Exchange:

Any and all the outstanding Existing Notes held by qualified institutional buyers for the following:

(i)     $164.60 in principal amount of new 6% Pari Passu Secured First Lien Notes due 2020 (the “New Pari Passu Secured First Lien Notes”) issued by the Issuer for each $1,000 in principal amount of Existing Notes exchanged, which New Pari Passu Secured First Lien Notes shall in any event not exceed a cap equal to $250 million;

(ii)    A to-be-determined principal amount of new 6% Pari Passu NPP Secured First Lien Notes due 2020 (the “New Pari Passu NPP Secured First Lien Notes”, and together with the New Pari Passu Secured First Lien Notes, the “Pari Passu Secured First Lien Notes”) issued by the Issuer for each $1,000 in principal amount of Existing Notes exchanged based upon the maximum principal amount of obligations permitted to be secured by Section 7.01(w) of the Existing First Lien Credit Agreement;¹

(iii)  $217.28 in principal amount of new 6% NG Secured Notes due 2020 (the “New NG Secured Notes”) issued by the NG Notes Issuer (as defined below) for each $1,000 in principal amount of Existing Notes exchanged, which New NG Secured Notes shall in any event (A) not exceed an original principal amount of $330 million in the aggregate and (B) be secured by the NG Notes Assets (as defined below) that constitute Non-Principal Property Mines (as defined below); and

(iv)   Assuming 100% participation in the Exchange Offer, the holders of Existing Notes who participate in the Exchange Offer will receive 10% of the outstanding equity of the Issuer (on a pro forma basis).

If less than 100% of the Existing Notes are exchanged (such remaining amount of New Pari Passu Secured First Lien Notes, the “Residual Notes”), (i) the above conversion percentages shall remain unchanged and (ii) those holders of Existing Notes who participate in the Exchange will also be entitled to tender other unsecured notes of the Issuer in the Exchange for Residual Notes at prices and priority levels to be determined by the Issuer and accepted or rejected by such holders in their sole discretion.

50% of accrued but unpaid interest on the Existing Notes that are exchanged shall be payable in cash at closing and 50% shall be payable in the form of additional New NG Secured Notes issued at closing.

Conditions:

The closing of the Exchange will be conditioned on:

(i)     a minimum of [    ]% of the aggregate principal amount of the Existing Notes electing to participate in the Exchange Offer (the “Minimum Condition”);

(ii)    the Issuer forming a single direct or indirect wholly owned subsidiary organized as a Delaware limited liability company that is designated as an “Unrestricted Subsidiary” under the Existing First Lien Credit Agreement (the “NG Notes Issuer”) and into which substantially all assets associated with the following mines are contributed on or prior to the closing of the Exchange unless other credit support is provided that is satisfactory to the holders of the Existing Notes that are being exchanged: (i) the Kayenta Mine (the “Principal Property Mine”) and (ii) the Francisco U/G Mine, the Gateway/Gateway North Mine and the Wild Boar Mine (collectively, the “Non-Principal Property Mines” and, together, with the Principal Property Mine, the “NG Notes Assets”);

(iii)  the NG Notes Issuer being set up as a bankruptcy remote entity subject to the terms set forth on Annex I attached hereto;

(iv)   [the receipt by the Issuer of not less than $500 million in net cash proceeds from asset sales from and after the commencement date of the Exchange Offer, including net cash proceeds from sales of mines other than the NG Notes Mines; and]

(v)    customary additional conditions.

For the avoidance of doubt, the Exchange Offer will not be conditioned on any new money financing or obtaining consent from the lenders under the Existing First Lien Credit Agreement (as defined below).

To be consistent with the Existing First Lien Credit Agreement, except as follows:

(a)    no maintenance covenants shall be required;

(b)    the restricted group shall not be permitted to incur any additional first lien debt other than Permitted Refinancing Indebtedness (as defined in the Credit Agreement); provided that reductions in the revolving commitments under the Existing First Lien Credit Agreement (other than “term outs” of the revolver that constitute Permitted Refinancing Indebtedness) shall not, for the avoidance of doubt, increase the amount of first lien debt that can be incurred under the New Pari Passu First Lien Indenture;

(c)    the restricted group shall not be permitted to make any investments (whether through the contribution of assets, the guaranty of obligations or otherwise) in an Unrestricted Subsidiary other than the NG Notes Issuer to the extent such investment would be permitted by the Existing First Lien Credit Agreement; and

(d)    a new covenant will be added restricting the ability of non-guarantor subsidiaries (including unrestricted subsidiaries) of the Issuer from incurring indebtedness (including the the New NG Secured Notes) in excess of $500 million at any one time or guaranteeing any indebtedness in excess of $250 million at any one time.

First Lien/Second

Lien Intercreditor:

Mandatory

Redemption:

Optional

Redemption:

Covenants and

Events of Default: