10-Q

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

FORM 10-Q

(Mark One)

X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended      September 30, 2007       
OR

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   0-50602

SOLITARIO RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)

Colorado
(State or other jurisdiction of
incorporation or organization)
4251 Kipling St. Suite 390, Wheat Ridge, CO
(Address of principal executive offices)
(303) 534-1030
Registrant's telephone number, including area code 84-1285791
(I.R.S. Employer
Identification No.
80033
(Zip Code)

          Indicate by checkmark 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) has been subject to such filing requirements for the past 90 days.

YES [X] NO [  ]

Indicate by checkmark whether the registrant is a large accelerated filer, accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

 Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

          Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act.)

YES [  ] NO [X]

          There were 29,606,992 shares of $0.01 par value common stock outstanding as of November 1, 2007.

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TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION	Page
Item 1     Financial Statements	3
Item 2    Management's Discussion and Analysis of Financial
Condition and Results of Operations	14
Item 3    Quantitative and Qualitative Disclosures About Market Risk	32
Item 4   Controls and Procedures	33
PART II - OTHER INFORMATION
Item 1    Legal Proceedings	34
Item 1A  Risk Factors
Item 2    Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3    Defaults Upon Senior Securities	34
Item 4    Submission of Matters to a Vote of Security Holders	34
Item 5    Other Information	34
Item 6    Exhibits	34
SIGNATURES	35

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SOLITARIO RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars,	September 30,	December 31,
except per share amounts)	2007	2006
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$2,059	$904
Joint venture receivable	56	88
Investments in marketable equity securities, at fair value	5,404	5,176
Prepaid expenses and other	186	219
Total current assets	7,705	6,387
Mineral properties, net	2,711	2,687
Investments in marketable equity securities, at fair value	16,550	15,728
Other assets	269	236
Total assets	$27,235	$25,038

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$      78	$     163
Deferred income taxes	1,760	1,652
Other	17	17
Total current liabilities	1,855	1,832
Deferred income taxes	3,931	4,131
Other	18	31
Total Liabilities	5,804	5,994
Commitments and contingencies
Minority interest	391	-
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 10,000,000    shares (none issued and outstanding September 30, 2007 and    December 31, 2006)	-	-
Common stock, $0.01 par value, authorized 50,000,000     shares (29,606,992 and 28,689,992 shares issued and     outstanding at September 30, 2007 and December 31, 2006)	296	287
Additional paid-in capital	30,497	28,462
Accumulated deficit	(21,791)	(20,156)
Accumulated other comprehensive income	12,038	10,451
Total stockholders' equity	21,040	19,044
Total liabilities and stockholders' equity	$27,235	$ 25,038

See Notes to Unaudited Condensed Consolidated Financial Statements

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SOLITARIO RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(in thousands of U.S. Dollars, except per share amounts)	Three months ended      September 30,		Nine months ended  September 30,
	2007	2006		2007	2006
Property and joint venture revenue
Joint venture property payments	$   100	$      -		$    100	$      -
Costs, expenses and other:
Exploration expense	846	821		1,898	1,925
Depreciation and amortization	21	17		57	36
General and administrative	888	465		2,286	1,409
Management fees	-	57		-	232
Unrealized loss on derivative instruments	-	-		-	6
Property abandonment and impairment	5	12		10	12
Other	-	4		-	4
Interest income	(22)	(2)		(56)	(21)
Total costs, expenses and other	(1,738)	(1,374)		(4,195)	(3,603)
Gain on sale of marketable equity securities	889	1,046		2,957	1,046
Loss before income taxes	(749)	(328)		(1,138)	(2,557)
Income tax (expense) benefit	(160)	(222)		(497)	161
Net loss	$(909)	$(550)		$(1,635)	$(2,396)
Basic and diluted loss per common share:	$(0.03)	$(0.02)		$(0.06)	$(0.08)
Basic and diluted weighted average number of shares outstanding	29,607	28,557		29,416	28,354

See Notes to Unaudited Condensed Consolidated Financial Statements

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SOLITARIO RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(in thousands of U.S. dollars)	Nine months ended September 30,
	2007	2006
Operating activities:
Net loss	$  (1,635)	$  (2,396)
Adjustments to reconcile net loss to net cash used in      operating activities:
Unrealized loss on derivative instruments	-	6
Depreciation and amortization	57	36
Amortization of prepaid consulting contract	60	-
Stock option expense	790	797
Deferred income taxes	497	(161)
Asset write down	10	12
Gain on sale of marketable equity securities	(2,957)	(1,046)
Other	-	7
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	57	(99)
Accounts payable	(97)	224
Due to Crown Resources Corporation	-	(15)
Net cash used in operating activities	(3,218)	(2,635)
Investing activities:
Additions to other assets	(168)	(46)
Additions to mineral properties	(34)	(34)
Cash received on sale of marketable equity securities	3,977	1,206
Other	26	-
Investment in marketable equity securities	-	(70)
Net cash provided by investing activities	3,801	1,056
Financing activities:
Issuance of common stock for cash	572	895
Net cash provided by financing activities	572	895
Net (decrease) increase in cash and cash equivalents	1,155	(684)
Cash and cash equivalents, beginning of period	904	2,120
Cash and cash equivalents, end of period	$2,059	$1,436

See Notes to Unaudited Condensed Consolidated Financial Statements

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.       Business and Significant Accounting Policies

Business

          Solitario is an exploration stage company with a focus on the acquisition of precious and base metal properties with exploration potential. Solitario acquires and holds a portfolio of exploration properties for future sale or joint venture prior to the establishment of proven and probable reserves. Although its mineral properties may be developed in the future through a joint venture, Solitario has never developed a mineral property and Solitario does not anticipate developing any currently owned mineral properties on its own in the future. At September 30, 2007, Solitario's mineral properties are located in Mexico, Brazil, Bolivia and Peru. Solitario was incorporated in the state of Colorado on November 15, 1984 as a wholly owned subsidiary of Crown Resource Corp. of Colorado, a wholly-owned subsidiary of Crown Resources Corporation (individually and collectively, "Crown"). On July 26, 2004, Crown distributed its holdin gs of Solitario to its shareholders. Crown was acquired by Kinross Gold Corporation of Toronto, Canada ("Kinross") on August 31, 2006 upon the completion of a merger whereby Kinross acquired all of the outstanding shares of Crown common stock for 0.32 shares of Kinross common stock for each share of Crown common stock (the "Crown -Kinross merger"). Kinross currently owns less than one percent of Solitario outstanding common stock.

           The accompanying interim condensed consolidated financial statements of Solitario for the nine months ended September 30, 2007 and 2006 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America. They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Interim results are not necessarily indicative of results, which may be achieved in the future or for the full year ending December 31, 2007.

          These financial statements should be read in conjunction with the financial statements and notes thereto which are included in Solitario's Annual Report for the year ended December 31, 2006. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.

Recent developments

          Solitario has a significant investment in Kinross at September 30, 2007, which consists of 1,442,920 shares of Kinross common stock. We received 1,942,920 shares in exchange for 6,071,626 shares of Crown common stock we owned on the date of the completion of the Crown - Kinross merger. During 2006, subsequent to the Crown - Kinross merger, Solitario sold 200,000 Kinross common shares for net proceeds of $2,442,000. During the three and nine months ended September 30, 2007 Solitario sold an additional 100,000 and 300,000 shares respectively, for net proceeds of $2,645,000 and $3,977,000, respectively and recorded a gain on the sale of marketable equity securities of $889,000 and $2,957,000 and reclassified these gains, net of $347,000 and $1,153,000 of deferred taxes, from other comprehensive income. Subsequent to September 30, 2007 Solitario sold an additional 100,000 shares for proceeds of $1,571,000 and as of November 1 , 2007, Solitario owns 1,342,920 shares of Kinross common stock which have a value of approximately $26.1 million based upon the market price of $19.46 per Kinross share. Any significant fluctuation in the market value of Kinross common shares could have a material impact on Solitario's liquidity and capital resources.

          On October 12, 2007 Solitario entered into a Zero-Premium Collar Hedge (the "Hedge") pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement between Solitario and UBS AG, London, England, an Affiliate of UBS Securities LLC (collectively "UBS") whereby Solitario pledged 900,000 shares of Kinross Gold Corporation ("Kinross") common shares to be sold (or delivered back to Solitario with any differences settled in cash) in the amounts of (i) 400,000 shares on April 14, 2009 (18 months) for a lower threshold price of no less than $13.81 per share (the "Floor Price") and an upper threshold price of no more than $21.77 per share (Cap Price One); (ii) 400,000 shares on April 13, 2010 (30 months) for a lower threshold of the Floor Price and an upper threshold price of no more than $24.46 per share ("Cap Price Two"); and (iii) 100,000 shares on April 12, 2011 (42 months) for no less than the Floor Price and an upper threshold price of no more than $27.62 per share ("Cap Price Three"). Kinross' quoted closing price was $16.37 per share on October 12, 2007, the date of the initiation of the Hedge.

          On April 24, 2007, Solitario signed the definitive agreement, the Shareholders Agreement relating to the Pedra Branca Project in Brazil, (the "Shareholders Agreement") pursuant to the previously signed Pedra Branca Letter Agreement with Anglo Platinum, Ltd., ("Anglo Platinum") for the exploration and development of Solitario's Pedra Branca Project. Solitario's and Anglo Platinum's property interests are held through the ownership of shares in a joint operating company Pedra Branca do Brazil Mineracao, S.A., ("PBM) that holds a 100% interest in the mineral rights and

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other project assets. As part of the agreement, Anglo Platinum earned a 15% interest in PBM as of September 30, 2007, as a result of spending a total of $2.25 million on exploration at Pedra Branca. Anglo Platinum is not required to make any future funding of exploration expenditures. However future cash contributions by Anglo Platinum will be recorded as additions to minority interest and a decrease in additional paid-in-capital. Additionally, Anglo Platinum may earn a 51% interest in PBM by spending a total of $7 million on exploration ($4.75 million in addition to the $2.25 million spent as of September 30, 2007) at Pedra Branca by February 28, 2010. Anglo Platinum can earn an additional 9% interest in PBM (for a total of 60%) by completing either (i) a bankable feasibility study or (ii) spending an additional $10.0 million on exploration or development. Anglo Platinum can also earn an additional 5% interest in PBM (for a total of 65%) by arranging for 100% financing to put the proj ect into commercial production. As of September 30, 2007 Solitario retains an 85% interest in PBM. Solitario recorded a minority interest in PBM of $391,000, equal to Anglo Platinum's 15% interest in the book value of PBM during the three and nine months ended September 30, 2007 as a reduction to additional paid in capital.

          On March 24, 2007, Solitario signed a definitive agreement, the Framework Agreement for the Exploration and Potential Development of Mining Properties, (the "Framework Agreement") pursuant to the previously signed Bongara Letter Agreement with Votorantim Metais ("Votorantim") on Solitario's Bongara zinc project in Peru. Solitario's and Votorantim's property interests will be held through the ownership of shares in a joint operating company that will hold a 100% interest in the mineral rights and other project assets. Votorantim can earn up to a 70% interest in the joint operating company by funding an initial $1.0 million exploration program, which they have completed as of September 30, 2007, by completing future annual exploration and development expenditures, and by making cash payments of $100,000 on August 15, 2007, which was made during the third quarter of 2007 and recorded as joint venture property payment revenue, and $ 200,000 on all subsequent annual anniversaries of that date until a production decision is made or the Framework Agreement is terminated. The option to earn the 70% interest can be exercised by Votorantim any time after the first year commitment by committing to place the project into production based upon a feasibility study. Additionally, Votorantim, in its sole discretion, may elect to terminate the option to earn the 70% interest at any time. The Framework Agreement calls for Votorantim to have minimum annual exploration and development expenditures of $1.5 million in each of years two and three, and $2.5 million in all subsequent years until a minimum of $18.0 million has been expended by Votorantim. Votorantim will act as project operator. Once Votorantim has fully funded its $18.0 million work commitment, it has further agreed to finance Solitario's 30% participating interest through production. Solitario will repay the loan facility through 50% of its cash flow distributions. During the three and nine months ended September 30, 2007 Solitario recorded $100,000 as joint venture property payment revenue in the statement of operations related to the payment received from Votorantim on the Bongara project.

          Solitario made the decision to drop its interest in the Purisima and the Corazon (Conception del Oro) projects in Mexico, as a result of ongoing geologic and exploration activities including drilling, during the nine months ended September 30, 2007. Solitario recorded property abandonment and impairment expense of $5,000 during the three months ended September 30, 2007 related to the write-off of the capitalized costs on Corazon and recorded property abandonment and impairment expense of $10,000 during the nine months ended September 30, 2007 for both properties.

          During the nine months ended September 30, 2007, Solitario capitalized $34,000, related to initial staking and lease costs on the Amazonas and Santiago exploration projects in Peru. Any additional costs incurred for subsequent lease payments or exploration activities will be expensed as incurred.

          On May 1, 2006 the government of Bolivia effectively nationalized its oil and gas production, by reducing the share of production a foreign owner of such assets may receive to 18%, and by ordering the Bolivian armed forces to forcibly occupy the country's largest gas fields. Solitario has a small mineral exploration program in Bolivia, covering two properties with total capital costs of approximately $30,000. The action by the Bolivian government did not include mining assets and does not directly affect our operations or assets. Solitario will continue to monitor the actions of the Bolivian government for any future impact or potential impairment.

Employee stock compensation plans         

          On January 1, 2006 Solitario adopted the revised Statement of Financial Accounting Standard No. 123, "Share Based Payments" ("SFAS No. 123R"). SFAS No. 123R requires public entities to measure the cost of employee services received in exchange for an award of equity instruments based upon the grant-date fair value of the award and requires that the cost be recognized over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. The grant-date fair value of employee share options and similar instruments will be measured using option-pricing models adjusted for any unique characteristics of those instruments. Solitario computes the fair value of each option on the date of grant based upon the Black-Scholes option pricing model. This

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model requires the input of subjective assumptions, including the expected term based upon historical data of past exercises of option awards and expected stock-price volatility based upon the historical quoted market prices of Solitario common stock as well as an estimate of forfeitures. These estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, Solitario's recognized stock-based compensation expense could have been materially different.

          a.)     The 2006 Stock Option Incentive Plan

          On June 27, 2006, Solitario's shareholders approved the 2006 Stock Option Incentive Plan (the "2006 Plan"). Under the terms of the 2006 Plan, the Board of Directors may grant up to 2,800,000 options to Directors, officers and employees with exercise prices equal to the market price of Solitario's common stock. On June 14, 2007, Solitario's shareholders approved certain technical modifications to the 2006 Plan, which among other things, modified the definition of the market price of a grant of an option to be equal to the closing market price in Canadian Dollars on the Toronto Stock Exchange on the date of granting such option. Previously under the 2006 Plan, the market price had been defined as the volume weighted average trading price of such shares traded on The Toronto Stock Exchange for the five trading days immediately preceding the date of granting such option.

New Activity in the nine months ended September 30, 2007

          On September 7, 2007 and June 14, 2007 the Board of Directors granted 502,000 and 100,000 options, respectively, in two grants at an exercise price of Cdn$4.53 and Cdn$5.12 per share, respectively, which was the quoted closing price on that date, in accordance with the terms of the Plan. In addition, on February 8, 2007, the Board of Directors granted 10,000 options under the 2006 Plan at an exercise price of Cdn$4.38 per share, in accordance with the terms of the 2006 Plan. The quoted closing price of Solitario's common shares on February 8, 2007, the date of the grant was Cdn$4.35. All of the options have a five-year contractual life and vest 25% on the date of the grant and 25% on each anniversary date for the next three years, and become fully vested on September 7, 2010, June 14, 2010 and February 8, 2010, respectively. Solitario determined the that fair value of the 2006 Plan options granted on September 7, 2007 was $976,000, the fair value of the options grated on June 14, 2007 was $223,000 and the fair value of the options granted on February 8, 2007 was $17,000 as detailed in the table below.

Grant Date	9/07/07	6/14/07	2/08/07
Options granted	502,000	100,000	10,000
Grant date fair value	$976,000	$223,000	$17,000
Weighted average fair value	$1.94	$2.23	$1.71
Risk-free interest rate	4.7%	5.2%	4.8%
Expected Life (1)	4 yrs	4 yrs	4 yrs
Expected volatility (2)	52%	53%	56%
Exchange rate (Cdn$ to US$) (3)	0.94930	0.93612	0.84551
Intrinsic value per share	-	-	-

(1)     Based upon expected volatility and past historical exercise patterns.
(2)     Expected volatility mirrors the historical volatility based upon the daily quoted stock price from the Toronto Stock Exchange over the four years prior to the date of grant.
(3)     The exchange rate on the date of grant.

          Solitario has elected to recognize the fair value of all option grants over their vesting period, with 25% recognized immediately, and the remaining 75% over three years on a straight line basis, recognizing as stock option compensation expense an amount at least equal to the percentage of options vested at that date. Solitario has assumed a zero forfeiture rate and a zero dividend rate for all grants, based upon historical experience.

          Solitario has recognized $419,000 and $790,000, respectively in option compensation expense for the three and nine months ended September 30, 2007, from option grants related to the 2006 Plan. Solitario recognized $159,000 and $793,000 respectively of option compensation expense from options granted pursuant to the 2006 Plan for the three and nine months ended September 30, 2006. Option compensation expense is included in general and administrative expense and Solitario has not capitalized any compensation expense related to its options under the 2006 Plan. Solitario has unrecognized compensation expense, related to non-vested options, of $1,967,000 as of September 30, 2007, which will be recognized over the remaining vesting period of the options.

          As of September 30, 2007, options for 2,267,000 shares had been granted, options for 17,500 shares had been exercised, options for 52,500 shares had been forfeited, and options for 2,197,000 shares were outstanding of which 945,500 shares were vested and available for exercise. Options for 17,500 shares from the 2006 Plan were exercised during the nine months ended September 30, 2007.

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          (b)     The 1994 Stock Option Plan

          Solitario adopted SFAS No. 123R on January 1, 2006 using the modified prospective transition method for the Solitario Resources Corporation Stock Incentive Plan (the "1994 Plan"). Under this method, compensation cost is recognized for option grants prior to, but not yet vested as of January 1, 2006, based upon the grant-date fair value, estimated in accordance with the original provisions of SFAS No. 123. Solitario recorded a charge of $1,000 and $4,000, respectively, as compensation expense, which is included in general and administrative expense for the three and nine months ended September 30, 2006, for options granted pursuant to the 1994 Plan prior to, but not yet vested as of January 1, 2006.

          As of December 31, 2006, Solitario has no remaining unrecognized compensation expense, related to unvested stock options granted pursuant to the 1994 Plan and no compensation expense was recorded related to the 1994 Plan during the nine months ended September 30, 2007.

          As of September 30, 2007, Solitario has vested and outstanding options for 110,000 shares of its common stock that are exercisable at Cdn$0.81 per share and that expire August 14, 2008 under the 1994 Plan. Under the 1994 Plan, these options were granted at option prices equal to the fair market value of the underlying common stock as quoted on the Toronto Stock Exchange on the date of grant. The 1994 Plan expired in 2004 and no additional shares may be granted pursuant to the 1994 Plan.

          Options from the 1994 Plan for 917,000 shares were exercised during the nine months ended September 30, 2007 for proceeds of $572,000. The intrinsic value of the shares exercised during the nine months ended September 30, 2007 on the dates of exercise of options from the 2004 Plan was $2,901,000. Options from the 1994 Plan for 30,500 and 1,112,500 shares were exercised during the three and nine months ended September 30, 2006 for proceeds of $22,000 and $895,000, respectively. The intrinsic value of the shares issued during the three and nine months ended September 30, 2006 on the date of exercise of options from the 2004 Plan was $67,000 and $1,291,000, respectively.

          c.)     Summary of stock-based compensation plans

          The following table summarizes the activity for stock options outstanding under the 1994 and 2006 Plans as of September 30, 2007, with exercise prices equal to the fair market value, as defined, on the date of grant and no restrictions on exercisability after vesting:

	Shares issuable on outstanding       Options	Weighted average  exercise Price    (Cdn$)	Weighted average   remaining       contractual term	Aggregate intrinsic  value(1)
1994 Plan:
Outstanding, beginning of year	1,027,000	$0.74
Exercised	(917,000)	$0.73
Outstanding at September 30, 2007	110,000	$0.81	0.9	$448,000
Exercisable at September 30, 2007	110,000	$0.81	0.9	$448,000
2006 Plan
Outstanding, beginning of year	1,637,500	$2.77
Granted	612,000	$4.53
Forfeited	(52,500)	$2.77
Outstanding at September 30, 2007	2,197,000	$3.29	4.3	$3,506,000
Exercisable at September 30, 2007	945,500	$3.07	4.2	$1,716,000

(1)The intrinsic value at September 30, 2007 based upon the quoted market price of Cdn$4.89 per share for our common stock on the Toronto Stock Exchange and an exchange ratio of 0.99747 Canadian dollars per United States dollar.

Earnings per share

          The calculation of basic and diluted loss per share is based on the weighted average number of common shares outstanding during the three and nine months ended September 30, 2007 and 2006.

           Our potentially dilutive shares are related to outstanding common stock options. Diluted earnings per common share consider the impact of these potentially dilutive shares, except in periods of a loss because their inclusion would have an anti-dilutive effect. It also excludes those periods when the option exercise price exceeds the weighted average market price of a share of our common stock during the period. Approximately 2,307,000 of potential common shares were excluded from the calculation of diluted loss per share for the three and nine months ended September 30, 2007 and approximately 2,800,000 for the three and nine months ended September 30, 2006 because the effects were anti-dilutive.

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 Marketable equity securities

          Solitario's investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification method. Changes in market value are recorded in accumulated other comprehensive income within stockholders' equity, unless a decline in market value is considered other than temporary, in which case the decline is recognized as a loss in the consolidated statement of operations. Solitario had marketable equity securities with fair values of $21,954,000 and $20,904,000, respectively, and cost of $2,880,000 and $3,900,000, respectively, at September 30, 2007 and December 31, 2006. Solitario has accumulated other comprehensive income for unrealized holding gains of $19,074,000 and $17,005,000, respectively, net of deferred taxes of $7,036,000 and $6,554,000 , respectively, at September 30, 2007 and December 31, 2006 related to our marketable equity securities. Solitario sold 100,000 and 300,000, respectively, of its Kinross common stock during the three and nine months ended September 30, 2007 for gross proceeds of $1,332,000 and $3,977,000, respectively. Solitario has classified $5,404,000 and $5,176,000, respectively, of marketable equity securities as current, as of September 30, 2007 and December 31, 2006, which represents Solitario's estimate of what portion of marketable equity securities will be liquidated within one year.

          The following table represents changes in marketable equity securities (000's).

(in thousands)	Three months ended		Nine months ended
	2007	2006	2007	2006
Gross cash proceeds	$1,332	$1,206	$3,977	$1,206
Cost	443	160	1,020	160
Gross gain on sale included in earnings during the period	889	1,046	2,957	1,046
Unrealized holding gain arising during the period included    in other comprehensive income, net of tax of $1,587 and    $1,586, respectively, for the three and nine months ended    September 30, 2007 and net of tax of $1,927 and $2,200,    respectively, for the three and nine months ended    September 30, 2006.	3,443	2,784	3,441	6,300
Reclassification adjustment for gains included in    earnings during the period, net of tax of $296 and $1,103,    Respectively, for the three and nine months ended    September 30, 2007, and net of tax of $408 and $1,185,    respectively, for the three and nine months ended    September 30, 2006	(593)	(638)	(1,854)	(638)

Recent Accounting Pronouncements

          In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard No. 159, "The Fair Value Option For Financial Assets and Financial Liabilities" (SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS 159 are effective for Solitario as of January 1, 2008. Solitario has not yet determined the impact of adopting SFAS 159 on its financial position, results of operations or cash flows.

          In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157 "Fair Value Measurements" (SFAS No. 157"). SFAS No. 157 clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the most advantageous market for the asset or liability. SFAS No. 157 clarifies that the transaction to sell an asset or transfer a liability is a hypothetical transaction at a measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. SFAS No. 157 states that fair value is a market-based measurement, not an entity specific measurement and that market assumptions should be based upon independent observations of the reporting entity about market participant assumptions. SFAS No. 157 states that market participant assumptions should include ri sk, restrictions on asset sales, non-performance risk, but that quoted market prices for financial instruments should not be adjusted for the size of a position relative to trading volume (block discounts). SFAS No. 157 expands disclosures about, among other things, the use of fair value to measure assets and liabilities in interim and annual periods, including the use of unobservable inputs, and the effect of fair value on earnings and changes in net assets. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Solitario has not yet determined the impact of adopting SFAS No. 157 on its financial position, results of

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operations or cash flows.

          In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," ("FIN 48") an interpretation of FASB Statement No. 109, "Accounting for Income Taxes." FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the entities recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of retained earnings. Solitario adopted FIN 48 on January 1, 2007 and it has not had an impact on its financial position, results of operations or cash flows.

          In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140" ("SFAS No. 155"). SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, "Application of Statement 133 to Beneficial Interests in Securitized Financial Assets." SFAS No. 155 became effective January 1, 2007 and is applicable based upon the nature and extent of any new derivatives entered into after that date. Solitario adopted SFAS No. 155 on January 1, 2007 and it has not had an impact on its financial position, results of operations or cash flows.

2.       Comprehensive (loss) income

   The following represents comprehensive (loss) income and its components:

(in thousands)	Three months ended            September 30,			Nine months ended      September 30,
		2007	2006	2007	2006
Net loss as reported		$(909)	$(550)	$(1,635	$(2,396)
Unrealized net gain on marketable equity securities, net of related tax effects		2,850	2,146	1,587	5,662
Comprehensive (loss) income		$1,941	$1,596	$  (48)	$3,266

      3.   Exploration Expense

          The following items comprised exploration expense:

(in thousands)	Three months ended September 30,		Nine months ended September 30,
	2007	2006	2007	2006
Geologic, drilling and assay	$585	$403	$1,208	$756
Field expenses	353	305	935	751
Administrative	364	209	798	596
Joint venture payments (see below)	(456)	(96)	(1,043)	(178)
Total exploration costs	$846	$821	$1,898	$1,925

During the three and nine months ended September 30, 2007, Pedra Branca work related to the Anglo Shareholders' Agreement totaled $456,000 and $1,043,000, respectively, compared to $96,000 and $178,000 during the three and nine months ended September 30, 2006, which has been billed as a joint venture receivable.

4.       Income Taxes

          Solitario accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Under SFAS No. 109, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized.

          In connection with the Bankruptcy of Crown in 2002 and Solitario's acquisition of Altoro Gold Corp. in 2000, Solitario had a greater than fifty percent change in ownership as defined in Section 382 of the Internal Revenue Code ("Section 382"). Pursuant to Section 382, the amount of future taxable income available to be offset by Solitario's carryovers is limited to approximately $614,000 per year.

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          Primarily as a result of the recognition of gain on Solitario's holdings of Crown warrants in prior years and subsequent increases in the value of Solitario's holdings of Kinross common stock (previously Crown common stock) recognized as other comprehensive income, Solitario estimated that its deferred tax liabilities exceeded its realizable deferred tax assets by $5,691,000 and $5,783,000 at September 30, 2007 and December 31, 2006, respectively.

          Solitario recorded a deferred tax expense in the statement of operations of $160,000 and $497,000, respectively for the three and nine months ended September 30, 2007 compared to a deferred tax (expense) benefit of $(222,000) and $161,000, respectively for the three and nine months ended September 30, 2006. Solitario recorded deferred tax expense of $1,587,000 and $1,586,000, respectively, to other comprehensive income related to net unrealized gains of $5,030,000 and $5,027,000, respectively, on marketable equity securities for the three and nine months ended September 30, 2007. Solitario recorded deferred tax expense of $1,372,000 and $3,620,000, respectively, to other comprehensive losses related to net unrealized gains of $3,518,000 and $9,282,000, respectively, on marketable equity securities for the three and nine months ended September 30, 2006. Solitario recorded a deferred tax benefit of $1,121,000 credited to addition al paid-in capital related to options for 917,000 shares exercised in the nine months ended September 30, 2007. Solitario recorded a deferred tax benefit of $26,000 and $504,000, respectively, credited to additional paid-in capital related to 30,500 and 1,125,500, stock options, respectively, exercised in the three and nine months ended September 30, 2006. During the three months ended September 30, 2007, in computing its estimated deferred tax expense and related liability, Solitario reduced its estimated tax rate by 1.7%, to account for the estimated deductibility of state taxes against United States federal taxes. This change in estimate had the effect of reducing Solitario's deferred tax rate to 37.3% from the previous estimated rate of 39%.

5.       Related Party Transactions

Crown Resources Corporation

          Crown provided management and technical services to Solitario under a management and technical services agreement originally signed in April 1994 and modified in April 1999, December 2000 and July 2002. The agreement was terminated on August 31, 2006 upon the completion of the Crown - Kinross merger. Under the modified agreement Solitario was billed by Crown for services at 25% of Crown's corporate administrative costs for executive and technical salaries, benefits and expenses, 50% of Crown's corporate administrative costs for financial management and reporting salaries, benefits, expenses and 75% of Crown's corporate administrative costs for investor relations salaries, benefits and expenses. In addition, Solitario reimbursed Crown for direct out-of-pocket expenses. These allocations were based upon the estimated time and expenses spent by Crown management and employees on both Crown activities and Solitario activities. Management of Solitario believed these allocations were reasonable and the allocations were periodically reviewed by Solitario management and approved by independent Board members of both Crown and Solitario. Management service fees were billed monthly, due on receipt and were generally paid within thirty days. Management service fees incurred by Solitario were $57,000, and $232,000 for the three and nine months ended September 30, 2006, respectively.

          On July 26, 2004, Crown completed a spin-off of our shares to its shareholders, whereby each Crown shareholder received 0.2169 shares of Solitario common stock for each Crown share they owned. As part of the spin-off, Crown retained 998,306 of Solitario shares for the benefit of Crown's warrant holders who would receive those shares when the warrant holders exercise their warrants. Subsequent to the spin-off, through August 31, 2006 when the Crown - Kinross merger was completed, Crown distributed 995,229 of these retained shares upon exercise of its warrants and the remaining 3,077 shares of our stock became the property of Kinross which is not a related party to Solitario.

          Christopher E. Herald, and Mark E. Jones, III were directors of both Crown and Solitario until August 31, 2006 when they resigned as directors of Crown upon the completion of the Crown - Kinross merger. Stephen Webster and Brian Labadie were directors of both Crown and Solitario from June 27, 2006 to August 31, 2006, when they resigned as directors of Crown upon the completion of the Crown- Kinross merger. Christopher E. Herald, James R. Maronick and Walter H. Hunt were officers of both Crown and Solitario until August 31, 2006 when they resigned as officers of Crown upon the completion of the Crown - Kinross merger.

Mark Jones Consulting Agreement

          On September 1, 2006, Solitario entered into a consulting agreement with Mark E. Jones, III, a director and vice-chairman of Solitario's Board of Directors. The consulting agreement has a two-year term. Under the agreement, Mr. Jones will advise Solitario on matters of strategic direction, planning, and identification of corporate opportunities, when and as requested by Solitario. In consideration for the services to be performed, Mr. Jones has been paid a one time lump sum payment of $160,000, plus he is entitled to receive reimbursement for pre-approved, documented expenses incurred

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in performance of the consulting services. Solitario charged $20,000 and $60,000 for consulting expense, related to the agreement, which is included in general and administrative expense for the three and nine months ended September 30, 2007. As of September 30, 2007 Solitario has $73,000 of prepaid expense related to Mr. Jones' consulting agreement, which will be amortized over the remaining term of the agreement.

TNR Gold Corp

          As of September 30, 2007, Solitario owns 1,000,000 shares of TNR Gold Corp. ("TNR") common stock with a fair value of $339,000 based upon the quoted market price of TNR. On July 24, 2006, Solitario exercised a warrant to purchase 500,000 shares of TNR common stock by paying $70,000. Solitario recorded the cash paid and the fair value of the warrant on the date of exercise of $12,000 as marketable equity securities. Solitario received this warrant in July 2004 when it exchanged 500,000 shares of TNR Gold Corp ("TNR") common stock for 500,000 shares of TNR common stock that were not available to be publicly traded in Canada until November 28, 2004 and a warrant to purchase an additional 500,000 shares of TNR common stock for Cdn$0.16 per share for a period of two years. The TNR shares are classified as marketable equity securities held for sale. As of December 31, 2006, Solitario does not own warrants for the purchase of TNR shares. Previous to their exercise, the TNR warrants were recorded at fair market value based upon quoted prices and classified as derivative instruments. Solitario recorded a loss on derivative instruments of $6,000 for the decrease in the value of its warrants during the nine months ended September 30, 2006. Christopher E. Herald, our CEO, is a member of the Board of Directors of TNR.

Kinross Merger Agreement

          We entered into a Voting Agreement dated as of April 15, 2002 among Zoloto Investors, LP ("Zoloto") and Crown. Zoloto and Solitario were both shareholders of Crown (the "Signing Shareholders"). Pursuant to the Voting Agreement, Zoloto and Solitario agreed that each would vote its owned shares during the term of the Voting Agreement for the election of three designees of Zoloto and one designee of ours (the "Designee Directors") to the Board of Directors of Crown. The Signing Shareholders agreed that any shares received by either Signing Shareholder would be subject to the Voting Agreement during its term and any successor, assignee or transferee of shares from either Signing Shareholder would be subject to the terms of the Voting Agreement during its term. The Voting Agreement terminated on June 25, 2006.

         Prior to the completion of the Crown - Kinross merger, we entered into a stockholder and voting agreement with Kinross, along with several Crown directors, Crown executive officers and entities affiliated with these directors and officers (collectively the "Signatories"), pursuant to which the Signatories voted all of the shares of Crown common stock owned by them in favor of the approval of the Crown - Kinross merger. On August 31, 2006, the shareholders of Crown approved the Crown - Kinross merger and all of Crown's common shares were converted to Kinross shares and the stockholder and voting agreement terminated.

6.       Subsequent event

          On October 12, 2007 Solitario entered into a Hedge pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement between Solitario and UBS whereby Solitario pledged 900,000 shares of Kinross common shares to be sold (or delivered back to Solitario with any differences settled in cash) in the amounts of (i) 400,000 shares on April 14, 2009 (18 months) for a Floor Price of no less than $13.81 per share and an upper threshold price of no more than $21.77 per share (Cap Price One); (ii) 400,000 shares on April 13, 2010 (30 months) for a lower threshold of the Floor Price and an upper threshold price of no more than $24.46 per share ("Cap Price Two"); and (iii) 100,000 shares on April 12, 2011 (42 months) for no less than the Floor Price and an upper threshold price of no more than $27.62 per share ("Cap Price Three"). Kinross' quoted closing price was $16.37 per share on October 12, 2007, the date of the i nitiation of the Hedge. Solitario has not designated the Hedge as a hedging instrument (as described in Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities") and any changes in the fair market value of the Hedge will be recognized in the statement of operations in the period of the change.

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Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

          The following discussion should be read in conjunction with the consolidated financial statements of Solitario for the years ended December 31, 2006, 2005 and 2004, and Management's Discussion and Analysis contained in Solitario's Annual Report on Form 10-K for the year ended December 31, 2006. Solitario's financial condition and results of operations are not necessarily indicative of what may be expected in future periods. Unless otherwise indicated, all references to dollars are to U.S. dollars.

(a). Business Overview and Summary

          We are an exploration stage company with a focus on the acquisition of precious and base metal properties with exploration potential. We acquire and hold a portfolio of exploration properties for future sale or joint venture prior to the establishment of proven and probable reserves. Although our mineral properties may be developed in the future through a joint venture, we have never developed a mineral property and we do not anticipate developing any currently owned mineral properties on our own in the future. We were incorporated in the state of Colorado on November 15, 1984 as a wholly owned subsidiary of Crown. We have been actively involved in this business since 1993 and have in the past recorded revenues from joint venture payments and the sale of these properties on an infrequent basis. We recorded revenues from joint venture payments of $100,000 related to our Bongara Project during the three months an d nine months ended September 30, 2007. Previously, our last significant revenues were recorded in 2000 upon the sale of our Yanacocha property for $6,000,000.  We expect future revenues from joint venture payments or the sale of properties, if any, will also occur on an infrequent basis. At September 30, 2007 we had seven exploration properties in Peru, Bolivia, Mexico and Brazil, and we own our Yanacocha royalty interest. We are conducting exploration activities in all of those countries. On July 26, 2004, Crown completed a spin-off of its holdings of our shares to its shareholders, whereby each Crown shareholder received 0.2169 shares of our common stock for each Crown share they owned. Crown was acquired by Kinross upon the completion of the Crown - Kinross merger and Kinross currently owns less than one percent of our outstanding common stock.

          Our principal expertise is in identifying mineral properties with promising mineral potential, acquiring these mineral properties and exploring them to enable us to sell or joint venture these properties prior to the establishment of proven and probable reserves. Currently we have no mineral properties in development and we do not anticipate developing any currently owned properties on our own in the future. Our goal is to discover economic deposits on our mineral properties and advance these deposits, either on our own or through joint ventures, up to the development stage (development activities include, among other things, the completion of a feasibility study, the identification of proven and probable reserves, as well as permitting and preparing a deposit for mining). At that point we would attempt to either sell our mineral properties or pursue their development through a joint venture with a partner that has expertise in mining operations.

          In analyzing our activities, the most significant aspect relates to results of our exploration activities and those of our joint venture partners on a property-by-property basis. When our exploration activities, including drilling, sampling and geologic testing indicate a project may not be economic or contain sufficient geologic or economic potential we may impair or completely write-off the property. Another significant factor in the success or failure of our activities is the price of commodities. For example, when the price of gold is up, the value of gold-bearing mineral properties increases, however, it also becomes more difficult and expensive to locate and acquire new gold-bearing mineral properties with potential to have economic deposits.

          The potential sale, joint venture or development through a joint venture of our mineral properties will occur, if at all, on an infrequent basis. Accordingly, while we conduct exploration activities, we need to maintain and replenish our capital resources. We have met our need for capital in the past through: (i) sale of properties, which last occurred in 2000 with the sale of our Yanacocha property for $6,000,000; (ii) joint venture payments, including the receipt of $100,000 on our Bongara Project in the three months ended September 30, 2007 (Previous joint venture payments last occurred during the years from 1996 through 2000); (iii) investment in Kinross (previously Crown); and (iv) issuance of common stock, including exercise of options, and through private placements including our strategic alliance with Newmont, discussed below. We have reduced our exposure to the costs of our exploration activities through the use of joint ventures. We anticipate these practices will continue for the foreseeable future although we expect that our primary funds will come from the sale of our investment in Kinross.

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(b.) Recent Developments

          We have a significant investment in Kinross Gold Corporation ("Kinross") at September 30, 2007, which consists of 1,442,920 shares of Kinross common stock. We received 1,942,920 shares in exchange for 6,071,626 shares of Crown common stock we owned on the date of the completion of a merger on August 31, 2006 whereby Kinross acquired all of the outstanding shares of Crown common stock for 0.32 shares of Kinross common stock per share of Crown common stock (the "Crown - Kinross merger"). During 2006, subsequent to the Crown - Kinross merger, we sold 200,000 Kinross common shares for net proceeds of $2,442,000. During the three and nine months ended September 30, 2007 we sold 100,000 and 300,000 shares, respectively, for net proceeds of $1,332,000 and $3,977,000, respectively. Subsequent to September 30, 2007, we sold an additional 100,000 shares for proceeds of $1,577,000 and as of November 1, 2007, we own 1,342,920 shares of Kinross common stock which have a value of approximately $26.1 million based upon the market price of $19.46 per Kinross share. Any significant fluctuation in the market value of Kinross common shares could have a material impact on our liquidity and capital resources.

          On October 12, 2007 we entered into a Zero-Premium Collar Hedge (the "Hedge") pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement between us and UBS AG, London, England, an Affiliate of UBS Securities LLC (collectively "UBS") whereby we pledged 900,000 shares of Kinross Gold Corporation ("Kinross") common shares to be sold (or delivered back to us with any differences settled in cash) in the amounts of (i) 400,000 shares on April 14, 2009 (18 months) for a lower threshold price of no less than $13.81 per share (the "Floor Price") and an upper threshold price of no more than $21.77 per share (Cap Price One); (ii) 400,000 shares on April 13, 2010 (30 months) for a lower threshold of the Floor Price and an upper threshold price of no more than $24.46 per share ("Cap Price Two"); and (iii) 100,000 shares on April 12, 2011 (42 months) for no less than the Floor Price and an upper threshold price of no more than $27.62 per share ("Cap Price Three"). Kinross' quoted closing price was $16.37 per share on October 12, 2007, the date of the initiation of the Hedge. The business purpose of the Hedge is to provide downside price protection of the Floor Price on approximately 900,000 shares of the 1,342,920 shares we currently own, in the event Kinross stock were to drop significantly from the current price. In consideration for obtaining this price protection, we have given up the upside appreciation above the Cap Prices discussed above during the term of the respective tranches.

          On April 24, 2007, we signed the definitive agreement, the Shareholders Agreement Relating to the Pedra Branca Project in Brazil, (the "Shareholders Agreement") pursuant to the previously signed Pedra Branca Letter Agreement with Anglo Platinum for the exploration and development of our Pedra Branca Project. Solitario's and Anglo Platinum's property interests are held through the ownership of shares in a Pedra Branca do Brazil Mineracao, S.A., ("PBM), a joint operating company that holds a 100% interest in the mineral rights and other project assets. As part of the agreement, Anglo Platinum earned a 15% interest in PBM as of September 30, 2007, as a result of spending a total of $2.25 million on exploration at Pedra Branca. Anglo Platinum is not required to make any future funding of exploration expenditures. However future cash contributions by Anglo Platinum will be recorded as additions to minority interest and a decrease in our additional paid-in-capital. Additionally, Anglo Platinum may earn a 51% interest in PBM by spending a total of $7 million on exploration at Pedra Branca by February 28, 2010. Anglo Platinum can earn an additional 9% interest in PBM (for a total of 60%) by completing either (i) a bankable feasibility study or (ii) spending an additional $10.0 million on exploration or development. Anglo Platinum can also earn an additional 5% interest in PBM (for a total of 65%) by arranging for 100% financing to put the project into commercial production. As of September 30, 2007 we retain an 85% interest in PBM. We recorded a minority interest in PBM of $391,000, equal to Anglo Platinum's 15% interest in the book value of PBM during the three and nine months ended September 30, 2007 as a reduction to additional paid in capital.

          On March 24, 2007, we signed a definitive agreement, the Framework Agreement for the Exploration and Potential Development of Mining Properties, (the "Framework Agreement") pursuant to the previously signed Bongara Letter Agreement with Votorantim Metais ("Votorantim") on our Bongara zinc project in Peru. Solitario's and Votorantim's property interests will be held through the ownership of shares in a joint operating company that will hold a 100% interest in the mineral rights and other project assets. Votorantim can earn up to a 70% interest in the joint operating company by funding an initial $1.0 million exploration program (completed), by completing future annual exploration and development expenditures, and by making cash payments of $100,000 on August 15, 2007, which was made during the third quarter of 2007 and recorded as joint venture property payment revenue, and $200,000 on all subsequent annual anniversaries of that date until a production decision is made or the agreement is terminated. The option to earn the 70% interest can be exercised by Votorantim any time after the first year commitment by committing to place the project into production based upon a feasibility study. Additionally, Votorantim, in its sole discretion, may elect to terminate the

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option to earn the 70% interest at any time. The agreement calls for Votorantim to have minimum annual exploration and development expenditures of $1.5 million in each of years two and three, and $2.5 million in all subsequent years until a minimum of $18.0 million has been expended by Votorantim. Votorantim will act as project operator. Once Votorantim has fully funded its $18.0 million work commitment, it has further agreed to finance our 30% participating interest through production. We will repay the loan facility through 50% of cash flow distributions that we receive.

          As a result of ongoing geologic and exploration activities including drilling, during the first nine months of 2007 we made the decision to drop our interest in the Corazon and Purisima projects in Mexico. We recorded property abandonment and impairment expense of $5,000 related to the write-off of the capitalized costs on the Corazon property during the three months ended September 30, 2007 and we recorded $10,000 in property abandonment and impairment expense related to both properties during the nine months ended September 30, 2007. During the nine months ended September 30, 2007, we capitalized $34,000 related to initial staking and lease costs on the Amazonas and Santiago exploration projects in Peru. Any additional costs incurred for subsequent lease payments or exploration activities will be expensed as incurred.

          On May 1, 2006 the government of Bolivia effectively nationalized its oil and gas production, by reducing the share of production a foreign owner of such assets may receive to 18%, and by ordering the Bolivian armed forces to forcibly occupy the country's largest gas fields. Solitario has a small mineral exploration program in Bolivia, covering two properties with total capital costs of approximately $30,000. The action by the Bolivian government did not include mining assets and does not directly affect our operations or assets. We will continue to monitor the actions of the Bolivian government for any future impact or potential impairment.

(c.) Results of Operations

Comparison of the quarter ended September 30, 2007 to the quarter ended September 30, 2006

          We had a loss of $909,000 or $0.03 per share for the three months ended September 30, 2007 compared to a loss of $550,000 or $0.02 per share for the three months ended September 30, 2006. As explained in more detail below, the reason for the increase in net loss for the three months ended September 30, 2007 compared to the loss in the same period of 2006 primarily related the following items: (i) Our exploration expense increased to $846,000 during the third quarter of 2007 compared to $821,000 during the same period of 2006; (ii) Our general and administrative expense increased to $888,000 compared to $465,000 in 2006. This increase included the recognition of $419,000 in stock-option compensation expense, which included $250,000 for the fair value of the 502,000 options granted on September 7, 2007, compared to $159,000 for the fair value of the 1,655,000 options granted on June 27, 2006 recognized in the three months ende d September 30, 2006; (iii) A decrease in other income related to a gain on sale of marketable equity securities during 2007 to $889,000 as a result of the sale of 100,000 shares of Kinross stock, compared to $1,046,000 during the same period of 2006 from the sale of 100,000 shares of Kinross stock as a result of higher book basis in the shares sold in 2007 compared to 2006. These increases were partially mitigated by joint venture property revenues of $100,000 related to our Bongara project received during the three months ended September 30, 2007. In calculating our United States pre-tax loss to determine tax expense or benefit we provide a valuation allowance to exclude our foreign exploration expenses. We recorded income tax expense of $160,000 during the third quarter of 2007 compared to $222,000 during the third quarter ended September 30, 2006, primarily related to our increased general and administrative costs. In calculating income tax expense, we provide a valuation allowance for any accumulat ed losses incurred in jurisdictions outside of the United States and do not provide an income tax benefit during the year for those losses. Each of these items is discussed in more detail below.

          Our net exploration expense increased to $846,000 during the third quarter of 2007 compared to $821,000 in the third quarter of 2006. During 2007 we significantly increased our reconnaissance exploration in Peru, Brazil and Mexico, portions of which led to the addition of certain exploration projects. Additionally, we increased our exploration activities associated with the Strategic Alliance upon the signing of the Alliance Agreement in January 2005, discussed below under "Joint Ventures, Royalty and the Strategic Alliance Properties." Although we increased our internal exploration activities during the third quarter of 2007 compared to the third quarter of 2006, which accounted for the increase in net exploration expense, we also had significant exploration activities on our Bongara and Pachuca properties which were conducted and funded by our partners as a result of signing joint ventures with Votorantim on our Bongara prope rty, and Newmont on our Pachuca project. In addition our gross expenditures increased, including work we conducted on our Pedra Branca project which is reflected in the reimbursement of exploration expense by Anglo Platinum on our Pedra Branca project. All of these joint ventures are discussed below under the heading "Joint Ventures, Royalty and the Strategic Alliance Properties." During the third quarter of 2007, exploration expenses were offset by joint venture reimbursements by Anglo Platinum of $456,000 on our Pedra Branca project compared to the

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reimbursement of certain care and maintenance expenses of $96,000 recorded during the third quarter of 2006. Accordingly, we had an increase in our gross exploration expenditures to $1,302,000 in the third quarter of 2007 compared to $917,000 in the third quarter of 2006. The largest increases in our gross exploration costs were for exploration associated with the Strategic Alliance and at our Pedra Branca Project in Brazil. We continued to perform sampling and exploration in our Alliance Project Areas, discussed below, as well as reconnaissance efforts to add new prospects and ongoing geologic work to evaluate and advance our existing exploration properties and targets. We did not capitalize any costs related to an initial staking for a new area added during the third quarter of 2007. We anticipate continuing to acquire mineral properties, either through staking, joint venture or lease, in Latin America during 2007 and have budgeted our related net exploration expenditure to be approx imately $2,071,000 for the full year 2007. The primary factors in our decision to increase exploration expenditures in 2007 relate to more projects being joint-ventured in 2007 and additional drill targets on our existing non-joint venture projects.

Exploration expense (in thousands) by project for the three and nine months ended September 30, 2007 and 2006 consisted of the following:

	Three months ended		Nine months ended
	September 30	September 30	September 30	September 30
Project Name	2007	2006	2007	2006
Newmont Strategic Alliance	$  148	$  284	$  392	$  550
Bongara	5	40	26	127
Pedra Branca, net	(9)	(54)	(65)	(12)
Mercurio	228	196	303	348
Pachuca	1	64	8	184
Corazon/Conception del Oro	6	15	21	31
Titicayo	37	14	168	24
Triunfo	118	-	184	15
Amazonas	2	-	5	-
Santiago	20	-	52	-
Las Purisimas	-	8	2	19
Pozos	1	-	1	18
Zinda	6	9	6	14
Reconnaissance	283	245	795	607
Total exploration expense, net	$846	$821	$1,898	$1,925

          General and administrative costs increased to $888,000 in the three months ended September 30, 2007 compared to $465,000 in the three months ended September 30, 2006. The increase was primarily related to an increase in stock option compensation expense to $419,000 in the three months ended September 30, 2007 compared to $160,000 in the same period in 2006. In addition we had increases in general and administrative costs as a result of increased administrative costs in support of our increased exploration activity discussed above as well as the termination of our management services agreement with Crown on August 31, 2006, where certain costs were incurred which previously were wholly or partially paid by Crown and reimbursed as part of that agreement. These costs included $214,000 of salary and benefits costs during the third quarter of 2007, compared to $73,000 during the same period of 2006, office costs of $47, 000 in the three months ended September 30, 2007 compared to $21,000 in 2006, insurance costs of $17,000 in the three months ended September 30, 2007 compared to $2,000 in 2006 and currency exchange losses of $16,000 in the three months ended September 30, 2007 compared to a currency gain of $5,000 in 2006 and travel costs which increased to $32,000 in the three months ended September 30, 2007 compared to $17,000 in 2006. These cost increases were partially mitigated by a reduction in shareholder services and investor relation costs to $32,000 in the three months ended September 30, 2007 compared to $101,000 in 2006, primarily due to a payment of $75,000 to the American Stock Exchange for our initial listing fee, which was paid in 2006.

          During the three months ended September 30, 2007, we received a joint venture payment of $100,000 on our Bongara Project from Votorantim in accordance with the Framework Agreement discussed above. There were no similar payments during the three months ended September 30, 2006.

          On January 1, 2006, we adopted SFAS 123R. SFAS 123R requires the expensing of the grant date fair value of options over the term of their vesting. On September 7, 2007, the Board of Directors granted options for 502,000 shares with a fair value of $976,000, on June 14, 2007 Board of Directors granted 100,000 shares with a fair value of $223,000, on February 8, 2007 the Board of Directors granted 10,000 options with a fair value of $17,000 and on June 27, 2006 the

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Board of Directors granted 1,655,000 options with a fair value of $2,536,000 under the 2006 Plan. We estimated the fair values of the options granted using a Black-Scholes option pricing model. During the three months ended September 30, 2007, we recognized $419,000 of stock-based compensation expense as part of general and administrative expense for the vesting of the options pursuant to the 2006 Plan compared to $160,000 recognized during the three months ended September 30, 2006, which included $1,000 of stock option compensation expense related to options previously granted pursuant to the 1994 Plan which had not vested as of January 1, 2006. See Employee stock compensation plans in Note 1 to the condensed consolidated financial statements.

          Management fee expense was $57,000 in the third quarter of 2006 and there was no similar expense during the third quarter of 2007 as a result of the termination of the Crown management agreement on August 31, 2006, and we will not incur any management fee expense during 2007.

          We regularly perform evaluations of our assets to assess the recoverability of our investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable utilizing established guidelines based upon future net cash flows from the asset. During the three months ended September 30, 2007 we recorded $5,000 of property abandonment and impairment cost related to our Corazon property project, compared to $12,000 of mineral property impairment related to our Libertad and Pillune projects in Peru and our Pozos project in Mexico during the three months ended September 30, 2006. We cannot predict if or when we may have additional property impairments, which is significantly affected by drilling, sampling and other geologic results from each property we own. See Critical Accounting Estimates below.

          During the three months ended September 30, 2007 we sold 100,000 shares of Kinross for proceeds of $1,332,000 and recorded a gain on sale of $889,000 compared to the sale of $100,000 shares of Kinross for proceeds of $1,206,000 for which we recorded a gain on sale of $1,046,000 during the three months ended September 30, 2006. The decrease in the gain was the result of a difference in our basis in the Kinross shares sold of $4.42 per share on the shares sold in 2007 compared to a basis of $1.60 per share on the shares sold in 2006. We anticipate we will continue to liquidate our Kinross holdings over the next three years. See "Liquidity and Capital Resources" below.

          We recorded deferred tax expense of $160,000 during the third quarter of 2007 compared to $222,000 during the third quarter of 2006. The tax expense related to the expected use of existing net operating losses in excess of newly generated net operating losses on United States activities. These include the gain on sale of 100,000 shares of our Kinross stock for gross proceeds of $1,332,000 during the third quarter of 2007 and a gain on sale of 100,000 shares of our Kinross stock for gross proceeds of $1,206,000 during the third quarter of 2006. We carry no tax basis in the shares of Kinross we own or sell, as a result of the reduction in basis from the spin out of Solitario in 2004 discussed above, and accordingly, any sale results in a taxable gain equal to the gross proceeds of sales. This resulted in a larger tax expense than anticipated in the three months ended September 30, 2007, despite the increase in United States gene ral and administrative costs discussed above, because the gross proceeds from our Kinross sales in the three months ended September 30, 2007 was greater than the gross proceeds from the sale of Kinross in the same period of 2006. During the three months ended September 30, 2007, in computing its estimated deferred tax expense and related liability, Solitario reduced its estimated tax rate by 1.7%, to account for the estimated deductibility of state taxes against United States federal taxes. This change in estimate had the effect of reducing Solitario's deferred tax rate to 37.3% from the previous estimated rate of 39%. We provide a valuation allowance for our foreign net operating losses, which are primarily related to our exploration activities in Mexico, Peru, Bolivia and Brazil. We anticipate we will continue to provide a valuation allowance for these net operating losses until we are in a net tax liability position with regards to those countries where we operate or until it is more likely than not t hat we will be able to realize those net operating losses in the future. We anticipate we will continue recognize taxable gains in the future upon the sale of our Kinross common stock.

Comparison of the nine months ended September 30, 2007 to the nine months ended September 30, 2006

          We had a loss of $1,635,000 or $0.06 per share for the nine months ended September 30, 2007 compared to a loss of $2,396,000 or $0.08 per share for the nine months ended September 30, 2006. The primary reason for the decrease in the loss in the nine months ended September 30, 2007 from the loss in the same period of 2006 was the sale of 300,000 shares of Kinross stock for proceeds of $3,977,000 and a gain on sale of $2,957,000 in the nine months ended September 30, 2007 compared to the sale of 100,000 shares of Kinross for proceeds of $1,206,000 and a gain on sale of $1,046,000 during the nine months ended September 30, 2006. We also received a joint venture payment of $100,000 on our Bongara project, discussed above, during the nine months ended September 30, 2007 and there were no similar payments in 2006. In addition, our net exploration expense decreased to $1,898,000 during the nine months ended September 30, 2007 com pared to $1,925,000 during the same period of 2006 and we had a complete reduction in the management fees

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paid to Crown in the first nine months of 2007 compared to $232,000 in the same period of 2006. These changes in revenue, gain on sale and expense items were partially mitigated by increased general and administrative costs which increased to $2,286,000 during the nine months ended September 30, 2007 compared to $1,409,000 in the same period of 2006 and we recorded deferred tax expense of $497,000 in the nine months ended September 30, 2007 compared to a deferred tax benefit of $161,000 in the nine months ended September 30, 2006. These items are discussed in more detail below.

          During the nine months ended September 30, 2007, we received a joint venture payment of $100,000 on our Bongara Project from Votorantim in accordance with the Framework agreement discussed above. There were no similar payments during the nine months ended September 30, 2006. The Framework Agreement calls for annual cash payments of $200,000 until a production decision is made by Votorantim or the agreement is terminated. There is no assurance that Votorantim will not terminate the Bongara Project however we currently believe that we will receive the annual payment of $200,000 under the Framework Agreement in 2008.

          Although our net exploration expense decreased to $1,898,000 during the first nine months of 2007 compared to $1,925,000 in the first nine month of 2006, our gross exploration expenditures increased significantly to $2,941,000 during the first nine months of 2007 compared to $2,103,000 during the first nine months of 2006. The difference between the gross and net exploration expenditures is entirely related to reimbursement by Anglo Platinum, our joint venture partner at our Pedra Branca project of $1,043,000 during the first nine months of 2007 compared to $178,000 during the first nine months of 2006. In addition exploration activities were conducted and funded by our joint venture partners on our Bongara and Pachuca properties during the first nine months of 2007. These joint ventures are discussed in more detail below under "Joint Ventures, Royalty and the Strategic Alliance Properties." During 2007 we increased our explor ation efforts on reconnaissance exploration in Peru, Brazil and Mexico, portions of which led to the addition of certain exploration projects.

           On January 1, 2006, we adopted SFAS 123R. SFAS 123R requires the expensing of the grant date fair value of options over the term of their vesting. On September 7, 2007, the Board of Directors granted an option for 502,000 shares with a fair value of $976,000, on June 14, 2007, the Board of Directors granted an option for 100,000 shares with a fair value of $223,000, on February 8, 2007 the Board of Directors granted 10,000 options with a fair value of $17,000 and on June 27, 2006 the Board of Directors granted 1,655,000 options with a fair value of $2,536,000 under the 2006 Plan. We determined the fair values of the options granted using a Black-Scholes option pricing model. During the nine months ended September 30, 2007, we recognized $790,000 of stock-based compensation expense as part of general and administrative expense for the vesting of the options pursuant to the 2006 Plan compared to $797,000 recognized during the n ine months ended September 30, 2006. See Employee stock compensation plans in Note 1 to the condensed consolidated financial statements.

          Excluding the $790,000 and $797,000, respectively, of stock-option compensation expense during the nine months ended September 30, 2007 and 2006 discussed above, other general and administrative costs were $1,496,000 during the first nine months of 2007 compared to $612,000 in the same period of 2006. These increases are primarily related to an increase in administrative support activities due to our increase in exploration and the termination of the Crown management agreement during 2006. The costs which increased included salary and benefits costs which increased to $730,000 during the nine months ended September 30, 2007, compared to $115,000 during the same period of 2006; an increase in office and rent costs to $131,000 in the first nine months of 2007 compared to $65,000 during the same period of 2006; a decrease in currency exchange gain to $1,000 during the first nine months of 2007 compared to a currency exchange gain of $74,000 in the first nine months of 2006; an increase in travel costs to $88,000 in the first nine months of 2007 compared to $69,000 in the same period of 2006. These increases in costs were partially mitigated by reductions in certain other costs during the first nine months of 2007 compared to the same period of 2006, including (i) a decrease in legal and accounting costs to $169,000 during the first nine months of 2007 compared to $184,000 in 2006 which increased during the first nine months of 2006 as a result of additional reviews of our accounting systems and reporting related to ongoing Sarbanes-Oxley compliance work, review of application of generally accepted accounting principles, and an increase in costs associated with our application for listing on the American Stock Exchange; (ii) a decrease in shareholder and investor relation costs including exchange fees to $195,000 in the first nine months of 2007 compared to $221,000 in 2006, primarily associated with the payment of a $75,000 fee to the American Stock Exchange in the third quarter of 2006. A general decline in the value of the dollar compared to the sole in Peru and the real in Brazil from 2006 to 2007 accounted for the gains on foreign currency in both 2007 and 2006. We anticipate an increase in general and administrative costs in the future as a result of the adoption of SFAS 123R discussed above and as a result of the completion of the Crown - Kinross merger.

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          No management fee expense was recorded in the first nine months of 2007 compared to $232,000 in the first nine months of 2007. The Crown management services agreement was terminated in August 2006 upon the completion of the Crown - Kinross merger.

          During the nine months ended September 30, 2007 we sold 300,000 shares of Kinross stock for proceeds of $3,977,000 and recorded a gain on sale of $2,957,000 in the nine months ended September 30, 2007 compared to the sale of 100,000 shares of Kinross for proceeds of $1,206,000 and a gain on sale of $1,046,000 during the nine months ended September 30, 2006. The basis in the Kinross shares sold in the nine months ended September 30, 2007 was an average of $3.40 per share compared to a basis of $1.60 per share on the shares sold in 2006. We anticipate we will continue to liquidate our Kinross holdings over the next three years. See "liquidity and Capital Resources" below.

         We exercised our remaining 500,000 TNR warrant during the nine months ended September 30, 2006 by paying $70,000 in cash and transferred our existing warrant valuation of $12,000 on the date of exercise to marketable equity securities and as a result recorded no gain or loss on derivative instruments related to our holdings of TNR warrants during the nine months ended September 30, 2007 compared to a loss of $6,000 during the nine months ended September 30, 2006. We do not anticipate recognizing any future gains or losses in our derivative instruments as we no longer own any warrants.

          We recorded deferred tax expense of $497,000 during the first nine months of 2007 compared to a deferred tax benefit of $161,000 during the same period of 2006 related to the expected benefit of the currently generated net operating losses on United States activities. The deferred tax expense during the first three months of 2007 primarily relate to the tax expense from the taxable gain on the sale of Kinross stock which was approximately equal to the gross proceeds of $3,977,000, discussed above, compared to the taxable gain of $1,206,000 during the nine months ended September 30, 2006. This increase in taxable gain was partially offset by the increase in general and administrative costs during the nine months ended September 30, 2007 compared to the same period of 2006, discussed above. We provide a valuation allowance for our foreign net operating losses, which our primarily related to our exploration activities in Mexico Pe ru, Bolivia and Brazil. We anticipate we will continue to provide a valuation allowance for these net operating losses until we are in a net tax liability position with regards to those countries where we operate or until it is more likely than not that we will be able to realize those net operating losses in the future.

(d.) Liquidity and Capital Resources

          Due to the nature of the mining business, the acquisition, and exploration of mineral properties requires significant expenditures prior to the commencement of development and production. In the past, we have financed our activities through the sale of our properties, joint venture arrangements, the sale our securities and most recently from the sale of our marketable equity security investment in Kinross. The sale of properties has occurred on an infrequent basis with the last significant revenues recorded in 2000 upon the sale of our Yanacocha property for $6,000,000.  We expect future revenues from the sale of properties, if any, would also occur on an infrequent basis. To the extent necessary, we expect to continue to use similar financing techniques; however, there is no assurance that such financing will be available to us on acceptable terms, if at all.

Investment in Marketable Equity Securities

          Our marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon market quotes of the underlying securities. At September 30, 2007 and December 31, 2006, we owned 1,442,920 shares and 1,742,920 of Kinross common stock, respectively. The Kinross shares are recorded at their fair market value of $21,615,000 and $20,706,000 at September 30, 2007 and December 31, 2006, respectively. In addition we own other marketable equity securities with a fair value of $339,000 and $198,000 as of September 30, 2007 and December 31, 2006, respectively. Changes in the fair value of marketable equity securities are recorded as gains and losses in other comprehensive income in stockholders' equity. During the three and nine months ended September 30, 2007, we recorded a gain on marketable equity securities in accumulated other comprehensive income in stockholders' equity of $5,030,000 and $5,027,000, respectively, less related deferred tax benefit of $1,587,000 and $1,586,000, respectively. In addition we reclassified $889,000 of unrealized gain on marketable equity securities, net of related deferred taxes of $297,000 to gain on sale of marketable equity securities as a result of the sale of 100,000 shares of Kinross during the three months ended September 30, 2007 and we reclassified $2,957,000 of unrealized gain on marketable equity securities net of related deferred taxes of $1,103,000 to gain on sale of marketable equity securities during the nine months ended September 30, 2007.

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          Any change in the market value of the shares of Kinross common stock could have a material impact on our liquidity and capital resources. The price of shares of Kinross common stock has varied from a high of $15.48 per share to a low of $11.31 per share during the 52 weeks ended September 30, 2007.

Hedge of the Investment in Kinross

          On October 12, 2007 we entered into the Hedge pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement between us and UBS whereby we pledged 900,000 shares of Kinross Gold Corporation ("Kinross") common shares to be sold (or delivered back to us with any differences settled in cash) in the amounts of (i) 400,000 shares on April 14, 2009 (18 months) for a lower threshold price of no less than $13.81 per share (the "Floor Price") and an upper threshold price of no more than $21.77 per share (Cap Price One); (ii) 400,000 shares on April 13, 2010 (30 months) for a lower threshold of the Floor Price and an upper threshold price of no more than $24.46 per share ("Cap Price Two"); and (iii) 100,000 shares on April 12, 2011 (42 months) for no less than the Floor Price and an upper threshold price of no more than $27.62 per share ("Cap Price Three"). Kinross' quoted closing price was $16.37 per share on Oc tober 12, 2007, the date of the initiation of the Hedge. The business purpose of the Hedge is to provide downside price protection of the Floor Price on approximately 900,000 shares of the 1,342,920 shares we currently own, in the event Kinross stock were to drop significantly from the current price. In consideration for obtaining this price protection, we have given up the upside appreciation above the Cap Prices discussed above during the term of the respective tranches.

          The Hedge is structured as a European-style synthetic hedge, which allows for the close of the position of each tranche (the "Termination") of the Hedge only on the specific dates for each tranche, 18, 30 and 42 months from the date of entering into the Hedge. UBS will keep any ordinary cash dividends declared by Kinross on any of the shares subject to the Hedge during the term of the Hedge. Solitario has the option to satisfy its obligations under the Hedge upon Termination of each tranche in either cash or Kinross shares. The settlement price on the Termination date of each tranche will be the volume weighted-average price of Kinross shares on such date (the "Reference Price").

          If the Hedge is to be settled in cash on the relevant Termination date, the cash settlement amount will be determined in the following manner: (a) if, on the Termination date, the Reference Price is less than the Floor Price, UBS will pay to us a cash settlement amount equal to the product of (x) the number of underlying shares multiplied by (y) the excess of the Floor Price over the Reference Price, and (b) if, on the Termination date, the Reference Price is greater than the relevant Cap Price, we will pay to UBS a cash settlement amount equal to the product of (x) the number of underlying shares multiplied by (y) the excess of the Reference Price over the relevant Cap Price. If the Reference Price is neither greater than the Cap Price nor less than the Floor Price, the cash settlement amount shall be zero.

          If the Hedge is to be settled in Kinross shares on the relevant Termination date, the settlement will be structured as follows: (a) if, on the Termination date, the Reference Price is greater than the relevant Cap Price, (i) UBS will pay to us a dollar amount equal to the product of (x) the number of underlying shares and (y) the relevant Cap Price and (ii) we will deliver to UBS the underlying shares, and (b) if, on the Termination date, the Reference Price is less than the Floor Price, (i) we will deliver to UBS the underlying shares and (ii) UBS will pay to us a dollar amount equal to the product of (x) the number of underlying shares and (y) the Floor Price.

          Pursuant to the Master Agreement for Equity Collars, appropriate adjustments may be made if during the life of the collar any event shall occur that has a dilutive or concentrative effect on the value of the underlying Kinross shares such as an extraordinary dividend, recapitalization, merger, consolidation or similar reorganization.

Working Capital

          We had working capital of $5,850,000 at September 30, 2007 compared to working capital of $4,555,000 as of December 31, 2006. Our working capital at September 30, 2007 consists of our cash and cash equivalents and marketable equity securities, primarily consisting of the current portion of our investment in 1,442,920 shares of Kinross common stock of $5,404,000, less related current deferred taxes of $1,760,000. Although no specific plans have been formulated by our Board, we intend to liquidate a portion of our Kinross shares over the next one to three years to reduce our exposure to a single asset, taking into consideration our cash and liquidity requirements, tax implications, the market price of gold and the market price of Kinross stock and expected proceeds from Kinross stock subject to the Hedge. Although our Kinross shares have been issued pursuant to an effective registration statement under the U.S. Securities Act of 1 933 (the "Securities Act"), due to our status as a Crown affiliate at the time of the Crown - Kinross merger, sales of our Kinross shares must be made in accordance with the requirements of Rule 145(d) under the Securities Act, which could limit or restrict sales of our Kinross shares any time prior to August 31, 2008. Any funds received from the sale of

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our Kinross shares would be used primarily to fund exploration on our existing properties, for the acquisition and exploration of new properties and general working capital.

          Cash and cash equivalents were $2,059,000 as of September 30, 2007 compared to $904,000 at December 31, 2006. Our cash balances are considered adequate to fund our 2007 exploration plan and all other expenditures. The nature of the mining business requires significant sources of capital to fund exploration, development and operation of mining projects. We will need additional resources if we choose to develop on our own any mineral deposits we have. We anticipate that we would finance these activities through the use of joint venture arrangements, the issuance of debt or equity, the sale of interests in our properties or the sale of our shares of Kinross common stock. There can be no assurance that such sources of funds will be available on terms acceptable to us, if at all.

Stock-Based Compensation Plans

          During the first nine months of 2007, holders exercised options from the 1994 Plan for 917,000 shares for proceeds of $572,000 at an exercise price of Cdn$0.73. The activity for stock options outstanding under the 1994 Plan and the 2006 Plan as of September 30, 2007 can be found in Note 1, to the Unaudited Condensed Consolidated Financial Statements in Part 1 of this Form 10-Q under the title "Employee stock compensation plans."

          Although a significant portion of our options from both the 1994 Plan and the 2006 Plan are significantly "in the money" as of September 30, 2007, we do not anticipate that any options will be exercised for the remainder of 2007 as no options expire in 2007. Of our outstanding options, 110,000 options from the 2004 Plan expire on August 14, 2008, and 1,585,000 options from the 2006 Plan expire on June 27, 2011.

(e.) Cash Flows

          Net cash used in operations during the nine months ended September 30, 2007 increased to $3,218,000 compared to $2,635,000 for the nine months ended September 30, 2006 primarily as a result of increased exploration expense related to increased exploration activities, as well as increased general and administration costs discussed above in results of operations. In addition during the first nine months of 2007 we recorded a net decrease (source of cash) in our prepaid expenses and receivables of $57,000, compared to a net increase (use of cash) of $99,000 during the first nine months of 2006. Theses changes in receivables were offset by a net payment (use of cash) on our accounts payables totaling $97,000 during the first nine months of 2007 compared to an increase in our accounts payable including our payable due to Crown (source of cash) totaling $224,000 during the first nine months of 2006. We expect our use of cash for o perations to continue for the remainder of 2007, primarily related to our planned exploration expenditures of $2,071,000 for the full year of 2007.

          We provided $3,801,000 in cash from investing activities during the nine months ended September 30, 2007 which was primarily from the sale of 300,000 shares of Kinross for proceeds of $3,977,000, discussed above. In addition we used $34,000 for acquisition of mineral property discussed above under "Recent Developments" in the first nine months of 2007 compared to $34,000 in the first nine months of 2006 for the addition of two new properties, Titicayo in Bolivia and Pau d'Arco in Brazil. We also acquired additional exploration vehicles, furniture and fixtures of $168,000 during 2007 compared to $46,000 in 2006.

          Net cash provided from financing activities decreased to $572,000 in the nine months ended September 30, 2007 from $895,000 in the nine months ended September 30, 2006. During the nine months ended September 30, 2007, holders exercised options for 917,000 shares of our common stock for proceeds of $572,000. During the nine months ended September 30, 2006, holders exercised options for 1,125,500 shares of our common stock for proceeds of $895,000.

(f.) Exploration Activities and Contractual Obligations

          A significant part of our business involves the review of potential property acquisitions and continuing review and analysis of properties in which we have an interest, to determine the exploration and development potential of the properties. In analyzing expected levels of expenditures for work commitments and property payments, our obligations to make such payments fluctuate greatly depending on whether, among other things, we make a decision to sell a property interest, convey a property interest to a joint venture, or allow our interest in a property to lapse by not making the work commitment or payment required. In acquiring our interests in mining claims and leases, we have entered into agreements, which generally may be canceled at our option. We are required to make minimum rental and option payments in order to maintain our interest in certain claims and leases. Our net 2006 mineral property rental and option paym ents were approximately $284,000. In 2007 we estimate our full-year mineral property rental and option payments to be approximately $350,000. Approximately $102,000 of these annual payments is reimbursable to us by our joint venture partners or paid by PBM from funds contributed by Anglo Platinum and recorded as additions to paid-in-capital.

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          We may be required to make further payments in the future if we elect to exercise our options under those agreements. As part of the Alliance Agreement (discussed below under "Joint Ventures, Royalty and the Strategic Alliance Properties") we are committed to spend $3,773,000 over the four years from the date of the Alliance Agreement on gold exploration in regions ("Alliance Projects Areas") that are mutually agreed upon by Newmont Exploration and us. As of September 30, 2007, we have spent approximately $1,342,000 of this commitment.

           As of September 30, 2007, we have no outstanding long-term debt, capital lease or other purchase obligations. We estimate our facility lease costs are approximately $32,000 per year which has a remaining two year term as of September30, 2007, related to the Wheat Ridge, Colorado office.

          We currently have deferred tax liabilities recorded in the amount of $5,691,000. These deferred tax liabilities primarily relate to our unrealized holding gains on our Kinross shares. We expect that a portion of these deferred tax liabilities may become currently payable as we sell the Kinross shares.

(g.) Joint Ventures, Royalty and the Strategic Alliance Properties

Bongara

          On August 15, 2006 we signed a letter Agreement with Votorantim on our 100%-owned Bongara zinc project in northern Peru. The Bongara project hosts the Florida Canyon zinc deposit, where high-grade zinc mineralization has been encountered in drill holes over an area 2.5 kilometers by 1.5 kilometers in dimension. On March 24, 2007, we signed a definitive agreement, the Framework Agreement pursuant to the previously signed Bongara Letter Agreement with Votorantim on our Bongara zinc project in Peru. Solitario's and Votorantim's property interests will be held through the ownership of shares in a joint operating company that holds a 100% interest in the mineral rights and other project assets. Votorantim can earn up to a 70% interest in the joint operating company by funding an initial $1.0 million exploration program (completed), by completing future annual exploration and development expenditures, and by making cash payments of $100,000 on August 15, 2007, which was made during the third quarter of 2007 and recorded as joint venture property payment revenue, and by making cash payments of $200,000 on all subsequent annual anniversaries of that date until a production decision is made or the agreement is terminated. The option to earn the 70% interest can be exercised by Votorantim any time after the first year commitment by committing to place the project into production based upon a feasibility study. Additionally, Votorantim, in its sole discretion, may elect to terminate the option to earn the 70% interest at any time. The agreement calls for Votorantim to have minimum annual exploration and development expenditures of $1.5 million in each of years two and three, and $2.5 million in all subsequent years until a minimum of $18.0 million has been expended by Votorantim. Votorantim will act as project operator. Once Votorantim has fully funded its $18.0 million work commitment, it has further agreed to finance our 30% part icipating interest through production. We will repay the loan facility through 50% of the cash flow distributions that we receive.

Pachuca

          On September 25, 2006 we signed a definitive venture agreement (the "Venture Agreement") with Newmont de Mexico, S.A. de C.V. ("Newmont"), a wholly owned subsidiary of Newmont Mining Corporation, on our Pachuca Real silver-gold project in central Mexico. The Venture Agreement calls for a firm work commitment by Newmont of $2.0 million over the first 18 months of the agreement. Work commitments over the 4.5 years from the date of the Venture Agreement total $12.0 million.

Exploration Expenditures and Due Dates	Amount	Aggregate Amount
18 months from signing - firm commitment	$2,000,000	$2,000,000
30 months from signing -optional commitment	$2,300,000	$4,300,000
42 months from signing - optional commitment	$3,500,000	$7,800,000
54 months from signing - optional commitment	$4,200,000	$12,000,000

          Newmont's initial firm work commitment includes a minimum of 7,500 meters of drilling, however Newmont will have 24 months to complete such drilling and any costs beyond the initial 18 month period to complete that drilling, if necessary, will be in addition to the $2.0 million work commitment above. Upon the completion of $12.0 million in expenditures, Newmont will have earned a 51% interest in the project. Newmont will have the right to earn an additional 14% (total 65%) by completing a positive feasibility study for the project. After Newmont has spent $12.0 million and has elected to complete a feasibility study (the "Feasibility Stage"), Newmont is required to spend a minimum of $5.0 million annually until such time as the positive feasibility study is completed. Newmont is also obligated to make payments on our behalf to keep the property in good standing. Newmont has the right to terminate the agreement at anytime following its firm initial work commitment. Upon completion of the feasibility study, we will have the option to self-finance our 35%-participating interest in the project, or to have Newmont fund our portion of construction costs at

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Libor + 3.5%. Such post-feasibility funding plus interest shall be paid from 80% of the distributions of future earnings or dividends from the venture that we receive. If we elect to have Newmont fund all our venture costs, including our portion of construction costs, then our participating interest will be 30% and Newmont's interest will be 70%.

          The 47,300 hectare Pachuca Real silver-gold property in central Mexico was acquired by staking in late 2005 and early 2006. Part of the property, the 13,600 hectare El Cura claim, is held under an option agreement with a private Mexican party. The option agreement provides for payments of $500,000 over four years. Payments totaling $12,000 are due to the underlying owner in 2007. Claims fees to be paid to the government of Mexico totaling $42,000 are due in 2007. As discussed above, all 2006 and 2007 payments to maintain the Pachuca-Real property are the responsibility of Newmont.

Pedra Branca

          On January 28, 2003, we entered into a Letter Agreement with Anglo Platinum, Ltd. on our 100%-owned Pedra Branca project in Brazil. The Letter Agreement was amended four times between July 2004 and April 2006, generally to extend various work commitment deadlines mandated in the Letter Agreement. On July 14, 2006, we signed the Pedra Branca Framework Agreement with Anglo Platinum that specified actions we and Anglo Platinum would take to establish and govern PBM, the corporate entity that now holds 100% title to all the assets of the Pedra Branca project, and the mechanics for Anglo Platinum's continued funding of Pedra Branca exploration. On April 24, 2007, we signed the Shareholders Agreement relating to the Pedra Branca Project in Brazil with Anglo Platinum for the exploration and development of the Pedra Branca Project. Solitario's and Anglo Platinum's property interests are held through the ownership of shares in PBM. To the date of the signing the Shareholders Agreement, Anglo Platinum had funded approximately $1.25 million in exploration expenditures. As part of the agreement, Anglo Platinum earned a 15% interest in PBM, as of September 30, 2007, as a result of spending a total of $2.25 million on exploration at Pedra Branca. Anglo Platinum is not required to make any future funding of exploration expenditures. However future cash contributions by Anglo Platinum will be recorded as additions to minority interest and a decrease in our additional paid-in-capital. Additionally, Anglo Platinum may earn a 51% interest in PBM, by spending a total of $7 million on exploration at Pedra Branca by February 28, 2010. Anglo Platinum can earn an additional 9% interest in PBM (for a total of 60%) by either (i) completing a bankable feasibility study or (ii) spending an additional $10.0 million on exploration or development. Anglo Platinum can also earn an additional 5% interest in PBM (for a total of 65%) by arranging for fin ancing to put the project into commercial production. We have recorded a receivable of $56,000 at September 30, 2007 from Anglo Platinum for the reimbursement of costs incurred through September 30, 2007. As of September 30, 2007 we retain an 85% interest in PBM. We recorded a minority interest in PBM of $391,000, equal to Anglo Platinum's 15% interest in the book value of PBM during the three and nine months ended September 30, 2007 as a reduction to additional paid in capital.

Strategic Alliance

          On January 18, 2005, we signed a Strategic Alliance Agreement (the "Alliance Agreement") with Newmont Overseas Exploration Limited ("Newmont Exploration"), to explore for gold in South America (the "Strategic Alliance"). Prior to the definitive agreement, we had signed a Letter of Intent on November 17, 2004, with Newmont Exploration. Concurrent with the signing of the Alliance Agreement, Newmont Mining Corporation of Canada ("Newmont Canada") purchased 2.7 million shares of Solitario (approximately 9.9% equity interest) for Cdn$4,590,000. As part of the Alliance Agreement we are committed to spend $3,773,000 over the four years from the date of the Alliance Agreement on gold exploration in regions ("Alliance Projects Areas") that are mutually agreed upon by Newmont Exploration and us. As of September 30, 2007, we have spent approximately $1,342,000 of this commitment. If we have not spent the $3,773,000, by January 18, 2 009, Newmont may elect to extend the four-year expenditure period for such additional time necessary to enable Solitario to spend the full $3,773,000 on qualified exploration expenditures. Newmont may also elect to become the manager of the Alliance Agreement and direct and spend any remaining funds up to the $3,773,000 qualified exploration expenditures. If we acquire properties within Alliance Project Areas and meet certain minimum exploration expenditures, Newmont Exploration will have the right to joint venture acquired properties and earn up to a 75% interest by taking the project through feasibility and financing Solitario's retained 25% interest into production. Newmont Exploration may elect to earn a lesser interest or no interest at all, in which case it would retain a 2% net smelter return royalty. Newmont Exploration also has a right of first offer on any non-alliance Solitario property in South America, acquired after the signing of the Alliance Agreement, that we may elect to sell an interes t in, or joint venture with a third party.

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Yanacocha Royalty property

          Concurrent with the signing of the Strategic Alliance Letter of Intent, was the signing of a second Letter of Intent by us and Newmont Peru, Ltd. ("Newmont Peru"), to amend our net smelter return ("NSR") royalty on a 61,000-hectare property located immediately north of the Newmont Mining-Buenaventura's Minera Yanacocha Mine, the largest gold mine in South America. In addition to amending the NSR royalty schedule, the Letter Agreement committed Newmont Peru to a long-term US$4.0 million work commitment on our royalty property and provides us access to Newmont Peru's future exploration results on an annual basis. The Yanacocha royalty amendment and work commitment Letter Agreements were subsequently replaced by a definitive agreement with the same terms.

(h). Wholly-owned Exploration Properties

Santiago

          In February of 2007, we acquired 5,600 hectares of 100%-owned mineral rights through concessions for our Santiago property in southern Peru. We capitalized $17,000 during the nine months ended September 30, 2007 in lease acquisition costs related to these concessions. The Santiago project consists of a single property block where previous surface sampling of rocks identified anomalous concentrations of gold in altered Tertiary volcanic rocks. We are currently conducting additional surface sampling and geological mapping to determine if the project warrants drill testing.

Amazonas

          In September of 2006, we acquired 5,200 hectares of 100%-owned mineral rights through concessions for our Amazonas property in northern Peru. We capitalized $17,000 during the nine months ended September 30, 2007 in lease acquisition costs related to new concessions covering an additional 5,600 hectares at the Amazonas project. The Amazonas project consists of six widely spaced areas where previous sampling has identified high-grade zinc mineralization at surface similar to that found at Florida Canyon, discussed above under our Bongara zinc property above. We may seek a joint venture partner for the property during 2007 or 2008.

Mercurio

          In September 2005, we completed an option agreement for the purchase of 100% of the mineral rights over the 8,550-hectare Mercurio property in the state of Para, Brazil.  An initial payment of 20,000 Brazilian Reais (approximately $7,000) was paid on signing of the agreement and the next payment of 36,000 Reais (approximately $12,000) was made in 2005 on signing of a definitive agreement upon conversion of the existing washing claims to exploration claims.  Further payments are required upon the conversion of garimpeiro licenses to exploration claims which occurred in the third quarter of 2006.  During 2007 payments will total approximately $50,000. To purchase the property, an escalating scale of payments totaling 780,000 Reais (approximately $350,000) are required over a sixty month period.  A net smelter return of 1.5% is retained by the owner.  This NSR can be extinguished with a payment of 2,300, 000 Reais (approximately $1,220,000).  All payments are indexed to inflation as of the signing of the agreement.  The owner of the mineral rights also owns the surface rights, the use of which is included in the exploration of the property.  On completion of all payments we will receive title to 1,500 hectares of surface rights.  We may terminate the agreement at any time at our sole discretion.  We completed a second phase of extensive soil sampling and auger testing of soils over selected portions of the property during the first half of 2006 and core drilling of eleven holes totaling 1,596 meters during the third quarter of 2006 for which assay results have been received and are under review.  During 2005 we completed 1,466 meters of core drilling. We are currently planning another round of core drilling to be completed by the end of 2007.

Titicayo

          On March 31, 2006, we signed a lease agreement with a private Bolivian company to lease certain concessions covering approximately 1,300 hectares, which comprise the Titicayo project in Bolivia. We capitalized our initial payment under the lease of $10,000. The lease calls for additional lease payments of $10,000 eight months from the date of the lease, which have been paid, $55,000 during the second year of the lease, $75,000 during the third year of the lease, $100,000 during the fourth year of the lease, $150,000 during the fifth year of the lease and $600,000 during the sixth year of the lease, after which we will own a 99% participating interest in the concessions. An amendment to the Titicayo Agreement was signed in November of 2006 that delayed the first additional lease payment until June 2007, which has been paid, with a corresponding adjustment to the rest of the payment schedule. A one time payment of $10,000 was made to the claim holders in consideration for this amended schedule. We have conducted a limited amount of surface exploration work to define drilling targets. We completed a four hole drilling program in the first half of 2007. Highly anomalous but sub-ore grade mineralization was intersected in all holes. Evaluation of the results is in progress and further drilling will be considered later in 2007.

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Triunfo

          The 256-hectare Triunfo poly-metallic exploration property in Bolivia was acquired in 2003. Lease obligations were renegotiated in 2006 providing for a payment of $12,000, which was paid in July of 2006, a payment of $35,000, which was paid in June 2007 and a payment of $45,000 due in 2008 in order to keep the agreement in good standing. An option to purchase the property for $1,000,000 must be exercised by September 2009. A geophysical survey has been completed on the property and three holes were drilled in the first half of 2007. We are reviewing the results and may plan another round of drilling for late 2007 or early 2008.

Corazon / Conception del Oro

          In September 2005, we signed an agreement with a private Mexican mineral concession holder allowing us to enter into lease options on four separate properties located throughout central Mexico, which included the Corazon gold property (formerly called the Concepcion del Oro property), located in the Conception del Oro mining district near the city of Mazapil in the state of Zacatecas. The Corazon property consists of 35 concessions totaling approximately 1,420 hectares. The agreement called for us to make an initial payment of $15,000 on signing and provided that we would conduct surface exploration on the four properties over a six-month period. We elected to sign definitive option agreements on the Corazon and the Las Purisimas properties. The other two properties were dropped. As a result of ongoing geologic and exploration activities including mapping and sampling, we made the decision to drop our interest in the Coraz on property. We recorded property abandonment and impairment expense of $5,000 related to the write-off of the capitalized costs on this property during the three months ended September 30, 2007. We have no additional work or payment obligations and no further work is planned for the Corazon property.

Las Purisimas

          The Las Purisimas gold property is located near the city of Tepic in the state of Navarit in Mexico and consists of six concessions totaling 600 hectares. The Las Purisimas property was acquired as part of the four property agreement discussed above under Corazon. The Las Purisimas property required payments to the concession holder of $10,000 in 2006, which has been paid, and $35,000 in 2007 to maintain the option agreements in good standing. As a result of ongoing geologic and exploration activities including drilling, during the first three months of 2007 we made the decision to drop our interest in the Las Purisimas project. We recorded property abandonment and impairment expense of $5,000 related to the write-off of the capitalized costs on this property during the three months ended March 31, 2007. We have no additional work or payment obligations and no further work is planned for the Las Purisimas property.

(i.) Critical Accounting Estimates

Mineral Properties, net

          We classify our interest in mineral properties as Mineral Properties, net (tangible assets) pursuant to EITF 04-2 (see "Recent Accounting Pronouncements, below). Prior to adoption of EITF 04-2 in April 2004, we classified our interests in mineral properties as intangible assets, Mineral Interests, net. Our mineral properties represent mineral use rights for parcels of land we do not own. All of our mineral properties relate to exploration stage properties and the value of these assets is primarily driven by the nature and amount of economic minerals believed to be contained, or potentially contained, in such properties. Prior to the adoption of EITF 04-2, we amortized the excess cost of our mineral interests over their estimated residual value over the lesser of (i) the term of any mineral interest option or lease or (ii) the estimated life of the mineral interest, which was our estimated exploration cycle. We amortized ou r mineral interests over a three-to-eight year period based upon facts and circumstances for each mineral interest on a property-by-property basis. We no longer amortize our mineral properties pursuant to the adoption of EITF 04-2.

Revenue Recognition

          We record any proceeds from the sale of property interests subject to joint ventures or shareholder agreements as a reduction of the related property's capitalized cost. Proceeds which exceed the capitalized cost of the property are recognized as revenue. To the extent such proceeds are made in connection with properties subject to a joint venture or shareholder agreement where no property interests are transferred, the proceeds are recorded as revenue in accordance with the terms of the joint venture or shareholder agreement.

Impairment

          We regularly perform evaluations of our investment in mineral properties to assess the recoverability and/or the residual value of our investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change, such as negative drilling results or termination of a joint venture, which indicate the carrying amount of an asset may not be recoverable, utilizing established guidelines based upon discounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic

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mineralization as a result of our analysis of exploration activities including surveys, sampling and drilling. We recorded $10,000 of mineral property write-downs in the nine months ended September 30, 2007. We recorded $12,000 of mineral property impairment in the nine months ended September 30, 2006 related to our Libertad and Pillune projects Peru and our Pozos project in Mexico. We may record additional future impairments if certain events occur, including loss of a venture partner, reduced commodity prices or unfavorable geologic results from sampling assaying surveying or drilling, among others.

Marketable equity securities

          Our investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification method. Changes in market value are recorded in accumulated other comprehensive income (loss) within stockholders' equity, unless a decline in market value is considered other than temporary, in which case the decline is recognized as a loss in the consolidated statement of operations. At September 30, 2007 and December 31, 2006, we have recorded unrealized holding gains of $19,074,000 and $17,004,000, respectively, net of deferred taxes of $7,036,000 and $6,553,000, respectively, related to our marketable equity securities.

Stock-Based compensation

          We compute the fair value of each option on the date of grant based upon the Black-Scholes option pricing model. This model requires the input of subjective assumptions, including the expected term based upon historical data of past exercises of option awards and expected stock-price volatility based upon the historical quoted market prices of Solitario common stock as well as an estimate of forfeitures. These estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, Solitario's recorded and pro-forma stock-based compensation expense could have been materially different from that reported.

          During the nine months ended September 30, 2007, we determined the fair value of the 2006 Plan options granted on September 7, 2007, June 14, 2007 and February 8, 2007, respectively, of $976,000, $223,000 and $17,000, using a Black-Scholes option pricing model resulting in a weighted average fair value of $1.94, 2.23, and 1.71 respectively, per share. We utilized the following assumptions:

Grant Date	9/07/07	6/14/07	2/08/07
Options granted	502,000	100,000	10,000
Grant date fair value	$976,000	$223,000	$17,000
Weighted average fair value	$1.94	$2.23	$1.71
Risk-free interest rate	4.7%	5.2%	4.8%
Expected Life (1)	4 yrs	4 yrs	4 yrs
Expected volatility (2)	52%	53%	56%
Exchange rate (Cdn$ to US$) (3)	.94930	0.93612	0.84551
Intrinsic value per share		-	-

(1)     Based upon expected volatility and past historical exercise patterns.
(2)     Expected volatility mirrors the historical volatility based upon the daily quoted stock price from the Toronto Stock Exchange over the four years prior to the date of grant.
(3)     The exchange rate on the date of grant.

          We elected cliff-vesting to recognize the fair value of all option grants over their vesting period, with 25% recognized immediately, and the remaining 75% over three years on a straight line basis, recognizing as stock option compensation expense an amount at least equal to the percentage of options vested at that date. Solitario has assumed a zero forfeiture rate and a zero dividend rate for all grants, based upon historical experience.

          During the nine months ended September 30, 2007 and 2006 we have recognized $790,000 and $797,000 in option compensation expense, respectively. During the nine months ended September 30 2007, an employee resigned and forfeited unexercised an option for 52,500 shares. The remaining unrecognized stock option compensation expense of approximately $50,000 from these forfeited options will not be recognized over the remaining vesting period of the options. No options were forfeited during the nine months ended September 30, 2006.

          As of September 30, 2007, Solitario has recognized $1,741,000 of option compensation expense for the vesting of the fair value as of the date of the grant over the life of all option grants, as discussed above under results of operations, which has been included in general and administrative expense. Solitario will recognize the balance of its unrecognized stock options compensation expense of $1,962,000 for its existing stock option grants over the remaining vesting periods at the rate of approximately $230,000 per quarter.

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Derivative instruments

          In July 2006 we exercised our only remaining TNR warrant as discussed above in recent developments. Our TNR warrants were recorded at fair market value based upon quoted prices and classified as derivative instruments. We recognized any increase or decrease in the fair value of these warrants as a gain or loss on derivative instruments in the consolidated statement of operations. We recorded a decrease in the fair value of our TNR warrants of $6,000 for the nine months ended September 30, 2006. We exercised our 500,000 share TNR warrant on July 27, 2006 by paying the exercise price of $70,000 to TNR, and have no remaining derivative instruments as of September 30, 2007.

Income taxes

          Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. Currently we believe our deferred tax assets, exclusive of our Yanacocha royalty asset, are recoverable. Recovery of these assets is dependent upon the realization of our expected gains on the Kinr oss securities we own. If these values are not realized, we may record additional valuation allowances in the future.

(j) Related Party Transactions

Crown Resources Corporation

          Crown provided management and technical services to Solitario under a management and technical services agreement originally signed in April 1994 and modified in April 1999, December 2000 and July 2002. The agreement was terminated on August 31, 2006 upon the completion of the Crown - Kinross merger. Under the modified agreement we were billed by Crown for services at 25% of Crown's corporate administrative costs for executive and technical salaries, benefits and expenses, 50% of Crown's corporate administrative costs for financial management and reporting salaries, benefits, expenses and 75% of Crown's corporate administrative costs for investor relations salaries, benefits and expenses. In addition, we reimbursed Crown for direct out-of-pocket expenses. These allocations were based upon the estimated time and expenses spent by Crown management and employees on both Crown activities and Solitario activities. Our manageme nt believed these allocations were reasonable and the allocations were periodically reviewed by our management and approved by independent Board members of both Crown and Solitario. Management service fees were billed monthly, due on receipt and generally paid within thirty days. Management service fees incurred by Solitario were $57,000 and $232,000, respectively, for the three and nine months ended September 30, 2006.

          On July 26, 2004, Crown completed a spin-off of our shares to its shareholders, whereby each Crown shareholder received 0.2169 shares of our common stock for each Crown share they owned. As part of the spin-off, Crown retained 998,306 of our shares for the benefit of Crown's warrant holders who would receive those shares when the warrant holders exercise their warrants. Subsequent to the spin-off, through August 31, 2006 when the Crown- Kinross merger was completed, Crown distributed 995,229 of these retained shares upon exercise of its warrants and the remaining 3,077 shares of our stock became the property of Kinross which is not a related party to Solitario.

          Christopher E. Herald, and Mark E. Jones, III were directors of both Crown and Solitario until August 31, 2006 when they resigned as directors of Crown upon the completion of the Crown - Kinross merger. Stephen Webster and Brian Labadie were directors of both Crown and Solitario from June 27, 2006 to August 31, 2006, when they resigned as directors of Crown upon the completion of the Crown - Kinross merger. Christopher E. Herald, James R. Maronick and Walter H. Hunt were officers of both Crown and Solitario until August 31, 2006 when they resigned as officers of Crown upon the completion of the Crown - Kinross merger.

Mark Jones Consulting Agreement

          On September 1, 2006, we entered into a consulting agreement with Mark E. Jones, III, a director and vice-chairman of our Board of Directors. The consulting agreement has a two-year term. Under the agreement, Mr. Jones will advise the Company on matters of strategic direction, planning, and identification of corporate opportunities, when and as requested by the Solitario. In consideration for the services to be performed, Mr. Jones has been paid a one time lump sum payment of $160,000, plus he is entitled to receive pre-approved, documented expenses incurred in performance of the consulting services. We have charged $20,000 and $60,000, respectively, for consulting expense, related to the agreement, which is included in general and administrative expense for the three and nine months ended September 30, 2007. As of September 30, 2007, we have $73,000 of remaining prepaid expense related to Mr. Jones' consulting agreement, which will be amortized over the term of the agreement.

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TNR Gold Corp

          On July 24, 2006, we exercised a warrant to purchase 500,000 shares of TNR Gold Corp. ("TNR") common stock by paying $70,000. We recorded the cash paid and the fair value of the warrant on the date of exercise of $12,000 as marketable equity securities. We received this warrant in July 2004 when we exchanged 500,000 shares of TNR Gold Corp ("TNR") common stock for 500,000 shares of TNR common stock that were not available to be publicly traded in Canada until November 28, 2004 and a warrant to purchase an additional 500,000 shares of TNR common stock for Cdn$0.16 per share for a period of two years. The TNR shares are classified as marketable equity securities held for sale. As of December 31, 2006, we do not own warrants for the purchase of TNR shares. Previous to their exercise, the TNR warrants were recorded at fair market value based upon quoted prices and classified as derivative instruments. As of September 30, 2007 , we own 1,000,000 shares of TNR with a fair value of $339,000 based upon the quoted market price of TNR. Solitario recorded a loss on derivative instruments of $6,000 for the decrease in the value of its warrants during the nine months ended September 30, 2006. Christopher E. Herald, our CEO, is a member of the Board of Directors of TNR.

Kinross Merger Agreement

          We entered into a Voting Agreement dated as of April 15, 2002 among Zoloto Investors, LP ("Zoloto") and Crown. Zoloto and Solitario were both shareholders of Crown (the "Signing Shareholders"). Pursuant to the Voting Agreement, Zoloto and Solitario agreed that each would vote its owned shares during the term of the Voting Agreement for the election of three designees of Zoloto and one designee of ours (the "Designee Directors") to the Board of Directors of Crown. The Signing Shareholders agreed that any shares received by either Signing Shareholder would be subject to the Voting Agreement during its term and any successor, assignee or transferee of shares from either Signing Shareholder would be subject to the terms of the Voting Agreement during its term. The Voting Agreement terminated on June 25, 2006.

         Prior to the completion of the Crown - Kinross merger, we entered into a stockholder and voting agreement with Kinross, along with several Crown directors, Crown executive officers and entities affiliated with these directors and officers (collectively the "Signatories"), pursuant to which the Signatories voted all of the shares of Crown common stock owned by them in favor of the approval of the Crown - Kinross merger. On August 31, 2006, the shareholders of Crown approved the Crown - Kinross merger and all of Crown's common shares were converted to Kinross shares and the stockholder and voting agreement terminated.

(k). Recent Accounting Pronouncements

          In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard No. 159, "The Fair Value Option For Financial Assets and Financial Liabilities" (SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS 159 are effective for Solitario as of January 1, 2008. We have not yet determined the impact of adopting SFAS 159 on our financial position, results of operations or cash flows.

          In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157 "Fair Value Measurements" (SFAS No. 157"). SFAS No. 157 clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the most advantageous market for the asset or liability. SFAS No. 157 clarifies that the transaction to sell an asset or transfer a liability is a hypothetical transaction at a measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. SFAS No. 157 states that fair value is a market-based measurement, not an entity specific measurement and that market assumptions should be based upon independent observations of the reporting entity over a reporting entity's observations about market participant assumptions. SFAS No. 157 states that market pa rticipant assumptions should include risk, restrictions on asset sales, non-performance risk, but that quoted market prices for financial instruments should not be adjusted for the size of a position relative to trading volume (block discounts). SFAS No. 157 expands disclosures about, among other things, the use of fair value to measure assets and liabilities in interim and annual periods, including the use of unobservable inputs, and the effect of fair value on earnings and changes in net assets. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We have not yet determined the impact of adopting SFAS No. 157 on our financial position, results of operations or cash flows.

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          In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," ("FIN 48") an interpretation of FASB Statement No. 109, "Accounting for Income Taxes." FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the entities recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of ret ained earnings. We adopted FIN 48 on January 1, 2007 and it has not had an impact on our financial position, results of operations or cash flows.

           In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140" ("SFAS No. 155"). SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, "Application of Statement 133 to Beneficial Interests in Securitized Financial Assets." SFAS No. 155 became effective January 1, 2007. We adopted SFAS No. 155 on January 1, 2007 and it has not had an impact on our financial position, results of operations or cash flows.

(l). Disclosure Controls and Procedures and Internal Controls Over Financial Reporting

Disclosure controls and procedures

          Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

           As of the end of the period covered by this report (the "Evaluation Date"), we carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in alerting them in a timely manner to material information relating to the Company and its subsidiaries that is required to be included in the reports that we file or submit under the Securities Exchange Act of 1934.

Internal control over financial reporting

          Internal control over financial reporting is defined as a process designed by, or under the supervision of our Chief Executive Officer and our Chief Financial Officer, and effected by our Board of Directors, through our Audit Committee, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. These include procedures that (i) pertain to maintenance of records in reasonable detail to accurately reflect transactions and disposition of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assuranc e regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

          We have performed a limited review of our system of internal controls over financial reporting and noted certain deficiencies in these controls. These deficiencies include (i) lack of segregation of duties, (ii) limited capability to interpret and apply United States generally accepted accounting principles, (iii) limited review of our documentation of our system of internal controls; (iv) limitations related to our information technology systems and (v) lack of experience in the review of our formal budgeting process, which has been operational for less than one year.

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Steps taken to address noted deficiencies and inherent limitations

          We have taken steps to address the above identified deficiencies, including (i) hiring of an outside accounting firm, other than our independent public accounting firm, to assist with preparation of our quarterly and annual reports, (ii) instituting a plan to update our accounting policies and procedures and budgeting processes, (iii) ongoing training and education regarding United States generally accepted accounting principles and Securities and Exchange Commission reporting and disclosure requirements (iv) ongoing documentation and review of our key business processes and internal controls over financial reporting; (v) testing of internal controls over financial reporting and (vi) an ongoing process to upgrade our existing information technology systems.

          Management believes that due to our nature and size, with only five total United States employees, it may not be economically feasible to completely eliminate and or mitigate all noted deficiencies in internal control over financial reporting. Management believes to do so would require the addition of several high-level accounting and financial reporting staff or the engagement of additional outside accounting and legal firms as well as the potential addition of several administrative positions that we believe may not make economic sense for our shareholders. The existence of these deficiencies potentially subjects our Company to additional risk that there may be material misstatements in the future as a result of the misapplication of United States generally accepted accounting principles or the improper recording of our accounts from the lack of segregation of duties.

Integrity of the financial information

          Our officers assure themselves of the integrity of financial information by applying existing control procedures. For example, our CFO reconciles general ledger balances to subsidiary ledgers or supporting schedules for all significant accounts and also performs various analytical procedures on financial information. Officers also hold informal meetings to review and approve all financial information.

          In addition, our senior management consists of Mr. Herald, our CEO, Mr. Maronick, our CFO and Mr. Hunt, our Vice President of Operations and our entire company has only five United States employees. With such a small and (operationally) efficient staff, we are in constant contact on a daily basis and are intimately familiar with the contents of our financial information and the related disclosures. Our senior management essentially creates our financial information as opposed to having financial information "provided" to them as may be the case with larger organizations. Furthermore, our total number of transactions, for example checks drawn on our bank accounts and recorded journal entries to our accounting records, rarely exceed 150 per month. We believe this gives us a natural advantage over large organizations, but has its limitations, as discussed above, for example with regard to internally available depth of knowledge i n complex accounting and reporting and the application of all United States generally accepted accounting principles. Our Chief Financial Officer has and will continue to regularly attend ongoing professional training in these areas to stay up to date. We intend to continue to utilize the outside accounting firm, discussed above, (not our independent registered public accounting firm) to assist in preparation of our financial statements and disclosures. We believe these steps also provide management with additional assurance regarding the integrity of our financial information.

          Our audit committee also reviews the financial information including discussions with the outside accounting firm and our independent registered public accounting firm. Management regularly discusses our financial statements and the annual and quarterly filings on Form 10-K and Form 10-Q with our outside accounting firm and members of the audit committee to satisfy management regarding the integrity of the financial information included in public filings with the Securities and Exchange Commission.

          Accordingly, the combination of all of the above factors along with our existing disclosure controls and procedures and our systems of internal control, including the implementation of the steps we have taken to mitigate the above noted deficiencies, allow management to assure themselves of the integrity of our financial information.

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Item 3   Quantitative and Qualitative Disclosures About Market Risk

(a)         Equity Price Risks

          Solitario's investment in Kinross is subject to equity market risk.

          As of September 30, 2007 a hypothetical increase of ten percent in the price of Kinross common stock would increase the value of our holdings of Kinross by $2,161,000 and increase other comprehensive income and total stockholders' equity by the same amount, net of deferred taxes of $806,000. Additionally, our working capital would also be increased by $339,000 from a hypothetical increase of ten percent in the price of Kinross common stock.

          A hypothetical decrease of ten percent in the price of Kinross common stock would have the opposite effect of the increase discussed above.

          (b.) Interest Rate Risks 

          Solitario has no material interest rate risks as it has no interest bearing debt and its interest bearing cash deposits do not generate a material amount of interest income.

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Item 4.   Controls and Procedures

Disclosure controls and procedures

          Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

         As of the end of the period covered by this report (the "Evaluation Date"), we carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in alerting them in a timely manner to material information relating to the Company and its subsidiaries that is required to be included in the reports that we file or submit under the Securities Exchange Act of 1934.

Internal control over financial reporting

          Internal control over financial reporting is defined as a process designed by, or under the supervision of our Chief Executive Officer and our Chief Financial Officer, and effected by our Board of Directors, through our Audit Committee, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. These include procedures that (i) pertain to maintenance of records in reasonable detail to accurately reflect the our transactions and disposition of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

          As of September 30, 2007, we are not required to report management's assessment of the effectiveness of our internal controls over financial reporting and we have not undertaken the kind of review of such controls that we would have been required to undertake if we were required to make such a report. However, we have noted certain deficiencies in our systems of internal control, from our limited review of such controls in connection with our review of disclosure controls and procedures above. These deficiencies include, lack of segregation of duties, limited capability to interpret and apply United States generally accepted accounting principles, limited review of our documentation of our system of internal controls, limitations in our information technology systems and lack of a formal budgeting process. During the three and nine months ended September 30, 2007, we have continued taking steps to address these identified defic iencies, including hiring of consultants to assist with preparation of our quarterly and annual reports, formally documenting our key business processes and our system of internal controls over financial reporting, testing our system of internal controls over financial reporting, instituting a plan to update our accounting policies and procedures and budgeting processes, increased training and education regarding generally accepted accounting principles and SEC reporting and disclosure requirements and continued our ongoing process to upgrade our existing information technology systems. However, until we have completed a formal review of our internal controls and even upon the completion of such a review, there is no assurance that we will have adequately addressed the identified deficiencies, as has been characteristic of companies that have completed their review of internal controls and have had to report on the effect or such review. Accordingly, our internal control over financial reporting may be sub ject to control deficiencies, which may include material weaknesses, as a result of the identified deficiencies reported herein as well as any that we have not identified.

          Within the three and nine months ended September 30, 2007, other than the steps that continue to be taken as described above, there were no changes to internal control over financial reporting or in other factors that could affect the internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

          None

Item 1A. Risk Factors

          During the third quarter of 2007, there were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

          During the three months ended September 30, 2007, holders exercised options granted under the Solitario Resources Corporation 1994 Stock Option Plan for 917,000 shares of our common stock, at an exercise price of Cdn$0.73 per share, pursuant to the exemption provided by Rule 701.

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

Exhibit Number                                         Description

3.1	Amended and Restated Certificate of Incorporation of Solitario Resources Corporation, (incorporated by reference to Exhibit 3.1 to Solitario's Form 10/A filed on July 1, 2004)
3.2	Amended and Restated By-laws of Solitario Resources Corporation (incorporated by reference to Exhibit 3.2 to Solitario's Form 10/A filed on July 1, 2004)
4.1	Form of Common Stock Certificate of Solitario Resources Corporation (incorporated by reference to Exhibit 4.1 to Solitario's Form 10/A filed on July 1, 2004)
10.1	Master Agreement for Equity Collars between Solitario Resources Corporation and UBS AG, London, England, an affiliate of UBS Securities, LLC, Stamford, CT, dated October 5, 2007, providing the terms and conditions for entering a Zero-Premium Collar Hedge on 900,000 shares of Kinross common stock pledged by Solitario.
10.2	Pledge and Security Agreement between Solitario Resources Corporation and UBS AG, London, England, an affiliate of UBS Securities, LLC, Stamford, CT, dated October 5, 2007 providing the terms and conditions to allow for the pledge by Solitario of 900,000 shares of Kinross common stock pursuant to a Master Agreement for Equity Collars dated of the same day.
10.3	Single Pay Collar Confirmations between Solitario Resources Corporation and UBS AG, London, England, an affiliate of UBS Securities, LLC, Stamford, CT dated October 12, 2007 for the pledge of 900,000 shares of Kinross common stock pursuant to the Master Agreement for Equity Collars and the Pledge and Security Agreement, filed above in item 10.1 and 10.2 respectively, setting the trade and termination date, upper and lower threshold prices, number of shares and other terms and conditions of three hedge collars entered into on the same date.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

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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.

SOLITARIO RESOURCES CORPORATION

November 8, 2007
Date By: /s/ James R. Maronick
James R. Maronick
Chief Financial Officer

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EX-10.2

Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT

between

Solitario Resources Corporation,

as Pledgor,

UBS AG, London Branch,
as Collars Office,

UBS AG, Stamford Branch,
as Collateral Agent

and

the other parties

named herein

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TABLE OF CONTENTS

                                                                                                                                   Page

SECTION 1.	Effectiveness of Certain Terms; Certain Definitions	1
SECTION 2.	Determination of Required Collateral	6
SECTION 3.	Delivery of Collateral	7
SECTION 4.	Representations, Warranties and Agreements	7
SECTION5.	The Security Interests	10
SECTION 6.	Entitlement Orders	11
SECTION 7.	Record Ownership of Pledged Securities	11
SECTION 8.	Voting Rights and Dividends	12
SECTION 9.	General Authority	13
SECTION 10.	No Performance Required of the Secured Parties	13
SECTION 11.	No Exercise or Transfer of Contract Rights	13
SECTION 12.	Defense of Title	14
SECTION 13.	Payment to the Collateral Agent	14
SECTION 14.	Further Assurances; Covenants	14
SECTION 15.	Remedies upon Event of Default	14
SECTION 16.	Application of Proceeds	17
SECTION 17.	Provision of Notice	18
SECTION 18.	Expenses	19
SECTION 19.	Appointment of Collateral Agent	19
SECTION 20.	Termination and Release of Collateral	20
SECTION 21.	Concerning the Collar Loans and the Lender	21
SECTION 22.	Notices	21
SECTION 23.	Waivers, Non-exclusive Remedies	22
SECTION 24.	Obligations Unconditional; Discharge of Obligations, etc.	23
SECTION 25.	Severability	23
SECTION 26.	Inconsistency	23
SECTION 27.	Miscellaneous	23
SECTION 28.	Governing Law; Suits; Jury Trial	23

Attachment I - Form of Amendment
Exhibit A - Form of Schedule I to Financing Statement
Exhibit B - Filing Offices

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PLEDGE AND SECURITY AGREEMENT

          PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of the date of the Master Agreement referred to herein, among UBS AG, London Branch (the "Collars Office"), pledgor(s) named on the signature page of this agreement (the "Pledgor"), UBS AG, Stamford Branch, as Collateral Agent for the Secured Parties (as defined herein) (the "Collateral Agent"), and, (A) when an Amendment in the form attached as Attachment I shall have been executed, UBS AG, New York Branch, or such other financial institution as may execute an Amendment (the "Lender") or (B) if a financial institution shall have executed this Agreement as a Securities Intermediary, as defined in the UCC (as defined below), such institution in its capacity as Securities Intermediary (the "Securities Intermediary").

          The Collars Office and the Pledgor have entered into a Master Agreement for Equity Collars dated as of the date hereof (the "Master Agreement"), pursuant to which the Collars Office and the Pledgor may enter into Collars (as defined in the Master Agreement) from time to time, which Collars will be evidenced by confirmations provided by The Collars Office ("Confirmations"). In addition, the Lender, the Pledgor or any Other Borrower (as defined herein) have entered into, or may in the future enter into, the Credit Terms (as defined herein), pursuant to which the Lender may make one or more Loans (as defined in the Credit Terms) to the Pledgor or Other Borrower, as the case may be, from time to time as evidenced by Notes and Loan Advices (as such terms are defined in the Credit Terms) and secured by the Pledged Securities, the Pledgor Contract Rights and other Collateral (as each term is defined herein). Such Loans are r eferred to herein as "Collar Loans".

          The Collars Office and the Pledgor have agreed that the Pledgor shall secure certain of the obligations to the Collars Office under the Master Agreement and to the Lender under the Credit Terms in accordance with the terms of this Agreement; and the Master Agreement, the Credit Terms (if and when entered into) and each Collar Loan and Confirmation will supplement, form a part of, and be subject to, this Agreement so that this Agreement, together with all such Collar Loans, Confirmations, the Credit Terms and the Master Agreement will form a single agreement among the Collars Office, the Lender and the Pledgor.

          Accordingly, the parties hereto agree as follows:

          Section 1. Effectiveness of Certain Terms; Certain Definitions. (a)  If, at any time and so long as, there is not outstanding any Collar Loan the repayment of which is secured hereunder, (i) this Agreement shall be read to exclude all references hereunder to the terms Collar Loan, Credit Terms, Note, Loan Advice and Lender and (ii) Sections 11, 13 and 21 shall be of no force and effect.

          (b)  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Master Agreement. In addition, as used in this Agreement, the following terms will have the meanings set forth below:

          "30-Day LIBOR" means the rate determined by the Lender for any date of determination as the rate for deposits for a period of thirty days in U.S. Dollars which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two London Banking Days preceding that date of determination. If such rate does not appear on the Telerate Page 3750, the rate for that date of determination will be determined as if the parties had specified the LIBOR-Reference Banks Rate as the applicable rate.

          "Agreements" means this Agreement, the Credit Terms and the Master Agreement, as well as any Note and any Loan Advice (as each is defined in the Credit Terms), collectively.

          "Authorized Officer" of any Company means any officer, trustee or general partner (or officer thereof), as the case may be, as to whom such Company shall have delivered notice to the Collateral

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Agent that such officer, trustee or general partner (or officer thereof) is authorized to act hereunder on behalf of such Company.

          "Collar Loans" has the meaning set forth in the first recital hereof.

          "Collar Loan Obligations" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of every kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Lender by or from the Pledgor or any Other Borrower, (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Pledgor or any Other Borrower), arising out of or under any Collar Loan, including, without limitation, all principal of and interest on such Collar Loans.

          "Collateral" has the meaning set forth in Section 5(a) hereof.

          "Collateral Notice" means a notice, which may be oral, from the Lender or Collars Office to the Pledgor requiring the Pledgor to post additional Collateral of a type, in an amount and by the time set forth in such notice.

          "Company" means a corporation, a partnership, an association, a trust or any other entity or organization.

          "Credit Terms" means the General Terms and Conditions between the Pledgor and the Lender and any schedules or attachments thereto as the same may be subsequently amended, supplemented or modified or such other agreement evidencing Collar Loan Obligations as may be executed from time to time.

          "Delivery" means (a) in the case of certificated Pledged Securities (as defined below) registered in the name of the Pledgor, delivery of certificates representing such Pledged Securities, free and clear of all liens, security interests or other encumbrances of any kind (other than the Security Interests (as defined below)), to the Securities Intermediary, accompanied by any required transfer tax stamps, and in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance satisfactory to the Collateral Agent, and the crediting of such Pledged Securities to the Securities Account, (b) in the case of uncertificated Pledged Securities registered in the name of the Pledgor, by transmission by the Pledgor of an instruction to the issuer of such Pledged Securities instructing such issuer to register such Pledg ed Securities in the name of the Securities Intermediary or its nominee, accompanied by any required transfer tax stamps, and such issuer's compliance with such instructions and the crediting of such Pledged Securities to the Securities Account, (c) in the case of Pledged Securities in respect of which security entitlements are held by the Pledgor through a securities intermediary, the crediting of such Pledged Securities, free and clear of all liens, security interests or other encumbrances of any kind (other than the Security Interests), accompanied by any required transfer tax stamps, to a securities account of the Securities Intermediary at such securities intermediary or at another securities intermediary satisfactory to the Securities Intermediary and the crediting of such Pledged Securities to the Securities Account and (d) in the case of cash, in accordance with such delivery instructions as the Collars Office may give to the Pledgor from time to time by written notice hereunder. The terms "Deliv er," "Delivered" and "Delivering" have corresponding meanings.

          "Equivalent Securities" means, with respect to Pledged Securities, Securities of the same class and issue, issuer, series, and, to the extent applicable, maturity, principal amount and redemption price.

          "Event of Default" means an Event of Default as defined in the Credit Terms or an Event of Default or Termination Event as defined in the Master Agreement (without regard to the application of Paragraph 9.3 of the Master Agreement) and also means any breach, repudiation, misrepresentation or

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default by the Pledgor (howsoever characterized), or any breach by the Pledgor of any of its representations, warranties, covenants or other obligations, under this Agreement.

          "Existing Transfer Restrictions" means the Transfer Restrictions, if any, on the Securities (or security entitlements in respect thereof) pledged or to be pledged hereunder as described in the Confirmation evidencing the related Collar or in the Shareholder Representation Letter or any other written representation that has been acknowledged by the Collars Office.

          "LIBOR-Reference Banks Rate" means that the rate for any date of determination will be determined on the basis of the rates which deposits in U.S. Dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding that date of determination to prime banks in the London interbank market for a period of thirty days commencing on that date of determination and in the Representative Amount. The Lender will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that date of determination will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date of determination will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Lender, at approximately 11:00 a.m., New York City time, on that date of determination for loans in U.S. Dollars to leading banks for a period of thirty days commencing on that date of determination and in the Representative Amount.

          "Location" means, with respect to any party, the place such party is "located" within the meaning of Section 9-307 of the UCC.

          "London Banking Day" means any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the city of London.

          "Other Borrower" means any person or entity (other than the Pledgor) that obtains a Loan (as defined in the Credit Terms) from the Lender that is secured by the Pledgor in accordance with this Agreement.

          "Pledged Securities" means (a) the Securities specified in the Confirmation evidencing the related Collar and (b) all Securities that become Pledged Securities pursuant to Section 5(b) hereof.

          "Pledgor Contract Obligations" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of any kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Collars Office by or from the Pledgor (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Pledgor) arising out of or under any Collar.

          "Pledgor Contract Rights" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of any kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Pledgor by or from the Collars Office (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Collars Office) arising out of or under any Collar.

          "Proceeds" means all proceeds, including cash, instruments, securities and other property, from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the exercise or disposition of any or all of the Collateral.

          "Potential Event of Default" means any event which, with the giving of notice or passage of time or both, would constitute an Event of Default.

          "Reference Banks" means, for the purposes of determining any LIBOR rate, four major banks in the London interbank market.

          "Representative Amount" means, for the purposes of determining any LIBOR rate for which a Representative Amount is relevant, an amount that is representative of the outstanding obligation to which such LIBOR rate is being applied.

          "Required Collateral" means (i) in respect of any Collar and any time, the types and amounts of Collateral required by the Collars Office as security for the Pledgor's obligations under that Collar at such time as specified in the applicable Confirmation, and (ii) in respect of any Collar Loan, the type and amount of Collateral specified in accordance with the Credit Terms, and in either case, as may be specified from time to time in a Collateral Notice.

          "Secured Obligations" means the obligations secured under this Agreement including (a) all Collar Loan Obligations, (b) all Pledgor Contract Obligations, (c) all amounts payable by the Pledgor hereunder, (d) other indebtedness, obligations or liabilities of any kind, now or hereafter existing, of the Pledgor or any Other Borrower, as the case may be, to UBS AG, whether absolute or contingent and however arising or acquired by UBS AG, and (e) any renewals or extensions of any of the foregoing.

          "Secured Parties" means the Collateral Agent, the Collars Office and the Lender.

          "Security" or "Securities" has the meaning set forth in Section 8-102(a)(15) of the UCC.

          "Securities Account" means the account in the name of the Pledgor or the Collateral Agent, as the case may be, at the Securities Intermediary in or to which certain of the Collateral is to be deposited or credited in accordance with an agreement among the relevant parties.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Security Interests" means the security interests in the Collateral granted hereunder securing the Secured Obligations.

          "Telerate" means, when used in connection with any designated page and LIBOR, the display page so designated on the Dow Jones Telerate Service (or such other page or locator as may replace that page on that service), or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to LIBOR.

          "Termination Event" has the meaning set forth in the Master Agreement.

          "Transaction" means any Collar or Collar Loan.

          "Transfer Restriction" means, with respect to any Security (or security entitlements in respect thereof) or other item of collateral pledged or to be pledged hereunder, any condition to or restriction on the ability of the holder thereof to sell, assign or otherwise transfer such Security (or security entitlements in respect thereof) or other item of collateral or to enforce the provisions thereof or of any document related thereto whether set forth in such item of collateral itself or in any document related thereto, including, without limitation, (i) any requirement that any sale, assignment or other transfer or enforcement of such Security (or security entitlements in respect thereof) or other item of collateral be consented to or approved by any person, including, without limitation, the issuer or underwriter thereof or any other obligor thereon, (ii) any limitations on the type or status, financial or otherwise, of any pu rchaser, pledgee, assignee or transferee of such Security (or security entitlements in respect thereof) or other item of collateral, (iii) any requirement of the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document of any person to the issuer of, any other obligor on or any registrar or transfer agent for, such Security (or security entitlements in respect thereof) or other item of collateral, prior to the sale, pledge, assignment or other transfer or enforcement of such Security (or security entitlements in respect thereof) or other item of collateral and (iv) any registration or qualification requirement or prospectus delivery requirement for such Security (or security entitlements

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in respect thereof) or other item of collateral pursuant to any federal, state or foreign securities law (including, without limitation, any such requirement arising as a result of Rule 144 or Rule 145 under the Securities Act); provided that the required delivery of any assignment, instruction or entitlement order from the seller, pledgor, assignor or transferor of such Security (or security entitlements in respect thereof) or other item of collateral, together with any evidence of the corporate or other authority of such person, shall not constitute a "Transfer Restriction".

          "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York.

          Section 2. Determination of Required Collateral. (a) Unless otherwise specified in the applicable Confirmation or otherwise determined by either the Collars Office or the Lender in its discretion from time to time, the Required Collateral in respect of any Collar and at any time shall be a quantity of the Underlying Shares (as defined in the Master Agreement) equal to the number of the Underlying Shares that are the subject of such Collar.

          (b) If at any time either the Collars Office or the Lender determines in its discretion that the Collateral securing the Pledgor's and any applicable Other Borrower's obligations under a particular Transaction or group of Transactions is insufficient, the Collars Office or the Lender may by Collateral Notice require the Pledgor to deliver additional Collateral in respect of that Transaction or group of Transactions, of the types and in the amounts set forth in such Collateral Notice.

           Section 3. Delivery of Collateral.

          (a)          On or prior to the Trade Date with respect to each Collar (as defined in the Confirmation with respect to such Collar), the Pledgor shall Deliver the Required Collateral, if any, with respect thereto.

          (b)          Upon entering into any Collar Loan, the Pledgor shall Deliver the Required Collateral, if any, with respect thereto.

          (c)          On the date specified in any Collateral Notice, the Pledgor shall Deliver the Required Collateral specified therein.

          (d)          If any Delivery is required to be made on a day on which the financial institution or clearing facility through which a Delivery is to be effected is not open for business, such Delivery shall instead be required to be made on the first following Business Day on which such entity is open for business.

          Section 4. Representations, Warranties and Agreements. (a) The Pledgor agrees that each of the Collateral Agent, the Collars Office and the Lender may rely upon the Pledgor's representations and warranties to the Collars Office in the Master Agreement as if such representations were provided directly to them and were set out in full in this Agreement.

          (b)          The Pledgor further represents and warrants to, and agrees with, each Secured Party that:

                    (i)          the Pledgor has and will have the power to grant to the Collateral Agent for the benefit of each Secured Party a perfected security interest in, and lien on, any Collateral Delivered or at any time to be Delivered hereunder and has taken, and will take, all necessary actions to authorize the granting of that security interest and lien;

                    (ii)          the Pledgor (A) owns and, at all times prior to the release of the Collateral pursuant to the terms of this Agreement, will own the Collateral free and clear of any liens, security interests or other encumbrances of any kind (other than the Security Interests and Existing Transfer Restrictions) and (B) is not and will not become a party to or otherwise bound by any agreement, other than the Agreements and the Existing Transfer Restrictions, that (x) restricts in any manner the rights of

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any present or future owner of the Collateral with respect thereto or (y) provides any person other than the Pledgor, the Secured Parties or the Securities Intermediary (but in the case of such Securities Intermediary only in respect of Collateral held through it) with control (as defined in Section 8-106 of the UCC) with respect to any Collateral;

                    (iii)          All Securities at any time pledged hereunder (or in respect of which security entitlements are pledged hereunder) are and will be either (i) certificated (and the certificate or certificates in respect of such securities are and will be located in the United States) and registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States or (ii) uncertificated and either registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States;

                    (iv)          the Pledgor has not performed and will not perform any acts that might prevent any Secured Party from enforcing any of the terms of this Agreement or that might limit any Secured Party in any such enforcement;

                    (v)          other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests, no financing statement, security agreement or similar or equivalent document or instrument covering all or any part of the Collateral is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect a lien, security interest or other encumbrance of any kind on such Collateral;

                    (vi)          upon the execution and delivery of this Agreement by the parties hereto and (i) in the case of Collateral consisting of investment property (as defined in Section 9-102(a)(49) of the UCC), the Delivery of such Collateral to the Securities Intermediary and (ii) in the case of Collateral consisting of general intangibles (as defined in section 9-102(a)(42) of the UCC), the filing of financing statements in the form of Exhibit A hereto in the filing offices specified in Exhibit B hereto, the Collateral Agent will have valid and perfected security interests in, and, in the case of any such Collateral consisting of investment property, control (within the meaning of Section 8-106 of the UCC) with respect to, the Collateral for the benefit of the Secured Parties, subject to no prior lien, security interest or other en cumbrance of any kind;

                    (vii)          no registration, recordation or filing with any governmental body, agency or official is required in connection with the execution and delivery of this Agreement or any Transaction or necessary for the validity or enforceability hereof or thereof or for the perfection or enforcement of the Security Interests other than the filing of financing statements in the form of Exhibit A hereto in the filing offices specified in Exhibit B hereto;

                    (viii)          the Location of the Pledgor is the address set forth under its name on the signature page of this Agreement, and under the Uniform Commercial Code as in effect in such Location, no local filing is required to perfect a security interest in Collateral consisting of general intangibles;

                    (ix)          the Pledgor does not know or have any reason to believe that any issuer of Pledged Securities has not complied with the reporting requirements contained in Rule 144(c)(1) under the Securities Act; and

                    (x)          Upon request, Pledgor shall provide the Collars Office with a certified copy of the Credit Terms, a specimen copy of each Note executed thereunder and all related documentation within ten (10) Business Days of the execution of such documents.

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          (c) The Securities Intermediary represents and warrants to, and agrees with, each of the Collateral Agent, the Collars Office, the Lender and the Pledgor that:

                    (i)          the Securities Intermediary is a corporation, duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to enter into, and perform its obligations under, this Agreement;

                    (ii)          the execution, delivery and performance by the Securities Intermediary of this Agreement have been duly authorized by all necessary corporate action on the part of the Securities Intermediary (no action by the shareholders of the Securities Intermediary being required) and do not and will not violate, contravene or constitute a default under any provision of applicable law or regulation or of the charter or by-laws of the Securities Intermediary or of any material agreement, judgment, injunction, order, decree or other instrument binding upon the Securities Intermediary;

                    (iii)          this Agreement constitutes a valid and binding agreement of the Securities Intermediary enforceable against the Securities Intermediary in accordance with its terms;

                    (iv)          the Securities Intermediary hereby agrees that (i) all liens, pledges and other security interests of any kind or nature held by it in any of the Collateral securing any obligation to the Securities Intermediary (either in such capacity or in any other capacity), other than liens securing the obligations of the Pledgor to it hereunder (collectively, "Other Liens") shall be subordinate and junior to the liens, pledges and security interest in the Collateral arising hereunder and that the Securities Intermediary will take no action to enforce any Other Lien so long as any obligation under the Agreements or hereunder (whether or not then due) should remain unsatisfied and (ii) its obligation to Pledgor in respect of any Collateral will not be subject to deduction, set-off, recoupment, banker's lien or any ot her right in respect of obligations owed by Pledgor or any other person to the Securities Intermediary; and

                    (v)          the Securities Intermediary is not and will not become a party to or otherwise bound by any agreement, other than this Agreement, that provides any person with control (as defined in Section 8-106 of the UCC) with respect to any of the Collateral.

          Section 5. The Security Interests. (a) In order to secure the full and punctual payment of the Secured Obligations in accordance with their terms and the performance of all the obligations of the Pledgor hereunder, the Pledgor hereby assigns, pledges and grants to the Collateral Agent, as agent of and for the benefit of the Secured Parties security interests in and to, and a lien upon and right of set-off against, and transfers to the Collateral Agent, for the benefit of the Secured Parties as and by way of a security interest having priority over all other security interests, with power of sale, all of its right, title and interest in and to (i) the Pledged Securities and all security entitlements in respect of the Pledged Securities; (ii) all of the Pledgor Contract Rights; (iii) the Securities Account and all financial assets (as defined in Section 8-102 of the UCC), funds, property a nd other assets from time to time held therein; (iv) all additions to and substitutions for the foregoing; (v) all income, Proceeds and other proceeds and collections received or to be received, or derived or to be derived, now or any time hereafter (whether before or after the commencement of any proceeding under applicable bankruptcy, insolvency or similar law, by or against Pledgor, with respect to Pledgor) from or in connection with any of the items mentioned in (i) through (v) (including, without limitation, any shares of capital stock issued in respect of any Securities (or security entitlements in respect thereof) constituting Collateral or any cash, Securities or other property distributed in respect of or exchanged for any Securities (or security entitlements in respect thereof) constituting Collateral, or into which any such Securities (or security entitlements in respect thereof) are converted, in connection with any Change (as defined in the Master

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Agreement) and any security entitlements in respect of any of the foregoing); and (vi) all powers, rights and privileges of the Pledgor, now or hereafter acquired, including rights of enforcement, with respect to the foregoing (collectively, the "Collateral").

          (b)          If any issuer of Pledged Securities at any time issues to the Pledgor in respect of any Pledged Securities or security entitlements in respect thereof, or the Pledgor receives or becomes entitled to receive in respect of any Pledged Securities or security entitlement in respect thereof, or the Pledgor receives any Proceeds in respect of any Pledged Securities or security entitlements in respect of Pledged Securities consisting of, any additional or substitute Securities of any kind (or security entitlements in respect thereof ), the Pledgor shall immediately pledge and Deliver to the Securities Intermediary all such Securities (and security entitlements) as additional security for the Secured Obligations. All such Securities (and security entitlements) shall constitute Pledged Securities (or security entitlements in respect thereof ) and are subject to all provisions of this Agreement.

          (c)          The Security Interests are granted as security only and shall not subject any Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor with respect to any of the Collateral or any transaction in connection therewith.

          (d)          The Securities Intermediary and the other parties hereto expressly agree that all rights, assets and property held at any time in the Securities Account shall be treated as a financial asset as described in Section 8-102(a)(9) of the UCC.

          (e)          Deleted.

          (f)          The parties hereto hereby agree that the Securities Intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) in respect of the Securities Account is New York and each such party represents that it has not and agrees that it will not enter into any agreement to the contrary.

          Section 6. Entitlement Orders.

          (a)          he Securities Intermediary agrees that it will comply with entitlement orders originated by the Collateral Agent in respect of any Collateral without further consent from the Pledgor or any other person. The Pledgor hereby consents to the foregoing agreement.

          (b)          Each of the Securities Intermediary and Pledgor agree that the Securities Intermediary shall not comply with entitlement orders of the Pledgor in respect of the Collateral until the Securities Intermediary shall receive notice from the Collateral Agent that it may comply with such entitlement orders.

          (c)          The Pledgor agrees that it shall not (1) create or permit to exist any lien, security interest or other encumbrance of any kind upon or with respect to the Collateral, except for those created hereunder, (2) sell or otherwise dispose of, or grant any option with respect to, any of the Collateral (other than pursuant to the Master Agreement) or (3) enter into a consent to any agreement pursuant to which any person other than the Collateral Agent has or will have control (within the meaning of Section 8-106 of the UCC) in respect of any Collateral, including, without limitation, the Securities Account and the financial assets and other property held in the Securities Account.

          Section 7. Record Ownership of Pledged Securities. The Collateral Agent may at any time or from time to time, in its sole discretion, upon the occurrence and during the continuation of a Potential Event of Default or an Event of Default, cause any or all of the Pledged Securities (or security entitlements in respect thereof) to be registered, or held through a securities intermediary, in the name of the Pledgor or its nominee to be transferred of record into, or held through a securities intermediary in, the name of the Collateral Agent or its nominee. The Pledgor shall promptly give to the Collateral Agent copies of any notices or other communications received by the Pledgor with respect to Pledged Securities (or security entitlements in respect thereof ) registered, or held through a securities

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intermediary, in the name of the Pledgor or its nominee and the Collateral Agent shall promptly give to the Pledgor copies of any notices and communications received by it with respect to Pledged Securities (or security entitlements in respect thereof) registered, or held through a securities intermediary, in the name of the Collateral Agent or its nominee.

          Section 8. Voting Rights and Dividends. (a) The Collateral Agent shall have the right to receive and retain as Collateral hereunder all Proceeds other than ordinary cash dividends or interest (such ordinary cash dividends or interest, "Dividend Proceeds") of the Collateral and, upon the occurrence and during the continuance of a Potential Event of Default or an Event of Default, all Proceeds of the Collateral including Dividend Proceeds and the Pledgor shall take all such action as the Collateral Agent shall deem necessary or appropriate to give effect to such right. All such Proceeds, including, without limitation, all dividends and other payments and distributions that are received by the Pledgor shall be received in trust for the benefit of the Secured Parties and, if the Collateral Agent so directs (but only, in the case of Dividend Proceeds, upon the occurrence and during the continuance of a Potential Event of Default or Event of Default), shall be segregated from other funds of the Pledgor and shall, forthwith upon demand by the Collateral Agent (but only, in the case of Dividend Proceeds, during the continuance of a Potential Event of Default or Event of Default), be paid over to the Collateral Agent as Collateral in the same form as received (with any necessary endorsement). After all Potential Events of Default and Events of Default have been cured, the Collateral Agent's right to retain Dividend Proceeds under this Section 8(a) shall cease and the Collateral Agent shall pay over to the Pledgor any such Collateral consisting of Dividend Proceeds retained by it during the continuance of a Potential Event of Default or Event of Default.

          (b) (i)          Unless a Potential Event of Default or an Event of Default shall have occurred and be continuing, the Pledgor shall have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to the Pledged Securities (or security entitlements in respect thereof), and the Collateral Agent shall, upon receiving a written request from the Pledgor accompanied by a certificate of the Pledgor (or if Pledgor is a Company, an Authorized Officer of the Pledgor) stating that no Potential Event of Default or Event of Default has occurred and is continuing, deliver to the Pledgor or as specified in such request such proxies, powers of attorney, consents, ratifications and waivers in respect of any of the Pledged Securities (or security entitlements in respect thereof ) that are registered, or held through a securities intermediary, in the name of the Collateral Agent or its nominee as shall be specified in such request and be in form and substance satisfactory to the Collateral Agent.

          (ii)          If a Potential Event of Default or an Event of Default shall have occurred and be continuing, the Collateral Agent shall have the right, to the extent permitted by law, and the Pledgor shall take all such action as may be necessary or appropriate to give effect to such right, to vote and to give consents, ratifications and waivers, and to take any other action with respect to any or all of the Pledged Securities (or security entitlements in respect thereof ) with the same force and effect as if the Collateral Agent were the absolute and sole owner thereof.

          Section 9. General Authority. The Pledgor hereby irrevocably appoints the Collateral Agent its true and lawful attorney, with full power of substitution, in the name of the Pledgor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties, but at the expense of the Pledgor, to the extent permitted by law, to exercise, at any time and from time to time while an Event of Default has occurred and is continuing, all or any of the following powers with respect to all or any of the Collateral:

          (a)          to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof,

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          (b)          to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto,

          (c)          to sell, transfer, assign, exercise rights of election pertaining thereto (including without limitation the exercise of any Collar or option included in the Collateral) or otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if the Collateral Agent were the absolute owner thereof (including, without limitation, the giving of instructions and entitlement orders in respect thereof), and

          (d)          to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; provided that the Collateral Agent shall give the Pledgor not less than one day's prior written notice of the time and place of any sale or other intended disposition of any of the Collateral, except any Collateral that threatens to decline speedily in value, including, without limitation, equity securities, or is of a type customarily sold on a recognized market. The Collateral Agent and the Pledgor agree that such notice constitutes "reasonable notification" within the meaning of Section 9-611(b) of the UCC. The power of attorney granted pursuant to this Section 9 is coupled with an interest and shall (i) survive and not be affected by the subsequent death, incapacity or disability of the Pledgor granting such power of attorney and (ii) ex tend to the Pledgor's successors, assigns and legal representatives.

          Section 10. No Performance Required of the Secured Parties. The Pledgor will remain liable to perform all of its obligations under the Transactions and any of the Collateral. None of the Secured Parties will have any obligation under the Transactions or any of the Collateral by reason of this Agreement.

          Section 11. No Exercise or Transfer of Contract Rights. The Pledgor agrees that, notwithstanding any provision of the Master Agreement (or any other provision or agreement) to the contrary, so long as any Collar Loan Obligations are outstanding, it shall not exercise any of the Pledgor Contract Rights (other than on the Expiration Date of the relevant Collars) or transfer or assign any of the Pledgor Contract Rights, except with the prior written consent of the Lender.

          Section 12. Defense of Title. (a) The Pledgor shall warrant and defend its title to the Collateral, subject to the rights of the Secured Parties, against the claims and demands of all persons.

          (b)          The Collateral Agent may elect, but without an obligation to do so, to discharge any lien, security interest or other encumbrance of any kind of any third party on any of the Collateral.

          Section 13. Payment to the Collateral Agent. Notwithstanding any provision in the Master Agreement to the contrary, the Pledgor directs the Collars Office, and the Collars Office agrees, until the Collar Loan Obligations or other Obligations (as defined by the Credit Terms) have been paid in full, to pay all amounts payable to the Pledgor pursuant to the Collars (without reduction or offset by amounts that may be payable to the Collars Office), directly to the Collateral Agent and the Collateral Agent agrees to retain such amounts as Collateral for the benefit of the Lender without exercising any offset, counterclaim, recoupment or other similar right.

          Section 14. Further Assurances; Covenants. (a) The Pledgor agrees that it shall, at its expense and in such manner and form as the Collateral Agent may require, execute, deliver, file and record any financing statement, specific assignment or other paper and take any other action that may be necessary or desirable, or that the Collateral Agent may request, in order to create, preserve, perfect, confirm or validate any Security Interest or to enable the Collateral Agent to exercise and enforce its rights on behalf of the Secured Parties hereunder with respect to any of the Collateral. To the extent permitted by applicable law, the Pledgor hereby authorizes the Collateral Agent to execute and file, in the name of the Pledgor or otherwise, financing statements or continuation statements (which may be carbon,

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photographic, photostatic or other reproductions of this Agreement or of a financing statement relating to this Agreement) that the Collateral Agent, in its sole discretion, may deem necessary or appropriate to further perfect any of the Security Interests; and further, to execute and file in the name of the Pledgor or otherwise any other document (including, without limitation, any notice on Form 144 or any filing required pursuant to Sections 13 or 16 of the Securities Exchange Act of 1934, as amended) that the Collateral Agent, in its sole discretion, may deem necessary or appropriate in connection with the Collateral Agent's authority conferred by Section 9 hereof.

          (b) The Pledgor agrees that it shall not change its name, identity, Location or, if the Pledgor is a Company, its organizational structure, unless in either case (1) it shall have given the Collateral Agent not less than 30 days' prior notice thereof and (2) such change shall not cause any of the Security Interests to become unperfected or subject to any other lien, security interest or other encumbrance of any kind.

          Section 15. Remedies upon Event of Default. (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may, on behalf of the Secured Parties, exercise all the rights of a secured party under the Uniform Commercial Code (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, the Collateral Agent may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law,

          (1)          if any Secured Obligations consist of obligations to deliver Pledged Securities (or security entitlements in respect thereof), deliver all Collateral consisting of Pledged Securities (or security entitlements in respect thereof) (but not in excess of the number thereof deliverable under the Secured Obligations) to the applicable Secured Party on the date upon which such delivery of Pledged Securities (or security entitlements in respect thereof) is due (whether pursuant to the terms of such Secured Obligations, upon acceleration as provided with respect thereto or otherwise) or on any date thereafter, against receipt by the Collateral Agent, on behalf of the Secured Parties, of the cash amount, if any, required to be paid by such Secured Party in respect of such delivery, in settlement of the Pledgor's obligations to deliver Pledged Securities (or security entitlements in respect thereof) under such Secured Obligations, whereupon such Secured Party shall hold such Pledged Securities (or security entitlements in respect thereof) absolutely free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted under applicable law, hereby waives all rights of redemption, stay or appraisal that it has or may have under any law now existing or hereafter adopted; and

          (2)          if such delivery shall be insufficient to satisfy in full all of the obligations of the Pledgor under the Secured Obligations consisting of obligations to deliver Pledged Securities (or security entitlements in respect thereof) and, in any event, in respect of all Secured Obligations that do not consist of obligations to deliver Pledged Securities (or security entitlements in respect thereof), (A) apply the cash, if any, then held by it as Collateral as specified in Paragraph 13 hereof or otherwise and (B) if there shall be no such cash or if such cash shall be insufficient to pay in full all the Secured Obligations not satisfied by delivery of Pledged Securities (or security entitlements in respect thereof), sell the Collateral or any part thereof at public or private sale or at any broker's board or securities exchange, for cash, upon credit or for future delivery, and at such price or prices as the Collateral Agent (after conferring with the Lender and the Collars Office) may deem satisfactory or, in the case of the Pledgor Contract Rights, to the extent permitted under applicable law, exercise rights with respect thereto.

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          Any Secured Party may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type that is the subject of widely distributed standard price quotations, at any private sale). The Collateral Agent is authorized, in connection with any such sale,

          (A)          to restrict the prospective bidders on or purchasers of any of the Collateral constituting "securities" within the meaning of the Securities Act to a limited number of sophisticated investors who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or sale of any of such Collateral,

          (B)          to cause to be placed on certificates for any or all of the Pledged Securities or on any other securities pledged hereunder a legend to the effect that such security has not been registered under the Securities Act and may not be disposed of in violation of the provisions of said Act, and

          (C)          to impose such other limitations or conditions in connection with any such sale as the Collateral Agent deems necessary or advisable in order to comply with the Securities Act or any other law.

          The Pledgor covenants and agrees that it shall execute and deliver such documents and take such other action as the Collateral Agent (after conferring with the Lender and the Collars Office) deems necessary or advisable in order that any such sale may be made in compliance with law. Upon any such sale, the Collateral Agent shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the Collateral so sold absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of the Pledgor that may be waived, and the Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that the Pledgor has or may have under any law now existing or hereafter adopted. The notice (if any) of such sale shall (1) in case of a public sale, state the time and place fixed for su ch sale, (2) in case of a sale at a broker's board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, will first be offered for sale at such board or exchange, and (3) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix in the notice of such sale. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may determine. The Collateral Agent shall not be obligated to make any such sale pursuant to any such notice. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or pla ce to which the same may be so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the selling price is paid by the purchaser thereof, but the Collateral Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. The Collateral Agent, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction.

          (b)          An Event of Default under this Agreement will be deemed to be an Event of Default under the Credit Terms and an Event of Default under the Master Agreement. In such an event, the Collars Office may exercise any or all of the rights reserved to the Collars Office under the Master

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Agreement, including, but not limited to, all rights under Section 8 of the Master Agreement; provided, however, that if an Event of Default shall have occurred and be continuing under the Credit Terms, and upon notice to the Collars Office, the Lender may direct the Collars Office to exercise its rights under the Master Agreement and the Collars Office shall be bound by such direction. The parties agree that the Collateral Agent will apply the proceeds of any termination or acceleration under the Master Agreement or any sale of Collateral in accordance with the terms of Paragraph 16 hereof.

          (c)          Until the Collar Loan Obligations have been satisfied in full (as determined by the Lender), the Pledgor and the Collars Office shall not, without the written consent of the Lender, modify any of the terms of the Master Agreement relating to the Pledgor Contract Rights, or permit the early termination or acceleration of any Collar.

          Section 16. Application of Proceeds. Upon the occurrence and during the continuance of an Event of Default,

          (a)          the proceeds of any sale of, or other realization upon, all or any part of the Collateral, including any cash received and held by the Collateral Agent in respect of Collateral (other than Pledgor Contract Rights and any Collateral received as proceeds thereof or as substitution therefor) shall be applied by the Collateral Agent in the following order of priorities:

          first, to the payment of any expenses of such sale or other realization, including reasonable compensation to the Collateral Agent and counsel for each Secured Party, and all expenses, liabilities and advances incurred or made by any Secured Party in connection therewith, and any other unreimbursed expenses for which any Secured Party is to be reimbursed pursuant to the Credit Terms, the Master Agreement or Section 18 hereof;

          second, to the payment of all Secured Obligations owed to the Collars Office for which such Collateral is Required Collateral;

          third, to the payment of all Secured Obligations owed to the Lender for which such Collateral is Required Collateral;

          fourth, to the payment of (or if a future or contingent obligation, to cash collateralize) any other Secured Obligations; and

          fifth, to the payment to the Pledgor or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

          (b)          the proceeds of any sale of, or other realization upon, all or any part of the Collateral consisting of Pledgor Contract Rights shall be applied by the Collateral Agent in the following order of priorities:

          first, to the payment of any expenses of such sale or other realization, including reasonable compensation to the Collateral Agent and counsel for each Secured Party, and all expenses, liabilities and advances incurred or made by any Secured Party in connection therewith, and any other unreimbursed expenses for which any Secured Party is to be reimbursed pursuant to the Credit Terms, the Master Agreement or Section 18 hereof;

          second, to the payment of all Secured Obligations owed to the Lender;

          third, to the payment of all Secured Obligations owed to the Collars Office;

          fourth, to the payment of (or if a future or contingent obligation, to cash collateralize) any other Secured Obligations; and

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          fifth, to the payment to the Pledgor or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

          Section 17. Provision of Notice. The Pledgor agrees that, until all outstanding Collar Loans have been repaid in full, it will notify the Lender and the Collars Office immediately upon the occurrence of any of the following events:

          (a)          the Pledgor fails to fulfill or discharge any of its obligations or agreements under or relating to any of the Agreements;

          (b)          any representation made or repeated or deemed to have been made or repeated by the Pledgor under the Agreements is or becomes incorrect or misleading in any material respect;

          (c)          any event occurs that would cause any Collar Loans to become immediately payable without demand or notice to the Pledgor;

          (d)          the Security Interests fail at any time to constitute valid and perfected security interests in all of the Collateral securing all obligations purported to be secured thereby, subject to no prior or equal lien, security interest or other encumbrance of any kind and as to which the Collateral Agent will have control (as defined in Section 8-106 of the UCC); or

          (e)          any Potential Event of Default or Event of Default by the Pledgor occurs under the Agreements.

          Section 18. Expenses. (a) The Pledgor agrees that it shall forthwith upon demand pay to the Collateral Agent for the accounts of the respective Secured Parties:

          (i)          the amount of any taxes or other amounts that any Secured Party may have been required to pay by reason of the Security Interests or to free any of the Collateral from any lien, security interest or other encumbrance of any kind thereon, and

          (ii)          the amount of any and all out-of-pocket expenses, including the fees and disbursements of counsel and of any other experts, that any Secured Party may incur in connection with (A) the enforcement of this Agreement, including such expenses as are incurred to preserve the value of the Collateral and the validity, perfection, rank and value of any Security Interest, (B) the collection, sale or other disposition of any of the Collateral, (C) the exercise by the Collateral Agent or any Secured Party of any of the rights conferred upon it hereunder or (D) any Potential Event of Default or Event of Default.

          (b)          Any such amount not paid on demand shall bear interest (computed on the basis of the number of days elapsed over a period of 360 days) at a rate per annum equal to 30-day LIBOR plus 500 basis points.

          Section 19. Appointment of Collateral Agent. (a) The Lender and the Collars Office hereby irrevocably appoint and authorize the Collateral Agent to take such action on their behalf and to exercise such powers under this Agreement as are delegated to the Collateral Agent by the terms hereof, together with all such powers as are reasonably incidental thereto.

          (b)           The Secured Parties (other than the Collateral Agent) shall indemnify the Collateral Agent (to the extent not reimbursed by the Pledgor) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Collateral Agent's gross negligence or willful misconduct) that the Collateral Agent may suffer or incur in connection with any action taken or omitted by the Collateral Agent hereunder.

          (c)          So long as any Collar Loans are outstanding, the Collateral Agent shall follow the instructions of the Lender with respect to the Collateral. The Collateral Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any

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action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

          (d)          Neither the Collateral Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection with this Agreement with the consent or at the request of the Secured Parties (other than the Collateral Agent) or in the absence of its own gross negligence or willful misconduct. The Collateral Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.

          (e)          Any corporation or association into which the Collateral Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its agency business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall, subject to the prior written consent of the Secured Parties, be and become a successor Collateral Agent hereunder and vested with all of the title to the Collateral and all of the powers, discretions, immunities, privileges and other matters as was its predecessor without, except as provided above, the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

          (f)          Beyond the exercise of reasonable care in the custody thereof, the Collateral Agent shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent, bailee, clearing corporation or securities intermediary or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if the Collateral is accorded treatment substantially equal to that which it accords its own property, and shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any agent, bailee, clearing corporation or securities intermediary selected by the Collateral Agent in good faith ( or selected by an agent, bailee, clearing corporation or securities intermediary so selected by the Collateral Agent).

          Section 20. Termination and Release of Collateral.

          (a)          Upon the satisfaction in full of all Secured Obligations and the termination of any commitments of the Secured Parties under the Credit Terms, each Collar and this Agreement, the Security Interests shall terminate and all rights to the Collateral shall revert to the Pledgor, subject to the conditions of the Master Agreement.

          (b)          At any time and from time to time prior to such termination of the Security Interests, the Collateral Agent may, with the prior consent of the Collars Office and the Lender, release any of the Collateral or control thereof. Upon any such termination of the Security Interests or release of Collateral, the Secured Parties shall, at the expense of the Pledgor, execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence the termination of the Security Interests or the release of such Collateral or control, as the case may be.

          (c)          Upon execution of this Agreement, the Pledgor shall provide the Collateral Agent with written instructions for the delivery of Collateral that has been released from the Security Interests. These instructions may be modified from time to time by written notice. The Collateral Agent shall be entitled to rely on the latest such instructions received by the Collateral Agent.

16

<PAGE>

          (d)          At any time the Secured Parties release Collateral consisting of Pledged Securities in accordance with this Section 20 in respect of any Transaction, the Secured Parties may Deliver Equivalent Securities instead of the Pledged Securities.

          Section 21. Concerning the Collar Loans and the Lender. (a) Notwithstanding any other term or provision of this Agreement or the other Agreements to the contrary, the Collars Office hereby consents to the making of Collar Loans and the creation of the Security Interests only upon the satisfaction of each of the following terms and conditions and the Lender hereby agrees as follows:

                    (i)          the interest of the Lender in and to the Collateral (other than the Pledgor Contract Rights) shall, in all respects, be junior, subject and subordinate to the interest of the Collars Office in and to the Collateral as set forth herein;

                    (ii)          except as otherwise expressly provided herein, the Collars Office shall have no agency or other fiduciary relationship with, or responsibility to, the Lender and, without limiting the foregoing, shall not be obligated in any way to seek the consent of the Lender, consult with or notify the Lender, or act on behalf of the Lender in connection with the exercise by the Collars Office of any rights granted to it by Pledgor under the Master Agreement or which the Collars Office may have under the UCC or other applicable law; and

          (b)          The Lender and the Pledgor each represent, warranty and agree that:

                    (i)          each Collar Loan complies and will comply in all respects with all applicable provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System; and

                    (ii)          the Lender shall have no right to exercise any of its remedies with respect to the Collateral hereunder or under the Credit Terms, any Note or any Loan Advice (or any related documentation) unless all Secured Obligations (other than those described in clause (d) of the definition of Secured Obligations) owed or owing to the Collars Office for which such Collateral is Required Collateral have been satisfied in full.

          Section 22. Notices. All notices and other communications provided for hereunder shall be given or made, as the case may be, in the manner contemplated by Section 13 of the Master Agreement or paragraph VII(d) of the Credit Terms, as the case may be, a copy of which the Collars Office shall deliver to the Lender and the Collateral Agent.

          Section 23. Waivers, Non-exclusive Remedies. No failure on the part of any Secured Party to exercise, and no delay in exercising and no course of dealing with respect to, any right under any of the Agreements shall operate as a waiver thereof; nor shall any single or partial exercise by any Secured Party of any right under any of the Agreements preclude any other or further exercise thereof or the exercise of any other right. The rights in the Agreements are cumulative and are not exclusive of any other remedies provided by law.

          Section 24. Obligations Unconditional; Discharge of Obligations, etc. (a) The obligations of the Pledgor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

                    (i)          any modification or amendment of or supplement to the Credit Terms, the Master Agreement or any Collar, Note or Loan Advice;

                    (ii)          the existence of any claim, set-off or other rights that the Pledgor may have at any time against any Secured Party or any other person, whether in connection herewith or with any related or unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; or

17

<PAGE>

                    (iii)          any other act or omission to act or delay of any kind by any Secured Party or any other person or any other circumstance whatsoever that might, but for the provisions of this paragraph 24, constitute a legal or equitable discharge of the Pledgor's obligations hereunder.

          (b)          The Pledgor's obligations hereunder shall remain in full force and effect until all outstanding Collar Loans and Collars shall have terminated and all Secured Obligations shall have been paid in full. If at any time any payment of any principal, interest or any other amount payable by the Pledgor under any Collar Loans or any payment or delivery by the Pledgor under any Collars is rescinded or must be otherwise restored or returned upon the insolvency or bankruptcy of the Pledgor or otherwise, the Pledgor's obligations hereunder with respect to such payment or delivery shall be reinstated as though such payment or delivery had been due but not made at such time.

          (c)          The Pledgor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein.

          Section 25. Severability. The provisions of this Agreement are severable. If any clause or provision is held to be invalid and unenforceable in whole or in part by a court of competent jurisdiction, then that invalidity or unenforceability will affect only that clause or provision, or part thereof, in such jurisdiction, and will not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision in any jurisdiction.

          Section 26. Inconsistency. In the event of any inconsistency between the provisions of the Credit Terms or the Master Agreement (and related documents), on the one hand, and the provisions of this Agreement on the other, this Agreement shall control.

          Section 27. Miscellaneous. This Agreement:

          (a)          cannot be altered, amended or modified in any way, except by a writing signed by all of the parties;

          (b)          will be binding upon the Pledgor and its successors and assigns, and will inure to the benefit of the Secured Parties and their nominees, successors and assigns; and

          (c)          may be executed in one or more counterparts, each of which when executed will be deemed to be an original, but all of which taken together will constitute one and the same document.

          Section 28. Governing Law; Suits; Jury Trial. UNLESS OTHERWISE AGREED BY THE PARTIES IN WRITING, ALL THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE PLEDGOR WITH RESPECT HERETO OR UNDER ANY OTHER DOCUMENT, AND WITH RESPECT TO ANY OBLIGATION OR OTHER TRANSACTION OR RELATIONSHIP (ALL SUCH DOCUMENTS, OBLIGATIONS, TRANSACTIONS AND RELATIONSHIPS BEING REFERRED TO HEREIN COLLECTIVELY AS THE "RELATIONSHIP") SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW DOCTRINE. The Pledgor hereby submits to the nonexclusive personal jurisdiction of, and agrees that any action or proceeding related in any way to the Relationship shall, if the Lender so chooses, be brought and enforced in, the Supreme Court of the State of New York for New York County or the United States District Court for the Southern District of New York, and hereby waives any objection to jurisdiction or venue in any such proceeding commenced in said courts. The Pledgor hereby waives personal service of any summons, complaint or other process and agrees that any process required to be served on the Pledgor for purposes of any such proceeding may be served on the Pledgor, with the same effect as personal service within the State of New York, by certified mail or by courier service providing evidence of delivery addressed to the Pledgor at the Pledgor's address for notices as provided in paragraph VII(d) of the Credit Terms or Section 13 of the Master Agreement and shall be deemed to have been served when received or delivered at such address. THE PLEDGOR AND THE LENDER EACH HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THE RELATIONSHIP, OR ANY OTHER CLAIM OR DISPUTE WITH RESPECT HERETO OR THERETO HOWSOEVER ARISING, TO WHICH THE PLEDGOR AND THE LENDER ARE PARTIES. If any provision hereof is invalid or unenforceable under applicable law, the other provisions hereof shall remain in full force and effect. All rights and remedies granted to the Lender hereunder, under any other document and under applicable law shall be cumulative and may be exercised by the Lender from time to time.

[signature page follows]

18

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

INDIVIDUALS:

Pledgor Signature                                                  Signature of Joint Owner, if Collar

                                                                               Agreement entered into jointly

Name:                                                                     Name of Joint Owner:

PARTNERSHIPS, CORPORATIONS
   OR TRUSTS:

Solitario Resources Corporation                   
Name and address of Pledgor
4251 Kipling St., Suite 390                          
Wheat Ridge, CO 80033                               
                                                                      

By:/s/ Christopher E. Herald                         
     Name:Christopher E. Herald
     Title:CEO

Colorado                                                        

Jurisdiction of Incorporation or Organization

UBS AG, London Branch,
  as Collars Office

By: /s/ Hina Mehta
       Name:Hina Mehta
       Title:Director and Counsel, Region Americas
                Legal Fixed Income Section

By:  /s/ Cynthia A. Curran
        Name: Cynthia A. Curran
       Title:Director, Region Americas Legal Equity
                Derivatives & Structured Products

19

<PAGE>

UBS AG, Stamford Branch,
  as Collateral Agent

By:  /s/ Louis DeLuca                                  

Name: Louis DeLuca
       Title: Associate Director Collateral Management

By:  Alan Chapman                                             

Name: Alan Chapman
       Title: Associate Director

The undersigned agrees to act as Securities Intermediary
in accordance with the Agreement:

UBS Financial Services Inc. 

[name of Securities Intermediary]

By:  /s/David Frieden                                           

Name: David Frieden
       Title:Regional Supervisory Officer

By:                                                                        

Name:
       Title:

20

<PAGE>

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SEC RULE 13a-14(a)/15D-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher E. Herald certify that:

1.          I have reviewed this quarterly report on Form 10-Q of Solitario Resources Corporation for the period ended September 30, 2007;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

               a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

               b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

               c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.          The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

               (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

               (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2007
/s/ Christopher E. Herald
Christopher E. Herald
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SEC RULE 13a-14(a)/15D-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James R. Maronick, certify that:

1.          I have reviewed this quarterly report on Form 10-Q of Solitario Resources Corporation for the period ended September 30, 2007;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

               a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

               b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

               c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.          The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

               (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

               (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2007
s/ James R. Maronick
James R. Maronick
Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Solitario Resources Corporation (the "Company") on Form 10-Q for the period ended September 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher E. Herald, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

(2) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2007
By: /s/ Christopher E. Herald
Christopher E. Herald
President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Solitario Resources Corporation (the "Company") on Form 10-Q for the period ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James R. Maronick, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

(2) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2007
By: /s/ James R. Maronick
James R. Maronick
Chief Financial Officer

EX-10.3

Exhibit 10.3

677 Washington Boulevard
Stamford, CT 06901
Phone: (203) 719-3000

For confirmation queries contact
Timothy Clary (203) 719 4180
Steven Chan (203) 719 4524

CONFIRMATION

Solitario Resources Corporation

Dear Solitario Resources Corporation,

We have acted as agent for you and for UBS AG, London Branch, in connection with the transaction(s) set forth in the underlying confirmations enclosed herewith. We have charged UBS AG, London Branch, a commission for our services. Details of the amount of such commission will be furnished to you upon your written request.

Please check the underlying confirmations carefully and immediately upon receipt so that errors and discrepancies can be promptly identified and rectified. If the enclosed confirmations correctly set forth the terms of the transaction(s), please execute each confirmation and promptly return by facsimile.

Please return to Fax no. (203) 719-0274.
Attn. Confirmations

***Please return entire confirmation***

If there are any errors or discrepancies, these should be communicated immediately to us and in any event no later than three business days after receipt of this letter.

Very Truly Yours,

UBS Securities LLC

/s/William Boss	/s/James Poucher
William Boss	James Poucher

UBS AG, LONDON BRANCH

100 Liverpool Street

London EC2M 2RH

Documentation: Tel: +44 207 568 0673

Fax: +44 207 568 9895/ 9896

Date:                                                17 October 2007

To:                                                  Solitario Resources Corporation ("Party B")
                                        4251 Kipling Street Suite 390
                                        Wheat Ridge, CO 80033

From:                                             UBS AG London Branch ("Party A"),
as Transacting Branch

Re:                                                  Single Pay Collar Confirmation
UBS Reference Number 1410057/8

The purpose of this writing (the "Confirmation") is to confirm the terms and conditions of the Transaction entered into between us on the Trade Date specified below (the "Transaction").

This Confirmation constitutes a "Confirmation" under, and supplements, forms part of, and is subject to, the Master Agreement for Equity Options (dated as of the date specified below), as may be amended and supplemented from time to time, between you and UBS AG (the "Master Agreement"). All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below. This Confirmation is further subject to the Pledge and Security (dated as of the date specified below) among you, the Collars Office (as defined in the Pledge Agreement), UBS AG London Branch, and certain others (the "Pledge Agreement"). Capitalized terms used but not defined herein shall have the meanings they are given in the Master Agreement or the Pledge Agreement, as the context requires, if defined therein.

Master Agreement Date:	05 October 2007
Pledge Agreement Date:	05 October 2007
Trade Date:	12 October 2007
General Terms
Underlying Shares:	Common Stock of Kinross Gold Corporation (Ticker: KGC)
Number of Underlying Shares:	400,000.00
Upper Threshold Price:	USD 21.7710
Lower Threshold Price:	USD 13.8099
Premium:	Zero
Premium Payment Date:	Not Applicable
Exercise Style:	European
Exchange:	The primary national securities market or automated quotation system on which the Underlying Shares are admitted for trading or quoted.
Related Exchange:	The primary on which options or futures on the Shares are traded.
Expiration Date:	14 April 2009, or, if that day is not an Exchange Business Day, the first following day that is an Exchange Business Day.
Expiration Time:	At the close of trading on the Exchange (without regard to any extended or after-hours trading sessions)
Automatic Exercise:	Applicable
Valuation Date:	The Expiration Date
Valuation Time:	The Expiration Time
Calculation Agent:	Party A, whose calculations shall be binding absent manifest error.
Clearance System :	The Depository Trust Company, or any successor to or transferee of such clearance system.
Settlement Terms
Settlement:	The Transaction will be Cash Settled; provided, however, that Party B may elect to require that the Transaction be Physically Settled, rather than Cash Settled, by giving notice to Party A no later than ten Exchange Business Days prior to the Expiration Date.
Physical Settlement:	If the Transaction is to be Physically Settled, on the Settlement Date, payment and delivery shall be made through the Clearance System, as specified in the Master Agreement.
Settlement Date:	Three Exchange Business Days after the Valuation Date.
Cash Settlement:	If Cash Settlement is applicable, then on the Settlement Date: (i)     if the Reference Price is less than the Lower Threshold Price, the Cash Settlement Amount shall be payable by Party A to Party B; (ii)     if the Reference Price is greater than the Upper Threshold Price, the Cash Settlement Amount shall be payable by Party B to Party A; and (iii)     if the Reference Price is (a) equal to or greater than the Lower Threshold Price and (b) equal to or less than the Upper Threshold Price, then no Cash Settlement Amount shall be payable by either party.
Reference Price:	(i) The average of the VWAP Prices on each averaging date as determined by the Calculation Agent.
VWAP Price:	Mean, for any day, the volume-weighted average per share price of Common Stock as listed on Bloomberg Page AQR for the hours 9:30 a.m. to 4:00 p.m. New York time.
Averaging Date:	14 April 2009
Cash Settlement Amount:	(i)     if the Reference Price is less than the Lower Threshold Price, an amount in USD equal to the product of (i) the excess of the Lower Threshold Price over the Reference Price and (ii) the Number of Underlying Shares; and (ii)     if the Reference Price is greater than the Upper Threshold Price, an amount in USD equal to the product of (i) the excess of the Reference Price over the Upper Threshold Price and (ii) the Number of Underlying Shares.
Physical Settlement:	If Physical Settlement is applicable, on the Settlement Date, (i)     if the Reference Price is greater than the Upper Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Upper Threshold Price and (ii) the Number of Underlying Shares; (ii)     if the Reference Price is less than the Lower Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Lower Threshold Price and (ii) the Number of Underlying Shares; (iii)      if the Reference Price is (a) equal to or less than the Upper Threshold Price and (b) equal to or greater than the Lower Threshold Price, then no payment or delivery shall occur.
Telephone or facsimile number for purposes of giving notice:
Party A:	Telephone:          203-719-3300 Fax:                     203-719-3333
Party B:	Telephone:          (Please Advise) Fax:
Security Provisions
Security Agreement:	The Transaction shall be subject to the Pledge and Security Agreement, pursuant to which Party B is required to Deliver the Required Collateral and pursuant to which UBS AG, Stamford Branch acts as Collateral Agent.
Required Collateral:	400,000.00 Underlying Shares
Account Details
Account for payments to Party A:	A/C NO 101-WA-140007-000 With UBS AG, in Stamford ABA NO 026-007-993
Account for payments to Party B:	(Please advise)
Dividend and Adjustments
Extraordinary dividends:	If an extraordinary dividend is declared, the Calculation Agent will decrease the Upper Threshold Price and the Lower Threshold Price by an amount equal to the amount of such extraordinary dividend paid, or to be paid per Share. All other events requiring an adjustment in the terms of the Transaction shall be governed by the adjustment provisions of the Master Agreement.
Special Provisions
Hedge Transaction:	In connection with establishing its hedge with respect to the Transaction, Party A may execute one or more transactions with UBS Securities LLC
Related Compensation:	In connection with the Transaction, Party A has paid a commission to UBS Financial Services
Additional Termination Events:	The occurrence of either a Hedging Disruption Event or an Excess Borrow Cost Event shall constitute an Event of Default with respect to the portion of the Transaction affected by the Hedging Disruption Event or the Excess Borrow Cost Event, and the amount(s) payable, if any, by one or the other party will be determined by the Calculation Agent as if Counterparty is the Defaulting Party.
	WHERE:           "Excess Borrow Cost Event" shall mean events or circumstances occurring any time after the Trade Date which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, maintain a borrow of Shares (up to a number equal to the Number of Shares) on terms that require Party A to pay borrow costs in an amount less than or equal to the Fixed Borrow Cost.            "Excess Borrow Costs" for any day equals the amount per Share by which UBS's direct or indirect average cost of borrowing the Shares for such day exceeds the Fixed Borrow Cost.           "Hedging Disruption Event" shall mean events or circumstances occurring any time following the Trade Date hereof, which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, successfully borrow the Shares.           "Fixed Borrow Cost" means 50 basis points.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

Yours sincerely,

UBS AG, LONDON BRANCH

/s/ Reed Raffel                                                  /s/Tracy Johnson

Name: Reed Raffel                                                             Name: Tracy Johnson
Title Associate Director                                                  Title:Associate Director

Accepted and agreed as of the
17^th day of October 2007, year

Solitario Resources Corporation

By:/s/James R. Maronick

Name: James R. Maronick
Title: CFO

TC

677 Washington Boulevard
Stamford, CT 06901
Phone: (203) 719-3000

For confirmation queries contact
Timothy Clary (203) 719 4180
Steven Chan (203) 719 4524

CONFIRMATION

Solitario Resources Corporation

Dear Solitario Resources Corporation,

We have acted as agent for you and for UBS AG, London Branch, in connection with the transaction(s) set forth in the underlying confirmations enclosed herewith. We have charged UBS AG, London Branch, a commission for our services. Details of the amount of such commission will be furnished to you upon your written request.

Please check the underlying confirmations carefully and immediately upon receipt so that errors and discrepancies can be promptly identified and rectified. If the enclosed confirmations correctly set forth the terms of the transaction(s), please execute each confirmation and promptly return by facsimile.

Please return to Fax no. (203) 719-0274.
Attn. Confirmations

***Please return entire confirmation***

If there are any errors or discrepancies, these should be communicated immediately to us and in any event no later than three business days after receipt of this letter.

Very Truly Yours,

UBS Securities LLC

/s/William Boss	/s/James Poucher
William Boss	James Poucher

UBS AG, LONDON BRANCH

100 Liverpool Street

London EC2M 2RH

Documentation: Tel: +44 207 568 0673

Fax: +44 207 568 9895/ 9896

Date:                                                17 October 2007

To:                                                  Solitario Resources Corporation ("Party B")
                                        4251 Kipling Street Suite 390
                                        Wheat Ridge, CO 80033

From:                                             UBS AG London Branch ("Party A"),
as Transacting Branch

Re:                                                  Single Pay Collar Confirmation
UBS Reference Number 1410057/8

The purpose of this writing (the "Confirmation") is to confirm the terms and conditions of the Transaction entered into between us on the Trade Date specified below (the "Transaction").

This Confirmation constitutes a "Confirmation" under, and supplements, forms part of, and is subject to, the Master Agreement for Equity Options (dated as of the date specified below), as may be amended and supplemented from time to time, between you and UBS AG (the "Master Agreement"). All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below. This Confirmation is further subject to the Pledge and Security (dated as of the date specified below) among you, the Collars Office (as defined in the Pledge Agreement), UBS AG London Branch, and certain others (the "Pledge Agreement"). Capitalized terms used but not defined herein shall have the meanings they are given in the Master Agreement or the Pledge Agreement, as the context requires, if defined therein.

Master Agreement Date:	05 October 2007
Pledge Agreement Date:	05 October 2007
Trade Date:	12 October 2007
General Terms
Underlying Shares:	Common Stock of Kinross Gold Corporation (Ticker: KGC)
Number of Underlying Shares:	400,000.00
Upper Threshold Price:	USD 24.4631
Lower Threshold Price:	USD 13.8099
Premium:	Zero
Premium Payment Date:	Not Applicable
Exercise Style:	European
Exchange:	The primary national securities market or automated quotation system on which the Underlying Shares are admitted for trading or quoted.
Related Exchange:	The primary on which options or futures on the Shares are traded.
Expiration Date:	13 April 2010, or, if that day is not an Exchange Business Day, the first following day that is an Exchange Business Day.
Expiration Time:	At the close of trading on the Exchange (without regard to any extended or after-hours trading sessions)
Automatic Exercise:	Applicable
Valuation Date:	The Expiration Date
Valuation Time:	The Expiration Time
Calculation Agent:	Party A, whose calculations shall be binding absent manifest error.
Clearance System :	The Depository Trust Company, or any successor to or transferee of such clearance system.
Settlement Terms
Settlement:	The Transaction will be Cash Settled; provided, however, that Party B may elect to require that the Transaction be Physically Settled, rather than Cash Settled, by giving notice to Party A no later than ten Exchange Business Days prior to the Expiration Date.
Physical Settlement:	If the Transaction is to be Physically Settled, on the Settlement Date, payment and delivery shall be made through the Clearance System, as specified in the Master Agreement.
Settlement Date:	Three Exchange Business Days after the Valuation Date.
Cash Settlement:	If Cash Settlement is applicable, then on the Settlement Date: (i)     if the Reference Price is less than the Lower Threshold Price, the Cash Settlement Amount shall be payable by Party A to Party B; (ii)     if the Reference Price is greater than the Upper Threshold Price, the Cash Settlement Amount shall be payable by Party B to Party A; and (iii)     if the Reference Price is (a) equal to or greater than the Lower Threshold Price and (b) equal to or less than the Upper Threshold Price, then no Cash Settlement Amount shall be payable by either party.
Reference Price:	(i) The average of the VWAP Prices on each averaging date as determined by the Calculation Agent.
VWAP Price:	Mean, for any day, the volume-weighted average per share price of Common Stock as listed on Bloomberg Page AQR for the hours 9:30 a.m. to 4:00 p.m. New York time.
Averaging Date:	13 April 2010
Cash Settlement Amount:	(i)     if the Reference Price is less than the Lower Threshold Price, an amount in USD equal to the product of (i) the excess of the Lower Threshold Price over the Reference Price and (ii) the Number of Underlying Shares; and (ii)     if the Reference Price is greater than the Upper Threshold Price, an amount in USD equal to the product of (i) the excess of the Reference Price over the Upper Threshold Price and (ii) the Number of Underlying Shares.
Physical Settlement:	If Physical Settlement is applicable, on the Settlement Date, (i)     if the Reference Price is greater than the Upper Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Upper Threshold Price and (ii) the Number of Underlying Shares; (ii)     if the Reference Price is less than the Lower Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Lower Threshold Price and (ii) the Number of Underlying Shares; (iii)      if the Reference Price is (a) equal to or less than the Upper Threshold Price and (b) equal to or greater than the Lower Threshold Price, then no payment or delivery shall occur.
Telephone or facsimile number for purposes of giving notice:
Party A:	Telephone:          203-719-3300 Fax:                     203-719-3333
Party B:	Telephone:          (Please Advise) Fax:
Security Provisions
Security Agreement:	The Transaction shall be subject to the Pledge and Security Agreement, pursuant to which Party B is required to Deliver the Required Collateral and pursuant to which UBS AG, Stamford Branch acts as Collateral Agent.
Required Collateral:	400,000.00 Underlying Shares
Account Details
Account for payments to Party A:	A/C NO 101-WA-140007-000 With UBS AG, in Stamford ABA NO 026-007-993
Account for payments to Party B:	(Please advise)
Dividend and Adjustments
Extraordinary dividends:	If an extraordinary dividend is declared, the Calculation Agent will decrease the Upper Threshold Price and the Lower Threshold Price by an amount equal to the amount of such extraordinary dividend paid, or to be paid per Share. All other events requiring an adjustment in the terms of the Transaction shall be governed by the adjustment provisions of the Master Agreement.
Special Provisions
Hedge Transaction:	In connection with establishing its hedge with respect to the Transaction, Party A may execute one or more transactions with UBS Securities LLC
Related Compensation:	In connection with the Transaction, Party A has paid a commission to UBS Financial Services
Additional Termination Events:	The occurrence of either a Hedging Disruption Event or an Excess Borrow Cost Event shall constitute an Event of Default with respect to the portion of the Transaction affected by the Hedging Disruption Event or the Excess Borrow Cost Event, and the amount(s) payable, if any, by one or the other party will be determined by the Calculation Agent as if Counterparty is the Defaulting Party.
	WHERE:           "Excess Borrow Cost Event" shall mean events or circumstances occurring any time after the Trade Date which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, maintain a borrow of Shares (up to a number equal to the Number of Shares) on terms that require Party A to pay borrow costs in an amount less than or equal to the Fixed Borrow Cost.            "Excess Borrow Costs" for any day equals the amount per Share by which UBS's direct or indirect average cost of borrowing the Shares for such day exceeds the Fixed Borrow Cost.           "Hedging Disruption Event" shall mean events or circumstances occurring any time following the Trade Date hereof, which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, successfully borrow the Shares.           "Fixed Borrow Cost" means 50 basis points.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

Yours sincerely,

UBS AG, LONDON BRANCH

/s/ Reed Raffel                                                  /s/Tracy Johnson

Name: Reed Raffel                                                             Name: Tracy Johnson
Title Associate Director                                                  Title:Associate Director

Accepted and agreed as of the
17^th day of October 2007, year

Solitario Resources Corporation

By:/s/James R. Maronick

Name: James R. Maronick
Title: CFO

TC

677 Washington Boulevard
Stamford, CT 06901
Phone: (203) 719-3000

For confirmation queries contact
Timothy Clary (203) 719 4180
Steven Chan (203) 719 4524

CONFIRMATION

Solitario Resources Corporation

Dear Solitario Resources Corporation,

We have acted as agent for you and for UBS AG, London Branch, in connection with the transaction(s) set forth in the underlying confirmations enclosed herewith. We have charged UBS AG, London Branch, a commission for our services. Details of the amount of such commission will be furnished to you upon your written request.

Please check the underlying confirmations carefully and immediately upon receipt so that errors and discrepancies can be promptly identified and rectified. If the enclosed confirmations correctly set forth the terms of the transaction(s), please execute each confirmation and promptly return by facsimile.

Please return to Fax no. (203) 719-0274.
Attn. Confirmations

***Please return entire confirmation***

If there are any errors or discrepancies, these should be communicated immediately to us and in any event no later than three business days after receipt of this letter.

Very Truly Yours,

UBS Securities LLC

/s/William Boss	/s/James Poucher
William Boss	James Poucher

IMG SRC="ubs.jpg">

UBS AG, LONDON BRANCH

100 Liverpool Street

London EC2M 2RH

Documentation: Tel: +44 207 568 0673

Fax: +44 207 568 9895/ 9896

Date:                                                17 October 2007

To:                                                  Solitario Resources Corporation ("Party B")
                                        4251 Kipling Street Suite 390
                                        Wheat Ridge, CO 80033

From:                                             UBS AG London Branch ("Party A"),
as Transacting Branch

Re:                                                  Single Pay Collar Confirmation
UBS Reference Number 1410057/8

The purpose of this writing (the "Confirmation") is to confirm the terms and conditions of the Transaction entered into between us on the Trade Date specified below (the "Transaction").

This Confirmation constitutes a "Confirmation" under, and supplements, forms part of, and is subject to, the Master Agreement for Equity Options (dated as of the date specified below), as may be amended and supplemented from time to time, between you and UBS AG (the "Master Agreement"). All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below. This Confirmation is further subject to the Pledge and Security (dated as of the date specified below) among you, the Collars Office (as defined in the Pledge Agreement), UBS AG London Branch, and certain others (the "Pledge Agreement"). Capitalized terms used but not defined herein shall have the meanings they are given in the Master Agreement or the Pledge Agreement, as the context requires, if defined therein.

Master Agreement Date:	05 October 2007
Pledge Agreement Date:	05 October 2007
Trade Date:	12 October 2007
General Terms
Underlying Shares:	Common Stock of Kinross Gold Corporation (Ticker: KGC)
Number of Underlying Shares:	100,000.00
Upper Threshold Price:	USD 27.6231
Lower Threshold Price:	USD 13.8099
Premium:	Zero
Premium Payment Date:	Not Applicable
Exercise Style:	European
Exchange:	The primary national securities market or automated quotation system on which the Underlying Shares are admitted for trading or quoted.
Related Exchange:	The primary on which options or futures on the Shares are traded.
Expiration Date:	12 April 2011 or, if that day is not an Exchange Business Day, the first following day that is an Exchange Business Day.
Expiration Time:	At the close of trading on the Exchange (without regard to any extended or after-hours trading sessions)
Automatic Exercise:	Applicable
Valuation Date:	The Expiration Date
Valuation Time:	The Expiration Time
Calculation Agent:	Party A, whose calculations shall be binding absent manifest error.
Clearance System :	The Depository Trust Company, or any successor to or transferee of such clearance system.
Settlement Terms
Settlement:	The Transaction will be Cash Settled; provided, however, that Party B may elect to require that the Transaction be Physically Settled, rather than Cash Settled, by giving notice to Party A no later than ten Exchange Business Days prior to the Expiration Date.
Physical Settlement:	If the Transaction is to be Physically Settled, on the Settlement Date, payment and delivery shall be made through the Clearance System, as specified in the Master Agreement.
Settlement Date:	Three Exchange Business Days after the Valuation Date.
Cash Settlement:	If Cash Settlement is applicable, then on the Settlement Date: (i)     if the Reference Price is less than the Lower Threshold Price, the Cash Settlement Amount shall be payable by Party A to Party B; (ii)     if the Reference Price is greater than the Upper Threshold Price, the Cash Settlement Amount shall be payable by Party B to Party A; and (iii)     if the Reference Price is (a) equal to or greater than the Lower Threshold Price and (b) equal to or less than the Upper Threshold Price, then no Cash Settlement Amount shall be payable by either party.
Reference Price:	(i) The average of the VWAP Prices on each averaging date as determined by the Calculation Agent.
VWAP Price:	Mean, for any day, the volume-weighted average per share price of Common Stock as listed on Bloomberg Page AQR for the hours 9:30 a.m. to 4:00 p.m. New York time.
Averaging Date:	12 April 2011
Cash Settlement Amount:	(i)     if the Reference Price is less than the Lower Threshold Price, an amount in USD equal to the product of (i) the excess of the Lower Threshold Price over the Reference Price and (ii) the Number of Underlying Shares; and (ii)     if the Reference Price is greater than the Upper Threshold Price, an amount in USD equal to the product of (i) the excess of the Reference Price over the Upper Threshold Price and (ii) the Number of Underlying Shares.
Physical Settlement:	If Physical Settlement is applicable, on the Settlement Date, (i)     if the Reference Price is greater than the Upper Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Upper Threshold Price and (ii) the Number of Underlying Shares; (ii)     if the Reference Price is less than the Lower Threshold Price, Party B shall deliver to Party A a number of Underlying Shares equal to the Number of Underlying Shares, against payment by Party A to Party B of an amount equal to the product of (i) the Lower Threshold Price and (ii) the Number of Underlying Shares; (iii)      if the Reference Price is (a) equal to or less than the Upper Threshold Price and (b) equal to or greater than the Lower Threshold Price, then no payment or delivery shall occur.
Telephone or facsimile number for purposes of giving notice:
Party A:	Telephone:          203-719-3300 Fax:                     203-719-3333
Party B:	Telephone:          (Please Advise) Fax:
Security Provisions
Security Agreement:	The Transaction shall be subject to the Pledge and Security Agreement, pursuant to which Party B is required to Deliver the Required Collateral and pursuant to which UBS AG, Stamford Branch acts as Collateral Agent.
Required Collateral:	100,000.00 Underlying Shares
Account Details
Account for payments to Party A:	A/C NO 101-WA-140007-000 With UBS AG, in Stamford ABA NO 026-007-993
Account for payments to Party B:	(Please advise)
Dividend and Adjustments
Extraordinary dividends:	If an extraordinary dividend is declared, the Calculation Agent will decrease the Upper Threshold Price and the Lower Threshold Price by an amount equal to the amount of such extraordinary dividend paid, or to be paid per Share. All other events requiring an adjustment in the terms of the Transaction shall be governed by the adjustment provisions of the Master Agreement.
Special Provisions
Hedge Transaction:	In connection with establishing its hedge with respect to the Transaction, Party A may execute one or more transactions with UBS Securities LLC
Related Compensation:	In connection with the Transaction, Party A has paid a commission to UBS Financial Services
Additional Termination Events:	The occurrence of either a Hedging Disruption Event or an Excess Borrow Cost Event shall constitute an Event of Default with respect to the portion of the Transaction affected by the Hedging Disruption Event or the Excess Borrow Cost Event, and the amount(s) payable, if any, by one or the other party will be determined by the Calculation Agent as if Counterparty is the Defaulting Party.
	WHERE:           "Excess Borrow Cost Event" shall mean events or circumstances occurring any time after the Trade Date which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, maintain a borrow of Shares (up to a number equal to the Number of Shares) on terms that require Party A to pay borrow costs in an amount less than or equal to the Fixed Borrow Cost.            "Excess Borrow Costs" for any day equals the amount per Share by which UBS's direct or indirect average cost of borrowing the Shares for such day exceeds the Fixed Borrow Cost.           "Hedging Disruption Event" shall mean events or circumstances occurring any time following the Trade Date hereof, which are beyond the control of Party A and that have resulted in Party A's inability to, after using commercially reasonable efforts, successfully borrow the Shares.           "Fixed Borrow Cost" means 50 basis points.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

Yours sincerely,

UBS AG, LONDON BRANCH

/s/ Reed Raffel                                                  /s/Tracy Johnson

Name: Reed Raffel                                                             Name: Tracy Johnson
Title Associate Director                                                  Title:Associate Director

Accepted and agreed as of the
17^th day of October 2007, year

Solitario Resources Corporation

By:/s/James R. Maronick

Name: James R. Maronick
Title: CFO

TC

EX-10.1

PARTNERSHIPS, CORPORATIONS OR TRUSTS:

Solitario Resources Corporation	/s/ Christopher E. Herald
Print name of Partnership, Corporation or Trust	Signature of individual signing on behalf of
	partnership, corporation or trust
Christopher E. Herald	CEO
Print name of individual signing on behalf of	Capacity of individual signing on behalf of
partnership, corporation or trust	partnership, corporation or trust
Address for notice (if different from principal	[Acknowledged by:
	[                 ], settler of (insert trust name)
	By:
Counterparty Specified Entities:	Name:][insert if client is a trust]
If Counterparty is a partnership, corporation or trust:
Jurisdiction of incorporation or formation:
Colorado
Name and address of registered agent:
CT Corporation
1675 Broadway, Suite 1200
Denver, CO 80202

Exhibit 10.1

MASTER AGREEMENT FOR EQUITY COLLARS

                                                                                                              UBS AG

Date: October 5, 2007

Name: Solitario Resources Corporation
           c/o Christopher E. Herald, CEO

Address: 4251 Kipling St., Suite 390
               Wheat Ridge, CO 80033

Dear Mr. Herald:

          In connection with transactions between you (the "Counterparty" (which term shall mean you acting jointly and severally if there is more than one of you)) and UBS AG ("UBS") in Collars on equity securities ("Collars"), we are pleased to offer you this Master Agreement for Equity Collars (this "Master Agreement"), dated as of the date shown above. UBS AG, London Branch (or if so stated on the relevant Confirmation, UBS AG, Zurich Branch) (in either case, the "Transacting Branch") will be your counterparty for all Collars. UBS Securities LLC (the "Agent"), will act as agent for both the Transacting Branch and for you in arranging and facilitating Collar transactions. At the same time you execute this Master Agreement with us, you will enter into a Pledge and Security Agreement with us and others (the "Security Agreement") and a related Representation Letter Regarding Underlying Shares (the "Representation Letter"). This Master Agreement, all Confirmations of Collars hereunder, the Representation Letter and the Security Agreement shall form a single agreement between us (collectively referred to as this "Agreement").

          1.          Transactions in Collars. Each Collar that you enter into with us, whether before or after the date of this Agreement, shall be governed by and form part of this Agreement.

          2.          Confirmation. Within 3 Business Days of entering into any Collar, we will deliver to you a written summary of the Collar transaction (the "Trade Summary"). Thereafter, we will confirm the economic and other terms of such Collar in a written Confirmation (the "Confirmation"). We may request that you fax or mail the Confirmation back to us with your signature indicating acceptance. In the event of a conflict between any provisions of this Master Agreement or any Trade Summary and any Confirmation, the Confirmation will prevail for purposes of the Collar to which that Confirmation relates.

          3.          Premium. The premium, if any, due in respect of each Collar (the "Premium") shall be paid by the party obligated to pay such Premium (the "Obligated Party") to the other party (the "Other Party") on the Premium Payment Date specified in the Confirmation for such Collar (or if such day is not a Business Day, the next Business Day). If the Obligated Party fails to pay the Premium on the required date, the Other Party may, as it chooses, (i) cancel the Collar by written notice to the Obligated Party and recover from the Obligated Party all costs and losses in respect of the canceled Collar (determined in the manner provided in Section 8 hereof) or (ii) charge interest on the unpaid amount at the Default Rate.

          4.          Exercise/Collar Style.

               4.1.          Each Collar entered into pursuant to this Master Agreement will be a "European" style Collar and shall be automatically exercised at the Expiration Time on the Expiration Date.

          5.          Settlement.

               5.1.     Settlement of an exercised Collar shall occur on the Settlement Date. On the Settlement Date each party shall deliver to the other party the cash (in same-day funds) or securities it is required to deliver under the terms of the Collar on a delivery versus payment basis. If a party reasonably doubts that the other party will make its delivery in time, such party may suspend its own delivery until the other party has given adequate assurances that it will deliver.

               5.2          If a Collar is stated to be "Cash Settled" in the Confirmation for that Collar, on the relevant Settlement Date, a settlement amount (the "Cash Settlement Amount") will be determined by the

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Calculation Agent in the following manner: (a) if, on the Valuation Date, the Reference Price is less than the Lower Threshold Price, UBS will pay to the Counterparty a Cash Settlement Amount in U.S. Dollars equal to the product of (x) the Number of Underlying Shares multiplied by (y) the excess of the Lower Threshold Price over the Reference Price, (b) if, on the Valuation Date, the Reference Price is greater than the Upper Threshold Price, the Counterparty will pay to UBS a Cash Settlement Amount in U.S. Dollars equal to the product of (x) the Number of Underlying Shares multiplied by (y) the excess of the Reference Price over the Upper Threshold Price and (c) if, on the Valuation Date, the Reference Price is neither greater than the Upper Threshold Price nor less than the Lower Threshold Price, then the Cash Settlement Amount shall be zero. Any such payment will be made on the relevant Settlement Date to the accounts specified in the related Confirmation.

              5.3.          If a Collar is stated to be "Physically Settled" in the Confirmation for that Collar, on the relevant Settlement Date, (a) if, on the Valuation Date, the Reference Price is greater than the Upper Threshold Price, (i) UBS will pay to the Counterparty a dollar amount equal to the product of (x) the number of Underlying Shares specified in the Confirmation to which the Collar exercise relates (as such number may be adjusted from time to time pursuant to Section 12 hereof or the terms of such Confirmation) and (y) the Upper Threshold Price specified in the relevant Confirmation and (ii) the Counterparty will deliver to UBS such number of Underlying Shares, and (b) if, on the Valuation Date, the Reference Price is less than the Lower Threshold Price, (i) Counteparty will deliver to UBS the number of Underlying Shares specified in the relevant Confirmat ion and (ii) UBS will pay to Counterparty a dollar amount equal to the product of (x) such number of Underlying Shares and (y) the Lower Threshold Price specified in the relevant Confirmation. Such payment and such delivery will be made on the relevant Settlement Date to the accounts specified in the related Confirmation and, if possible, on a delivery versus payment basis. Any stamp duty or similar tax or charge shall be borne by the party that would bear it in a corresponding regular way trade according to normal practice on the Exchange.

          6.          Assignment. Neither party may assign, resell, transfer, pledge, create a charge over or grant a security interest in this Agreement or in any Collar, except that we may transfer this Agreement and all outstanding Collars as a whole to any other branch or affiliate of UBS AG and you may grant (but only with the prior consent of UBS) a security interest in any Collar to secure your obligations under any loan made by another branch of UBS AG or a third party lender, if, in each case, as a result of such transfer or grant, as the case may be, (a) it does not become unlawful for either party to perform any obligation under this Agreement; (b) neither party is required to deduct or withhold any tax from any sum payable under this Agreement; (c) no Event of Default occurs in respect of either party; and (d) the representations in subparagraphs (a) thro ugh (h) of Paragraph 11.1, if made by the transferee branch or the affiliate, immediately after such transfer, would not be incorrect or misleading in any material respect.

          7.          Payments.

               7.1.          Except as otherwise provided herein, (a) all payments to be made under this Agreement shall be made on the due date therefor without set-off, deduction or counterclaim in U.S. Dollars (or such other currency as may be set forth in the relevant Confirmation) with respect to any payments required to be made in connection with such Collars in same-day freely transferable, cleared funds to (i) in the case of payments to UBS, such bank account as UBS shall have designated in writing, and (ii) in the case of payments to you, the account established at UBS in your name or the name of your nominee and (b) all deliveries of securities to be made under this Agreement shall be made on the due date to the accounts specified in the relevant Confirmation.

               7.2.          Notwithstanding Section 7.1, upon a termination of Collars pursuant to Paragraph 8.2 (which deals with Default) or Paragraph 9.2 (which deals with Illegality and certain other events), in addition to and not in limitation of any other right or remedy under applicable law, the Non-Defaulting or Non-Affected Party (in either case, "X") may without prior notice set off any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed or due by the Defaulting

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Party or Affected Party (in either case, "Y") to X or any Affiliate of X against any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed or due by X or any Affiliate of X to Y, and, for this purpose, may convert one currency into another at a market rate determined by X. If any sum or obligation is unascertained, X may in good faith estimate that sum or obligation and set off in respect of that estimate, subject to X or Y, as the case may be, accounting to the other party when such sum or obligation is ascertained.

          All payments are to be made without deduction or withholding for any tax whatsoever. If either party is compelled by law to deduct or withhold any tax from any sum payable under the terms of this Agreement, the sum payable shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the receiving party receives a net sum equal to the sum it would have received if no such deduction or withholding had been made; provided that, for the avoidance of doubt, a receiving party shall not be entitled to receive any additional payment as described above in respect of (i) any tax which is not a withholding tax and is imposed on its net profits or gains and (ii) any tax which is imposed as a result of any breach by the receiving party of its obligations under Section 11.8.

          If either party does not pay any sum payable under this Agreement when due, it shall pay to the other party on demand interest on the overdue sum, from the date such sum was due up to and including the date it is received by the other party, at the applicable Default Rate.

          8.          Default.

               8.1.          If one or more of the following events, as applicable, shall occur with respect to a party or any Specified Entity, such event shall constitute an event of default (an "Event of Default") with respect to such party (the party in default (or whose Specified Entity is in default) being hereafter referred to as the "Defaulting Party" and the party not in default as the "Non-Defaulting Party"):

(a)      such party fails to make any payment or delivery to the other party required in respect of any Collar within three Business Days, in respect of a payment, or three Exchange Business Days, in respect of a delivery, after the due date therefor;

(b)     such party fails to comply with any other obligation owed to the other party under this Agreement within five Business Days of the Non-Defaulting Party giving it notice requiring it to comply;

(c)     any representation or warranty of such party under this Agreement or any other agreement with or to the other party proves to have been false or misleading in any material respect when made or repeated or when deemed to be made or repeated;

(d)     such party or Specified Entity suffers any Specified Indebtedness in an aggregate amount greater than the Threshold Amount to become, or to become capable of being declared, due and payable prior to its stated maturity by reason of a default, event of default or other similar condition or event (however described) or if any such indebtedness shall not be paid when due (after allowing for any applicable grace period), or if any encumbrance granted by such party becomes enforceable; provided, however, that it shall not constitute an event of default hereunder if, as demonstrated to the reasonable satisfaction of the other party, if the failure to pay such indebtedness when due (i) is a failure to pay caused by an error or omission of an administrative or operational nature; (ii) funds were available to such party to enable it to make the relevant payment when due and (iii) such payment is made within three Business Days following receipt of written notice from an interested party of such failure to pay;

(e)     such party consolidates or amalgamates with or merges into or transfers all or substantially all its assets to another entity and at the time of such consolidation, amalgamation, merger or transfer the resulting, surviving or transferee entity fails to assume all the obligations of such party under this Agreement by operation of law or pursuant to an agreement satisfactory to the other party;

(f)     such party or Specified Entity (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger) or, if such party is a limited partnership, is terminated; (ii) becomes

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insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debt as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (v) has a resolution passed for its winding-up, official management or l iquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (vii) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (viii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (vii) (inclusive); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; < /P>

(g)          such party fails to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with the Security Agreement if such failure is continuing after any applicable grace period has elapsed; or

(h)     an event of default (however named) applicable to the Counterparty occurs and is continuing under any loan agreement, credit agreement, financing agreement, letter of credit reimbursement agreement or any other agreement pursuant to which UBS, or any branch or affiliate, has advanced funds, extended credit or provided financial accommodations to the Counterparty.

               8.2.          Upon notice to the Defaulting Party from the Non-Defaulting Party at any time following an Event of Default, the Non-Defaulting Party shall have the right to designate a day not earlier than the day such notice is effective as the date on which all, but not less than all, outstanding Collars shall be terminated and liquidated in the manner set forth below (the "Early Termination Date").

          If the Non-Defaulting Party designates an Early Termination Date, a settlement amount (the "Settlement Amount") due from each party, calculated in accordance with either (a) or (b) below at the Non-Defaulting Party's election, shall be determined by the Non-Defaulting Party and shall be payable by such party to the other party:

(a)     the sum of (i) with respect to each Collar, the current market premium, if any, that such party would receive to enter into an equivalent Collar, (ii) with respect to each Collar, any unpaid Premium due from such party and interest thereon as provided herein and (iii) any other amounts due and payable by such party to the other party hereunder, together with any interest thereon as may be provided herein (collectively, the "Unpaid Amounts"); or

(b)     the sum of the other party's total losses (or gains, in which case expressed as a negative number), costs and expenses (including without limitation any loss or cost incurred as a result of terminating, liquidating, obtaining or reestablishing any hedge or related trading position, but excluding expenses provided for in Section 8.5) incurred in covering its obligations with respect to all terminated Collars.

          The Settlement Amount so calculated which the Non-Defaulting Party owes to the Defaulting Party, if any, shall be netted against the Settlement Amount so calculated which the Defaulting Party owes to the Non-Defaulting Party, if any, to determine a single liquidated amount due from one party to the other.

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               8.3.          Any net amount payable pursuant to the provisions of Paragraph 8.2 above shall be paid on the Business Day next following the Early Termination Date. Any amounts owed but not paid when due under this Paragraph 8.3 shall bear interest at the Default Rate for the period from and including the day due to and excluding the day on which such amount is paid.

               8.4.          Without prejudice to the foregoing, so long as a party shall be in default in payment or performance to the other party under this Agreement, the other party may, at its election (but, in the case of any Collar securing another obligation of such party, only with the prior consent of the party secured thereby) and without penalty, suspend its obligation to perform under this Agreement.

               8.5.          The Defaulting Party shall pay to the Non-Defaulting Party all reasonable out-of-pocket expenses (including fees and disbursements of counsel and time charges of legal advisers who may be employees of the Non-Defaulting Party) incurred by the Non-Defaulting Party in connection with any enforcement and protection of its rights under this Agreement as a result of the occurrence of an Event of Default, including, but not limited to, costs of collection.

               8.6.          The parties agree that the amounts recoverable under this Paragraph 8 are a reasonable pre-estimate of loss and not a penalty. Such amounts are payable for the loss of bargain and the loss of protection against future risks and, except as otherwise provided in this Agreement, neither party will be entitled to recover any additional damages as a consequence of such losses.

               8.7.          You agree to promptly notify UBS of any occurrence or condition that constitutes an Event of Default or an event which with the giving of notice or the passage of time (or both) would become an Event of Default.

               8.8.          The Non-Defaulting Party's rights under this Paragraph 8 shall be in addition to, and not in limitation or exclusion of any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law or otherwise), including any rights it has under Paragraphs 7.1 and 7.2.

          9.          Taxation, Illegality and Other Events.

               9.1.          If (a) a party (the "Affected Party") (i) is required to pay additional amounts in respect of a Collar pursuant to Paragraph 8.3; or (ii) determines that its performance under an Collar has become unlawful in whole or in part as a result of compliance in good faith by the Affected Party with any law, rule, regulation, judgment, order or directive of any governmental, administrative, legislative or judicial authority, (b) a Termination Event occurs with respect to the Counterparty (in which case the Counterparty shall be the "Affected Party"), then in each such case, the Affected Party (or the Affected Party's personal representative) shall give notice thereof to the other party (the "Non-Affected Party") and the parties shall promptly negotiate in good faith for a period of 30 days after the giving of such notice (or such shorter period as the Affected Party may deem reasonable under the circumstances prevailing) with a view, in the case of an event described in subparagraph (a), to finding a satisfactory alternative method of payment or performance to avoid such payment of additional amounts or so that such illegality ceases to exist, and in the case of an event described in subparagraph (b), to agreeing on an alternative arrangement satisfactory to UBS.

               9.2.     If the parties fail to agree on a satisfactory alternative method of payment or performance or a satisfactory alternative arrangement within the period specified above, then either party may, by giving notice in writing to the other party, designate the date on which such notice is given as an Early Termination Date with respect to all outstanding Collars (or, in the case of an event described in Section 9.1(a), each Collar affected by such event (an "Affected Transaction")). The parties' damages, if any, in respect of such an Early Termination Date shall be determined in the manner set forth in subparagraphs (a) and (b) of Paragraph 8.2 (the Affected Party being deemed the Defaulting Party for such purpose), and the resulting aggregate payment obligations computed for each party shall be netted together to a single liquidated amount payable by one party to the other. Such amount, if any, shall be paid by the appropriate party on the Business Day following the cancellation.

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               9.3.          If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an event described in Paragraph 9.1(a)(ii) or (b) above, it will be treated as provided under Paragraph 9.1 and will not constitute an Event of Default.

          10.          Market Disruption. If there is a Market Disruption Event on any day that otherwise would have been the Valuation Date for a cash-settled Collar (the "Original Date"), then UBS will notify the Counterparty as soon as reasonably practicable, and the Valuation Date for that Collar shall be the first succeeding Exchange Business Day on which there is no Market Disruption Event, provided that if there is a Market Disruption Event on each of the five Exchange Business Days immediately following the Original Date, the fifth Exchange Business Day immediately following the Original Date shall be the Valuation Date, and UBS will determine the Reference Price on the basis of UBS's good faith estimate of the market value of the relevant security at the Valuation Time on such fifth Exchange Business Day.

          11.          Representations, Warranties and Agreements.

               11.1.          Each party hereby represents and warrants to and for the other party, which representations and warranties shall be deemed repeated on each Trade Date for a Collar, as follows:

(a)     if it is not a natural person, it is duly organized and validly existing under the laws of the place of its incorporation or formation;

(b)      if it is not a natural person, it has the power to execute and deliver this Agreement and to enter into transactions in Collars as contemplated hereby and to perform its obligations under this Agreement and any Collars and has taken all action necessary to authorize such execution and delivery and performance of such obligations, and if it is a natural person, it has legal capacity to make a contract, is not a minor and has not been adjudged incompetent;

(c)     the execution and delivery of this Agreement and entry into Collars by it and the performance of its obligations hereunder and thereunder do not and will not violate or conflict with (i) any law, rule or regulation applicable to it, (ii) any provisions of its constitutive documents, (iii) any corporate policy of the issuer of any Collar or any other rule or regulation of the issuer applicable to such party; (iv) any order or judgment of any court or other agent of government applicable to it or any of its assets or any agreement or contractual restriction binding on or affecting it or any of its assets, including without limitation any agreement between such party and (A) the issuer of the Underlying Shares, (B) any underwriter in respect of the Underlying Shares or (C) shareholders of the issuer of the Underlying Shares;

(d)     all authorizations of and exemptions, actions and approvals by, and all notices to or filings with, any governmental or other authority that are necessary to enable it to enter into and perform its obligations under this Agreement and any outstanding Collars have been obtained or made and are in full force and effect and all conditions of any such authorizations, exemptions, actions or approvals have been complied with as of the Trade Date of each Collar entered into pursuant to this Agreement;

(e)     this Agreement and each Collar entered into hereunder constitutes the legal, valid and binding obligation of such party enforceable against such party in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to the principle that the availability of equitable remedies is subject to the discretion of the court before which any proceeding for such remedies may be brought);

(f)     no event has occurred or circumstances arisen which constitutes, or with the giving of notice or the passage of time (or both) would become, an Event of Default (as defined hereunder or in the Security Agreement without regard to the application of Paragraph 9.3 herein) in respect of such party;

(g)     it is not required to deduct or withhold any taxes with respect to any payment which is or could be required to be made by it pursuant to this Agreement or any Collar;

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(h)     there is not pending or, to its knowledge, threatened against it any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator to draw into question, or that is likely to affect, the legality, validity or enforceability against it of this Agreement or any outstanding Collar or its ability to perform its obligations under this Agreement or any outstanding Collar; and

          (i)          all information that it has furnished to the other party in any document delivered in connection with this transaction is, as of the date of the information (and as of the date hereof unless otherwise specified), true, accurate and complete in every material respect.

In making the representation contained in clause (g) above, such party may rely on the accuracy of any representations made by the other party pursuant to and the satisfaction of the agreement contained in Section 11.8 of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 11.8 of this Agreement.

               11.2.          Each party represents and warrants to the other party, which representations and warranties shall be deemed repeated on each Trade Date for a Collar, that:

(a)     it is acting for its own account;

(b)     it has made its own independent decision to enter into this Agreement, including any Collar, and any related investment, hedging and trading decisions and has made the decision as to whether this Agreement, including any Collar, is appropriate and proper for it (including with respect to the suitability of any Collar and the competitiveness of the rates, prices or amounts and other terms of each Collar) based upon its own judgment and upon such advice from legal, regulatory, tax, business, financial, accounting or other advisors as it has deemed necessary;

(c)     it is not relying on any communication (written or oral) of the other party or of the Agent as investment advice or as a recommendation to enter into this Agreement, including any Collar, it being agreed that information and explanations related to the terms and conditions of this Agreement including any Collar shall not be considered investment advice or a recommendation to enter into this Agreement including any Collar;

(d)     it has not received from the other party or the Agent any assurance or guarantee as to the expected results of this Agreement including any Collar;

(e)     (it is capable of evaluating and understanding on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement, including any Collar;

(f)     it is capable of assuming, and assumes, the financial and other risks of this Agreement, including any Collar; and

(g)     it acknowledges that neither the other party nor the Agent is acting as a fiduciary or an advisor for it in respect of this Agreement, including any Collar.

               11.3.          At the time of each delivery, if any, of Underlying Shares pursuant to exercise of a Collar, all securities so delivered shall be in good deliverable form and the delivering party will be deemed to represent and warrant to the other party at and as of such time that:

(a)     it is the legal and beneficial owner of such Underlying Shares, free and clear of all liens, charges, equities, preemptive rights, security interests, encumbrances and of all resale restriction whatsoever; and

(b)     it has the right to transfer such Underlying Shares at that time on the terms of this Agreement and the relevant Confirmation.

               11.4.          Each party acknowledges that the Collars are securities that are subject to the Securities Act of 1933, as amended (the "1933 Act"). Each party makes the following representations, warranties and covenants, and such representations, warranties and covenants shall remain in full force and effect whenever such party shall enter into a Collar, exercise a Collar, or make any settlement relating to a Collar:

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(a)     it is entering into the Collar for its own account as principal, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Collar entered into hereunder;

(b)     it acknowledges its understanding that the offer and sale of any Collar is intended to be exempt from registration under the 1933 Act, by virtue of Section 4(2) of the 1933 Act. In furtherance thereof, it represents and warrants that (i) it has the financial ability to bear the economic risk of its investment, and (ii) it qualifies as an "accredited investor" as that term is defined in Regulation D under the 1933 Act;

(c)     it has been given the opportunity to ask questions of, and receive answers from, the other party concerning the terms and conditions of the Collar and has been given the opportunity to obtain such additional information necessary in order for it to evaluate the merits and risks of the Collar, to the extent the other party possesses such information or can acquire it without unreasonable effort or expense, and it has determined that the Collar is a suitable investment for it. It further represents and warrants that, each time it enters into a Collar hereunder, it will be able to bear a loss of its entire investment. It further understands and agrees that in circumstances where it holds a short position, its risk of loss could be unlimited;

(d)     it represents and warrants that it is not in possession of any material non-public information with respect to any security related to a Collar that, under the U.S. federal securities laws, it would have to disclose in advance to a party effecting a purchase or sale of such security;

(e)     it fully understands and agrees that it must bear the economic risk of the Collar for the entire time period set forth in the Confirmation; and it understands and agrees that disposition of the Collar is restricted under this Master Agreement, the 1933 Act and state securities laws. It understands that the Collar has not been, and is not intended to be, registered under the 1933 Act or under the securities laws of certain states and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless registered under the 1933 Act and under the applicable laws of such states, or an exemption from such registration is available. It understands and agrees that the other party is not obliged to register the Transaction on behalf of it or to assist it in complying with any exemption from registration under the 1933 Act or state securities laws. It further understands and agrees that the other party is not, and will not be, obliged under any circumsta nces to enter into or arrange an Collar for the purpose of offsetting a particular Collar, but may do so in its discretion; and

(f)     nothing contained herein shall require either party to enter any part or all of a Collar offered by the other party. Each party reserves the right to limit the number and amount of Collars that the other party, acting by itself or as part of a group, may maintain or acquire through or from it (or any Affiliate of it) at any time.

               11.5.          You represent and warrant that:

(a)     you are entering into Collars pursuant to this Agreement for the purpose of managing your borrowings or investments, hedging your underlying assets or liabilities or in connection with a line of business, and not for purposes of speculation;

(b)     if you are a limited partnership, we shall be entitled to deal exclusively with the general partner on behalf of the partnership, unless and until we shall have received written notice of a change in the general partner or a delegation of authority by the general partner; and

(c)     if you are a trust or charitable corporation, any Collars entered into pursuant to this Agreement will be prudent and appropriate in light of your trust or corporate documentation, financial situation and investment objectives, guidelines and policies.

               11.6.          You represent, warrant and agree that you have filed and will undertake to file or cause to be filed with the Securities and Exchange Commission or other governmental, regulatory or self-regulatory authority any and all disclosure documents which may be required or appropriate with respect to any Underlying Shares and any Collars, (including but not limited to, filings required pursuant to Rule 144

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under the 1933 Act and Sections 13 and 16 of the Securities Exchange Act of 1934) and the information contained in each such filing was or will be true and correct as of the date of such filing. You also acknowledge that you have received from UBS or its agent, reviewed and fully understand the "Risk Disclosure Statement - Over-the-Counter Equity Options."

               11.7.          Each party agrees and acknowledges:

(a)     that the Agent is acting as agent for both parties for purposes of this Agreement, including any Collar that is part of this Agreement;

(b)     that the Agent is not a principal to this Agreement, or any Collar, that the Agent may execute this Agreement or the Confirmation for any Collar solely in its capacity as agent;

(c)     that the Agent shall have not responsibility or liability (including without limitation by way of guarantee, endorsement, or otherwise) to any party in respect of this Agreement or any Collar;

(d)     that it will not proceed against the Agent to collect or recover any obligation owed to it under this Agreement or any Collar; and

(e)     that the Agent may rely on the representations, warranties and agreements set forth in this Section 11 of the Master Agreement.

          Each of the above representations, warranties and agreements will be correct and complied with in all respects at all times so long as the parties continue to have obligations and duties to each other hereunder as if repeated then, by reference to then existing circumstances.

               11.8.          Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement, it will deliver to the other party or, in certain cases to such government or taxing authority as the other party reasonably directs, (i) any forms, documents or certificates relating to taxation specified in the Confirmation; (ii) upon reasonable demand by such other party, any form, document or certificate that may be required or reasonably requested in writing in order to allow such other party to make a payment under this Agreement without any deduction or withholding for or on account of any tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form, document, or certificate would not materially prejudice the legal or commercial position of the party in rec eipt of such demand) in each case.

          12.          Adjustment Provisions.

               12.1          If during the life of any Collar any event shall occur that in UBS's sole judgment has a dilutive or concentrative effect on the theoretical value of the Underlying Shares, or the issuer of the Underlying Shares shall make a distribution in respect of such Underlying Shares, other than an ordinary cash dividend, or the Underlying Shares shall be exchanged for, or otherwise represent a right to receive or obtain securities or any other property (including without limitation cash), or a combination thereof, pursuant to a recapitalization, merger, consolidation or any similar reorganization (any of the foregoing, a "Change"), UBS will determine, in a commercially reasonable manner, whether an adjustment is required to any terms of the Collar (including without limitation the Lower Threshold Price, the Upper Threshold Price, number of Und erlying Shares or type of property to be delivered by either party) to take account of the effect of the Change, and the nature of such adjustment if we conclude that an adjustment is required. In determining the nature of an adjustment, we will be guided but not bound by the adjustment principles set forth in the By-Laws, Interpretations and Policies of The Options Clearing Corporation and any adjustment that it may make to the terms of any listed options that it issues on such Underlying Shares. Except as may otherwise be set forth in the Confirmation relating to any Collar, UBS will not make any adjustment for an ordinary cash dividend.

               12.2          If after the date on which a Collar is entered into there is a cash tender offer with respect to the relevant Underlying Shares: (a) where a tender offer is made to all holders of Underlying Shares to tender a portion, and not all, Underlying Shares for consideration consisting only of cash, the Calculation Agent will adjust the Upper Threshold Price and Lower Threshold Price and any other terms of the Collar in an appropriate manner, to be determined in the discretion of the Calculation Agent; and (b) where a tender offer is made to all holders of Underlying Shares to tender all Underlying Shares for consideration consisting

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only of cash, the Calculation Agent will designate a day not earlier than the day such tender offer is consummated as an Early Termination Date with respect to such Collar, and the calculations prescribed by Section 8 will be made as if the Counterparty was the Defaulting Party; provided that the Valuation Date for such Collar will be the date of the announcement of the tender offer.

          13.          Notices. Any notice to be given under this Agreement to either UBS or the Counterparty or in respect of any Collar shall be in writing and shall be delivered by personal delivery, or sent by prepaid registered or certified first class mail, return receipt requested, or by Federal Express, DHL or other comparable courier with fees prepaid. Any notice given hereunder shall be deemed to have been effectively given, made or served (a) if sent by mail, seven days after dispatch; or (b) if sent by courier, on the date specified to the courier for delivery. Any notice given hereunder shall be addressed to the relevant party at its address set forth on the signature page hereto or to such other address as the relevant party shall have given to the other party by notice.

          14.          Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. In relation to any lawsuit, action or proceeding to enforce this Agreement or arising out of or in connection with this Agreement ("Proceedings"), each party irrevocably submits to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in The City of New York and waives any objection to Proceedings in any such court on grounds of improper venue or inconvenient forum. Such submission shall not affect the right of either party to institute Proceedings in any jurisdiction or preclude either party for instituting Proceedings in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JUR Y IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY COLLAR AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY'S ENTERING INTO THIS AGREEMENT.

          15.          Other Provisions. (a) A failure or delay on the part of either party to enforce any right, power or privilege in respect of this Agreement shall not be construed as a waiver of its rights to do so and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise of that right, power or privilege or the exercise of any other right, power or privilege; (b) this Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when so executed shall constitute one and the same binding agreement between the parties; (c) in the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remai ning provisions contained herein shall not in any way be affected or impaired thereby; (d) except as expressly provided herein, no waiver, amendment, supplement or other variation of or addition to the terms, conditions or provisions of this Agreement whatsoever shall be valid unless in writing signed by the parties; (e) time shall be of the essence under any Collar; (f) the parties agree that each may electronically record all telephonic conversations between trading, operations and marketing personnel of the parties and their Affiliates, agrees to give notice to such personnel of it and its Affiliates that their calls will be recorded, and agrees that in any Proceedings, it will not object to the introduction of such recordings in evidence on the grounds that consent was not properly given; and (g) when used in this Agreement, the terms "it" and "its" shall be deemed replaced with the appropriate masculine or feminine counterparts when used in reference to a natural person, the terms "w e" and "us" shall refer to UBS or the Transacting Branch, as appropriate, and the term "you" shall refer to the Counterparty.

          16.          Definitions. (a) In this Agreement, unless the context otherwise requires:

"Affiliate" means (i) with respect to the Counterparty, any entity controlled, directly or indirectly, by the Counterparty; any entity that controls, directly or indirectly, the Counterparty; or any entity under common control with the Counterparty; and, if the Counterparty is a natural person, the spouse of the Counterparty and (ii) with respect to UBS, any subsidiary consolidated for financial reporting purposes in the group financial statements as presented in the Annual Report of UBS.

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          "Business Day" means (i) in relation to any payment, a day on which commercial banks in the city from which payment is to be made and to which payment is to be made are open for business; (ii) in relation to any delivery of Underlying Shares by book entry, a day on which the party making delivery and the depository on whose books the delivery is to be made are open for business; (iii) in relation to any delivery of Underlying Shares in certificated form, a day on which UBS, the Counterparty and the transfer agent are open for business; and (iv) in all other cases, a day on which commercial banks are open for business in The City of New York;

          "Cash-Settled Collar" means a Collar that is to be settled by payment of the Cash Settlement Amount, rather than by delivery of the Underlying Shares;

          "Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) of funding the relevant amount plus 1% per annum;

          "Exchange" means each exchange or quotation system specified as such for the Underlying Shares in the relevant Confirmation or any successor to such exchange or quotation system, provided, however, that if the specified Exchange ceases to list or otherwise include the Underlying Shares, the parties will negotiate in good faith to agree on another exchange or quotation system (if any) in relation to the Underlying Shares.

          "Exchange Business Day" means a day on which the Exchange with respect to a particular Collar, and any Relevant Market in relation to such Collar, is or, but for the occurrence of a Market Disruption Event, would have been open for trading (other than a day on which trading on such Exchange or Relevant Market is scheduled to close prior to its regular weekday closing time);

          "Expiration Date" and "Expiration Time" mean (respectively) the date on, and time of day on that date at, which a Collar is to expire, as specified in the relevant Confirmation (or if the date so specified is not an Exchange Business Day, the first following Exchange Business Day);

          "Lower Threshold Price" means the price per share of the Underlying Shares specified, or determined as provided, in the Confirmation.

          "Market Disruption Event" in relation to any Cash-Settled Collar means  in respect of the Underlying Shares relating to a Collar, the occurrence or existence on any Exchange Business Day during the one-half hour period that ends at the Valuation Time of any suspension of or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) on (i) the Exchange in the Underlying Shares or (ii) any options contracts relating to the Underlying Shares on any Relevant Market, if, in any such case, such suspension or limitation is, in the determination of UBS, material;

          "Normal Trading Day" means an Exchange Business Day on which no Market Disruption Event has occurred or is continuing;

          "Physically Settled Collar" means a Collar to be settled by delivery of the Underlying Shares;

          "Premium" means the amount payable by the Obligated Party to the Other Party in consideration of entering into a Collar;

          "Reference Price" means (i) in relation to a Collar to be settled by physical delivery, the price per share of the Underlying Shares at the Expiration Time on the Expiration Date, as determined by UBS in a commercially reasonable manner, and (ii) in relation to a Collar to be cash settled, the price per share of the Underlying Shares at the Valuation Time on the Valuation Date, determined as specified in the Confirmation, or if not specified in the Confirmation, as determined by UBS in a commercially reasonable manner;

          "Relevant Market" means (a) in relation to any Collar each Exchange or other market specified as such in the Confirmation, (b) in relation to any Underlying Shares, for purposes of Paragraph 5 or for purposes of determining Trading Days, the Exchange or other market specified as such in the Confirmation on which such shares are primarily traded, provided that if no such Exchange or market is so specified, the Relevant Market will be the stock exchange(s) or recognized securities market(s) on which such shares are primarily traded; and (c) in relation to any exchange-traded option contract on any Underlying Shares for

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purposes of determining if a Market Disruption has occurred, the Exchange or other market specified as such on which such option contracts are traded;

          "Settlement Date" means the third Exchange Business Day following the date of exercise, unless (with respect to a Physically-Settled Collar only) a Settlement Disruption Event prevents the delivery of Underlying Shares as required by the terms of such Collar on such day, in which case the Settlement Date shall be the first succeeding day on which Underlying Shares can be delivered through the Clearance System;

          "Settlement Disruption Event" means an event beyond the control of the parties as a result of which the relevant Clearance System cannot clear the transfer of Underlying Shares;

          "Specified Entity" in relation to a party means each entity, if any, specified as such in relation to that party on the signature page hereof;

          "Specified Indebtedness" means, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of money;

          "Threshold Amount" means (i) with respect to us, 2% of "Total Capital and Reserves" of UBS as shown on the most recent annual audited financial statements of UBS; and (ii) with respect to you or any Specified Entity, the lesser of U.S. Dollars 100,000 or 2% of the net worth, net asset value or stockholder's equity (as the case may be) of you or the relevant Specified Entity as shown on the most recent annual audited financial statements;

          "Termination Event" means the following: (a) if the Counterparty is an individual, the death, disability or other incapacity of the Counterparty which, in the sole determination of UBS, could prevent or materially impair the Counterparty's ability to perform his or her obligations under this Agreement; (b) if the Counterparty is a trust, (i) the resignation of the trustee of the trust, or if an individual, the death, disability or other incapacity of such individual, which, in the sole determination of UBS, could prevent the trustee from acting in a prudent, timely and effective manner or (ii) the trust is revoked, in whole or in part, or terminated, or there is a distribution of trust assets that materially affects the trust's ability to perform its obligations under this Agreement; or (c) if the Counterparty is a limited partnership, (i) the death, disability or other incapacity of the general partner of the partnership or the resignation or removal of the general partner as the general partner of the partnership; (ii) a modification or termination of the power or authority of the general partner, (iii) an event described in Paragraph 8.1(g) of this Agreement occurs in respect of the general partner of a partnership; or (iv) a partnership makes a distribution of its assets or redeems any limited partnership interests, if immediately following such action the creditworthiness of the partnership, in the sole determination of UBS, is materially weaker than immediately prior to such action;

          "Trade Date" means the date on which the parties enter into a Collar;

          "Trading Day" means a day on which the Relevant Market is open for business;

          "Underlying Shares", in respect of any Collar, means the shares or other securities specified as such in the relevant Confirmation;

          "Upper Threshold Price" means the price per share of Underlying Shares specified, or determined as provided, in the Confirmation.

          "Valuation Date" in relation to a cash-settled Collar means the date on which the Collar is exercised if that date is an Exchange Business Day, or otherwise the following Exchange Business Day, in either case subject to the provisions for Market Disruption Events in Paragraph 10; and

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          "Valuation Time" in relation to any Collar, means the time specified as such in the relevant Confirmation.

               (b) Each of the following terms is defined in the Paragraph set forth opposite such term:

Term	Paragraph
"Affected Party"	9.1
"Affected Transaction"	9.2
"Agent"	preamble
"Agreement"	preamble
"Cash Settlement Amount"	5.2
"Change"	12.1
"Collars"	preamble
"Confirmation"	2
"Counterparty"	preamble
"Defaulting Party"	8.1
"Early Termination Date"	8.2
"Event of Default"	8.1
"Non-Affected Party"	9.1
"Non-Defaulting Party"	8.1
"Obligated Party"	3
"Original Date"	10
"Other Party"	3
"Proceedings"	14
"Representation Letter"	Preamble
"Security Agreement"	preamble
"Settlement Amount"	8.2
"Trade Summary"	2
"Transacting Branch"	Preamble
"Unpaid Amounts"	8.2
"1933 Act"	11.4

[signature page follows]

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Yours faithfully,

UBS AG, London Branch

By: /s/ Hina Mehta                

          Name:Hena Mehta
          Title:Director and Counsel, Region Americas Legal Fixed Income Section

By: /s/ Cynthia A. Curran     

          NameCynthia A. Curran:
          Title:Director, Region Americas Legal Equity Derivatives & Structured Products

Address for Notices:

UBS Securities LLC
677 Washington Blvd.
Stamford, CT 06901
Attention:                                         

Address for Notices:

UBS Securities LLC
677 Washington Blvd.
Stamford, CT 06901
Attention:                                         

Accepted and agreed to:

INDIVIDUALS:

Print name of Counterparty

Print name of Joint Owner if Transactions
are to be entered jointly

Signature of Counterparty

Signature of Joint Owner if Transactions
are to be entered jointly

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PARTNERSHIPS, CORPORATIONS OR TRUSTS:

Solitario Resources Corporation	/s/ Christopher E. Herald
Print name of Partnership, Corporation or Trust	Signature of individual signing on behalf of
	partnership, corporation or trust
Christopher E. Herald	CEO
Print name of individual signing on behalf of	Capacity of individual signing on behalf of
partnership, corporation or trust	partnership, corporation or trust
Address for notice (if different from principal	[Acknowledged by:
	[                 ], settler of (insert trust name)
	By:
Counterparty Specified Entities:	Name:][insert if client is a trust]
If Counterparty is a partnership, corporation or trust:
Jurisdiction of incorporation or formation:
Colorado
Name and address of registered agent:
CT Corporation
1675 Broadway, Suite 1200
Denver, CO 80202

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