Exhibit 10.1
 
 
SUBSCRIPTION AGREEMENT
 
This Subscription Agreement (this “Agreement”) is being delivered to the
purchaser identified on the signature page to this Agreement (the “Subscriber”)
in connection with its investment in American Energy Fields, Inc., a Delaware
corporation (the “Company”) whose shares of common stock are quoted on the OTC
bulletin board. The Company is conducting a private placement (the “Offering”)
of a minimum of Two Million Dollars ($2,000,000) (the “Minimum Offering”) and a
maximum of Ten Million Dollars ($10,000,000) (the “Maximum Offering”) of units
(the “Units”) at a purchase price of $0.50 per Unit, which each Unit consisting
of (i) one share of the Company’s common stock, par value $0.0001 per share (the
“Shares”)and (ii) a five (5) year warrant to purchase one share of the Company’s
common stock (the “Warrant Shares”), at a per share exercise price of $0.50 (the
“Exercise Price’), substantially in the form attached hereto as Exhibit A (the
“Warrants”).  Each Subscriber will be required to purchase a minimum of 200,000
Units.  For purposes of this Agreement, the term “Securities” shall refer to the
Units, the Shares, the Warrants, and the Warrant Shares.Sales of Units to the
Company’s officers and their affiliates may be included in satisfying the
Minimum Offering.
 
1.           SUBSCRIPTION AND PURCHASE PRICE
 
(a)           Subscription.  Subject to the conditions set forth in Section 2
hereof, the Subscriber hereby subscribes for and agrees to purchase the number
of Units indicated on page10 hereof on the terms and conditions described
herein.
 
(b)           Purchase of Units.  The Subscriber understands and acknowledges
that the purchase price to be remitted to the Company in exchange for the Units
shall be set at $0.50per Unit, for an aggregate purchase price as set forth on
page 10 hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of
this Agreement to the Company shall be accompanied by payment for the Units
subscribed for hereunder, payable in United States Dollars, by wire transfer of
immediately available funds delivered contemporaneously with the Subscriber’s
delivery of this Agreement to the Company in accordance with the wire
instructions provided on Exhibit B. The Subscriber understands and agrees that,
subject to Section 2 and applicable laws, by executing this Agreement, it is
entering into a binding agreement.
 
2.           ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES
 
(a)           Acceptance or Rejection. The obligation of the Subscriber to
purchase the Units shall be irrevocable, and the Subscriber shall be legally
bound to purchase the Units subject to the terms set forth in this Agreement.
The Subscriber understands and agrees that the Company reserves the right to
reject this subscription for Units in whole or part in any order at any time
prior to the Closing for any reason, notwithstanding the Subscriber’s prior
receipt of notice of acceptance of the Subscriber’s subscription. In the event
of rejection of this subscription by the Company in accordance with this Section
2, or if the sale of the Unitsis not consummated by the Company for any reason
or no reason, this Agreement and any other agreement entered into between the
Subscriber and the Company relating to this subscription shall thereafter have
no force or effect, and the Company shall promptly return or cause to be
returned to the Subscriber the purchase price remitted to the Company, without
interest thereon or deduction therefrom.
 
(b)           Closing.  The closing of the purchase and sale of the Units
hereunder (the “Closing”) shall take place at the offices ofSichenzia Ross
Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006or such other
place as determined by the Company.  The Closing shall take place on a Business
Day promptly following the satisfaction of the conditions set forth in Section 8
below, as determined by the Company (the “Closing Date”). “Business Day” shall
mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time)
of a day other than a Saturday, Sunday or other day on which commercial banks in
New York, New York are authorized or required to be closed. The Shares and
Warrants purchased by the Subscriber will be delivered by the Company promptly
following the Closing.

(c)           Following Acceptance or Rejection.  The Subscriber acknowledges
and agrees that this Agreement and any other documents delivered in connection
herewith will be held by the Company. In the event that this Agreement is not
accepted by the Company for whatever reason, which the Company expressly
reserves the right to do, this Agreement, the Aggregate Purchase Price received
(without interest thereon) and any other documents delivered in connection
herewith will be returned to the Subscriber at the address of the Subscriber as
set forth in this Agreement. If this Agreement is accepted by the Company, the
Company is entitled to treat the Aggregate Purchase Price received as an
interest free loan to the Company until such time as the Subscription is
accepted.
 
 
 
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(d)           Reserved.

(e)           Reserved.

(f)           Reserved.

(g)           Reserved.
 
(h)           Extraordinary Events Regarding Common Stock.  In the event that
the Company shall (a) issue additional shares of Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of Common Stock, then, in each such event,
the Unit Purchase Price shall, simultaneously with the happening of such event,
be adjusted by multiplying the then Purchase Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein. The number of shares of
Common Stock and Warrants that the Subscriber shall thereafter, be issued and
obtain on the exercise hereof, be entitled to receive shall be adjusted to a
number determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section) be issuable on such exercise
by a fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section) be in effect, and (b) the
denominator is the Purchase Price in effect on the date of such exercise.
 
(i)           Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock issuable hereunder or on the exercise
of the Warrants, the Company at its expense will promptly cause its President or
other appropriate designee to compute such adjustment or readjustment in
accordance with the terms hereof and of the Warrant and prepare a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, including a statement of
(a) the consideration received or receivable by the Company for any additional
shares of Common Stock (or Other Securities) issued or sold or deemed to have
been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received and to be received upon
exercise of the Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided herein. The Company will
forthwith mail a copy of each such certificate to the Subscriber and of the
Warrant and any Warrant Agent of the Company.
 
3.           THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 
The Subscriber hereby acknowledges, agrees with and represents, warrants and
covenants to the Company, as follows:
 
(a)           The Subscriber has full power and authority to enter into this
Agreement, the execution and delivery of which has been duly authorized, if
applicable, and this Agreement constitutes a valid and legally binding
obligation of the Subscriber.
 
(b)           The Subscriber acknowledges its understanding that the Offering
and sale of the Securities is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(2) of the Securities Act and the provisions of Regulation D promulgated
thereunder (“Regulation D”) or Rule 903 of Regulation S promulgated
thereunder.  In furtherance thereof, the Subscriber represents and warrants to
the Company and its affiliates as follows:
 
(i)           The Subscriber realizes that the basis for the exemption from
registration may not be available if, notwithstanding the Subscriber’s
representations contained herein, the Subscriber is merely acquiring the
Securitiesfor a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. The Subscriber does not have any
such intention.
 
 
 
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(ii)           The Subscriber realizes that the basis for exemption would not be
available if the Offering is part of a plan or scheme to evade registration
provisions of the Securities Act or any applicable state or federal securities
laws.
 
(iii)           The Subscriber is acquiring theSecuritiessolely for the
Subscriber’s own beneficial account, for investment purposes, and not with a
view towards, or resale in connection with, any distribution of the Securities.
 
(iv)           The Subscriber has the financial ability to bear the economic
risk of the Subscriber’s investment, has adequate means for providing for its
current needs and contingencies, and has no need for liquidity with respect to
an investment in the Company.
 
(v)           The Subscriber and the Subscriber’s attorney, accountant,
purchaser representative and/or tax advisor, if any (collectively, the
“Advisors”) has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of a prospective investment
in the Securities. If other than an individual, the Subscriber also represents
it has not been organized solely for the purpose of acquiring the Securities.
 
(vi)           The Subscriber (together with its Advisors, if any) has received
all documents requested by the Subscriber, if any, has carefully reviewed them
and understands the information contained therein, prior to the execution of
this Agreement.
 
(c)           The Subscriber is not relying on the Company or any of its
employees, agents, sub-agents or advisors with respect to the legal, tax,
economic and related considerations involved in this investment. The Subscriber
has relied on the advice of, or has consulted with, only its Advisors. Each
Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is
annexed to this Agreement) the specific details of any and all past, present or
future relationships, actual or contemplated, between the Advisor and the
Company or any affiliate or sub-agent thereof.
 
(d)           The Subscriber has carefully considered the potential risks
relating to the Company and a purchase of the Securities, and fully understands
that the Securities are a speculative investment that involves a high degree of
risk of loss of the Subscriber’s entire investment.Among other things, the
Subscriber has carefully considered each of the risks described under the
heading “Risk Factors” in the Company’s SEC Filings (as defined in Section 4(d)
below), which risk factors are incorporated herein by reference.
 
(e)           The Subscriber will not sell or otherwise transfer anySecurities
without registration under the Securities Act or an exemption therefrom, and
fully understands and agrees that the Subscriber must bear the economic risk of
its purchase because, among other reasons, the Securities have not been
registered under the Securities Act or under the securities laws of any state
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under the
applicable securities laws of such states, or an exemption from such
registration is available.  In particular, the Subscriber is aware that the
Securities are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule 144”), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that, except as otherwise provided in Section 5
hereof, the Company is under no obligation to register the Securities on behalf
of the Subscriber or to assist the Subscriber in complying with any exemption
from registration under the Securities Act or applicable state securities laws.
The Subscriber understands that any sales or transfers of the Securities are
further restricted by state securities laws and the provisions of this
Agreement.
 
(f)           No oral or written representations or warranties have been made,
or information furnished, to the Subscriber or its Advisors, if any, by the
Company or any of its officers, employees, agents, sub-agents, affiliates,
advisors or subsidiaries in connection with the Offering, other than any
representations of the Company contained herein, and in subscribing for the
Units, the Subscriber is not relying upon any representations other than those
contained herein.
 
(g)           The Subscriber’s overall commitment to investments that are not
readily marketable is not disproportionate to the Subscriber’s net worth, and an
investment in the Securities will not cause such overall commitment to become
excessive.
 
 
 
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(h)           The Subscriber understands and agrees that the certificates for
the Securities shall bear substantially the following legend until (i) such
Securities shall have been registered under the Securities Act and effectively
disposed of in accordance with a registration statement that has been declared
effective or (ii) in the opinion of counsel for the Company, such Securitiesmay
be sold without registration under the Securities Act, as well as any applicable
“blue sky” or state securities laws:
 
For U.S. Persons:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
 
For Non-U.S. Persons
 
THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) PURSUANT TO REGULATION S UNDER THE 1933
ACT.  ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE
BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR,
DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED IN REGULATION S PROMULGATED
UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933
ACT.
 
(i)           Neither the Securities and Exchange Commission (the “SEC”) nor any
state securities commission has approved the Securities or passed upon or
endorsed the merits of the Offering. There is no government or other insurance
covering any of the Securities.
 
(j)           The Subscriber and its Advisors, if any, have had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the Offering and the business,
financial condition, results of operations and prospects of the Company, and all
such questions have been answered to the full satisfaction of the Subscriber
andits Advisors, if any.
 
(k)           The Subscriber is unaware of, is in no way relying on, and did not
become aware of, the Offering through or as a result of, any form of general
solicitation or general advertising, including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, or electronic
mail over the Internet, in connection with the Offering and is not subscribing
for Units and did not become aware of the Offering through or as a result of any
seminar or meeting to which the Subscriber was invited by, or any solicitation
of a subscription by, a person not previously known to the Subscriber in
connection with investments in securities generally.
 
(l)           The Subscriber has taken no action that would give rise to any
claim by any person for brokerage commissions, finders’ fees or the like
relating to this Agreement or the transactions contemplated hereby.
 
 
 
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(m)           The Subscriber is not relying on the Company or any of its
employees, agents, or advisors with respect to the legal, tax, economic and
related considerations of an investment in the Shares, and the Subscriber has
relied on the advice of, or has consulted with, only its own Advisors.
 
(n)           The Subscriber acknowledges that any estimates or forward-looking
statements or projections furnished by the Company to the Subscriber were
prepared by the management of the Company in good faith, but that the attainment
of any such projections, estimates or forward-looking statements cannot be
guaranteed by the Company or its management and should not be relied upon.
 
(o)           No oral or written representations have been made, or oral or
written information furnished, to the Subscriber or its Advisors, if any, in
connection with the Offering that are in any way inconsistent with the
information contained herein.
 
(p)           (For ERISA plans only) The fiduciary of the ERISA plan (the
“Plan”) represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (i) is responsible for the decision to invest in the Company; (ii) is
independent of the Company and any of its affiliates; (iii) is qualified to make
such investment decision; and (iv) in making such decision, the Subscriber or
Plan fiduciary has not relied primarily on any advice or recommendation of the
Company or any of its affiliates.
 
(q)           This Agreement is not enforceable by the Subscriber unless it has
been accepted by the Company, and the Subscriber acknowledges and agrees that
the Company reserves the right to reject any subscription for any reason.
 
(r)           The Subscriber will indemnify and hold harmless the Companyand,
where applicable, its directors, officers, employees, agents, advisors,
affiliates and shareholders, and each other person, if any, who controls any of
the foregoing from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) (a “Loss”) arising out of or based upon any
representation or warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Companyin connection herewith being untrue in
any material respect or any breach or failure by the Subscriber to comply with
any covenant or agreement made by the Subscriber herein or therein; provided,
however, that the Subscriber shall not be liable for any Lossthat in the
aggregate exceeds the Subscriber’s Aggregate Purchase Price tendered hereunder.
 
(s)           The Subscriber is, and on each date on which the Subscriber
continues to own restricted securities from the Offering will be, an “Accredited
Investor” as defined in Rule 501(a) under the Securities Act. In general, an
“Accredited Investor” is deemed to be an institution with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 (excluding
such person’s residence) or annual income exceeding $200,000 or $300,000 jointly
with his or her spouse.  Notwithstanding the foregoing, if the Subscriber is a
Non-U.S. Person (a “Reg S Person”), such Subscriber hereby represents that the
representations contained in paragraphs (1) through (7) of this Section 3(s) are
true and correct with respect to such Subscriber:
 
(1)           (i) the issuance and sale to such Reg S Person of the Units is
intended to be exempt from the registration requirements of the Securities Act,
pursuant to the provisions of Regulation S; (ii) it is not a “U.S. Person,” as
such term is defined in Regulation S, and is not acquiring the Units for the
account or benefit of any U.S. Person; and (iii) the offer and sale of the Units
has not taken place, and is not taking place, within the United States of
America or its territories or possessions.  Such Reg S Person acknowledges that
the offer and sale of the Units has taken place, and is taking place in an
“offshore transaction,” as such term is defined in Regulation S.
 
(2)           Such Reg S Person acknowledges and agrees that, pursuant to the
provisions of Regulation S, the Units cannot be sold, assigned, transferred,
conveyed, pledged or otherwise disposed of to any U.S. Person or within the
United States of America or its territories or possessions for a period of one
year from and after the Closing Date, unless such Units are registered for sale
in the United States pursuant to an effective registration statement under the
Securities Act or another exemption from such registration is available.  Such
Reg S Person acknowledges that it has not engaged in any hedging transactions
with regard to the Units.
 
 
 
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(3)           Such Reg S Person consents to the placement of a legend on any
certificate, note or other document evidencing the Securities and understands
that the Company shall be required to refuse to register any transfer of
securities not made in accordance with applicable U.S. securities laws.
 
(4)           Such Reg S Person is not a “distributor” of securities, as that
term is defined in Regulation S, nor a dealer in securities.
 
(5)           Such Reg S Person understands that the Units have not been
registered under the Securities Act, or the securities laws of any state and are
subject to substantial restrictions on resale or transfer.  The Units are
“restricted securities” within the meaning of Regulation S and Rule 144,
promulgated under the Securities Act.
 
(6)           Such Reg S Person acknowledges that the shares of Common Stock may
only be sold offshore in compliance with Regulation S or pursuant to an
effective registration statement under the Securities Act or another exemption
from such registration, if available.  In connection with any resale of the
shares of Common Stock pursuant to Regulation S, the Company will not register a
transfer not made in accordance with Regulation S, pursuant to an effective
registration statement under the Securities Act or in accordance with another
exemption from the Securities Act.
 
(7)           Such Reg S Person makes the representations, declarations and
warranties as contained in this Section 3(s) (1)-(7) with the intent that the
same shall be relied upon by the Company in determining its suitability as a
purchaser of such Units.
 
(t)           The Subscriber, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the Offering,
and has so evaluated the merits and risks of such investment. The Subscriber has
not authorized any person or entity to act as its Purchaser Representative (as
that term is defined in Regulation D of the General Rules and Regulations under
the Securities Act) in connection with the Offering. The Subscriber is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
 
(u)           The Subscriber has reviewed, or had an opportunity to review, all
of the SEC Filings, including the Company’s Annual Report on Form 10-K for the
year ended March 31, 2010 and all Risk Factors contained therein, including the
following additional Risk Factor:
 
INVESTOR RELATIONS ACTIVITIES, NOMINAL “FLOAT” AND SUPPLY AND DEMAND FACTORS MAY
AFFECT THE PRICE OF OUR STOCK.
 
We expect to utilize various techniques such as non-deal road shows and investor
relations campaigns in order to create investor awareness for the
Company.  These campaigns may include personal, video and telephone conferences
with investors and prospective investors in which our business practices are
described.  We may provide compensation to investor relations firms and pay for
newsletters, websites, mailings and email campaigns that are produced by
third-parties based upon publicly-available information concerning the
Company.  We will not be responsible for the content of analyst reports and
other writings and communications by investor relations firms not authored by
the Company or from publicly available information.  We do not intend to review
or approve the content of such analysts’ reports or other materials based upon
analysts’ own research or methods.  Investor relations firms should generally
disclose when they are compensated for their efforts, but whether such
disclosure is made or complete is not under our control.   In addition,
investors in the Company may be willing, from time to time, to encourage
investor awareness through similar activities.  Investor awareness activities
may also be suspended or discontinued which may impact the trading market our
common stock.
  
 
 
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 The SEC and FINRA enforce various statutes and regulations intended to prevent
manipulative or deceptive devices in connection with the purchase or sale of any
security and carefully scrutinize trading patterns and company news and other
communications for false or misleading information, particularly in cases where
the hallmarks of “pump and dump” activities may exist, such as rapid share price
increases or decreases.  We, and our shareholders may be subjected to enhanced
regulatory scrutiny due to the small number of holders who initially will own
the registered shares of our common stock publicly available for resale, and the
limited trading markets in which such shares may be offered or sold which have
often been associated with improper activities concerning penny-stocks, such as
the OTC Bulletin Board or the OTCQB Marketplace (Pink OTC) or pink
sheets.  Until such time as the common stock sold in the Offering is registered
and until such time as our restricted shares are registered or available for
resale under Rule 144, there will continue to be a small percentage of shares
held by a small number of investors, many of whom acquired such shares in
privately negotiated purchase and sale transactions, that will constitute the
entire available trading market.  The Supreme Court has stated that manipulative
action is a term of art connoting intentional or willful conduct designed to
deceive or defraud investors by controlling or artificially affecting the price
of securities.  Often times, manipulation is associated by regulators with
forces that upset the supply and demand factors that would normally determine
trading prices.  Since a small percentage of the outstanding common stock of the
Company will initially be available for trading, held by a small number of
individuals or entities, the supply of our common stock for sale will be
extremely limited for an indeterminate amount of time, which could result in
higher bids, asks or sales prices than would otherwise exist.  Securities
regulators have often cited thinly-traded markets, small numbers of holders, and
awareness campaigns as components of their claims of price manipulation and
other violations of law when combined with manipulative trading, such as wash
sales, matched orders or other manipulative trading timed to coincide with false
or touting press releases.  There can be no assurance that the Company’s or
third-parties’ activities, or the small number of potential sellers or small
percentage of stock in the “float,” or determinations by purchasers or holders
as to when or under what circumstances or at what prices they may be willing to
buy or sell stock will not artificially impact (or would be claimed by
regulators to have affected) the normal supply and demand factors that determine
the price of the stock.

Furthermore, persons affiliated with the Company or the Placement Agent, if any,
may subscribe for Units. In such case, the Company may accept subscriptions from
affiliated parties that would allow the Company to reach the Minimum Offering
amount required to close on the sale of Units. Persons affiliated with Unit
purchasers may hold or acquire Company Common Stock prior to or following any
initial Closing at prices other than the price per share of Common Stock sold in
the Offering. No investor should conclude that subscriptions for the amount
necessary to effectuate the initial Closing ($2,000,000) are indicative of an
independent assessment made concerning the merits or advantages of the Offering
by unaffiliated persons who have subscribed for Units in an amount necessary to
provide assurance to other investors that unaffiliated persons have agreed to
subscribe for the Offering in such an amount necessary to permit the Company to
proceed with closing on the sale of Units.
 

 
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4.           THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 
The Company hereby acknowledges, agrees with and represents, warrants and
covenants to the Subscriber, as follows:
 
(a)           The Company has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
has been duly authorized, executed and delivered by the Company and is valid,
binding and enforceable against the Company in accordance with its terms.
 
(b)           The Securities to be issued to the Subscriber pursuant to this
Agreement, when issued and delivered in accordance with the terms of this
Agreement, will be duly and validly issued and will be fully paid and
non-assessable.
 
(c)           Neither the execution and delivery nor the performance of this
Agreement by the Company will conflict with the Company’s organizational
materials, as amended to date, or result in a breach of any terms or provisions
of, or constitute a default under, any material contract, agreement or
instrument to which the Company is a party or by which the Company is bound.
 
(d)           The Company is subject to, and in full compliance with, the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). The Company has made available to each
Subscriber through the EDGAR system true and complete copies of each of the
Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and
Current Reports on Form 8-K, in each case filed since December 28, 2009
(collectively, the “SEC Filings”), and all such SEC Filings are incorporated
herein by reference.  The SEC Filings, when they were filed with the SEC (or, if
any amendment with respect to any such document was filed, when such amendment
was filed), complied in all material respects with the applicable requirements
of the Exchange Act and the rules and regulations thereunder and did not, as of
such date, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. All reports and statements required to be filed by the
Company under the Securities Act and the Exchange Act have been filed, together
with all exhibits required to be filed therewith. The Company and each of its
direct and indirect subsidiaries, if any (collectively, the “Subsidiaries”), are
engaged in all material respects only in the business described in the SEC
Filings, and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and the Subsidiaries.
 
(e)           The Company acknowledges and agrees that the Subscriber is acting
solely in the capacity of an arm’s length purchaser with respect to the
Securities and the transactions contemplated hereby. The Company further
acknowledges that the Subscriber is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by the
Subscriber or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to the
Subscriber’s purchase of the Units. The Company further represents to the
Subscriber that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
 
(f)           The Company will indemnify and hold harmless the Subscriber and,
where applicable, its directors, officers, employees, agents, advisors and
shareholders, from and against any and all Lossarising out of or based upon any
representation or warranty of the Company contained herein or in any document
furnished by the Company to the Subscriber in connection herewith being untrue
in any material respect or any breach or failure by the Company to comply with
any covenant or agreement made by the Company to the Subscriber in connection
therewith; provided, however, that the Company’s liability shall not exceed the
Subscriber’s Aggregate Purchase Price tendered hereunder.
 
(g) .  For a period of twelve (12) months from the date hereof, the Company
agrees that it shall not file any Registration Statements on Form S-8 with the
SEC.
 
5. REGISTRATION RIGHTS
 
The Company will file a “resale” registration statement with the SEC covering
all shares of Common Stock included within the Units sold in the Offering and
underlying any Warrants as well as the shares underlying the Placement Agent
Warrants. The Company will maintain the effectiveness of the “resale”
registration statement from the effective date through and until twelve (12)
months after the Closing Date, unless all securities registered under the
registration statement have been sold or are otherwise able to be sold pursuant
to Rule 144.  The Companywill its use commercially reasonable efforts to have
such “resale” registration statement declared effective by the SEC as soon as
possible and, in any event, within 180 days after the final Closing Date of the
Offering (the “Effectiveness Date”).
 
 
 
8

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The Company is obligated to pay to the Subscribers a fee of 1% per month of the
investors’ investment, payable in cash, up to a maximum of 6%, for each month in
excess of the Effectiveness Deadline that the registration statement has not
been declared effective; provided, however, that the Company shall not be
obligated to pay any such liquidated damages if the Company is unable to fulfill
its registration obligations as a result of rules, regulations, positions or
releases issued or actions taken by the SEC pursuant to its authority with
respect to “Rule 415”, provided the Company registers at such time the maximum
number of shares of Common Stock permissible upon consultation with the staff of
the SEC.
 
The description of registration rights is qualified in its entirety by reference
to Registration Rights Agreement annexed hereto as Exhibit C.
 
6.           USE OF PROCEEDS
 
The Company anticipates using the grossproceeds from the Offering for general
working capital including the acquisition of mineral claims and rights.

7.           CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION
 
The Company’s right to accept the subscription of the Subscriberis conditioned
upon satisfaction of the following conditions precedent on or before the date
the Company accepts such subscription:
 
(a)           As of the Closing, no legal action, suit or proceeding shall be
pending that seeks to restrain or prohibit the transactions contemplated by this
Agreement.
 
(b)           The representations and warranties of the Companycontained in this
Agreement shall have been true and correct in all material respects on the date
of this Agreement and shall be true and correct as of the Closing as if made on
the Closing Date.
 
8.           MISCELLANEOUS PROVISIONS
 
(a)           All parties hereto have been represented by counsel, and no
inference shall be drawn in favor of or against any party by virtue of the fact
that such party’s counsel was or was not the principal draftsman of this
Agreement.
 
(b)           Each of the parties hereto shall be responsible to pay the costs
and expenses of its own legal counsel in connection with the preparation and
review of this Agreement and related documentation.
 
(c)           Neither this Agreement, nor any provisions hereof, shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, modification, discharge or
termination is sought.
 
(d)           The representations, warranties and agreement of the Subscriber
and the Company made in this Agreement shall survive the execution and delivery
of this Agreement and the delivery of the Securities.
 
(e)           Any party may send any notice, request, demand, claim or other
communication hereunder to the Subscriber at the address set forth on the
signature page of this Agreement or to the Company at its primary office
(including personal delivery, expedited courier, messenger service, fax,
ordinary mail or electronic mail), but no such notice, request, demand, claim or
other communication will be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties written notice in the manner
herein set forth.
 
 
 
9

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(f)           Except as otherwise provided herein, this Agreement shall be
binding upon, and inure to the benefit of, the parties to this Agreement and
their heirs, executors, administrators, successors, legal representatives and
assigns.  If the Subscriber is more than one person or entity, the obligation of
the Subscriber shall be joint and several and the agreements, representations,
warranties and acknowledgments contained herein shall be deemed to be made by,
and be binding upon, each such person or entity and its heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
 
(g)           This Agreement is not transferable or assignable by the
Subscriber.
 
(h)           This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflicts of
law principles.
 
(i)           The Company and the Subscriber hereby agree that any dispute that
may arise between them arising out of or in connection with this Agreement shall
be adjudicated before a court located in the City of New York, Borough of
Manhattan, and they hereby submit to the exclusive jurisdiction of the federal
and state courts of the State of New York located in the City of New York,
Borough of Manhattan with respect to any action or legal proceeding commenced by
any party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the sale of
the securities hereunder, and consent to the service of process in any such
action or legal proceeding by means of registered or certified mail, return
receipt requested, postage prepaid, in care of the address set forth herein or
such other address as either party shall furnish in writing to the other.
 
(j)           This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 
[Signature Pages Follow]
 
 
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ALL SUBSCRIBERS MUST COMPLETE THIS PAGE

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day
of November 2010.
 

 
  x           
  =             $0.50 for each Unit     
$
Units subscribed for
 
Aggregate Purchase Price

Manner in which Title is to be held (Please Check One):
 
1.
___
Individual
7.
___
Trust/Estate/Pension or Profit sharing Plan
Date Opened:______________
2.
___
Joint Tenants with Right of Survivorship
8.
___
As a Custodian for
________________________________
Under the Uniform Gift to Minors Act of the State of
________________________________
3.
___
Community Property
9.
___
Married with Separate Property
4.
___
Tenants in Common
10.
___
Keogh
5.
___
Corporation/Partnership/ Limited Liability Company
11.
___
Tenants by the Entirety
6.
___
IRA
     

ALTERNATIVE DISTRIBUTION INFORMATION
 
To direct distribution to a party other than the registered owner, complete the
information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.
 
Name of Firm (Bank, Brokerage, Custodian):
 
Account Name:
 
Account Number:
 
Representative Name:
 
Representative Phone Number:
 
Address:
 
City, State, Zip:
 
 
 
 
 
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IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
 
INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 12.
 
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 13.
 
EXECUTION BY NATURAL PERSONS
 
_____________________________________________________________________________
Exact Name in Which Title is to be Held
 
_________________________________
Name (Please Print)
 
_________________________________
Name of Additional Purchaser
     
_________________________________
Residence: Number and Street
 
_________________________________
Address of Additional Purchaser
     
_________________________________
City, State and Zip Code
 
_________________________________
City, State and Zip Code
     
_________________________________
Social Security Number
 
_________________________________
Social Security Number
     
_________________________________
Telephone Number
 
_________________________________
Telephone Number
     
_________________________________
Fax Number (if available)
 
________________________________
Fax Number (if available)
     
_________________________________
E-Mail (if available)
 
________________________________
E-Mail (if available)
     
__________________________________
(Signature)
 
 
 
________________________________
(Signature of Additional Purchaser)
ACCEPTED this ___ day of _________ 2010, on behalf of the Company.
 
 
By:_________________________________
Name:
          Title:
   

 
 
 
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EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, LLC, Trust, Etc.)
 

_____________________________________________________________________________
Name of Entity (Please Print)
Date of Incorporation or Organization:
State of Principal Office:
Federal Taxpayer Identification Number:
____________________________________________
Office Address
 
____________________________________________
City, State and Zip Code
 
____________________________________________
Telephone Number
 
____________________________________________
Fax Number (if available)
 
____________________________________________
E-Mail (if available)
 
 
By: _________________________________
       Name:
       Title:
[seal]
Attest: _________________________________
                            (If Entity is a Corporation)
_________________________________
_________________________________
Address
   
ACCEPTED this ____ day of __________ 2010, on behalf of the Company.
 
 
 
By: _________________________________
       Name:
       Title:

 

 
13

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INVESTOR QUESTIONNAIRE
 
Instructions:  Check all boxes below which correctly describe you.
 
o
You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), (ii) a savings and loan association or other
institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in an individual or fiduciary capacity, (iii) a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), (iv) an insurance company as defined in Section
2(13) of the Securities Act, (v) an investment company registered under the
Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi)
a business development company as defined in Section 2(a)(48) of the Investment
Company Act, (vii) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended, (viii) a plan established and maintained by
a state, its political subdivisions, or an agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees and you have
total assets in excess of $5,000,000, or (ix) an employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) and (1) the decision that you shall subscribe for and purchase shares
of common stock and warrants to purchase common stock (the “Units”), is made by
a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or (2) you have total assets in excess of $5,000,000 and the decision
that you shall subscribe for and purchase the Shares is made solely by persons
or entities that are accredited investors, as defined in Rule 501 of Regulation
D promulgated under the Securities Act (“Regulation D”) or (3) you are a
self-directed plan and the decision that you shall subscribe for and purchase
theUnits is made solely by persons or entities that are accredited investors.

 
o
You are a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, as amended.

 
o
You are an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar
business trust or a partnership, in each case not formed for the specific
purpose of making an investment in the Units and its underlying securities in
excess of $5,000,000.

 
o
You are a director or executive officer of the Company.

 
o
You are a natural person whose individual net worth, or joint net worth with
your spouse, exceeds $1,000,000 (excluding residences) at the time of your
subscription for and purchase of the Units.

 
o
You are a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with your spouse in excess of
$300,000 in each of the two most recent years, and who has a reasonable
expectation of reaching the same income level in the current year.

 
o
You are a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Units and whose subscription for and purchase
of the Units is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D.

 
o
You are an entity in which all of the equity owners are persons or entities
described in one of the preceding paragraphs.

 
o
You are a non-U.S. Person(a “Reg S Person”), and as such Reg S Person, you
hereby represent that the representations contained in paragraphs (1) through
(7) below are true and correct:

 
(1)           (i) the issuance and sale to such Reg S Person of the Units is
intended to be exempt from the registration requirements of the Securities Act,
pursuant to the provisions of Regulation S; (ii) you are not a “U.S. Person,” as
such term is defined in Regulation S, and are not acquiring the Units for the
account or benefit of any U.S. Person; and (iii) the offer and sale of the Units
has not taken place, and is not taking place, within the United States of
America or its territories or possessions.  Such Reg S Person acknowledges that
the offer and sale of the Units has taken place, and is taking place in an
“offshore transaction,” as such term is defined in Regulation S.
 
 
 
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(2)           Such Reg S Person acknowledges and agrees that, pursuant to the
provisions of Regulation S, the Units cannot be sold, assigned, transferred,
conveyed, pledged or otherwise disposed of to any U.S. Person or within the
United States of America or its territories or possessions for a period of one
year from and after the Closing Date, unless such Units are registered for sale
in the United States pursuant to an effective registration statement under the
Securities Act or another exemption from such registration is available.  Such
Reg S Person acknowledges that it has not engaged in any hedging transactions
with regard to the Units.
 
(3)           Such Reg S Person consents to the placement of a legend on any
certificate, note or other document evidencing the Securities and understands
that the Company shall be required to refuse to register any transfer of
securities not made in accordance with applicable U.S. securities laws.
 
(4)           Such Reg S Person is not a “distributor” of securities, as that
term is defined in Regulation S, nor a dealer in securities.
 
(5)           Such Reg S Person understands that the Units have not been
registered under the Securities Act, or the securities laws of any state and are
subject to substantial restrictions on resale or transfer.  The Units are
“restricted securities” within the meaning of Regulation S and Rule 144,
promulgated under the Securities Act.
 
(6)           Such Reg S Person acknowledges that the shares of Common Stock may
only be sold offshore in compliance with Regulation S or pursuant to an
effective registration statement under the Securities Act or another exemption
from such registration, if available.  In connection with any resale of the
shares of Common Stock pursuant to Regulation S, the Company will not register a
transfer not made in accordance with Regulation S, pursuant to an effective
registration statement under the Securities Act or in accordance with another
exemption from the Securities Act.
 
(7)           Such Reg S Person makes the representations, declarations and
warranties as contained in this Agreement with the intent that the same shall be
relied upon by the Company in determining its suitability as a purchaser of such
Units.
 
 
 
15

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Check all boxes below which correctly describe you.
 
With respect to this investment in the Units, your:
 
Investment Objectives:                               oAggressive
Growth                      oSpeculation
 
Risk Tolerance:                                             oLow
Risk                                        oModerate
Risk                                 oHigh Risk
 
Are you associated with a FINRA Member Firm?     oYes             oNo
 
 
Your initials (purchaser and co-purchaser, if applicable) are required for each
item below:

 
____   ____ 
I/We understand that this investment is not guaranteed.

 
____   ____ 
I/We are aware that this investment is not liquid.

 
____   ____ 
I/We are sophisticated in financial and business affairs and areable to evaluate
the risks and merits of an investment in thisoffering.

 
____   ____ 
I/We confirm that this investment is considered “high risk.” (This type of
investment is considered high risk due to the inherent risksincludinglack of
liquidity and lack of diversification.  Success or failure of private placements
such as this is dependent on the corporate issuer ofthese securities and is
outside the control of the investors. While potential loss is limited to the
amount invested,such loss is possible.)

 
 
 
16

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The Subscriber hereby represents and warrants that all of its answers to this
Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased the Units.
 
 
 
___________________________________
Name of Purchaser  [please print]
 
___________________________________
Signature of Purchaser (Entities please
provide signature of Purchaser’s duly
authorized signatory.)
 
___________________________________
Name of Signatory (Entities only)
 
___________________________________
Title of Signatory (Entities only)
 
 
___________________________________
Name of Co-Purchaser  [please print]
 
___________________________________
Signature of Co-Purchaser

 
 
 
 
17

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VERIFICATION OF INVESTMENT ADVISOR/BROKER
 
I state that I am familiar with the financial affairs and investment objectives
of the investor named above and reasonably believe that a purchase of the
securities is a suitable investment for this investor and that the investor,
either individually or together with his or her purchaser representative,
understands the terms of and is able to evaluate the merits of this offering.  I
acknowledge:
 
 
(a)
that I have reviewed the Subscription Agreement and forms of securities
presented to me, and attachments (if any) thereto;

 
 
(b)
that the Subscription Agreement and attachments thereto have been fully
completed and executed by the appropriate party; and

 
 
(c)
that the subscription will be deemed received by the Company upon acceptance of
the Subscription Agreement.

 
Deposit securities from this offering directly to purchaser’s
account?               oYes     oNo
 
If “Yes,” please indicate the account number:
_____________________________________
 
 

 
_________________________________
Broker/Dealer  
 
_________________________________
Account Executive
     
_________________________________
(Name of Broker/Dealer)  
 
_________________________________
(Signature)
     
_________________________________
(Street Address of Broker/Dealer Office) 
 
_________________________________
(Print Name)
     
_________________________________
(City of Broker/Dealer Office)  (State)  (Zip)     
 
_________________________________
(Representative I.D. Number)
     
_________________________________
(Telephone Number of Broker/Dealer Office)
 
_________________________________
(Date)
     
_________________________________
(Fax Number of Broker/Dealer Office)
 
________________________________
(E-mail Address of Account Executive)

 
 
 
                                                                                     
 
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