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United States of America v. Federal Resources Corp.

April 25, 2013

UNITED STATES OF AMERICA, PLAINTIFF AND COUNTERCLAIM-DEFENDANT,
v.
FEDERAL RESOURCES CORP., BLUM REAL ESTATE TRUST; AND RE BENTLEY J. BLUM, IN HIS ESTABLISHMENT OF CAPACITY AS TRUSTEE OF THE BLUM COURT REGISTRY ACCOUNT REAL ESTATE TRUST DEFENDANTS AND COUNTERCLAIMANT.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

) STIPULATION AND ) ORDER RE: SEQUESTRATION OF FUNDS

Federal Resources Corporation, the Blum Real Estate Trust, Bentley J. Blum, and Camp Bird Colorado, Inc. (collectively, Defendants), Caldera Mineral Resources, LLC, (Caldera), Caldera Holdings, LLC (Holdings), and the United States of America (United States) respectfully submit this Stipulation and Proposed Order re: Sequestration of Funds settling and resolving any objections Defendants, Caldera, and Holdings may have to the Writ of Sequestration issued by the Court (CM/ECF # 157), and resolving Caldera and Holdings' Motion to Intervene (CM/ECF # 161).

BACKGROUND

In support of the Stipulation, the Defendants, Caldera, Holdings and the United States submit the following facts:

TRANSFERS TO CALDERA & HOLDINGS

1. Camp Bird Colorado, Inc. (CBCI) is the present title owner of the Camp Bird Mine (Camp Bird), located in Ouray and San Miguel Counties, Colorado, including all real property, mineral rights, and water rights.

2. Commencing in June 2012, CBCI entered into a series of agreements transferring certain rights and assets in Camp Bird.

3. In June 2012, CBCI entered into a Memorandum of Understanding (MOU) with Copper King Mining Corporation regarding the transfer of certain rights and assets. The MOU had an effective date of June 22, 2012.

4. On or about August 6, 2012, Copper King Mining Corporation assigned its rights under the MOU to Caldera (Assignment).

5. By "Mining Lease and Option to Purchase" (Lease Option) dated September 20, 2012, CBCI entered into an agreement with Caldera whereby Caldera acquired rights in Camp Bird, including lease rights and two options to purchase ownership interests in Camp Bird.

6. On September 20, 2012, CBCI, Camp Bird Tunnel, Mining and Transportation Company (TMTC), Caldera, and Holdings entered into a Non-Recourse Guarantee and Security Agreement (Guarantee Agreement) whereby Caldera and Holdings obtained a claim for repayment of costs advanced at Camp Bird to facilitate exploration, development and mining operations, to acquire interests in Camp Bird, and other repayment obligations from CBCI and TMTC (Recoupable Costs).

7. On September 20, 2012, CBCI and TMTC granted a deed of trust in Camp Bird, and certain other rights, in favor of Holdings (Deed of Trust) to secure the repayment obligations under the Guarantee Agreement.

8. On September 20, 2012, CBCI entered into a letter agreement granting Caldera rights to remove and process tailings (Tailings Letter).

9. On September 20, 2012, CBCI executed with Caldera a Reservation of Perpetual Gross Royalty instrument (Royalty Reservation) in furtherance of the terms of the Lease Option.

10. On September 20, 2012, CBCI and TMTC granted an Irrevocable License for Use of Water (Water License) to Caldera.

11. On September 20, 2012, CHH Operating Corp. (CHH), a California corporation, and Holdings entered into a Subordination Agreement (Subordination Agreement) whereby CHH subordinated its mortgage in Camp Bird to the Deed of Trust in favor of Holdings. The Subordination Agreement, MOU, Assignment, Lease Option, Guarantee Agreement, Deed of Trust, Tailings Letter, Royalty Reservation, and Water License shall be referred to collectively in this Stipulation as the "Caldera Agreements."

12. CBCI's transfers to Caldera and Holdings through the Caldera Agreements are hereinafter referred to collectively as the "Transfers."

13. Caldera and Holdings assert that they were unaware of the above captioned proceeding or the claims asserted by the United States (collectively, Case) prior to the Agreements, and did not learn of the Case until January 16, 2013.

14. On and after September 20, 2012, Caldera and Holdings began expending Recoupable Costs including transferring $600,000 to CBCI, building, repairing, restoring infrastructure, and other expenses.

LEASE OPTION -- FIRST OPTION

15. Under § 17 of the Lease Option, Caldera holds an option (First Option) to purchase an undivided 60 percent interest in Camp Bird from CBCI. "Mining Claims," as used in the Lease Option, is expressly defined to include all real property, mineral rights, and water rights in Camp Bird. Lease Option, § 1(c) & (e).

16. In order to exercise the First Option, Caldera must provide notice (Notice) to CBCI in accordance with the Lease Option of Caldera's intent to exercise the First Option on or before March 19, 2013. Lease Option, § 17(a).

17. Caldera provided the Notice to CBCI on March 19, 2013.

18. The purchase price for the First Option is $6.5 ...


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