Co\Dee & Johnson                    15N       22E     22                                            640.00
   474    J-P Cattle Co\Dee & Johnson                    15N       22E     26                                            640.00
   474    J-P Cattle Co\Dee & Johnson                    15N       22E     29;E OF Silver Creek                          620.00
                                                                                                               ----------------
                                                                                                                       2,599.65

  9901    Byron Stucky                                   15N       23E     25                                            640.00

  474A    Dee Johnson                        INV 04/02   14N       21E     1; E of Silver Creek                          160.00

  476A    Glen Flake                         INV 05/02   14N       21E     13; E of Silver Creek                         100.00

 2000-1   A&J Palmer                         INV 03/02   13N       20E     25                                            640.00
 2000-1   A&J Palmer                         INV 03/02   13N       21E     31                                            633.11
                                                                                                               ----------------
                                                                                                                       1,273.11

   444    Seibert Cattle\John Seibert                    18N       18E     14;S2NE4, NW4,S2                              491.06
                                                                                                               ----------------
                                                                                                                         491.06

                                                                                                               ----------------
TOTAL NAVAJO COUNTY, AZ GRAZING ACRES                                                                                 28,018.74
                                                                                                               ================


ROYALTY AGREEMENTS



               NAME                                 TYPE                COUNTY
               ----                                 ----                ------
                                                               
        Eterna-Tec Corp.                          Kaolinite          Mohave County
        CA Properties, Inc.                       Limestone          Cibola County



                                       88

                                    EXHIBIT E

                        EXCLUSIVE SALES AGENCY AGREEMENT

Sales Agreements

      -     Sales agency agreement with First United Service, Trust 7602 dated
            2/13/87

      -     Sales agency agreement with First United Service, Trust 8398 dated
            1/1/01

      -     Agreement with First United Service dated June 3, 1997

Trust Agreements

      -     Trust agreement with First American Title Insurance Company, Trust
            6798 dated 3/7/80

      -     Trust agreement with First American Title Insurance Company, Trust
            7602 dated 2/27/87

      -     Trust agreement with First American Title Insurance Company, Trust
            8340 dated 11/12/97

      -     Trust agreement with First American Title Insurance Company, Trust
            8398 dated 1/28/99

      -     Trust agreement with First American Title Insurance Company, Trust
            4517


                                       89

                                    EXHIBIT F

                                 URANIUM RIGHTS

MINERAL LAND LEASES



          NAME                           ACRES                    LOCATION
          ----                           -----                    --------
                                                  
Uranium Resources Inc.                  959.24          Hosta Butte, McKinley County


ROYALTY AGREEMENTS



          NAME                           TYPE                      COUNTY
          ----                           ----                      ------
                                                  
Uranium Resources Inc.                  Uranium         Hosta Butte, McKinley County



                                       90

                                    EXHIBIT G

                         SELLER'S INTELLECTUAL PROPERTY

- -     The service mark "NZ," Registration No. 2472780 was registered with the
      United States Patent and Trademark Office on July 24, 2001.

- -     The service mark "New Mexico and Arizona Land Company," Registration No.
      2470944 was registered with the United States Patent and Trademark Office
      on July 31, 2001.

- -     The service mark "NZ"(stylized), Registration No. 2477161 was registered
      with the United States Patent and Trademark Office on August 14, 2001.

- -     The brand registered with the Arizona Department of Agriculture as Brand
      No. 13492


                                       91

                                    EXHIBIT H

                              OIL AND GAS INTERESTS

Limited partnership interests in the following New Mexico partnerships:

Chace Limited XIX

Chace Limited XX

Chace Limited XXI

Chace Limited XXII

Chace 47-19 Joint Venture

The following mineral rights in Oklahoma, together with associated leases to
Marathon Oil.

                                 NZ CORPORATION
                                MINERAL HOLDINGS
                          VARIOUS SECTIONS IN OKLAHOMA
                                   12/31/2001



                              ORIGINAL      MINERAL      SURFACE        MINERAL        SURFACE
                                 ACRES        ACRES        ACRES          ACRES          ACRES
     TWN     RGE   SEC        ACQUIRED         SOLD         SOLD       RETAINED       RETAINED
                                                                 
      5N      9W     4           60.00         0.00         0.00          60.00           0.00
     11N     23W    10           14.00         0.00         0.00          14.00           0.00
     12N     23W    35           14.90         0.00         0.00          14.90           0.00
     12N     25W    25            5.00         0.00         0.00           5.00           0.00
     12N     25W    26           10.00         0.00         0.00          10.00           0.00
     12N     25W    30            5.00         0.00         0.00           5.00           0.00
     12N     25W    35           20.00         0.00         0.00          20.00           0.00
     12N     26W    36           21.25         0.00         0.00          21.25           0.00
     13N      9W    27           93.75        93.75         0.00           0.00           0.00
     15N     13W    32           93.00         0.00         0.00          93.00           0.00

                                336.90        93.75         0.00         243.15           0.00



                                       92

                                   EXHIBIT 1-A

                                 PROMISSORY NOTE

                              
        DATE:                    March 28, 2002

       MAKERS:                   NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
                                 NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

                                 c/o Robert M. Worsley

                                 _________________________________
                                 _____________, Arizona 85________
                                 Facsimile Number (602) __________

        PAYEE:                   NZ CORPORATION, AN ARIZONA CORPORATION

                                 NZ DEVELOPMENT CORPORATION, AN ARIZONA CORPORATION
                                 NZU CORPORATION, A NEW MEXICO CORPORATION
                                 333 North 44th Street, Suite 420
                                 Phoenix, Arizona 85008
                                 Facsimile Number (602) 952-8769



        ORIGINAL
        PRINCIPAL
        AMOUNT
        OF LOAN:   Seven Million Three Hundred Sixty Thousand and No/100 Dollars
($7,360,000)

      FOR VALUE RECEIVED, Makers promise and agree to pay to Payee, at the
mailing address of Payee, or at such other place as the holder hereof ("Holder")
may from time-to-time designate, the principal sum of Seven Million Three
Hundred Sixty Thousand and No/100 Dollars ($7,360,000) with Interest (as defined
herein) commencing as provided herein on the unpaid amount of said sum at the
Base Rate (as defined herein) or the Default Rate (as defined herein), whichever
is applicable, as follows:

      1. INTEREST RATE.

            a. Commencing on March 30, 2002, and so long as no Event of Default
(as defined herein) exists, the unpaid balance of this Note shall accrue
interest ("Interest") at the rate of five and one-quarter percent (5.25%) per
annum ("Base Rate").

            b. During any Event of Default under this Note or any security for
this Note, the unpaid balance of this Note shall accrue Interest at the rate of
ten percent (10%) per annum ("Default


                                       93

Rate"). Interest shall accrue at the Default Rate from the date of an Event of
Default, without notice to Makers, if Borrower does not cure an Event of Default
as provided in this Note.

            c. The Interest provided herein shall be calculated on the basis of
a 365-day year and if not paid as provided below by the tenth (10th) day of each
month, the due and unpaid Interest shall be compounded effective on the first
(1st) day of each such month.

      2. PAYMENTS.

            a. So long as no Event of Default exists, no monthly payments shall
be made until the Maturity Date (as defined herein) of this Note.

            b. If not sooner paid, all accrued and unpaid Interest and all
unpaid principal of this Note shall be paid on June 28, 2002 ("Maturity Date").
Provided there is not an existing Event of Default under this Note, Makers shall
have the right to three (3) separate thirty (30) day extensions of the Maturity
Date by giving notice to Holder not later than ten (10) business days prior to
the then applicable Maturity Date ("Notice Date") of Makers' election to extend
the Maturity Date and by paying to Holder a principal reduction payment of not
less than $100,000.00 on the Notice Date(s) for each thirty day extension.

      3. LATE PAYMENT CHARGE. Makers shall pay to Holder a late charge ("Late
Payment Charge") equal to five percent (5%) of any payment not received by the
Holder within five (10) days after said payment is due, including the unpaid
balance of this Note as of the Maturity Date.

      4. REASONABLENESS OF CHARGES. Makers acknowledge that upon the occurrence
of an Event of Default, the damages to the Holder would be extremely difficult
to ascertain, including the Holder's lost profit and loss of use of the funds
evidenced hereby and expenses incurred in connection with such default, and that
the accrual of Interest at the Default Rate and the Late Payment Charge are
reasonable estimates of the loss to the Holder incurred by virtue of an Event of
Default.

      5. LEGAL LIMITS.

            a. Makers agree to an effective rate of interest which is the rate
stated herein plus any additional rate of interest resulting from any other
payments in the nature of interest, including without limitation, any loan fees
or other charges to the extent that such charges may be deemed includable in
interest for any purpose.

            b. All agreements between Makers and Payee are hereby expressly
limited so that in no event whatsoever, whether by reason of deferment in
accordance with this Note or under any agreement or by virtue of acceleration or
maturity of the loan evidenced by this Note, or otherwise, shall the amount paid
or agreed to be paid to Payee for the loan, use, forbearance or detention of the
money to be loaned under this Note or to compensate Payee for damages to be
suffered by reason of a late payment or default under this Note, exceed the
maximum permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Note, or of any provision in the security
for this Note at the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law, from the date of this
Note, the obligations to be fulfilled shall be reduced to the limit of such
validity. This provision shall never be superseded or waived and shall control
every other provision of all agreements between Makers and Payee.

      6. PREPAYMENT. The unpaid principal balance of this Note may be prepaid in
whole or in part without penalty at any time upon one business day's prior
notice.


                                       94

      7. FORM OF PAYMENTS. Payments of $100,000.00 or less may be paid by
company check but all other Principal and Interest payments shall be payable in
lawful money of the United States of America by wire transfer in immediately
available funds.

      8. CREDITING OF PAYMENTS. Each payment hereunder shall be credited first
to costs of collection, second to late fees, third to accrued Interest and then
to principal.

      9. EVENTS OF DEFAULT AND REMEDIES.

            a. The existence or occurrence of either one or both of the
following events shall constitute an event of default ("Event of Default") under
this Note: (i) The failure by Makers to make any payment of principal, Interest,
Late Payment Charge or any other cost or expense due under this Note in
accordance with the terms of this Note; or, (ii) The occurrence of any event of
default under any security for this Note, including the Deed of Trust (as
defined herein).

            b. Upon the occurrence of any Event of Default and the failure of
Makers to cure such default within five (5) days after notice thereof if
monetary and within thirty (30) days after notice thereof if non-monetary
(unless the Event of Default cannot be cured within thirty (30) days and Makers
commence a cure within the thirty (30) days and diligently prosecutes the cure
until it is complete, in which event, Makers shall have a reasonable amount of
time after the thirty (30) days to cure a non-monetary default): (i) the entire
unpaid principal balance, any unpaid Interest, and any other amounts owing under
this Note shall, at the option of the Holder and without further notice or
demand of any kind to Makers or any other person, immediately become due and
payable; and, (ii) the Holder shall have and may exercise any and all rights and
remedies available at law or in equity and also any and all rights and remedies
provided in any security for this Note.

            c. The remedies of the Holder, as provided in this Note and in any
security for this Note, shall be cumulative and concurrent, and may be pursued
singularly, successively or together, at the sole discretion of the Holder, and
may be exercised as often as occasion therefor shall arise. No act of omission
or commission of the Holder, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of any
right, remedy or recourse, such waiver or release to be effected only through a
written document executed by the Holder. A waiver or release with reference to
any one event shall not be construed as continuing, as a bar to, or as a waiver
or release of, any subsequent right, remedy or recourse as to a subsequent
event.

      10. SECURITY. This Note is secured by, among other things, and is entitled
to the benefits of a deed of trust, assignment of rents and leases and security
agreement ("Deed of Trust"), a Security Agreement, and a Collateral Assignment
of Member's Interest in Limited Liability Company (collectively referred to as
the "Security Documents"), all dated the date of this Note. The provisions of
the Deed of Trust are incorporated herein by reference as if set forth in full,
and the covenants and conditions of this Note shall control if there is a
conflict between them and the covenants and conditions contained in the Deed of
Trust.

      11. ATTORNEYS' FEES. In the Event of Default under this Note or in the
event the Holder seeks legal advice in order to enforce the provisions of this
Note after an Event of Default, Makers agree to pay a reasonable sum to Holder
for Holderss.s attorneys' fees. If any action is brought to enforce or interpret
the provisions of this Note, the prevailing party shall be entitled to a
reasonable sum for attorneys' fees.

      12. GOVERNING LAW AND SEVERABILITY. This Note is made pursuant to, and
shall be construed and governed by, the laws of the State of Arizona. If any
provision of this Note or any


                                       95

security for this Note is construed or interpreted by a court of competent
jurisdiction to be void, invalid or unenforceable, such decision shall affect
only those provisions so construed or interpreted and shall not affect the
remaining provisions of this Note or any security for this Note.

      13. TIME OF ESSENCE. Time is of the essence of this Note, provided that if
the date on which any payment of performance is due under this Note falls on a
day that is not a business day, then the payment and performance shall be due on
the next following business day.

      14. PAYMENT WITHOUT OFFSET. Principal and Interest shall be paid without
deduction or offset.

      15. CALENDAR DAYS. Unless otherwise provided in this Note to the contrary,
calendar days, and not business days, shall be used in calculating any time
periods set forth in this Note.

      16. NOTICES. Any notices which any party may be required, or may desire,
to give, unless otherwise specified, shall be in writing and shall be (i)
hand-delivered, effective upon receipt, (ii) transmitted by telecopier,
effective upon receipt, with the original mailed the same date by first class
mail, postage prepaid, (iii) sent by United States Express Mail or by private
overnight courier, effective upon receipt, or (iv) served by certified mail,
postage prepaid, return receipt requested and addressed to such party at the
address set forth above, or to such other address(es) or addressee(s) as the
party to be served with notice may have furnished in writing to the other party,
effective three (3) days after mailing.

      17. ASSIGNMENT. Payee or any other Holder of this Note may assign all or a
portion of its rights, title and interest in this Note and security to any
person, firm, corporation or other entity without the consent of Makers.

      18. RELATIONSHIP. The relationship of the parties hereto is that of
borrower and lender and it is expressly understood and agreed that nothing
contained in this Note or in any security for this Note shall be interpreted or
construed to make Makers and Payee partners, joint venturers or participants in
any other legal relationship except for borrower and lender.

      19. WAIVER. Except as otherwise expressly provided to the contrary in this
Note, the Deed of Trust or other loan documents relating to this Note, Makers
for themselves and for their successors, transferees and assigns and all
guarantors, endorsers and signers, hereby waives all valuation and appraisement
privileges, presentment and demand for payment, protest, notice of protest and
nonpayment, dishonor and notice of dishonor, bringing of suit, lack of diligence
or delays in collection or enforcement of this Note and notice of the intention
to accelerate, the release of any party liable, the release of any security for
this Note, the taking of any additional security and any other indulgence or
forbearance. Makers agree that this Note and any or all payments coming due
hereunder may be extended or renewed from time to time without in any way
affecting or diminishing Makers' liability under this Note. The acceptance by
Holder of a partial amount of a payment due from Makers to Holder under this
Note shall not constitute a waiver of the requirement of Makers to make a full
payment to Holder, and it shall not constitute a waiver by Holder of the time of
the essence provision of this Note.

      20. HEADINGS. The subject headings of the paragraphs of this Note are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.

      21. JOINT AND SEVERAL LIABILITY. All persons or entities identified as one
of the Makers are jointly and severally liable for all of the Makers'
obligations hereunder; any breach, default or


                                       96

Event of Default by any of the persons or entities identified as one of the
Makers shall be deemed to be a breach, default or Event of Default of all
Makers.

      22. NOTE NON-NEGOTIABLE. Except for endorsement, sale or transfer to a
parent or wholly owned subsidiary of Payee, this Note is otherwise
non-negotiable.

      23. CARRYBACK FINANCING. This Note represents payment obligations of
Makers under the Purchase Agreement for Real and Personal Property, dated March
28, 2002, between Payee, as seller and Makers, as buyer, and is subject to the
terms of such agreement.

      IN WITNESS WHEREOF, Makers have executed this Note as of the date set
forth above.

         MAKERS:

NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager



                                       97

NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager

                     SIGNATURES CONTINUED ON FOLLOWING PAGE


                                       98

NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley

  Its: Manager


NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -------------------------------------------------
        Robert M. Worsley

  Its:  Manager

                            NOTARY ON FOLLOWING PAGE


                                       99

STATE OF ARIZONA    )
                    ) ss.
County of Maricopa  )

      The foregoing instrument was acknowledged before me this 28th day of
March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf
of each of the following entities:

            NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY.


                                                   /s/ Yvonne E. Ulrich
                                                --------------------------------
                                                Notary Public

My commission expires:

  March 25, 2004


                                      100

                                   EXHIBIT 1-B

AFTER RECORDING, RETURN TO:

K. Bellamy Brown, Esq.
THE CAVANAGH LAW FIRM, P.A.
1850 N. Central Ave., Suite 2400
Phoenix, Arizona  85004

                  DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES
                             AND SECURITY AGREEMENT

                                 
         DATE:                      March 28, 2002

         TRUSTOR:

                                    NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY
                                    COMPANY NZ SNOWFLAKE, LLC, AN ARIZONA
                                    LIMITED LIABILITY COMPANY NZ MILKY RANCH,
                                    LLC, AN ARIZONA LIMITED LIABILITY COMPANY NZ
                                    SILVER CREEK, LLC, AN ARIZONA LIMITED
                                    LIABILITY COMPANY NZ JOSEPH CITY, LLC, AN
                                    ARIZONA LIMITED LIABILITY COMPANY NZ NEW
                                    MEXICO LAND, LLC, AN ARIZONA LIMITED
                                    LIABILITY COMPANY NZ URANIUM, LLC, AN
                                    ARIZONA LIMITED LIABILITY COMPANY NZ
                                    TRAVERTINE, LLC, AN ARIZONA LIMITED
                                    LIABILITY COMPANY NZ OIL AND GAS, LLC, AN
                                    ARIZONA LIMITED LIABILITY COMPANY NZ
                                    MINERALS, LLC, AN ARIZONA LIMITED LIABILITY
                                    COMPANY NZ HISTORY AND ARTIFACTS, LLC, AN
                                    ARIZONA LIMITED LIABILITY COMPANY

                                    Attention:  Robert Worsley

                                    ---------------------------------

                                    ---------------------------------
                                    Facsimile Number (___)

        BENEFICIARY:                NZ CORPORATION, AN ARIZONA CORPORATION

                                    NZ DEVELOPMENT CORPORATION, AN ARIZONA
                                    CORPORATION NZU CORPORATION, A NEW MEXICO
                                    CORPORATION 333 North 44th Street, Suite 420
                                    Phoenix, Arizona 85008 Facsimile Number
                                    (602) 952-8769

         TRUSTEE:                   K. BELLAMY BROWN, ESQ.
                                    Attorney at Law
                                    THE CAVANAGH LAW FIRM, LP
                                    1850 North Central Ave.
                                    Suite 2400
                                    Phoenix, AZ  85004
                                    Facsimile Number (602) 322-4000




                                      101

                                         
         ORIGINAL PRINCIPAL
         INDEBTEDNESS SECURED:              Seven Million Three Hundred
                                            Sixty Thousand and No/100 Dollars
                                            ($7,360,000) evidenced by that
                                            certain Promissory Note of even date
                                            herewith executed by Trustor as the
                                            Maker and payable to Beneficiary as
                                            the Payee (the "Note").

         LEGAL DESCRIPTION
         OF REAL PROPERTY:                  That certain real property more  particularly
                                            described in Exhibit "A" attached  hereto
                                            and by this reference incorporated herein ("Property").




      Trustor, in consideration of the loan described herein, irrevocably
grants, bargains, conveys, transfers and assigns the Property to Trustee, its
successors and assigns, in trust, with power of sale and right of entry and
possession, together with all structures and improvements now existing or
hereafter erected on the Property, all easements, rights and appurtenances
thereto or used in connection therewith, all leases, lease guarantees, rents,
royalties, issues, profits, revenues, income and other benefits thereof or
arising from the use or enjoyment of all or any portion thereof (subject to the
rights given below to Trustor to collect and apply such rents, royalties,
issues, profits, revenues, income and other benefits), all water rights and
water stock, all solar rights, all rights held by Trustor as the declarant under
any covenants, conditions and restrictions against the Property, all tangible
property and rights relating to the Property or the operation thereof, or used
in connection therewith, including without limitation (if owned by Trustor or if
Trustor has an interest therein) all goods, instruments, documents, chattel
paper, contract rights, accounts, general intangibles, inventory, furniture,
equipment and fixtures, trade names and trademarks, licenses, permits,
franchises, all fixtures, machinery, equipment, building materials, appliances
and goods of every nature whatsoever now or hereafter located in, or on,
attached or affixed to, or used or intended to be used in connection with, the
Property, including, but without limitation, all heating, lighting, laundry,
incinerating, gas, electric and power equipment, engines, pipes, pumps, tanks,
motors, conduits, switchboards, plumbing, lifting, cleaning, fire prevention,
fire extinguishing, refrigerating, ventilating and communications apparatus, air
conditioning apparatus, elevators and related machinery and equipment, pool and
pool operation and maintenance equipment, shades, awnings, blinds, curtains,
drapes, attached floor coverings, including rugs and carpeting, television,
radio and music cable antennae and systems, screens, storm doors and windows,
stoves, refrigerators, dishwashers and other installed appliances, attached
cabinets, partitions, ducts and compressors, and trees, plants and other items
of landscaping, all of which, including replacements and additions (including
abandonment) thereto, shall, to the fullest extent permitted by law and for the
purposes of this Deed of Trust, be deemed conclusively to be real property and
conveyed by this Deed of Trust, and all proceeds and products of any and all
thereof, and Trustor agrees to execute and deliver, from time to time, such
further instruments and documents as may be required by Beneficiary to confirm
the lien of this Deed of Trust on any of the foregoing; all of the foregoing
property referred to in this paragraph, together with the Property, are
collectively referred to hereafter as the "Property";

      This Deed of Trust is given for the purpose of securing, in such order of
priority as Beneficiary may elect:

            (a) Payment in full of the Note and any extensions, renewals or
modifications thereof, including payment of principal and interest pursuant to
the terms of the Note in graduated, adjusted or graduated and adjusted payments,
if the Note calls for graduation, adjustment or graduation and adjustment of
payments, respectively, and including payment of interest as adjusted pursuant
to the terms of the Note, if the Note calls for any adjustments in the rate at
which interest accrues and including payment of amounts respecting interest
added to principal, if the Note provides for the addition of accrued and unpaid
interest to principal, and the performance and discharge of each and every
obligation of Trustor set forth in the Note.

            (b) Payment of such additional sums, with interest thereon, as may
hereafter be borrowed from Beneficiary by the then record owner or owners of the
Property when evidenced by another promissory note or notes which recite that
they are so secured.

            (c) Performance of each agreement of Trustor herein contained or
incorporated herein by reference including those contained in that certain Loan
Agreement between Beneficiary and Trustor dated the same date as this Deed of
Trust, and other documents executed by Trustor in connection with the loan
evidenced by the Note, which documents are hereby incorporated by reference.


                                      102

            (d) Payment and performance of all obligations under this Deed of
Trust.

            (e) All interest and charges on all obligations secured hereby
including, without limit, late charges and loan fees.

                              COVENANTS OF TRUSTOR

      To ensure payment of the Note and all amounts due thereunder and to
protect the security of this Deed of Trust, Trustor covenants and agrees as
follows:

      1. PERFORMANCE OF OBLIGATIONS SECURED. Trustor shall promptly pay when due
the principal and interest evidenced by the Note, and any late charges and other
fees provided for in the Note or provided for herein, and shall further perform
fully and in a timely manner all other obligations of Trustor contained in this
Deed of Trust or in the Note. All sums payable by Trustor hereunder shall be
paid without demand, counterclaim, offset, deduction or defense, and Trustor
waives all rights now or hereinafter conferred by law or otherwise to any such
demand, counterclaim, offset, deduction or defense.

      2. INSURANCE. Trustor shall keep the Property insured with an all-risk
policy insuring against loss or damage by fire with extended coverage and
against any other risks or hazards (to the extent insurable) and which, in the
opinion of Beneficiary, should be insured against, in an amount not less than
the full insurable value thereof on a replacement cost basis, with an inflation
guard endorsement, with a company or companies and in such form and with such
endorsements as may be approved or required by Beneficiary, including, if
applicable, boiler explosion coverage and sprinkler leakage coverage. All losses
under said insurance shall be payable to Beneficiary and shall be applied in the
manner provided in Paragraph 3 herein. Trustor also shall carry comprehensive
general public liability insurance for not less than $1,000,000 per occurrence
in such form and with such companies as are reasonably satisfactory to
Beneficiary. Trustor also shall carry insurance against flood if required by the
Federal Flood Disaster Protection Act of 1973 and regulations issued thereunder.
All hazard, flood and rent loss insurance policies shall be endorsed with a
standard noncontributory mortgagee clause in favor of and in form acceptable to
Beneficiary, and may be canceled or modified only upon not less than ten (10)
days' prior written notice to Beneficiary. All of the above-mentioned insurance
policies or certificates of such insurance satisfactory to Beneficiary, together
with receipts for the payment of premiums thereon, shall be delivered to and
held by Beneficiary, which delivery shall constitute assignment to Beneficiary
of all return premiums to be held as additional security hereunder. All renewal
and replacement policies shall be delivered to Beneficiary at least thirty (30)
days before the expiration of the expiring policies. Beneficiary shall not by
the fact of approving, disapproving, accepting, preventing, obtaining or failing
to obtain any insurance, incur any liability for or with respect to the amount
of insurance carried, the form or legal sufficiency of insurance contracts,
solvency of insurance companies, or payment or defense of lawsuits, and Trustor
hereby expressly assumes full responsibility therefor and all liability, if any,
with respect thereto.

      3. CONDEMNATION AND INSURANCE PROCEEDS.

            a. Payment of Proceeds. The proceeds of any award or claim for
damages, direct or consequential, in connection with any condemnation or other
taking of or damage or injury to the Property, or any part thereof, or for
conveyance in lieu of condemnation, are hereby assigned to and shall be paid to
Beneficiary and to be applied in accordance with the provisions of Subparagraph
(3b) herein. In addition, all causes of action, whether accrued before or after
the date of this Deed of Trust, of all types for damages or injury to the
Property, or in connection with or affecting the Property or any part thereof,
including without limitation causes of action arising in tort or contract and
causes of action for fraud or concealment of a material fact, are hereby
assigned to Beneficiary as additional security, and the proceeds thereof shall
be paid to Beneficiary. Beneficiary may at its option appear in and prosecute in
its own name any action or proceeding to enforce any such cause of action and
may make any compromise or settlement thereof. Trustor, immediately upon
obtaining knowledge of any casualty damage to the Property or damage in any
other manner in excess of $25,000 or knowledge of the institution of any
proceedings relating to condemnation or other taking of or damage or injury to
the Property or any portion thereof, shall immediately notify Beneficiary in
writing of such occurrence. Beneficiary may participate in any such proceedings
and may join Trustor in adjusting any loss covered by insurance.


                                      103

            b. Application of Proceeds. All compensation, awards, proceeds,
damages, claims, insurance recoveries, rights of action and payments which
Trustor may receive or to which Trustor may become entitled with respect to the
Property in the event of any damage or injury to or a partial condemnation or
other partial taking of the Property shall be paid over to Beneficiary and shall
be applied first toward reimbursement of all costs and expenses of Beneficiary
in connection with recovery of the same, and then shall be applied, as follows:

                  1) Beneficiary shall consent to the application of such
payments to the restoration of the Property so damaged if and only if Trustor
fulfills all of the following conditions, a breach of any one of which shall
constitute an Event of Default under this Deed of Trust: (i) that no default or
Event of Default which has not been cured within the applicable cure period is
then outstanding under this Deed of Trust or the Note; (ii) Beneficiary is
satisfied that the insurance or award proceeds shall be sufficient to fully
restore and rebuild the Property free and clear of all liens except the liens of
any Senior Encumbrance or of this Deed of Trust, or, in the event that such
proceeds are in Beneficiary's reasonable judgment insufficient to restore and
rebuild the Property, then Trustor shall deposit promptly with Beneficiary funds
which, together with the insurance or award proceeds, shall be sufficient in
Beneficiary's sole judgment to restore and rebuild the Property; (iii)
construction and completion of restoration and rebuilding of the Property shall
be completed in accordance with plans and specifications and drawings submitted
to and approved by Beneficiary, which plans and specifications and drawings
shall not be substantially modified, changed or revised without Beneficiary's
prior written consent, said consent not to be unreasonably withheld; and, (v)
any and all monies which are made available for restoration and rebuilding
hereunder shall be disbursed through Beneficiary, the Trustee or a title
insurance company satisfactory to Beneficiary, in accord with standard
construction lending practice, including, if requested by Beneficiary, monthly
lien waivers and title insurance endorsements, and the provision of payment and
performance bonds by Trustor, or in any other manner approved by Beneficiary in
Beneficiary's sole discretion; or,

                  2) If less than all of conditions (i) through (v) in
Subparagraph (1) above are satisfied, then such payments shall be applied in the
sole and absolute discretion of Beneficiary: (i) to the payment or prepayment
with any applicable prepayment premium of any indebtedness secured by this Deed
of Trust in such order as Beneficiary may determine; or, (ii) to the
reimbursement of Trustor's expenses incurred in the rebuilding and restoration
of the Property. In the event Beneficiary elects under this Subparagraph (2) to
make any monies available to restore the Property, then all of conditions (i)
through (v) in Subparagraph (1) above shall apply, except such conditions which
Beneficiary, in its sole discretion, may waive.

After restoration of the Property as provided in 3(b)(1) above, such payments
shall be applied to the payment or prepayment of any indebtedness secured by
this Deed of Trust.

            c. Inadequate Insurance. If any material part of the Property is
damaged or destroyed and the loss is not adequately covered by insurance
proceeds collected or in the process of collection, Trustor shall deposit,
within ten (10) days of the Beneficiary's request therefor, the amount of the
loss not so covered.

            d. Condemnation Award and Insurance Proceeds. All compensation,
awards, proceeds, damages, claims, insurance recoveries, rights of action and
payments which Trustor may receive or to which Trustor may become entitled with
respect to the Property in the event of a total condemnation or other total
taking of the Property shall be paid over to Beneficiary and shall be applied
first toward reimbursement of all costs and expenses of Beneficiary in
connection with recovery of the same, and then shall be applied to the payment
or prepayment (with any applicable prepayment premium) of any indebtedness
secured hereby in such order as Beneficiary may determine, until the
indebtedness secured hereby has been paid and satisfied in full. Any surplus
remaining after payment and satisfaction of the indebtedness secured hereby
shall be paid to Trustor as its interest may then appear.

            e. No Waiver. Any application of such amounts or any portion thereof
to any indebtedness secured hereby shall not be construed to cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to
any such default or notice.

      4. TAXES, LIENS AND OTHER ITEMS. Trustor shall pay at least ten days
before delinquency, all taxes, bonds, assessments, special assessments, common
area charges, fees, liens, charges, fines, penalties, impositions and any and
all other items which are attributable to or affect the Property and which may
attain a priority over this Deed of Trust, by making payment directly to the
payee thereof, unless Trustor shall be required to make payment to


                                      104

Beneficiary on account of such items pursuant to Paragraph 5 herein. Trustor
shall discharge any lien which has attained or may attain priority over this
Deed of Trust within thirty (30) days from the date that Trustor receives notice
of same. In the event of the passage after the date of this Deed of Trust of any
law deducting from the value of real property for the purposes of taxation any
lien thereon, or changing in any way the laws for the taxation of deeds of trust
or debts secured by deeds of trust for state, federal or any other purposes, or
the manner of the collection of any such taxes, so as to affect this Deed of
Trust, the holder of this Deed of Trust and of the debt which it secures shall
have the right to declare the principal sum and the interest due on a date to be
specified by not less than thirty (30) days written notice to be given to
Trustor by Beneficiary; provided, however, that such election shall be
ineffective if Trustor is permitted by law to pay the whole of such tax in
addition to all other payments required hereunder and if, prior to such
specified date, does pay such taxes and agrees to pay any such tax when
hereafter levied or assessed against the Property, and such agreement shall
constitute a modification of this Deed of Trust.

      5. IMPOUND ACCOUNT. Upon any Event of Default under this Deed of Trust,
whether or not subsequently cured, Trustor agrees to pay to Beneficiary, if
Beneficiary so requests, in addition to any other payments required hereunder or
under the Note, the monthly installments, as estimated by Beneficiary, of all
taxes, assessments and insurance premiums (together with ground rents if the
Property includes a leasehold estate) for the purpose of building up a fund to
insure payment when due or before delinquency of any or all of the taxes,
assessments and insurance premiums (and rents if applicable) required to be paid
with respect to the Property. If the amounts paid to Beneficiary under the
provisions of this Paragraph 5 are insufficient to discharge the obligations of
Trustor to pay such premiums, taxes and assessments (and rents if applicable) as
the same become due or delinquent, Trustor shall pay to Beneficiary, upon its
demand, such additional sums as are necessary to discharge Trustor's obligations
to pay such amounts. All moneys paid to Beneficiary under this Paragraph 5 may
be intermingled with other moneys of or paid to Beneficiary but a separate
account called "Impound Account" shall be maintained therefor. Disbursements
shall be made against such account for the payment by Beneficiary of the
foregoing amounts, whether before or after they become due and payable. In the
event of a default in the payment of any moneys due on the Note or default in
the performance of any of the covenants and obligations of this Deed of Trust,
then the balance remaining from moneys paid to Beneficiary under the provisions
of this Paragraph 5 may, at the option of Beneficiary, be applied to the payment
of principal and/ or interest upon the Note after being applied to any of the
purposes for which the Impound Account was established. Beneficiary will make
such reports of the Impound Account as are required by law. If Beneficiary sells
or assigns this Deed of Trust, Beneficiary shall have the right to transfer all
amounts deposited under this Paragraph 5 to the purchaser or assignee, and
Beneficiary shall thereupon be released and have no further liability hereunder
for the application of such deposits, and Trustor shall look solely to such
purchaser or assignee for such application and for all responsibility relating
to such deposits.

      6. MAINTENANCE AND PRESERVATION OF THE PROPERTY. Trustor shall: (i) keep
the Property in good condition and repair; (ii) not remove or demolish the
Property or any part thereof without Beneficiary's prior written consent; (iii)
except for any Improvements described in the Loan Agreement, not alter, restore
or add to the Property without Beneficiary's prior written consent; (iv)
complete or restore promptly and in good and workmanlike manner the Property
pursuant to Section 3(b) or any part thereof which may be damaged or destroyed;
(v) not suffer violation of any, and shall comply with all: (a) laws,
ordinances, regulations and standards; (b) all covenants, conditions,
restrictions and equitable servitudes, whether public or private, of every kind
and character; and, (c) requirements of insurance companies and any bureau or
agency which establishes standards of insurability, which laws, covenants or
requirements affect the Property and pertain to acts committed or conditions
existing therein, including (but without limit) such work or alteration,
improvement or demolition as laws, covenants or requirements mandate; (vi) not
alter the occupancy or use of all or any part of the Property without the prior
written consent of Beneficiary; (vii) as required by Beneficiary, perform the
lessor's covenants under the leases affecting the Property in which Trustor
holds the lessor's interest, and not to cause or permit a modification or
termination of any lease that would impair the value of the leases to the
lessor, or the interest of the lessor or Beneficiary in the leases; (viii) not
commit or permit waste of the Property; (ix) do all other acts which from the
character or use of the Property may be reasonably necessary to maintain and
preserve its value; (x) not create any deed of trust or encumbrance upon the
Property subsequent hereto, without the prior written consent of Beneficiary;
(xi) make no further assignment of rents of the Property without Beneficiary's
prior written consent; and, (xii) execute and, where appropriate, acknowledge
all further documents, instruments and other papers as Beneficiary or Trustee
deems necessary or appropriate to preserve, continue, perfect and enjoy the
security of this Deed of Trust and perform Trustor's obligations, including,
without limit, statements of the amount secured hereby then owing and statements
of no offset.


                                      105

      7. CONSTRUCTION OF IMPROVEMENTS. If Trustor shall commence any alteration
or construction of improvements on the Property, Trustor agrees, anything in
this Deed of Trust to the contrary notwithstanding: (i) to complete same in
accordance with plans and specifications satisfactory to Beneficiary; (ii) to
allow Beneficiary to inspect the Property at all times during construction;
(iii) to replace any work or materials unsatisfactory to Beneficiary within
thirty (30) days after written notice from Beneficiary of such fact; (iv) to
immediately discharge or bond over any mechanic or materialman's lien; and (v)
that work shall not cease on the construction of such improvements for any
reason whatsoever (except for acts of God or force majeure) for a period of
fifteen (15) or more calendar days. Trustor shall comply with all laws affecting
the Property and pertaining to any alterations or improvements to be made
thereon.

      8. PROTECTION OF BENEFICIARY'S SECURITY. If Trustor fails to perform the
covenants and agreements contained in this Deed of Trust, or if any action or
proceeding is commenced which materially affects Beneficiary's interest in the
Property, including, but not limited to, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankrupt or decedent,
then Beneficiary at its option, upon notice to Trustor, may make such
appearances, disburse such sums and take such action as is necessary to protect
Beneficiary's interest, including, but not limited to, disbursement of
reasonable attorneys' fees and entry upon the Property to make repairs. Any
amounts disbursed by Beneficiary pursuant to this Paragraph 8, or any other
provision of this Deed of Trust, with interest thereon, shall become additional
indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and
Beneficiary agree to other terms of payment, such amounts shall be payable upon
notice from Beneficiary to Trustor requesting payment thereof, and shall bear
interest from the date of disbursement at the Default Rate set forth in the
Note, unless payment of interest at such rate would be contrary to applicable
law, in which event such amounts shall bear interest at the highest rate
permissible under applicable law. Trustor recognizes that its failure to pay
such sums when due will require Beneficiary to incur additional expense in
servicing the loan secured hereby, in loss to the Beneficiary in meeting its
other financial commitments, and that damages caused thereby would be extremely
difficult and impractical to ascertain. Trustor agrees that the accrual of
interest at the Default Rate on such sums is a reasonable estimate of the damage
to Beneficiary in the event of Trustor's failure to pay such sums. Nothing
contained in this Paragraph 8 shall require Beneficiary to incur any expense or
take any action hereunder. Likewise, in the event that Trustee shall expend any
amounts pursuant to any provision of this Deed of Trust, such amounts with
interest shall be repaid and become additional indebtedness secured by this Deed
of Trust, all in accordance with the foregoing.

      9. ACCESS TO TRUSTOR'S BOOKS AND RECORDS. Trustor shall permit and hereby
authorize Beneficiary or its agents, at all reasonable times during normal
business hours (but not more than once a quarter) subject to 24 hours verbal
notice, to have unrestricted access to and to copy its records, books of
account, ledgers, journals, contracts, subcontracts, bills and statements
relating to the Property, including any supporting or related vouchers or other
instruments. If Beneficiary so requires, such records, books, vouchers or other
documents shall be made available at Trustor's office to an accountant of
Beneficiaryss.s choice for audit, examination, inspection or duplication.

      10. USE OF PROPERTY. Except as provided in the Loan Agreement of even date
herewith or unless required by applicable law or unless Beneficiary has
otherwise agreed in writing, Trustor shall not allow material changes in the use
for which the Property was intended at the time this Deed of Trust was executed.
Trustor shall not initiate or acquiesce in a change in the zoning classification
of the Property without Beneficiary's written consent.

      11. PERFORMANCE UNDER SUPERIOR LIENS.

            a. Performance Required. In the event the lien of this Deed of Trust
is subject and subordinate at any time to the lien of any other mortgage(s) or
deed(s) of trust (collectively, "Senior Encumbrance"), Trustor agrees to perform
and discharge in due course and in accordance with its terms and provisions, all
obligations secured by the Senior Encumbrance, including all other agreements or
obligations undertaken or created for the purpose of evidencing or securing the
obligations evidenced by the note(s) (collectively, "Senior Note") secured by
the Senior Encumbrance (together "Senior Encumbrance Obligations"). Any failure
on the part of Trustor fully to perform and discharge all such Senior
Encumbrance Obligations in accordance with their terms shall constitute a breach
and default by Trustor of its obligation to Beneficiary arising under this Deed
of Trust, in which


                                      106

event, subject to applicable cure periods, Beneficiary may elect to accelerate
and declare the entire principal balance and all accrued and unpaid interest on
the Note, and all other sums secured hereby, immediately due and payable.
Trustor agrees that Beneficiary may, but need not, perform and/or discharge any
Senior Encumbrance Obligations. Trustor hereby warrants to Beneficiary that
Trustor's obligation pursuant to any such senior Deed of Trust is fully current
and that no default exists with respect thereto.

            b. Default for Failure to Perform. In addition, in the event that
Trustor shall, voluntarily or involuntarily, take or permit to be taken any act,
or fail to take any act which results in an acceleration of the due date of the
principal balance of the Senior Note or a change in the terms thereof (other
than a change in the interest rate pursuant to an adjustment to a variable
interest rate set forth in such Senior Note) or in the making of a future
advance secured by the Senior Encumbrance (if such advance increases the
principal balance of the Senior Note to an amount greater than the principal
amount shown on said Senior Note), then, irrespective of whether or not
Trustor's act or omission constitutes a default under the Senior Note or Senior
Encumbrance and irrespective of the Senior Note holder's actual authority or
entitlement to accelerate or change such terms, subject to applicable cure
periods, Beneficiary may elect at any time thereafter to accelerate and declare
the entire principal balance and all accrued and unpaid interest on the Note,
and all other sums secured hereby, immediately due and payable. Without in any
manner limiting the aforesaid right of Beneficiary to accelerate in such event,
Beneficiary may also elect to perform or discharge the Senior Encumbrance
obligations or contest, at Beneficiary's sole discretion, the right and
authority of the holder of the Senior Note to take the above-described action.
In the event that Beneficiary shall perform or discharge all or part of the
Senior Encumbrance Obligations, expenditures thus made by Beneficiary shall be
reimbursed by Trustor to Beneficiary on demand. In the event that Beneficiary
shall contest the aforesaid action taken by the holder of the Senior Note,
Trustor agrees to cooperate with Beneficiary in such contest.

      12. ABSOLUTE ASSIGNMENT OF RENTS, ISSUES AND PROFITS.

            a. Present Assignment. All of Trustor's interest in any leases or
other occupancy agreements pertaining to the Property now existing or hereafter
entered into, and all of the leases, lease guarantees, rents, royalties, issues,
profits, revenue, income and other benefits of the Property existing from the
use or enjoyment of all or any portion thereof or from any lease or agreement
pertaining to occupancy of any portion of the Property now existing or hereafter
entered into (the "Rents and Profits"), whether now due, past due, or to become
due, and including all prepaid rents and security deposits, are hereby
absolutely, presently and unconditionally assigned, transferred and conveyed to
Beneficiary to be applied by Beneficiary in payment of the principal and
interest and all other sums payable on the Note and under this Deed of Trust.
Beneficiary temporarily waives the right to exercise the rights and powers
assigned to Beneficiary herein and agrees not to revoke such waiver until and
unless an Event of Default (as defined hereafter) occurs and the cure period has
expired. It is understood and agreed that the foregoing assignment of Rents and
Profits to Beneficiary shall not be deemed to make Beneficiary a
"mortgagee-in-possession" or otherwise responsible or liable in any manner with
respect to the Property or the use, occupancy, enjoyment or operation of all or
any portion thereof, unless and until Beneficiary, in person or by agent,
assumes actual possession thereof. Likewise, appointment of a receiver for the
Property or any part thereof shall not be deemed to make Beneficiary a
"mortgagee-in-possession" or otherwise responsible or liable in any manner with
respect to the Property. Upon the occurrence of any Event of Default hereunder
and the expiration of any applicable cure period, this shall constitute a
direction to and full authority to each lessee under any lease to pay all Rents
and Profits to Beneficiary without proof of the default. Trustor hereby
irrevocably authorizes each lessee to rely on and comply with any notice or
demand by Beneficiary for the payment to Beneficiary of any Rents and Profits
due or to become due.

            b. Application of Rents. Trustor shall apply the Rents and Profits
to the payment of all necessary and reasonable operating costs and expenses of
the Property, and debt service on the indebtedness secured hereby, before using
the Rents and Profits for Trustor's personal use or any other purpose not for
the direct benefit of the Property.

            c. Performance by Trustor and Assignment of Leases. Trustor shall at
all times perform the obligations of lessor under all such leases. Trustor shall
at any time or from time to time, upon request of Beneficiary, transfer and
assign to Beneficiary in such form as may be satisfactory to Beneficiary,
Trustor's interest in any lease, subject to and upon the condition, however,
that prior to the occurrence of any Event of Default and the expiration of any
cure period hereunder Trustor shall have a license to collect and receive all
Rents and


                                      107

Profits under such lease upon accrual, but not prior thereto, as set forth in
Subparagraph a above. Whenever requested by Beneficiary, Trustor shall furnish
to Beneficiary, as to all tenancies of a term in excess of thirty (30) days: (i)
a certificate of Trustor setting forth the names of all lessees under any
leases, the terms of their respective leases, the space occupied, the rents
payable thereunder, and the dates through which any and all rents have been
paid; and, (ii) (upon a best efforts basis) duly executed estoppel certificates
from any one or more leases as required by Beneficiary attesting to such facts
as Beneficiary may reasonably require. Trustor shall not collect rents for more
than one payment period in advance from any tenant without the written consent
of Beneficiary.

            d. Attornment. Each lease for any part of the Property, shall make
provision for the attornment of the lessee thereunder to any person succeeding
to the interest of Trustor as the result of any foreclosure or transfer in lieu
of foreclosure hereunder.

            e. Direct Creditor. Beneficiary shall be deemed to be the creditor
of each lessee in respect of any assignments for the benefit of creditors and
any bankruptcy, arrangement, reorganization, insolvency, dissolution,
receivership or other debtor-relief proceedings affecting such lessee (without
obligation on the part of Beneficiary, however, to file timely claims in such
proceedings or otherwise pursue creditor's rights therein). Beneficiary shall
have the right to assign Trustor's right, title and interest in any leases to
any subsequent holder of this Deed of Trust or any participating interest
therein or to any person acquiring title to all or any part of the Property
through foreclosure or otherwise. Any subsequent assignee shall have the rights
and powers herein provided to Beneficiary. Upon an Event of Default and the
expiration of the period of time to cure, Beneficiary shall have the authority,
as Trustor's attorney-in-fact, such authority being coupled with an interest and
irrevocable, to sign the name of Trustor and to bind Trustor on all papers and
documents relating to the operation, leasing and maintenance of the Property.

      13. PERSONAL PROPERTY SECURITY INTEREST.

            a. Security Interest. This Deed of Trust grants a security interest
in and covers all property owned by Trustor or in which Trustor has an interest
affixed to or located upon the Property, all articles of personal property and
all materials delivered to the Property for incorporation or use in any
construction being conducted thereon which, to the fullest extent permitted by
law, shall be deemed fixtures and a part of the Property. Such personal property
shall include the personal property identified in the attached Exhibit B, if
any, and: (i) all presently owned and hereafter acquired goods, instruments,
documents, chattel paper, contract rights, accounts, general intangibles,
inventory, fixtures, furniture, furnishings, machinery, equipment and appliances
and all personal property of Trustor now or hereafter attached to or installed
or placed in, on or about the Property for use in conjunction with the use and
occupancy thereof, together with all accessories, parts and appurtenances
thereto and all additions, renewals, improvements, and replacements thereof.
(Trustor also hereby assigns to Beneficiary all leases and use agreements of all
personal property in the categories above set forth, under which Trustor is the
lessee or entitled to use such items, and Trustor agrees to execute to
Beneficiary separate assignments of such leases and agreements when requested by
Beneficiary, but Beneficiary shall not be obligated thereunder unless it so
chooses, and Trustor agrees to fully and timely perform such obligations); (ii)
all leases, lease guarantees, income, rents, issues, and profits which, from and
after the date hereof, may accrue from said goods, fixtures, furnitures,
furnishings, machinery, equipment and appliances, or any part thereof, or which
may be received or receivable by Trustor from any use, leasing, or subleasing
thereof (provided, that so long as Trustor is not in default hereunder after the
expiration of the applicable cure period, Trustor shall have a license to
collect said income, rents, issues and profits, subject, however, to any
separate and prior assignment of leases and rents); (iii) all presently owned
and hereafter acquired general intangibles and rights of every kind and nature
of Trustor relating to the Property or the operation thereof, including but not
limited to, all governmental permits relating to construction on the Property,
all names by which the Property may be operated or known, all rights to carry on
business under any such names, and all trade names, trademarks and goodwill in
any way relating to the Property; (iv) all presently owned and hereafter
acquired reserves, deferred payments, deposits, refunds, and payments, of every
kind and nature of Trustor in any way relating to the Property or any of the
personal property thereon other than rents, issues and profits previously and
separately assigned; (v) all presently owned and hereafter acquired water stock
and all solar rights owned by Trustor relating to the Property; and, (vi) all
presently owned and hereafter acquired drawings, plans and specifications of
Trustor prepared for construction of improvements relating to the Property, and
all studies and data related thereto, and all contracts and agreements of the
Trustor relating thereto or to the construction of improvements on the Property.


                                      108

            b. Security Agreement. To the extent any property covered by this
Deed of Trust consists of personal property covered by the Uniform Commercial
Code, this Deed of Trust constitutes a Security Agreement and is intended to
create a security interest in such personal property in favor of Beneficiary.
This Deed of Trust shall be self-operative with respect to said personal
property, but Trustor agrees to execute and deliver on demand such security
agreement, financing statement and other instruments as Beneficiary may request
in order to impose the lien hereof more specifically upon any of said personal
property. Further, Trustor will at all times, at its sole cost and expense, keep
said personal property insured to the full cash value thereof against loss or
damage by fire and other risks which, in the opinion of Beneficiary, should be
insured against, under policies of insurance with loss payable to Beneficiary,
in form and by companies acceptable to Beneficiary and which shall provide for
thirty (30) days minimum cancellation notice to Beneficiary. Each such policy or
a certificate thereof shall be delivered to and retained by Beneficiary.
Beneficiary is hereby irrevocably appointed Trustor's attorney-in-fact to
endorse any check or draft that may be payable to Trustor, alone or jointly with
other payees, so that Beneficiary may collect the proceeds payable for any loss
under such insurance. Such proceeds, less any expenses incurred by Beneficiary
in collection thereof, shall be applied either toward the costs of repair or
replacement of the items damaged or destroyed, or, on account of any sums
secured hereby, whether or not then due, in the same manner and upon the same
terms and conditions as provided in Paragraph 3 above.

            c. Sale of Personal Property. In the Event of Default, and the
expiration of the period of time to cure, Beneficiary may sell such personal
property or any part thereof at public or private sale with notice to Trustor as
hereinafter provided. The proceeds of sale, after deducting all expenses of
Beneficiary in taking, storing, repairing and selling the personal property
(including reasonable attorney's fees) shall be applied to such matters, in such
amounts, and in such order, as Beneficiary shall determine. At any sale, public
or private, of said personal property or any part thereof, Beneficiary may
purchase any or all said personal property offered at such sale. Beneficiary
shall give Trustor reasonable notice of any sale of any of said personal
property. Trustor agrees that notice and demand shall be conclusively deemed to
be reasonable and effective if such notice is mailed at least five (5) days
prior to sale, by regular or certified mail, postage prepaid, to Trustor at its
address above set forth, or to such other address as Trustor may hereafter
designate in writing to Beneficiary.

            d. Creditors' Rights. Beneficiary shall have all the rights and
remedies afforded a secured party under the Uniform Commercial Code of the state
in which the Property is located and all other legal or equitable remedies
provided by law, including, without limitation, the right to the appointment of
a receiver.

      14. FIXTURE FILING. This Deed of Trust constitutes a financing statement
filed as a fixture in the Official Records of the County Recorder of the county
in which the Property is located with respect to any and all fixtures included
within the term "Property" as used herein and with respect to any goods or other
personal property that may now be or hereafter become such fixtures.

      15. TRANSFER RESTRICTIONS AND ACCELERATION. Subject to the provisions set
forth herein, should Trustor sell, convey, transfer, or assign its interest in,
including placing a lien thereon, or lease for a term in excess of one (1) year
(except for the leases in effect as of the date of this Deed of Trust), the
Property, or any part thereof, or any interest therein, or agree so to do, or
suffer Trustor's title or any interest therein to be divested, whether
voluntarily or involuntarily, or change, or permit to be changed, the character
or the use of the Property, or drill or extract oil, gas or other hydrocarbon
substances or any mineral of any kind or character on the Property, or if
Trustor is a partnership and the interest of a general partner is assigned or
transferred or, if Trustor is a corporation and more than 25% of the corporate
stock thereof is sold, transferred or assigned during any eighteen (18) month
period (collectively, hereinafter "Sale"), without the written consent of
Beneficiary being first obtained, then Beneficiary shall have the right, at its
option, subject to applicable law, to accelerate and declare the entire
principal balance and all accrued and unpaid interest on the Note, and all other
sums secured hereby, immediately due and payable. The provisions of this
Paragraph 15 shall be fully applicable to any involuntary Sale and Sale by
operation of law as well as any voluntary Sale by Trustor, but an agreement to
sell subject to the consent of Beneficiary shall not be deemed to be a Sale. The
foregoing right of acceleration is in addition to all other rights of
acceleration which Beneficiary may have under this Deed of Trust or the Note.
The foregoing shall not apply to the release of the Property under any provision
in this Deed of Trust; furniture and fixtures, breakables and supplies, sold or
exchanged in the ordinary course of business, provided that items of comparable
value and quality are substituted as replacements; any assignment, transfer or
conveyance of the Property with the consent of Beneficiary which consent may be


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withheld by Beneficiary, based upon Beneficiary's review of the transferee's
credit worthiness, transferee's experience with projects of the nature secured
hereby, the terms of the transfer, and other factors deemed by Beneficiary to be
material in evaluating the proposed transferee. Upon the assignment, transfer or
conveyance of the Property with Beneficiary's consent, Trustor shall pay to
Beneficiary a fee in an amount equal to one percent of the unpaid principal
balance of the loan ("Transfer Fee") at the time of the said assignment,
transfer or conveyance.

      16. FINANCIAL STATEMENTS; OFFSET CERTIFICATES.

            a. Annual Statement. Trustor shall keep accurate books and records
in connection with the Property. Trustor, without expense to Beneficiary, shall,
upon receipt of written request from Beneficiary, furnish to Beneficiary an
annual statement of the operation of the Property prepared and certified by
Trustor, showing, in reasonable detail satisfactory to Beneficiary, total rents
received and total expenses together with an annual balance sheet and profits
and loss statement, within one hundred twenty (120) days after the close of each
fiscal year of Trustor.

            b. Offset Certificates. Trustor, within five (5) business days upon
request in person or within ten (10) days upon request by mail, shall furnish a
written statement duly acknowledged of all amounts due on any indebtedness
secured hereby, whether for principal or interest on the Note or otherwise, and
stating whether any offsets or defenses exist against the indebtedness secured
by this Deed of Trust and covering such other matters with respect to any such
indebtedness as Beneficiary may reasonably require. If Trustor fails to furnish
such a statement, Beneficiary may prepare and furnish such a statement which
shall be deemed true and correct and may be relied on by third parties as such.

      17 TRUSTEE'S COSTS AND EXPENSES; GOVERNMENTAL CHARGES. Trustor shall pay
all costs, fees and expenses of Trustee, its agents and counsel in connection
with the performance of its duties under this Deed of Trust, including without
limitation the cost of any trustee's sale guaranty or other title insurance
coverage ordered in connection with any sale or foreclosure proceedings
hereunder, and shall pay all taxes (except federal and state income taxes) or
other governmental charges or impositions imposed by any governmental authority
on Trustee or Beneficiary by reason of its interest in the Note or this Deed of
Trust.

      18 NOTIFY LENDER OF DEFAULT. Trustor shall notify Beneficiary in writing
within five (5) days of the occurrence of any Event of Default or other event
which, upon the giving of notice or the passage of time or both, would
constitute an Event of Default.

                                EVENTS OF DEFAULT

      The existence or occurrence of any one or more of the following events
shall constitute an event of default ("Event of Default") hereunder (including,
if Trustor consists of more than one person or entity, the occurrence of any of
such events with respect to any one or more of such persons or entities):

      19 PAYMENT AND PERFORMANCE OBLIGATIONS. Failure to make any payment of
principal, interest or late charges on the Note when and as the same shall
become due and payable, whether at maturity or by acceleration or as part of any
prepayment or otherwise, or default in the performance of any of the covenants
or agreements of Trustor contained herein, if any monetary default shall not
have been cured within 10 days after notice thereof and any non-monetary default
shall not have been cured within 30 days after notice thereof (unless the
default cannot be cured within 30 days and Trustor commences a cure within the
30 days and diligently prosecutes the cure until it is complete, in which event,
Trustor shall have a reasonable amount of time after the 30 days to cure a
non-monetary default).

      20 RECEIVERSHIP. The appointment, pursuant to an order of a court of
competent jurisdiction, of a trustee, receiver or liquidator of the Property or
any part thereof, or of Trustor, or any termination or voluntary suspension of
the transaction of business of Trustor, or any attachment, execution or other
judicial seizure of all or any substantial portion of Trustor's assets.

      21 BANKRUPTCY OR INSOLVENCY. Trustor being insolvent by being unable to
pay debts when due or by having liabilities in excess of assets; or Trustor
committing an act of bankruptcy, making a general assignment


                                      110

for the benefit of creditors, or the filing by or against Trustor of a voluntary
or involuntary petition in bankruptcy or for the appointment of a receiver (and
any involuntary petition is not dismissed within 90 days from the filing
thereof); or if there commences under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, proceedings affecting the
Property or for the composition, extension, arrangement or adjustment of any of
Trustor's obligations (and any involuntary petition is not dismissed within 90
days from the filing thereof); or if Trustor's business is discontinued as a
going concern or is suspended; or if a writ of attachment, execution, or any
similar process is issued or levied against any significant part of Trustor's
property that is not released, stayed, bonded or vacated within a reasonable
time after its issue or levy; or if Beneficiary shall deem itself insecure with
respect to Trustor's performance of any of its obligations to Beneficiary
hereunder or otherwise.

      22 TERMINATION. If Trustor is other than a natural person or persons,
without the prior written consent of Beneficiary in each case, the voluntary or
involuntary dissolution or termination of existence of Trustor.

      23 TAX EVENT. The imposition of a tax, other than a state or federal
income tax, on or payable by Trustee or Beneficiary by reason of its ownership
of the Note or this Deed of Trust, and Trustor not promptly paying said tax, or
it being illegal for Trustor to pay said tax.

      24 MISREPRESENTATION OF FACT. Willful or negligent misrepresentations of
material fact by Trustor in any document submitted to Beneficiary in support of
the loan represented by the Note or in connection with the Note and this Deed of
Trust.

      25 OTHER. Any other event occurring which, under this Deed of Trust, or
under the Note constitutes a default by Trustor hereunder or thereunder or gives
Beneficiary the right to accelerate the maturity of the indebtedness (or any
part thereof) secured hereby, including but not limited to a prohibited transfer
as described in Paragraph 15 above.

                                    REMEDIES

      Upon the occurrence of any Event of Default, Trustee and Beneficiary shall
have the following rights and remedies, subject to Trustee or Beneficiary giving
Trustor ten (10) days' written notice for a monetary default and thirty (30)
days' written notice for a non-monetary default; provided, however, that Trustor
shall have a reasonable amount of time after the 30 days for a cure of a
non-monetary default, if the default cannot be cured within 30 days and Trustor
commences a cure within 30 days and diligently prosecutes the cure until it is
completed:

      26 CONCURRENT CURE PERIODS. All notice and cure periods provided in this
Deed of Trust, the Note or any other document or instrument evidencing or
securing the Note shall run concurrently with any notice or cure periods
provided by law. Without limiting the foregoing, Beneficiary shall be entitled
to exercise its remedies under this Deed of Trust if any event occurs which,
with the giving of notice or the passage of time, or both, would constitute an
Event of Default under this Deed of Trust or would entitle Beneficiary to
accelerate the indebtedness evidenced by the Note. Furthermore, the recording
and mailing to Trustor of a notice or breach and election to sell shall
constitute notice of such failure to perform under this Deed of Trust, the Note
or any other loan document.

      27 ACCELERATION. Beneficiary may declare the entire principal amount of
the Note then outstanding (if not then due and payable), and accrued and unpaid
interest thereon, and all other sums or payments required thereunder, to be due
and payable immediately.

      28 ENTRY. Irrespective of whether Beneficiary exercises the option
provided in Paragraph 28 herein, Beneficiary in person or by agent or by
court-appointed receiver may, without notice to Trustor, enter on, take
possession of, manage and operate the Property or any part thereof and do all
things necessary or appropriate in Beneficiary's sole discretion in connection
therewith, including without limitation making and enforcing, and if the same be
subject to modification or cancellation, modifying or cancelling leases upon
such terms or conditions as Beneficiary deems proper, obtaining and evicting
tenants, and fixing or modifying rents, contracting for and making repairs and
alterations, and doing any and all other acts which Beneficiary deems proper to
protect the security hereof; and either with or without so taking possession, in
its own name or in the name of Trustor, sue for or otherwise collect and receive
the Rents and Profits, including those past due and unpaid, and apply the same
less costs and expenses of operation and collection, including reasonable
attorneys' fees, upon any indebtedness secured


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hereby, and in such order as Beneficiary may determine. Upon request of
Beneficiary, Trustor shall assemble and make available to Beneficiary at the
site of the Property any of the Property which has been removed therefrom. The
entering upon and taking possession of the Property, or any part thereof, and
the collection of any Rents and Profits and the application thereof as aforesaid
shall not cure or waive any default theretofore or thereafter occurring or
affect any notice or default hereunder or invalidate any act done pursuant to
any such default or notice, and, notwithstanding continuance in possession of
the Property or any part thereof by Beneficiary, Trustor or a receiver, and the
collection, receipt and application of the Rents and Profits, Beneficiary shall
be entitled to exercise every right provided for in this Deed of Trust or by law
or in equity upon or after the occurrence of an Event of Default, including
without limitation the right to exercise the power of sale. Any of the actions
referred to in this Paragraph 28 may be taken by Beneficiary irrespective of
whether any notice of default or election to sell has been given hereunder and
without regard to the adequacy of the security for the indebtedness hereby
secured.

      29 JUDICIAL ACTION. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this instrument as a realty mortgage or to
enforce any of the terms hereof, subject to any non-recourse provision in this
Deed of Trust.

      30 POWER OF SALE. Beneficiary may elect to cause the Property or any part
thereof to be sold under the power of sale herein granted in any manner
permitted by applicable law. In connection with any sale or sales hereunder,
Beneficiary may elect to treat any of the Property which consists of a right in
action or which is property that can be severed from the Property or any
improvements thereon without causing structural damage thereto as if the same
were personal property, and dispose of the same in accordance with applicable
law, separate and apart from the sale of real property. Sales hereunder of any
personal property only shall be conducted in any manner permitted by the Uniform
Commercial Code of the state in which the Property is located. Where the
Property consists of real property and personal property located on or within
the real property, Beneficiary may elect in its discretion to dispose of both
the real and personal property together in one sale pursuant to real property
law as permitted by the Uniform Commercial Code of the state in which the
Property is located. Should Beneficiary elect to sell the Property, or any part
thereof, which is real property or which Beneficiary has elected to treat as
real property as provided above, Beneficiary or Trustee shall give such notice
of default and election to sell as may then be required by law. Thereafter, upon
the expiration of such time and the giving of such notice of sale as may then be
required by law, and without the necessity of any demand on Trustor, Trustee, at
the time and place specified in the notice of sale, shall sell said real
property or part thereof at public auction to the highest bidder for cash in
lawful money of the United States. Trustee may, and upon request of Beneficiary
shall, from time to time, postpone any sale hereunder by public announcement
thereof at the time and place notice therefor. If the Property consists of
several lots, parcels or items of property, Beneficiary may: (i) designate the
order in which such lots, parcels or items shall be offered for sale or sold;
or, (ii) elect to sell such lots, parcels or items through a single sale, or
through two or more successive sales, or in any other manner Beneficiary deems
in its best interest. Any person, including Trustor, Trustee or Beneficiary, may
purchase at any sale hereunder, and Beneficiary shall have the right to purchase
at any sale hereunder by crediting upon the bid price the amount of all or any
part of the indebtedness hereby secured. Should Beneficiary desire that more
than one sale or other disposition of the Property be conducted, Beneficiary
may, at its option, cause the same to be conducted simultaneously, or
successively, on the same day, or at such different days or times and in such
order as Beneficiary may deem to be in its best interests, and no such sale
shall terminate or otherwise affect the lien of this Deed of Trust on any part
of the Property not sold until all indebtedness secured hereby has been fully
paid. In the event Beneficiary elects to dispose of the Property through more
than one sale, Trustor agrees to pay the costs and expenses of each such sale
and of any judicial proceedings wherein the same may be made, including
reasonable compensation to Trustee and Beneficiary, their agents and counsel,
and to pay all expenses, liabilities and advances made or incurred by Trustee in
connection with such sale or sales, together with interest on all such advances
made by Trustee at the lower of the rate set forth in the Note or the maximum
rate permitted by law to be charged by Trustee. Upon any sale hereunder, Trustee
shall execute and deliver to the purchaser or purchasers a deed or deeds
conveying the property so sold, but without any covenant or warranty whatsoever,
express or implied, whereupon such purchaser or purchasers shall be let into
immediate possession; and the recitals in any such deed or deeds of facts, such
as default, the giving of notice of default and notice of sale, and other facts
affecting the regularity or validity of such sale or disposition, shall be
conclusive proof of the truth of such facts and any such deed or deeds shall be
conclusive against all persons as to such facts recited therein.


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      31 PROCEEDS OF SALE. The proceeds of any sale made under or by virtue of
this Deed of Trust, together with all other sums which then may be held by
Trustee or Beneficiary under this Deed of Trust, shall be applied as follows:

            FIRST: To the payment of costs and expenses of sale and of any
judicial proceedings wherein the same may be made, including reasonable
compensation to the agents and counsel of Trustee and Beneficiary, and to the
payment of all expenses, liabilities and advances made or incurred by Trustee
under this Deed of Trust, together with interest on all advances made by Trustee
at the lower of the interest rate set forth in the Note or the maximum rate
permitted by law to be charged by Trustee.

            SECOND: To the payment of any and all sums expended by Beneficiary
under the terms of this Deed of Trust, not then repaid, with accrued interest at
the rate set forth in the Note, and all other sums (except advances of principal
and interest thereon) required to be paid by Trustor pursuant to any provisions
of this Deed of Trust, or the Note, including without limitation all expenses,
liabilities and advances made or incurred by Beneficiary under this Deed of
Trust or in connection with the enforcement thereof, together with interest
thereon as herein provided.

            THIRD: To the payment of the entire amount then due, owing or unpaid
for principal and interest upon the Note with interest on the unpaid principal
at the rate set forth therein from the date of advancement thereof until the
same is paid in full.

            FOURTH: The remainder, if any, to the person or persons legally
entitled thereto.

      32 WAIVER OF LAWS. To the fullest extent Trustor may do so, Trustor agrees
that it will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, and Trustor, for itself and its
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the extent permitted by law, hereby
waives and releases all rights of redemption, valuation, exemption,
appraisement, stay of execution, notice of intention to mature or declare due
the whole or any part of the indebtedness secured hereunder, notice of election
to mature or declare due the whole or any part of such indebtedness and all
rights to a marshaling of the assets of Trustor, including the Property, or to a
sale in inverse order of alienation in the event of foreclosure of the liens and
security interests hereby created. Trustor shall not have or assert any right
under any statute or rule of law pertaining to the marshaling of assets, sale in
inverse order of alienation, the exemption of homestead, the administration of
estates of decedents or other matters whatever to defeat, reduce or affect the
right of Beneficiary under the terms of the Deed of Trust to a sale of the
Property for the collection of such indebtedness without any prior or different
resort for collection, or the right of Beneficiary under the terms of the Deed
of Trust to the payment of such indebtedness out of the proceeds of sale of the
Property in preference to every other claimant whatever. If any law referred to
in this Section and now in force, of which Trustor or its representatives,
successors and assigns and such other persons claiming any interest in the
Property might take advantage despite this Section, shall hereafter be repealed
or cease to be in force, such law shall not thereafter be deemed to preclude the
application of this Section.

      33 REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other remedy herein or
by law provided, but each shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law, in equity or
otherwise. No delay or omission of Trustee or Beneficiary to exercise any right
or power accruing upon any Event of Default shall impair any right or power or
shall be construed to be a waiver of any Event of Default or any acquiescence
therein; and every power and remedy given by this Deed of Trust to Trustee or
Beneficiary may be exercised from time to time as often as may be deemed
expedient by Trustee or Beneficiary. If there exists additional security for the
performance of the obligations secured hereby, the holder of the Note, at its
sole option, and without limiting or affecting any of its rights or remedies
hereunder, may exercise any of the rights and remedies to which it may be
entitled hereunder either concurrently with whatever rights and remedies it may
have in connection with such other security or in such order as it may
determine. Notwithstanding any other provision of this Deed of Trust,
Beneficiary shall have all remedies available at law, in equity or otherwise.


                                      113

                                  MISCELLANEOUS

      34 SEVERABILITY. In the event any one or more of the provisions contained
in this Deed of Trust shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Deed of Trust, but this Deed of
Trust shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein.

      35 CERTAIN CHARGES. Trustor agrees to pay Beneficiary for each statement
of Beneficiary (other than for the standard periodic statement of Beneficiary)
as to the obligations secured hereby, furnished at Trustor's request, the fees,
costs and expenses incurred by Beneficiary in connection with each statement.
Trustor further agrees to pay the charges of Beneficiary for any other service
rendered Trustor, or on its behalf, connected with this Deed of Trust or the
indebtedness secured hereby, including without limitation the delivery to an
escrow holder of a request for full or partial reconveyance of this Deed of
Trust, transmitting to an escrow holder moneys secured hereby, changing its
records pertaining to this Deed of Trust and indebtedness secured hereby to show
a new owner of the Property, and replacing an existing policy of insurance held
hereunder with another such policy.

      36 NOTICES. All notices expressly provided hereunder to be given by
Beneficiary to Trustor and all notices and demands of any kind or nature
whatsoever which Trustor may be required or may desire to give to or serve on
Beneficiary shall be in writing and shall be (i) hand-delivered, effective upon
receipt, (ii) transmitted by telecopier, effective upon receipt, with the
original mailed the same date by first class mail, postage prepaid, (iii) sent
by United States Express Mail or by private overnight courier, effective upon
receipt, or (iv) served by certified mail, postage prepaid, return receipt
requested and addressed to such party at the address set forth above, or to such
other address(es) or addressee(s) as the party to be served with notice may have
furnished in writing to the other party, effective three (3) days after mailing.

      37 TRUSTOR NOT RELEASED. Extension of the time for payment or modification
of the terms of payment of any sums secured by this Deed of Trust granted by
Beneficiary to any successor in interest of Trustor shall not operate to
release, in any manner, the liability of the original Trustor. Beneficiary shall
not be required to commence proceedings against such successor or refuse to
extend time for payment or otherwise modify the terms of payment of the sums
secured by the Deed of Trust by reason of any demand made by the original
Trustor. Without affecting the liability of any person, including Trustor, for
the payment of any indebtedness secured hereby, or the lien of this Deed of
Trust on the remainder of the Property for the full amount of any such
indebtedness and liability unpaid, Beneficiary and Trustee are respectively
empowered as follows: Beneficiary may from time to time and without notice: (i)
release any person liable for the payment of any of the indebtedness; (ii)
extend the time or otherwise alter the terms of payment of any of the
indebtedness; (iii) accept additional real or personal property of any kind as
security thereof, whether evidenced by deeds of trust, mortgages, security
agreement or any other instrument of security; or, (iv) alter, substitute or
release any property securing the indebtedness. Trustee may, at any time, and
from time to time, upon the written request of Beneficiary: (i) consent to the
making of any map or plat of the Property or any part thereof; (ii) join in
granting any easement or creating any restriction thereon; (iii) join in any
subordination or other agreement affecting this Deed of Trust or the lien or
charge hereof; or, (iv) reconvey, without any warranty, all or part of the
Property.

      38 RECONVEYANCE. Upon the payment in full of all sums and the performance
of all obligations secured by this Deed of Trust, Beneficiary shall request
Trustee to reconvey the Property and shall surrender this Deed of Trust and all
notes evidencing indebtedness secured by this Deed of Trust to Trustee. Upon
payment of its fees and any other sums owing to it under this Deed of Trust,
Trustee shall reconvey the Property without warranty to the person or persons
legally entitled thereto. Such person or persons shall pay all costs of
recordation, if any. The recitals in such conveyance of any matters of facts
shall be conclusive proof of the truthfulness thereof. The grantee in such
reconveyance may be described as "the person or persons legally entitled
thereto."

      39 STATUTE OF LIMITATIONS. The pleading of any statute of limitations as a
defense to any and all obligations secured by this Deed of Trust is hereby
waived to the fullest extent permitted by law.

      40 EFFECT AS DEED OF TRUST. Trustor acknowledges that it is the intent of
the parties hereto that this Deed of Trust qualify and operate as a Deed of
Trust upon real property pursuant to the laws of the jurisdiction where the
Property is located. Trustor agrees that in the event that a court of competent
jurisdiction finds that this


                                      114

Deed of Trust is ineffective, unenforceable or void as a Deed of Trust pursuant
to the laws of the jurisdiction where the Property is located, this Deed of
Trust shall be construed as a realty mortgage wherein Trustor is the mortgagor
and Beneficiary is the mortgagee, and may thereby be foreclosed after default or
breach hereunder in accordance with and pursuant to the laws of the jurisdiction
where the Property is located (as amended at the time of such default or
breach). In such event and to effectuate a realty mortgage effective as of the
date hereof, Trustor as mortgagor does hereby forever grant, bargain, sell,
convey, assign, transfer and mortgage the Property to Beneficiary and its
successors and assigns as mortgagee.

      41 INTERPRETATION. Wherever used in this Deed of Trust, unless the context
otherwise indicates a contrary intent, or unless otherwise specifically provided
herein, the word "Trustor" shall mean and include Trustor and any subsequent
owner or owners of the Property, and the word "Beneficiary" shall mean and
include not only the original Beneficiary hereunder but also any future owners
and holders, whether in whole or in part, including pledgees, of the Note
secured hereby. In this Deed of Trust whenever the context so requires, the
masculine gender includes the feminine and/or neuter, and the neuter includes
the feminine and/or masculine, and the singular number includes the plural and
conversely. In this Deed of Trust, the use of the word "including" shall not be
deemed to limit the generality of the term or clause to which is has reference,
whether or not non-limiting language (such as "without limitation," or "but not
limited to," or words of similar import) is used with reference thereto, but
rather could reasonably fall within the broadest scope of such general
statement, term or matter. The captions and headings of the paragraphs of this
Deed of Trust are for convenience only and are not to be used to interpret,
define or limit the provisions of this Deed of Trust.

      42 CONSENT; DELEGATION TO SUB-AGENTS. The granting or withholding of
consent by Beneficiary to any transaction as required by the terms hereof shall
not be deemed a waiver of the right to require consent to future or successive
transactions. Wherever a power of attorney is conferred upon Beneficiary
hereunder, it is understood and agreed that such power is conferred with full
power of substitution, and Beneficiary may elect in its sole discretion to
exercise such power itself or to delegate such power, or any part thereof, to
one or more sub-agents.

      43 SUCCESSORS AND ASSIGNS. All of the grants, obligations, covenants,
agreements, terms, provisions and conditions herein shall run with the land and
shall apply to, bind and inure to the benefit of, the heirs, administrators,
executors, legal representatives, successors and assigns of Trustor and the
successors in trust of Trustee and the endorsees, transferees, successors and
assigns of Beneficiary. In the event Trustor is composed of more than one party,
the obligations, covenants, agreements, and warranties contained herein as well
as the obligations arising therefrom are and shall be joint and several as to
each such party.

      44 GOVERNING LAW. The loan secured by this Deed of Trust is made pursuant
to, and shall be construed and governed by, the laws of the jurisdiction where
the Property is located, and that the exercise by Beneficiary of the power of
sale by virtue of this Deed of Trust shall be construed and governed by the laws
of the jurisdiction where the Property is located.

      45 SUBSTITUTION OF TRUSTEE. Beneficiary may remove Trustee at any time or
from time to time and appoint a successor trustee, and upon such appointment,
all powers, rights, duties and authority of Trustee, as aforesaid, shall
thereupon become vested in such successor. Such substitute trustee shall be
appointed by written instrument duly recorded in the county or counties where
the real property covered hereby is located, which appointment may be executed
by any authorized agent of Beneficiary or in any other manner permitted by
applicable law.

      46 NO WAIVER. No failure or delay by Beneficiary in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. No waiver, consent or approval of any kind by Beneficiary shall be
effective unless contained in writing, signed and delivered by Beneficiary. No
notice to or demand on Trustor in any case shall entitle Trustor to any other
notice or demand in similar or other circumstances, nor shall such notice or
demand constitute a waiver of the rights of Beneficiary to any other or further
actions.

      47 BENEFICIARY NOT PARTNER OF TRUSTOR; TRUSTOR TO INDEMNIFY BENEFICIARY.
The exercise by Beneficiary of any of its rights, privileges or remedies
conferred hereunder or under the Note or under applicable


                                      115

law, shall not be deemed to render Beneficiary a partner or a co-venturer with
the Trustor or with any other person. Trustor shall indemnify Beneficiary
against any claim by any third party for any injury, damage or liability of any
kind arising out of any failure of Trustor to perform its obligations in this
transaction, shall notify Beneficiary of any lawsuit based on such claim, and at
Beneficiary's election, shall defend Beneficiary therein at Trustor's own
expense by counsel satisfactory to Beneficiary or shall pay the Beneficiary's
cost and attorneys' fees if Beneficiary chooses to defend itself on any such
claim. This paragraph shall not apply to any claim caused by the negligence or
willful misconduct of Beneficiary.

      48 TIME OF ESSENCE. Time is of the essence of this Deed of Trust and each
and all of its terms and provisions.

      49 ENTIRE AGREEMENT. This Deed of Trust, the Note, and that certain
Purchase Agreement for Real and Personal Property dated March 28, 2002, and any
other instruments securing payment of the Note, if any, constitute the entire
agreement between Trustor and Beneficiary and none of the foregoing may be
modified or amended in any manner other than by supplemental written agreement
executed by Trustor and Beneficiary; provided, however, that all written
representations of Trustor, and of any partner, principal or agent of Trustor,
previously made to Beneficiary shall be deemed to have been made to induce
Beneficiary to make the loan secured hereby and to enter into the transaction
evidenced hereby and by the Note, and shall survive the execution hereof and the
closing pursuant hereto. This Deed of Trust cannot be changed or modified except
by written agreement signed by both Trustor and Beneficiary.

      50 NO THIRD PARTY BENEFITS. This Deed of Trust, the Note and the other
Related Agreements, if any, are made for the sole benefit of Trustor and
Beneficiary and their successors and assigns, and convey no other legal interest
to any party under or by reason of any of the foregoing.

      51 SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT. Any leasehold estate
against the Property shall be and is hereby made subject and subordinate in
every respect to the lien of this Deed of Trust, and to all the provisions
hereof, to all advances made or to be made under this Deed of Trust or the Note,
and to any increases, renewals, modifications, or replacements of this Deed of
Trust or the Note; provided, however, that (a) any lessee's right to quiet
possession of the leasehold estate shall not be disturbed by Beneficiary so long
as the lessee is not in default under the lease that creates the leasehold
estate, and so long as the lessee shall pay the rent and observe and perform all
of the provisions of the lease, unless the lease is otherwise terminated
pursuant to its terms, and (b) in the event Beneficiary obtains title to the
Property through foreclosure, exercise of power of sale, or other remedy under
this Deed of Trust or deed in lieu of foreclosure, the lessee shall continue
occupancy of the leasehold estate under the same terms and conditions of the
lease and shall attorn to Beneficiary, its successors and assigns, or to the
purchaser under a foreclosure or exercise of power of sale, or to the grantee of
a deed in lieu of foreclosure, to the same extent and with the same force as if
Beneficiary or such other party were the lessor under the leasehold estate.
Under such circumstances, however, Beneficiary shall not be (a) liable for any
act or omission of the lessor of the leasehold estate; or (b) subject to any
offsets or defenses which the lessee might have against the lessor; or (c) bound
by any rent or additional rent which the lessee might have paid beyond that due
for the current month to the lessor; or (d) bound by any amendment or
modifications of the lease made after the date of this Deed of Trust without
Beneficiary's prior written consent.


                                      116

      IN WITNESS WHEREOF, the undersigned have executed this Deed of Trust as of
the date set forth above.

TRUSTOR:

NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY


By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its: Manager


NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its: Manager


NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its: Manager


NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


                                      117

NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager

                     SIGNATURES CONTINUED ON FOLLOWING PAGE

                                      118

NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager


NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY

By: /s/ Robert M. Worsley
   -----------------------------------------
        Robert M. Worsley
  Its:  Manager

                            NOTARY ON FOLLOWING PAGE


                                      119

STATE OF ARIZONA  )
                  ) ss.
County of Maricopa)

      The foregoing instrument was acknowledged before me this 28th day of
March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf
of each of the following entities:

            NZ TRUST, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ SNOWFLAKE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ MILKY RANCH, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ SILVER CREEK, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ JOSEPH CITY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ NEW MEXICO LAND, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ URANIUM, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ TRAVERTINE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ OIL AND GAS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ MINERALS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY
            NZ HISTORY AND ARTIFACTS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY.


                                                   /s/ Yvonne E. Ulrich
                                                --------------------------------
                                                   Notary Public

My Commission expires:

  March 25, 2004


                                      120

                                   EXHIBIT 1-C

                               SECURITY AGREEMENT

      THIS SECURITY AGREEMENT is made and delivered as of the 28th day of March,
2002, collectively by all of the following companies:

         NZ Trust, LLC, an Arizona limited liability company
         NZ Snowflake, LLC, an Arizona limited liability company
         NZ Milky Ranch, LLC, an Arizona limited liability company
         NZ Silver Creek, LLC, an Arizona limited liability company
         NZ Joseph City, LLC, an Arizona limited liability company
         NZ New Mexico Land, LLC, an Arizona limited liability company
         NZ Uranium, LLC, an Arizona limited liability company
         NZ Travertine, LLC, an Arizona limited liability company
         NZ Oil and Gas, LLC, an Arizona limited liability company
         NZ Minerals, LLC, an Arizona limited liability company
         NZ History and Artifacts, LLC, an Arizona limited liability company,

which together shall hereafter be referred to collectively as "BORROWER", to and
for the benefit of NZ Corporation, an Arizona corporation, NZ Development
Corporation, an Arizona corporation, and NZU Corporation, a New Mexico
corporation (collectively referred to hereinafter as "LENDER").

                                R E C I T A L S:

      A. Lender has agreed to make a loan to Borrower in the amount of
$7,360,000.00 (the "LOAN") pursuant to and in accordance with the terms,
provisions and conditions set forth in that certain Purchase Agreement for Real
and Personal Property dated March 28, 2002, by and between Borrower and Lender
(the "LOAN AGREEMENT"). Borrower is executing a certain Promissory Note of even
date herewith (the "NOTE") payable to the order of Lender to evidence the Loan.
The Note is secured by, among other things, a certain Deed of Trust of even date
herewith (the "DEED OF TRUST") made by Borrower for the benefit of Lender
covering the real estate described in EXHIBIT A attached hereto (the
"PROPERTY"). All capitalized terms which are not defined herein shall have the
meanings ascribed thereto in the Loan Agreement.

      B. A condition precedent to Lender's extension of the Loan to Borrower is
the execution and delivery by Borrower of this Agreement.

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

      1. CREATION OF SECURITY INTEREST. Borrower hereby grants to Lender a
security interest in and mortgages the property owned by Borrower (specifically
excluding therefrom any property owned by any tenant of the Property) and
described as follows (hereinafter referred to collectively as the "COLLATERAL"):


                                      121

            (a) All apparatus, machinery, devices, fixtures, communication
      devices, systems and equipment, fittings, appurtenances, equipment,
      appliances, furniture, furnishings, appointments, accessories,
      landscaping, plants and all other items of personal property located at
      the Property or used in the operation or maintenance of the Property or
      any business or operation conducted thereon. All fixtures and equipment
      now or hereafter installed for use in the operation of the buildings,
      structures and improvements now or hereafter on the Property, including
      but not limited to, all lighting, heating, cooling, ventilating,
      air-conditioning, plumbing, sprinkling, incinerating, refrigerating,
      air-cooling, lifting, fire extinguishing, cleaning, entertaining,
      security, communicating and electrical and power systems, and the
      machinery, appliances, fixtures and equipment pertaining thereto, all
      awnings, ovens, stoves, refrigerators, dishwashers, disposals, carpeting,
      switchboards, engines, motors, tanks, pumps, screens, storm doors and
      windows, shades, floor coverings, ranges, washers, dryers, disposals,
      cabinets, furniture, partitions, conduits, ducts and compressors, and all
      elevators and escalators and the machinery and appliances, fixtures and
      equipment pertaining thereto.

            (b) Any and all revenues, receivables and income now owned or
      hereafter acquired and arising from or out of the Property and/or the
      businesses and operations conducted thereon.

            (c) Any and all other personal property of any kind, nature or
      description, whether tangible or intangible, (including without
      limitation, any and all goods, accounts, management, maintenance, service
      and other contract rights, franchises, licenses, permits, chattel paper,
      money, documents, instruments and general intangibles) of Borrower arising
      from, relating to or used in connection with the operation or maintenance
      of the Property, whether now owned or hereafter acquired, or in which
      Borrower now has or shall hereafter acquire any right, title or interest
      whatsoever (whether by bill of sale, lease, conditional sales contract, or
      other title retention document or otherwise), and all bank, savings,
      checking, money market and other depositary accounts of Borrower, and the
      balances therein, whether now or hereafter maintained with Lender or any
      other institution.

            (d) Any and all additions and accessories to all of the foregoing
      and any and all proceeds (including proceeds of insurance, eminent domain
      or other governmental takings and tort claims), renewals, replacements and
      substitutions of all of the foregoing.

            (e) All property listed on EXHIBIT B attached hereto and
      incorporated herein by this reference.

            (f) All of the books and records pertaining to the foregoing.

      2. SECURED OBLIGATIONS. The security interest created herein is given as
security for the payment of all indebtedness and the performance and observance
of all covenants, conditions, agreements, representations, warranties and other
liabilities and obligations of Borrower or any other obligor to or benefitting
Lender which are evidenced, secured or created


                                      122

by the Loan Agreement, this Agreement, the Note or any of the other Loan
Documents, together with all amendments and modifications hereof and thereof
(collectively, the "OBLIGATIONS").

      3. BORROWER'S COVENANTS. Borrower covenants and agrees as follows:

            (a) The Collateral shall be kept at the Property and will be used
      only in the conduct of Borrower's business and operation of the buildings,
      structures and improvements now or at any time hereafter on the Property.

            (b) The Collateral shall not be misused, wasted or allowed to
      deteriorate, except for the ordinary wear and tear resulting from its use.

            (c) The Collateral shall at all times be insured against loss,
      damage, theft, and such other risks as Lender may require in such amounts,
      with such companies, under such policies, in such form and for such
      periods as shall be reasonably satisfactory to Lender, and each policy
      shall provide that the loss thereunder and the proceeds payable thereunder
      shall be payable to Lender as its interest may appear.

            (d) The Collateral shall not be used in violation of any applicable
      law or regulation.

            (e) The Collateral may be examined and inspected by Lender at any
      reasonable time, wherever located.

            (f) Any of the Collateral which becomes worn out or is damaged shall
      be promptly replaced with items of equal or greater value and utility.

            (g) Borrower shall not sell, transfer, lease or otherwise dispose of
      any of the Collateral or any interest therein or offer to do so other than
      in the ordinary course of Borrower's business without the prior written
      consent of Lender (which shall not be unreasonably withheld), or permit
      anything to be done that may impair the value of any of the Collateral or
      the security intended to be afforded by this Agreement.

            (h) Borrower shall pay all taxes and assessments upon the Collateral
      or for its use or operation prior to any delinquency thereof.

            (i) Borrower shall sign and execute alone or with Lender any
      financing statement or other document or procure any documents and pay all
      costs, expenses and fees, including reasonable attorneys' fees, necessary
      to protect the security interest under this Agreement against the rights,
      interests or claims of third persons.

            (j) Borrower shall reimburse Lender for all costs, expenses and
      fees, including, without limitation, court costs and reasonable attorneys'
      fees, incurred by or for Lender for any action taken by or for Lender to
      remedy an Event of Default of Borrower hereunder or under the other Loan
      Documents, together with interest accruing


                                      123

      thereon at the Default Rate commencing on the date that is ten days from
      the date demand for payment is made by Lender until repaid to Lender.

            (k) Borrower shall (i) from time to time promptly execute and
      deliver to Lender all such other assignments, certificates, supplemental
      writings, and financing statements, and do all other reasonable acts or
      things as Lender may request in order to more fully evidence and perfect
      the security interest created herein; (ii) punctually and properly perform
      all of its agreements and obligations under the Loan Agreement, the Note,
      the Deed of Trust and the other Loan Documents; (iii) pay the indebtedness
      secured hereby in accordance with the terms thereof and in accordance with
      the terms of the Loan Agreement, the Note, the Deed of Trust and the other
      Loan Documents; (iv) promptly furnish Lender with any information or
      writings which Lender may request concerning the Collateral; (v) allow
      Lender to inspect all records of Borrower relating to the Collateral, the
      Property, the Obligations and the business and operation of Borrower with
      respect to the Collateral or the Property, and to make and take away
      copies of such records; (vi) promptly notify Lender of any material
      adverse change in any facts or circumstances warranted or represented by
      Borrower in this Agreement or in any other writing furnished by Borrower
      to Lender in connection with the Collateral, the Obligations or the
      business and operation of Borrower or the Property; (vii) promptly notify
      Lender of any claim, action or proceeding affecting title to the
      Collateral, or any part thereof, or the security interest created herein,
      and, at the request of Lender, appear in and defend, at Borrower's
      expense, any such action or proceeding; and (viii) promptly, after being
      requested by Lender, pay to Lender the amount of all expenses, including
      reasonable attorneys' fees and other legal expenses, incurred by Lender in
      enforcing the security interest created herein, together with interest
      thereon at the Default Rate commencing on the date that is ten days after
      the date demand for payment is made by Lender until the date repaid to
      Lender.

            (l) Borrower shall not, without the prior written consent of Lender,
      create any other security interest in, mortgage, pledge, or otherwise
      encumber the Collateral, or any part thereof, or permit the same to be or
      become subject to any lien, attachment, execution, sequestration, other
      legal or equitable process, or any encumbrance of any kind or character,
      however, Borrower shall have the right to contest by appropriate
      proceedings the validity or amount of any such lien if and only if
      Borrower shall, within thirty days after the filing thereof, place a bond
      with the Lender in an amount, form, content and issued by a surety
      reasonably acceptable to the Lender for the payment of any such lien.

            (m) Should any part of the Collateral ever be in any manner
      converted by its issuer or maker into another type of property or any
      money or other proceeds ever be paid or delivered to Borrower as a result
      of Borrower's rights in the Collateral, then all such property, money and
      other proceeds shall become part of the Collateral, and Borrower covenants
      to forthwith pay or deliver to Lender all of the same which is susceptible
      of delivery and, at the same time, if Lender deems it necessary and so
      requests, Borrower will properly endorse or assign the same. With respect
      to any of such property of a kind requiring any additional security
      agreement, financing statement or other writing to


                                      124

      perfect a security interest therein in favor of Lender, Borrower will
      forthwith execute and deliver to Lender whatever Lender shall deem
      necessary or proper for such purpose.

            (n) Should any covenant, duty or agreement of Borrower fail to be
      performed in accordance with its terms hereunder, Lender may after an
      Event of Default, but shall never be obligated to, perform or attempt to
      perform such covenant, duty or agreement on behalf of Borrower, and any
      amount expended by Lender in such performance or attempted performance
      shall become a part of the indebtedness secured hereby, and, upon demand
      of Lender, Borrower agrees to pay such amount promptly to Lender, together
      with interest accrued thereon at the Default Rate commencing on the date
      that is ten days after the date demand for payment is made by Lender until
      repaid to Lender.

      4. DEFAULT. An "EVENT OF DEFAULT" shall occur under this Agreement upon
the occurrence of (a) a breach by Borrower of any of the covenants, agreements,
representations, warranties or other provisions hereof which is not cured or
waived within the applicable grace or cure period, if any, set forth in the Loan
Agreement, or (b) any other Event of Default described in the Loan Agreement or
any of the other Loan Documents.

      5. LENDER'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default, Lender shall have available to it the following rights and remedies:

            (a) Right to Assign. Lender may assign this Agreement and, if Lender
      does assign this Agreement, the assignee shall be entitled to the
      performance of all of Borrower's agreements and obligations under this
      Agreement, and the assignee shall be entitled to all the rights and
      remedies of Lender under this Agreement. Borrower expressly agrees that it
      will assert no claims or defenses it may have against Lender against the
      assignee except those available to it pursuant to this Agreement.

            (b) Right to Discharge Borrower's Obligations. Lender may, at its
      option, discharge taxes, liens or security interests or other encumbrances
      at any time levied or placed on the Collateral, may remedy or cure any
      default of Borrower under the terms of any lease, rental agreement, or
      other document which in any way pertains to or affects Borrower's title to
      or interest in any of the Collateral, may pay for insurance on the
      Collateral, and may pay for the maintenance and preservation of the
      Collateral, and Borrower agrees to reimburse Lender, on demand, for any
      payment made or any expense incurred by Lender, including reasonable
      attorneys' fees, pursuant to the foregoing authorization, together with
      interest at the Default Rate from the date so paid or incurred by Lender
      until repaid to Lender, which payments, expenses and interest shall be
      secured by this Agreement and by the Deed of Trust and the other Loan
      Documents.

            (c) Rights as Secured Creditor. Upon the occurrence of an Event of
      Default, Lender, in its sole and absolute discretion, and to the fullest
      extent permitted under applicable law, may: (a) exercise any one or more
      of the rights and remedies afforded to secured parties under the Uniform
      Commercial Code in force in the State(s) in which the Collateral is
      located, together with any and all other rights and remedies otherwise
      provided and available to Lender at law or in equity; (b) enter, with
      process of law, any


                                      125

      premises where the Collateral (or the books and records of Borrower
      related thereto) is or may be located, and without charge or liability to
      Lender therefor seize and remove the Collateral (and copies of Borrower's
      books and records in any way relating to the Collateral) from said
      premises and/or remain upon said premises and use the same (together with
      said books and records) for the purpose of collecting, preparing and
      liquidating the Collateral, all without cost to Lender; and (c) sell or
      otherwise dispose of the Collateral at public or private sale or auction
      for cash or credit (which sale or auction may, at the option of Lender,
      occur on the premises where the Collateral is located or elsewhere, at no
      cost to Lender) and from the proceeds of such sale or disposal retain (i)
      all costs and charges incurred by Lender in taking and causing the removal
      and sale or disposal of the Collateral, including reasonable attorneys'
      fees; and (ii) an amount equal to all other Obligations; provided,
      however, that Borrower shall be credited with the net proceeds of such
      sale only when such proceeds are actually received by Lender.

            (d) Assembly of Collateral; Injunctive Relief. Upon the occurrence
      of an Event of Default and after giving effect to any applicable notice
      and cure periods, Borrower, immediately upon demand by Lender, shall
      assemble the Collateral and make it available to Lender at a place or
      places to be designated by Lender. Borrower hereby acknowledges and agrees
      that if Borrower fails to perform, observe or discharge any of its
      obligations or liabilities under this Agreement, no remedy of law shall
      provide adequate relief to Lender, and that Lender shall be entitled to
      temporary and permanent injunctive relief in any such case without the
      necessity of posting of bond, surety or other security.

            (e) Notice of Collateral Disposition. Any notice required to be
      given by Lender of a sale, lease or other disposition of the Collateral or
      any other intended action by Lender, deposited in the United States mail,
      postage prepaid and duly addressed to Borrower at Borrower's address set
      forth in the Deed of Trust not less than ten days prior to such proposed
      action, shall constitute commercially reasonable and fair notice to
      Borrower thereof.

            (f) Matters Regarding Sale of Collateral. Borrower agrees that
      Lender may, if Lender deems it reasonable, postpone or adjourn any sale of
      Collateral from time to time by an announcement at the time and place of
      sale or by announcement at the time and place of such postponed or
      adjourned sale, without being required to give a new notice of sale.
      Borrower also waives and releases any cause of action and claim against
      Lender as a result of Lender's possession, collection or sale of the
      Collateral, any liability or penalty for failure of Lender to comply with
      any requirement imposed on Lender relating to notice of sale, holding of
      sale, or reporting of sale of the Collateral, and any right of Borrower to
      redeem the Collateral from such sale. At any sale or sales made pursuant
      to this Agreement or in a suit to foreclose the same, the Collateral, at
      the option of Lender or its assigns, may be sold (i) in its entirety or
      separately, at the same or at different times, and (ii) separate or
      together with any foreclosure sale of the collateral covered by the Deed
      of Trust in accordance with Section 9-504 of the Uniform Commercial Code,
      and the Collateral need not be present at the time or place of sale. At
      any such sale, Lender or the holder of the indebtedness hereby secured may
      bid for and


                                      126

      purchase any of the property sold, notwithstanding that such sale is
      conducted by Lender or its attorneys, agents, or assigns, and no
      irregularity in the manner of sale or of giving notice shall operate to
      preclude Lender from recovering the Obligations.

            (g) Replevin. If Lender seeks possession of the Collateral through
      replevin or other court action, Borrower hereby irrevocably waives (i) any
      bond, surety or security required as an incident to such possession, and
      (ii) any demand by Lender for possession of the Collateral prior to the
      commencement of any such suit or action.

            (h) Enforcement Standards. Lender shall have the right at all times
      to enforce the provisions of this Agreement in strict accordance with the
      terms hereof, notwithstanding any conduct or custom on the part of Lender
      in refraining from so doing at any time or times. The failure of Lender at
      any time or times to enforce its rights under said provisions strictly in
      accordance with the same shall not be construed or operate as a waiver of
      any of the rights and remedies granted Lender hereunder or as having
      created a custom in any way or manner contrary to the specific provisions
      of this Agreement or as having in any way or manner modified the same. All
      rights and remedies of Lender are cumulative and concurrent, and the
      exercise of one right or remedy by Lender shall not be deemed a waiver or
      release of any other right or remedy.

      6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that:

            (a) Borrower has authority to execute and deliver this Agreement;

            (b) no financing statement covering the Collateral, or any part
      thereof, has been filed and remains in effect;

            (c) no other security agreement covering the Collateral, or any part
      thereof, has been made and no security interest, other than the one herein
      created, has attached or been perfected in the Collateral or in any part
      thereof;

            (d) all information supplied and statements made in any financial or
      credit statements or application for credit prior to the execution of this
      Agreement are true and correct in all material respects as of the date
      hereof; and

            (e) at the time Lender's security interest attaches to any of the
      Collateral or its proceeds, Borrower will be the lawful owner with the
      right to transfer any interest therein, and Borrower will make such
      further assurances as to prove title to the Collateral in Lender as may be
      required and will defend the Collateral and its proceeds against the
      lawful claims and demands of all persons whomsoever.

The delivery at any time by Borrower to Lender of the Collateral shall
constitute a representation and warranty by Borrower that, with respect to such
Collateral, and each item thereof, Borrower is owner of the Collateral and the
matters heretofore represented and warranted in this Paragraph 6 are true and
correct. Further, Borrower, upon the request of Lender, agrees to amend this
Agreement and any and all financing statements filed in connection therewith for
the purpose of


                                      127

setting forth in said Agreement and said financing statements an accurate and
itemized list of the Collateral now generally described herein and in said
financing statements and to include in said accurate and itemized list an
identification of the Collateral by make, model, serial number and other
appropriate descriptive data.

      7. SUBROGATION. If the Obligations, or any part thereof, are renewed or
extended, or applied toward the payment of any indebtedness secured by any deed
of trust, mortgage, pledge, security agreement or other lien, Lender shall be
and is hereby subrogated to all of the rights, titles, security interests and
other liens securing the indebtedness so renewed, extended or paid.

      8. FURTHER AGREEMENTS.

            (a) "Borrower" and "Lender" as used in this Agreement include the
      legal representatives, successors and assigns of those parties.

            (b) Neither Borrower nor Lender shall be bound by any amendment not
      expressed in writing and signed by the party to be bound thereby.

            (c) It is expressly intended, understood and agreed: (i) that this
      Agreement is made and entered into for the sole protection and benefit of
      Lender and Borrower, and their successors and assigns and no other person
      or persons shall have any right of action hereunder or rights to the
      proceeds of the Loan at any time; (ii) that the proceeds of the Loan do
      not constitute a trust fund for the benefit of any third party; and (iii)
      that no third party shall under any circumstances be entitled to any
      equitable lien on any undisbursed proceeds of the Loan at any time. The
      relationship between Lender and Borrower is solely that of a lender and
      borrower, and nothing contained herein, or in the Loan Agreement, the
      Note, the Deed of Trust or any of the other Loan Documents shall in any
      manner be construed as making the parties hereto partners, joint venturers
      or as creating any relationship other than lender and borrower.

            (d) Except with respect to the creation, perfection, priority and
      enforcement of the liens and security interests created hereby, which
      shall be construed in accordance with and governed by the laws of the
      State of Arizona, the validity and interpretation of this Agreement shall
      be construed in accordance with and governed by the laws of the State of
      Illinois. In the event that any provision of this Agreement is deemed to
      be invalid by reason of the operation of law, or by reason of the
      interpretation placed thereon by any administrative agency or any court,
      Borrower and Lender shall negotiate an equitable adjustment in the
      provisions of the same in order to effect, to the maximum extent permitted
      by law, the purpose of this Agreement and the validity and enforceability
      of the remaining provisions, or portions or applications thereof, shall
      not be affected thereby and shall remain in full force and effect.

            (e) To the extent permitted by law, Borrower hereby waives any and
      all rights to require marshalling of assets.


                                      128

            (f) All notices, demands, requests and other correspondence which
      are required or permitted to be given hereunder shall be deemed
      sufficiently given when delivered or mailed in the manner and to the
      address of Borrower or Lender, as the case may be, as specified in the
      Loan Agreement.

            (g) This Agreement shall inure to the benefit of Lender and its
      successors and assigns and shall be binding upon Borrower and its
      successors and assigns.

            (h) BORROWER AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
      AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
      RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
      BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED
      TO THIS AGREEMENT, THE LOAN AGREEMENT, THE DEED OF TRUST, ANY OTHER LOAN
      DOCUMENT, OR ANY RELATIONSHIP BETWEEN BORROWER AND LENDER. THIS PROVISION
      IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN DESCRIBED HEREIN
      AND IN THE OTHER LOAN DOCUMENTS.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.

LENDER:

      NZ CORPORATION,
      an Arizona corporation

      By:   /s/ Jerome L. Joseph
         ----------------------------------
        Its: Treasurer
            -------------------------------


      NZ DEVELOPMENT CORPORATION,
      an Arizona corporation

      By:   /s/ Jerome L. Joseph
         ----------------------------------
        Its: Treasurer
            -------------------------------

                     SIGNATURES CONTINUED ON FOLLOWING PAGE


                                      129

      NZU, INC.,
      a New Mexico corporation

      By:   /s/ Jerome L. Joseph
         ----------------------------------
        Its: Treasurer

BORROWER:

      NZ TRUST, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley

        Its: Manager


      NZ SNOWFLAKE, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ MILKY RANCH, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager

                     SIGNATURES CONTINUED ON FOLLOWING PAGE


                                      130

      NZ SILVER CREEK, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ JOSEPH CITY, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ NEW MEXICO LAND, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ URANIUM, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager

                     SIGNATURES CONTINUED ON FOLLOWING PAGE


                                      131

      NZ TRAVERTINE, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ OIL AND GAS, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ MINERALS, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager


      NZ HISTORY AND ARTIFACTS, LLC,
      an Arizona limited liability company

      By:    /s/ Robert M. Worsley
         ----------------------------------
           Robert M. Worsley
        Its: Manager

                            NOTARY ON FOLLOWING PAGE

                                      132

STATE OF ARIZONA    )
                    ) ss.
County of Maricopa  )

      The foregoing instrument was acknowledged before me this 28th day of
March, 2002 by Robert M. Worsley, in his capacity as Manager for and on behalf
of each of the following entities:

            NZ Trust, LLC, an Arizona limited liability company
            NZ Snowflake, LLC, an Arizona limited liability company
            NZ Milky Ranch, LLC, an Arizona limited liability company
            NZ Silver Creek, LLC, an Arizona limited liability company
            NZ Joseph City, LLC, an Arizona limited liability company
            NZ New Mexico Land, LLC, an Arizona limited liability company
            NZ Uranium, LLC, an Arizona limited liability company
            NZ Travertine, LLC, an Arizona limited liability company
            NZ Oil and Gas, LLC, an Arizona limited liability company
            NZ Minerals, LLC, an Arizona limited liability company
            NZ History and Artifacts, LLC, an Arizona limited liability company.


                                                     /s/ Yvonne E. Ulrich
                                                   -----------------------------
                                                   Notary Public

My commission expires:

  March 25, 2004


STATE OF     Arizona      )
                          )ss.
County of    Maricopa     )


      SUBSCRIBED AND SWORN TO before me this 29th day of March, 2002, by Joe
Joseph as treasurer of the NZ Corporation, NZ Development Corporation, and NZU,
Inc.

                                               /s/ Norma J. Oswalt
                                               ---------------------------------
                                               Notary Public

My commission expires:

  10-14-2003

                                      133

                                   EXHIBIT 1-D

                                   PLEDGE AND
           COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST
                             AND SECURITY AGREEMENT

THIS PLEDGE AND COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST AND
SECURITY AGREEMENT (the "SECURITY AGREEMENT") is made this 28th day of March,
2002, by and between NZ Corporation, an Arizona corporation, NZ Development
Corporation, an Arizona corporation, and NZU Corporation, a New Mexico
corporation (collectively "SECURED PARTY"), and New Mexico and Arizona Land
Company, LLC, an Arizona limited liability company ("PLEDGOR").

                                    RECITALS

            A. Pledgor is the sole member of the Company (defined hereinbelow)
which Company is indebted to Secured Party in the sum of $7,360,000.00 plus
interest thereon, pursuant to the terms of that certain Promissory Note of even
date hereof, as described in more detail in Section 3, hereinbelow.

            B. As security for the indebtedness, Pledgor is willing and has
agreed to give Secured Party a security interest in certain assets hereinafter
described.

                                    COVENANTS

            NOW, THEREFORE, intending to be legally bound and for good and
valuable consideration, including granting of credit to the Company and the
mutual promises and covenants of the parties, the receipt, sufficiency and
adequacy of which are hereby acknowledged by all parties, and the performance of
the terms and conditions herein set forth, it is agreed as follows:

            1. INCORPORATION OF RECITALS.

            The parties hereto agree that the recitals set forth above are true
and correct and are incorporated herein by reference.

            2. SECURITY INTEREST.

            As security for the payment of the indebtedness more particularly
described in Section 3 of this Security Agreement, Pledgor does hereby pledge,
grant, assign, convey, transfer and set over to Secured Party all of Pledgor's
rights and proceeds in the following described property and does hereby grant to
Secured Party a security interest in and to the following described property
("COLLATERAL"):

            (a) All of Pledgor's right, title and interest as a member and
otherwise in and to, without limitation, all distributions, profits and property
due to or payable in respect of Pledgor's interest in the following limited
liability companies and any certificates representing the membership interest
therein:


                                      134

         NZ Trust, LLC, an Arizona limited liability company
         NZ Snowflake, LLC, an Arizona limited liability company
         NZ Milky Ranch, LLC, an Arizona limited liability company
         NZ Silver Creek, LLC, an Arizona limited liability company
         NZ Joseph City, LLC, an Arizona limited liability company
         NZ New Mexico Land, LLC, an Arizona limited liability company
         NZ Uranium, LLC, an Arizona limited liability company
         NZ Travertine, LLC, an Arizona limited liability company
         NZ Oil and Gas, LLC, an Arizona limited liability company
         NZ Minerals, LLC, an Arizona limited liability company, and
         NZ History and Artifacts, LLC, an Arizona limited liability company.

The above identified limited liability companies are collectively referred to
herein as the "COMPANY";

            (b) All proceeds (including insurance proceeds) or products
attributable to or arising from any of the foregoing Collateral;

            (c) All other property substituted for any of such property
described above, including the proceeds of all such Collateral.

            3. INDEBTEDNESS SECURED HEREBY.

            The security interest granted herein by Pledgor secures and shall
secure:

            (a) Payment of any and all obligations, liabilities and indebtedness
owed by the Company to Secured Party by virtue of that certain Promissory Note
(the "PROMISSORY NOTE") of even date hereof, in the principal amount of
$7,360,000.00, plus interest thereon, between the Company and Secured Party in
which the parties provided for payment by the Company to Secured Party of the
purchase price of certain real and personal property sold by Secured Party to
the Company;

            (b) Performance under (i) that certain Deed of Trust Deed Of Trust,
Assignment Of Rents And Leases And Security Agreement of even date hereof and
(ii) that certain Security Agreement of even date hereof (collectively the
"SECURITY DOCUMENTS"), which together serve as security for the Promissory Note.

            (b) Payment of all costs and expenses incurred by Secured Party in
enforcing or protecting its rights with respect to the Collateral, or the
indebtedness secured by the Collateral, including, but not limited to,
reasonable attorney's fees.

            For purposes of this Security Agreement, all such sums and
performance obligations secured by the Collateral shall be referred to herein as
"Indebtedness."


                                      135

            4. PLEDGOR'S REPRESENTATIONS TO SECURED PARTY.

            Pledgor hereby represents the following facts to be true and correct
as of the date hereof:

            (a) Pledgor is the true and lawful owner of the Collateral, free and
clear of any lien or encumbrance, except for the security interest created by
this Agreement;

            (b) Pledgor is the sole member in each of limited liability
companies comprising the Company;

            (c) Pledgor has a good right and full power and authority to grant a
security interest in the Collateral;

            (d) There are no advances, liens, security interests or encumbrances
against the Collateral.

            (e) This Security Agreement, the pledge of the Collateral pursuant
hereto and the filing of a financing statement in connection therewith create a
valid and perfected first priority security interest in the Collateral securing
the payment of the Indebtedness, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken;

            (f) The execution and performance by Pledgor of this Agreement have
been duly authorized by all necessary entity action of the Company and do not
and will not (i) contravene the Company's organizational governance documents,
(ii) violate any provision of any law, rule, or regulation, or (iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which Pledgor or the
Company is a party or by which either of Pledgor or the Company or their
properties may be bound or affected.

            (g) This Agreement is a legal, valid and binding obligation of
Pledgor, enforceable in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.

            (h) No consent of any other person or entity and no authorization,
approval or action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge by Pledgor of the
Collateral pursuant to this Agreement, for the grant by Pledgor of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Pledgor, (ii) for the perfection or maintenance of the pledge and
security interest created hereby (including the first priority nature of such
pledge and security interest), or (iii) for the exercise by Secured Party of the
voting or other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement (except as may be required in
connection with the disposition of any portion of the Collateral by laws
affecting the offer and sale of securities generally).

            (i) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.

            (j) The pledge of the Collateral hereunder will not result in any
termination of the Company under its limited liability company operating
agreement or the limited liability company act of the state of the Company's
formation.


                                      136

            5. PLEDGOR'S WARRANTIES AND COVENANTS OF PLEDGOR TO SECURED PARTY.

            Pledgor hereby warrants, covenants and agrees that, until the
Indebtedness secured hereby shall have been paid in full or unless it shall have
received a prior written consent of the Secured Party:

            (a) Protection and Use of Collateral. Pledgor will keep the
Collateral free from any adverse lien, security interest, or encumbrance (other
than the security interest granted herein, and the lien of ad valorem taxes not
yet delinquent) and in good order and repair and will not waste or destroy the
Collateral or any part thereof; Pledgor will not use the Collateral in violation
of any regulations, statute or ordinance or of any judgments, citations, decrees
or orders of any judicial or administrative authority;

            (b) Sale or Impairment of Collateral. Pledgor will not sell or offer
to sell or otherwise transfer, dispose of or encumber the Collateral or any
interest therein, or otherwise dispose of any material asset, for less than its
reasonable fair market value in such manner as to materially diminish the value
of the Collateral, or in any other manner impair any of its assets so as to
substantially diminish the value of the Collateral;

            (c) Indemnification. Pledgor will and does hereby agree to indemnify
and hold Secured Party harmless against all claims arising out of or in
connection with Pledgor's ownership or use of the Collateral;

            (d) Execute Additional Documents. Pledgor will authorize or sign and
execute alone or with Secured Party any UCC-1 or other financing statement or
any other document or procure any document and pay all necessary costs to
protect the security interest under this Security Agreement against the interest
of third persons. Pledgor will pay the cost of filing the same in all public
offices wherever filing is deemed by Secured Party to be necessary and
desirable. Secured Party is hereby appointed Pledgor's attorney-in-fact to do
all acts and things which Secured Party may deem necessary to perfect and/or
continue the perfection of the security interest created by this Security
Agreement and to protect the Collateral. Pledgor further agrees to pay all costs
and fees for filing any termination statements;

            (e) Payment by Company. Pledgor will and does hereby authorize and
direct the Company to make all distributions in respect to the Collateral
directly to the Secured Party until further notice by the Secured Party is
delivered to the Company.

            (f) Pledge of Collateral. The pledge of the Collateral and grant of
security interest hereunder will not immediately result in Secured party being
deemed a member of the Company for any purpose, including for any required
capital contribution assessment purpose under the Company's limited liability
company operating agreement. If there is an Event of Default or the Indebtedness
is not otherwise satisfied, to the extent that the Collateral is transferred to
Secured party in satisfaction of the Indebtedness, Secured Party shall become
the sole member of the Company with rights to vote to amend the Company's
limited liability company operating agreement or remove the manager(s) of the
Company.

            6. PLEDGOR'S USE OF COLLATERAL.

            Prior to payment in full of the Indebtedness, Pledgor may use the
Collateral in the ordinary course of Pledgor's business; provided, upon the
occurrence of an event of default, Pledgor's right to use the Collateral shall
terminate until further written notice from the Secured Party.


                                      137

            (a) So long as no Default or Event of Default shall have occurred
and be continuing:

                           (i)      Pledgor shall be entitled to exercise or
                                    refrain from exercising any and all voting
                                    and other consensual rights pertaining to
                                    the Collateral or any part thereof for any
                                    purpose not inconsistent with the terms of
                                    this Agreement or the Security Documents.

                           (ii)     Pledgor shall be entitled to receive and
                                    retain any and all periodic cash
                                    distributions paid in respect of the
                                    Collateral, provided, however, that any and
                                    all distributions received after and during
                                    the continuance of a Default or an Event of
                                    Default shall be received in trust for the
                                    benefit of Secured Party, be segregated from
                                    the other property or funds of Pledgor, and
                                    be forthwith delivered to Secured Party in
                                    the same form as so received (with any
                                    necessary endorsement or assignment) and
                                    Secured Party shall apply such funds to the
                                    payment of the Indebtedness.

            (b) Upon the occurrence and during the continuance of a Default or
an Event of Default:

                           (i)      All rights of Pledgor to exercise or refrain
                                    from exercising the voting and other
                                    consensual rights which Pledgor would
                                    otherwise be entitled to exercise pursuant
                                    to Section 6(a)(i) and to receive the
                                    distributions which it would otherwise be
                                    authorized to receive and retain pursuant to
                                    Section 6(a)(ii) shall cease, and all such
                                    rights shall thereupon become vested in
                                    Secured Party who shall thereupon have the
                                    sole right to exercise or refrain from
                                    exercising such voting and other consensual
                                    rights and to receive and hold as Collateral
                                    such distributions.

                           (ii)     All distributions which are received by
                                    Pledgor contrary to the provisions of
                                    paragraph (i) of this Section 6(b) shall be
                                    received in trust for the benefit of Secured
                                    Party, shall be segregated from other funds
                                    of Pledgor and shall be forthwith paid over
                                    to Secured Party as Collateral in the same
                                    form as so received (with any necessary
                                    endorsement or assignment).

            7. EVENTS OF DEFAULT.

            The term "EVENT OF DEFAULT," whenever used in this Security
Agreement, shall mean any one or more of the following events or conditions:

            (a) The occurrence of an Event of Default under any provision of
this Security Agreement;

            (b) The occurrence of an Event of Default under either of the
Security Documents and/or the Promissory Note;


                                      138

            (c) The loss or destruction which is not fully insured, or the
unauthorized sale, transfer or disposition (without the prior written consent of
Secured Party) or the unauthorized encumbrance of any of the Collateral.

            8. REMEDIES.

            Secured Party shall have the following remedies hereunder:

            (a) Acceleration and Foreclosure, Etc. Upon the happening of any
Event of Default specified in Section 7 above, and at any time thereafter, at
the option of Secured Party, any and all Indebtedness secured hereby shall
become immediately due and payable without demand or any notice to Pledgor or
any other person obligated thereon and Secured Party shall have and may exercise
any and all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of Arizona, and as otherwise
contractually granted herein or under any other applicable law or under any
other agreement executed by Pledgor in favor of Secured Party, including,
without limitation, the right and power to sell, or otherwise dispose of or
utilize such portion of the Collateral or any part or parts thereof in any
manner consistent with Chapter 9 of the Arizona Uniform Commercial Code after
default by Pledgor, and to apply the proceeds thereof toward payment of any
costs and expenses and reasonable attorneys' fees and legal expenses thereby
incurred by Secured Party and toward payment of the obligations in such order or
manner as Secured Party may elect.

            (b) Waiver of Notice, Etc. Pledgor agrees that if such notice of
default is mailed, postage prepaid, or sent by facsimile, charges prepaid, to
Pledgor, at least fifteen (15) days before the time of the proposed sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement of giving notice, and a proposed sale may take place anytime after
such fifteen-day (15) period (but not more than thirty (30) days thereafter)
without the necessity of sending another notice to Pledgor. Secured Party may
postpone and reschedule any proposed sale at its option without the necessity of
giving Pledgor further notice of such fact as long as the rescheduled sale
occurs within thirty (30) days of the originally scheduled sale.

            (c) Method of Sale of Collateral Approved. All recitals in any
instrument of assignment or any other document or paper executed by Secured
Party incident to sale, transfer, assignment or other disposition or utilization
of the Collateral or any part thereof hereunder shall be sufficient to establish
full legal propriety of the sale or other action taken by Secured Party or of
any fact, condition or thing incident thereto and all prerequisites of such sale
or other action shall be presumed conclusively to have been performed or to have
occurred.

            9. SECURED PARTY'S POWERS AND DUTIES WITH RESPECT TO COLLATERAL.

            (a) Secured Party shall be in no way liable to Pledgor or
responsible for any diminution in the value of the Collateral from any cause
whatsoever.

            (b) Pledgor agrees to pay all taxes, charges, transfer fees and
assessments against the Collateral and to do all things necessary to preserve
and maintain the value and collectibility thereof, and on the failure of Pledgor
to so do, Secured Party may, after giving Pledgor written notice


                                      139

of its intention to do so, make such payments and advance such sums on account
thereof as Secured Party, in Secured Party's discretion, deems desirable.
Pledgor agrees to reimburse Secured Party immediately upon demand for all such
payments and advances plus interest thereon at the rate of eighteen percent
(18%) per annum or at such lesser rate as may be the maximum rate allowed by
applicable law, repayment of all of which is secured by this Security Agreement
and the Collateral.

            (c) Secured Party, or any of its agents, shall have the right to
call at reasonable times at the Pledgor's place or places of business at
intervals to be determined by Secured Party, and without hindrance or delay, to
inspect, audit, check, and make extracts from the books, records, journals,
orders, receipts, correspondence, and other data relating to the Pledgor's
operations.

            10. GENERAL AUTHORITY.

            Effective immediately, but exercisable by Secured Party only upon
the occurrence of an Event of Default, Pledgor hereby irrevocably appoints
Secured Party as Pledgor's true and lawful attorney-in-fact with full power of
substitution, in Secured Party's name or Pledgor's name or otherwise, for
Secured Party's sole use and benefit, but at Pledgor's cost and expense, to
exercise at any time and from time to time all or any of the following powers
with respect to all or any of the Collateral:

            (a) To demand, sue for collection, receive and give acquittance for
any and all monies due or to become due upon and by virtue thereof;

            (b) To receive, take, endorse, assign and deliver any and all
checks, notes, drafts, documents and other property taken or received by Secured
Party in connection therewith; and

            (c) To extend the time of payment and to make any allowance or other
adjustments with reference thereto.

Provided, however, the exercise by Secured Party of or failure to so exercise
any such authority shall in no manner affect Pledgor's liability to Secured
Party hereunder or in connection with the Indebtedness; and provided further,
that Secured Party shall be under no obligation or duty to exercise any of the
powers hereby conferred upon it, and it shall have no liability for any act or
failure to act in connection with any of the Collateral. Secured Party shall not
be bound to take any steps necessary to preserve rights in any instrument,
contract or lease against prior parties.


                                      140

            9. SECURITY INTEREST ABSOLUTE.

Until all obligations are paid in full, all rights of Secured Party and the
pledge and security interest hereunder, and all obligations of Pledgor
hereunder, shall be absolute and unconditional, irrespective of:

            (a) Any lack of validity, regularity, or enforceability of the
Promissory Note, Security Documents or any other agreement or instrument
relating thereto;

            (b) Any change in the time, manner, or place of payment of, or in
any other term of, all or any of the Indebtedness, or any other amendment or
waiver of or any consent to any departure from the Promissory Note or Security
Documents, including, without limitation, any increase in Indebtedness resulting
from the extension of additional credit to Pledgor or otherwise;

            (c) Any taking, exchange, release, or nonperfection of any other
Collateral, or any taking, release, or amendment or waiver of or consent to
departure from any of the Indebtedness;

            (d) Any manner of application of Collateral, or proceeds thereof, to
all or any of the Indebtedness, or any manner of sale or other disposition of
any Collateral for all or any of the Indebtedness or any other assets of
Pledgor;

            (e) Any change or restructuring of the structure or existence of the
Company; or

            (f) Any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor or a third-party grantor of a
security interest.

            10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES.

            All agreements, representations and warranties contained herein or
made in writing by or on behalf of Pledgor in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Security
Agreement, any investigation at any time made by Secured Party or on its behalf,
and the acquisition and disposition of the Indebtedness. All statements
contained in any certificate or other instrument delivered by or on behalf of
Pledgor pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by Pledgor hereunder.

            11. DEALINGS WITH PLEDGOR.

            It is expressly understood and agreed that, notwithstanding anything
else contained in this Security Agreement to the contrary, Secured Party may,
for all purposes hereof deal solely with Pledgor in connection therewith, and
nothing herein shall be construed so as to require dealings with, consent of, or
notice to any other parties or persons.

            12. AGREEMENT NOT EXCLUSIVE REMEDY.

            This Security Agreement shall not prejudice the right of Secured
Party, and its option, to enforce collection of the Indebtedness by suit or in
any lawful manner. If Secured Party has additional security, then it may resort
to such other security for the payment of the Indebtedness


                                      141

secured hereby. No right or remedy in this Security Agreement or in any
instrument evidencing the Indebtedness is intended to be exclusive of any other
right or remedy, but every such right or remedy shall be cumulative and shall be
in addition to every other right or remedy herein or therein conferred, or now
or hereafter existing, by contract, at law or in equity or by statute.

            13. NON-WAIVER PROVISION.

            No delay or omission by Secured Party to exercise any right or
remedy shall impair any such right or remedy or any other right or remedy or
shall be construed to be a waiver of any Event of Default or an acquiescence
therein; and every right and remedy herein conferred or now or hereafter
existing by contract or at law or in equity or by statute may be exercised
separately or concurrently and in such order and as often as may be deemed
expedient by Secured Party. Not limiting the generality of the foregoing,
pursuit or exercise of any right or remedy conferred herein, or by law or in
equity or by statute, shall not be, and shall not be considered to be, an
election against, waiver or relinquishment of, any other right or remedy.

            14. SEVERABILITY.

            The invalidity or unenforceability of any of the rights or remedies
herein provided in any jurisdiction shall not in any way affect the right to the
enforcement in such jurisdiction or elsewhere of any of the other rights or
remedies herein provided.

            15. APPLICABLE LAW.

            This Security Agreement is being delivered and is intended to be
performed in the State of Arizona and shall be construed and enforced in
accordance with and governed by the substantive law of Arizona.

            16. BINDING AGREEMENT.

            This Security Agreement shall be binding upon and inure to the
benefit of the successors, representatives and assigns of the parties hereto.

            17. ENTIRE AGREEMENT.

            This Security Agreement contains the entire Security Agreement
between Secured Party and Pledgor and supersedes all prior agreements and
understandings relating to the subject matter hereof. Notwithstanding the prior
sentence, the parties hereto recognize the existence of that certain Purchase
Agreement for Real and Personal Property dated March 28, 2002 (the "PURCHASE
AGREEMENT"), executed by and between Secured party and the Company, and
acknowledge that the Purchase Agreement grants certain limited rights of
rescission to the Company. To the extent that the Company duly exercises any
such right, this Security Agreement shall be subject to such change. It may not
be changed or terminated orally but may only be changed by an agreement in
writing signed by the party or parties against whom enforcement of any waiver,
change, modification, extension, discharge or termination is sought.

            18. CAPTIONS. The captions of this Security Agreement are for the
purpose of reference only and shall not limit or otherwise affect any of the
terms hereof.


                                      142

            19. NOTICES. All notices, certificates, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered or certified mail, postage prepaid, or by facsimile, charges prepaid,
as follows:

            (a) If to Secured Party, to the following address:

            333 North 44th Street, Suite 420
            Phoenix, Arizona 85008

            and

            K. Bellamy Brown, Esq.
            The Cavanagh Law Firm, P.C.
            1850 N. Central Avenue, Suite 2400
            Phoenix, AZ  85004-4527

            (b) If to Pledgor, to the following address:

            c/o Robert M. Worsley
            601 East Houston
            Gilbert, Arizona 85234

            and

            Paul D. Ellsworth, Esq.
            4041 East Grove
            Mesa, Arizona 85206

            or

            (c) A such other address as either party may designate by written
notice to the other party in accordance herewith.


                                      143

            IN WITNESS WHEREOF, this Pledge and Collateral Assignment of Limited
Liability Company Interest and Security Agreement has been executed and
delivered as of the date first above written.

DATED: March 28, 2002               PLEDGOR:

                                    NEW MEXICO AND ARIZONA LAND COMPANY, LLC,
                                    an Arizona limited liability company

                                    By:      /s/ Robert M. Worsley
                                       -----------------------------------
                                           Robert M. Worsley
                                      Its: Manager

DATED:  March 28, 2002              SECURED PARTY:

                                    NZ CORPORATION,

                                    an Arizona corporation

                                    By:      /s/ Jerome L. Joseph
                                       -----------------------------------
                                      Its: Treasurer


                                    NZ DEVELOPMENT CORPORATION,

                                    an Arizona corporation

                                    By:      /s/ Jerome L. Joseph
                                       -----------------------------------
                                      Its: Treasurer


                                    NZU, INC.,
                                    a New Mexico corporation


                                      144

                                    By:      /s/ Jerome L. Joseph
                                       -----------------------------------
                                      Its: Treasurer

STATE OF          Arizona           )
        ----------------------------
                                    )ss.
County of         Maricopa          )
         --------------------------

      SUBSCRIBED AND SWORN TO before me this 28th day of March, 2002, by Robert
M. Worsley as manager of the New Mexico and Arizona Land Company, LLC.

                                    /s/ Yvonne E. Ulrich
0                                   ----------------------------
                                    Notary Public

My commission expires:

   March 25, 2004
- --------------------


STATE OF          Arizona           )
        ----------------------------
                                    )ss.
County of         Maricopa          )
         ---------------------------

      SUBSCRIBED AND SWORN TO before me this 29th day of March, 2002, by Jerome
Joseph as treasurer of the NZ Corporation, NZ Development Corporation, and NZU,
Inc.

                                    /s/ Norma J. Oswalt
                                    ------------------------------
                                    Notary Public

My commission expires:

         10-14-2003
- ----------------------------


                                      145

LIMITED LIABILITY COMPANY CONSENT AND AUTHORIZATION

DATED: March 28, 2002

            To induce NZ Corporation, NZ Development Corporation, and NZU
Corporation (collectively "SECURED PARTY") to enter into both of the Promissory
Note referenced in Section 3 of the foregoing Collateral Assignment of Limited
Liability Company Interest and Security Agreement (herein called the "Security
Agreement"), with the Company (as defined in the Security Agreement) pursuant to
the foregoing Security Agreement, the undersigned hereby certifies, represents
and agrees that on this date and as of the date which the Security Agreement
bears:

            1. The undersigned is the sole member of all the limited liability
companies constituting the Company, whose full and exact names and address are
as follows:

            New Mexico and Arizona Land Company, LLC
            601 East Houston
            Gilbert, Arizona 85234

            2. The undersigned has full power and authority in the name and on
behalf of the said New Mexico and Arizona Land Company, LLC to execute and
deliver the Security Agreement, any other financial agreement between the said
Company and Secured Party, and such instruments, documents and other writings as
may be desirable to carry out the purposes and intent of said Security Agreement
or agreements; and to secure any indebtedness of the Pledgor to Secured Party by
assignment, pledge, mortgage, transfer and/or delivery of any property or assets
of the said New Mexico and Arizona Land Company, LLC; and

            3. Robert M. Worsley, manager of the New Mexico and Arizona Land
Company, LLC, is hereby requested, authorized and empowered to and on behalf and
in the name of company to execute and deliver any and all documents identified
and set forth in said Security Agreement.

            4. The undersigned hereby consents to the pledge and collateral
assignment of all of the membership interests in the Company as described in the
Security Agreement.

                                      NEW MEXICO AND ARIZONA LAND COMPANY, LLC,
                                      an Arizona limited liability company


                                      By:      /s/ Robert M. Worsley
                                         ---------------------------------------
                                             Robert M. Worsley
                                        Its: Manager

                            NOTARY ON FOLLOWING PAGE

                                      146

STATE OF          Arizona           )
        ----------------------------
                                    )ss.
County of         Maricopa          )
         ---------------------------

      SUBSCRIBED AND SWORN TO before me this 28th day of March, 2002, by Robert
M. Worsley as manager of the New Mexico and Arizona Land Company, LLC.


                                                     /s/ Yvonne E. Ulrich
                                                     --------------------------
                                                     Notary Public

My commission expires:

      March 25, 2004
- --------------------------


                                      147