EXHIBIT 10.1

AMENDMENT NO. 1 TO

OPTION AGREEMENT

DATED AUGUST 5, 2008

 

This Amendment No. 1(“Amendment No. 1”) to the Option Agreement, dated August 5,
2008 (the “Option Agreement”), by and among Gryphon Gold Corporation, a Nevada
corporation (the “Company”), Gerald Baughman, an individual, and Fabiola
Baughman, an individual, and together with Gerald Baughman, husband and wife
(jointly, the “Debtholders”) and Nevada Eagle Resources LLC, a Nevada limited
liability company, as guarantor (“Nevada Eagle”), is entered into effective as
of February 5, 2010 (the “Effective Date”).

WHEREAS, the Company issued the Debtholders a 5% Convertible Note, due March 30,
2010, dated August 21, 2009 (Certificate No. CN2007-001), in the principal
amount of five million dollars and no cents ($5,000,000) (the “Convertible
Note”) as partial consideration in connection with the purchase of all of the
outstanding common limited liability company interests of Nevada Eagle under the
terms of a Membership Interest Purchase Agreement dated July 4, 2007; and

WHEREAS, the Convertible Note is currently convertible into shares of common
stock of the Company at $1.00 per share, escalating to $1.25 per share after the
first anniversary, escalating to $1.50 after the second anniversary and
escalating to $1.75 if converted on March 30, 2010 (the “Current Conversion
Price”); and

WHEREAS, on August 5, 2008, the Company, the Debtholders and Nevada Eagle
entered into the Option Agreement which granted the Company the option,
exercisable for an initial term of one year (extendable for an additional six
months) (the “Option”) to amend the terms of the Convertible Note to (a) convert
two million five hundred thousand dollars ($2,500,000) of principal of
Convertible Note as follows: (i) five hundred thousand dollars ($500,000) paid
in cash (the “Option Exercise Price”); and (ii) two million dollars ($2,000,000)
paid by issuing 4,000,000 shares of common stock of the Company at a deemed
value of $0.50 per share (the “Option Shares”); and (b) amend the Convertible
Note with the remaining principal amount of two million five hundred thousand
dollars ($2,500,000) as follows: (i) extend the due date to March 30, 2012; (ii)
amend Section 3.2 of the Convertible Note so that the Convertible Note is
convertible at $0.70 per share through the first anniversary after the Option is
exercised (the “Option Exercise”), escalating to $0.80 per share after the first
anniversary of the Option Exercise, escalating to $0.90 per share after the
second anniversary of the Option Exercise, and escalating to $1.00 per share
after the third anniversary of the Option Exercise through March 30, 2012
(“Option Conversion Price”); (iii) amend the Convertible Note to provide for
mandatory conversion of the 100% principal amount of Convertible Note upon
satisfaction of certain stock price and volume criteria as detailed in the
Option Agreement; (iv) facilitate the resale of the Option Shares and shares
issuable upon conversion of the Convertible Note; (v) amend Section 2.1(f) of
the Convertible Note; and (vi) have Nevada Eagle guarantee the obligations under
the Convertible Note and grant a first priority security interest in the
properties set forth on Schedule A to the Option Agreement (the “Secured
Properties”); and

 

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WHEREAS, the Option Exercise was conditioned on the satisfaction of several
conditions as set forth in the Option Agreement (the “Option Exercise
Conditions”); and

WHEREAS, the Company has paid to the Debtholders the initial payment of $35,000
in consideration for entering into the Option Agreement and the Company has paid
to the Debtholders the additional payment of $35,000 necessary to extend the
expiration date of the Option Agreement an additional six months, until February
5, 2010; and

WHEREAS, the Company, Nevada Eagle and the Debtholders have determined that it
is in the best interest of the Company, its shareholders, Nevada Eagle and the
Debtholders to amend the Option Agreement to waive the Option Exercise
Conditions, permit the Company to pay the Option Exercise Price through the
issuance of a 14 day promissory note (the “Promissory Note”) of the Company and
amend Schedule A to reflect changes in the Secured Properties; and

WHEREAS, the Company and the Debtholders concurrently herewith are entering into
a separate agreement relating to additional consideration to the Debtholders for
entering into this Amendment No. 1 to the Option Agreement (the “Option
Consideration Agreement”).

NOW, THEREFORE, for and in consideration of the covenants set forth in the
Option Agreement, the Option Consideration Agreement and this Amendment No. 1,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:

 

1.

Section 1.2, subsection (a)(i) of the Option Agreement is hereby amended to read
as follows:

“five hundred thousand dollars ($500,000) paid (i) in cash, if the Company has
received the net proceeds from the private placement of the Company announced on
January 22, 2010 (the “Private Placement”) by February 5, 2010; or (ii) by
issuance of a $500,000 promissory note to the Debtholders, payable on the
earlier of (A) 14 days or (B) from any proceeds of the Private Placement and
secured only by the proceeds of the Private Placement (“Option Note”); provided
however, that the Company agrees that all proceeds from the Private Placement
shall be first used to satisfy the obligations under the Option Note and that if
aggregate proceeds of the Private Placement are not available in the amount of
$500,000 on or before February 19, 2010, the Option Note will expire, the Option
will extinguish, as if unexercised, and the Convertible Note will revert to its
original terms, as if the Option had never been exercised.”

 

2.

Section 1.3 of the Option Agreement is hereby deleted, in full, and the
Debtholders hereby waive any and all conditions to the exercise of the Option by
the Company, except for the Option expiration date of February 5, 2010, which
remains in full force and effect.

 

3.

Schedule A to the Option Agreement is hereby amended and replaced, in full, by
Schedule A hereto.

 

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3.

Capitalized terms not defined herein have the meaning ascribed to them in the
Option Agreement.

 

4.

All other provisions of the Option Agreement shall remain in full force and
effect.

 

5.

This Amendment No. 1 may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.

[Signatures on Following Page]

 

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            IN WITNESS THEREOF, Gryphon, Nevada Eagle and the Debtholders have
executed this Agreement as of the Effective Date.

GRYPHON GOLD CORPORATION

 

By: _/s/ R. William Wilson___________________     

 

Name:

Title:

R. William Wilson

Chief Financial Officer

 

 

NEVADA EAGLE RESOURCES LLC

 

By: _/s/ John L. Key__________________________

Name:

Title:

 

 

__/s/ Gerald W. Baughman_____________________

Gerald W. Baughman

 

__/s/ Fabiola Baughman_______________________

Fabiola Baughman

 

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SCHEDULE A

 

List of Properties

 

 

 

Property:

1.

Velvet

2.

Troy

3.

Regent

4.

Golden Arrow

5.

Gold Spring

6.

Blue Sphinx

7.

Suitcase

8.

Easter

9.

Rosebud

10.

Monte Cristo

 

 

 

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