Document:

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

Registration Rights Agreement (the “Agreement”), dated as of May 20, 2010, by and between Global Earth Energy, Inc., a corporation organized under the laws of Nevada, USA (the “Company”), and Dutchess Opportunity Fund, II, LP, a Delaware Limited Partnership, with its principal office at 50 Commonwealth Avenue, Suite 2, Boston, MA 02116 (the “Investor”).

Whereas, in connection with the Investment Agreement by and between the Company and the Investor of this date (the “Investment Agreement”), the Company has agreed to issue and sell to the Investor up to 8,000,000 shares of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), to be purchased pursuant to the terms and subject to the conditions set forth in the Investment Agreement; and 

 

Whereas, to induce the Investor to execute and deliver the Investment Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws, with respect to the shares of Common Stock issuable pursuant to the Investment Agreement.

 

Now therefore, in consideration of the foregoing promises and the mutual covenants contained hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows: 

 

Section 1.  DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

“Execution Date” means the date of this Agreement set forth above.

“Investor” means Dutchess Opportunity Fund, II, LP, a Delaware Limited Partnership.

“Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency. 

“Principal Market” shall mean Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board or the Pink Sheets, whichever is the principal market on which the Common Stock of the Company is listed. 

 

“Register,” “Registered,” and “Registration” refer to the Registration effected by preparing and filing one (1) or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

“Registrable Securities” means (i) the shares of Common Stock issued or issuable pursuant to the Investment Agreement, and (ii) any shares of capital stock issued or issuable with respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the 1933 Act.

1

 

“Registration Statement” means the registration statement of the Company filed under the 1933 Act covering the Registrable Securities.

All capitalized terms used in this Agreement and not otherwise defined herein shall have the same meaning ascribed to them as in the Investment Agreement. 

Section 2.  REGISTRATION.

(a)  The Company shall, within twenty-one (21) calendar days of the date of this Agreement, file with the SEC the Registration Statement or Registration Statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions.  The Company shall initially register for resale 8,000,000 shares of Common Stock, except to the extent that the SEC indicates that the share amount be reduced as a condition of effectiveness.

(b)  The Company shall use all commercially reasonable efforts to have the Registration Statement(s) declared effective by the SEC within ninety (90) calendar days after the date that the Registration Statement is filed. 

(c)  The Company agrees not to include any other securities in the Registration Statement covering the Registrable Securities without Investor’s prior written consent which Investor may withhold in its sole discretion. Furthermore, the Company agrees that it will not file any other Registration Statement for other securities, until thirty calendar days after the Registration Statement for the Registrable Securities is declared effective by the SEC except for one registration statement on Form S-8.

Section 3.  RELATED OBLIGATIONS.

At such time as the Company is obligated to prepare and file the Registration Statement with the SEC pursuant to Section 2(a), the Company shall have the following obligations with respect to the Registration Statement:

(a)  The Company shall use all commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective within ninety (90) days after the date that the Registration Statement is filed and shall keep such Registration Statement effective until the earlier to occur of  the date on which (A) the Investor shall have sold all the Registrable Securities; or (B) the Company has no right to sell any additional shares of Common Stock under the Investment Agreement (the “Registration Period”).  The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall use all commercially reasonable efforts to respond to all SEC comments within ten (10) business days from receipt of such comments by the Company. The Company shall use all commercially reasonable efforts to cause the Registration Statement relating to the Registrable Securities to become effective no later than five  (5)  business days after notice from the SEC that the Registration Statement may be declared effective.  The Investor agrees to provide all information which it is required by law to provide to the Company, including the intended method of disposition of the Registrable Securities, and the Company’s obligations set forth above shall be conditioned on the receipt of such information.

(b)  The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective during the Registration Period, and, during such period, comply with the 

2

 

provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor thereof as set forth in such Registration Statement.  In the event the number of shares of Common Stock covered by the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover all of the Registrable Securities, the Company shall amend such Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase Price of the Common Stock and other relevant factors on which the Company reasonably elects to rely), assuming the Company has sufficient authorized shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized.  The Company shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. 

(c)  The Company shall make available to the Investor and its legal counsel without charge (i) if requested by the Investor, promptly after the same is prepared and filed with the SEC at least one (1) copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, the prospectus included in such Registration Statement (including each preliminary prospectus) and, with regards to such Registration Statement(s), any correspondence by or on behalf of the Company to the SEC or the staff of the SEC and any correspondence from the SEC or the staff of the SEC to the Company or its representatives unless the Company believes that such correspondence would be material, non-public information; (ii) upon the effectiveness of any Registration Statement, the Company shall make available copies of the prospectus, via EDGAR, included in such Registration Statement and all amendments and supplements thereto; and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities.

 

(d)  The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or “blue sky” laws of such states in the United States as the Investor reasonably requests; (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period; (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (y) subject itself to general taxation in any such jurisdiction.  The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(e)  As promptly as practicable after becoming aware of such event, the Company shall notify Investor in writing of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (“Registration Default”) and use all diligent efforts to promptly prepare a supplement or amendment to such Registration Statement and take any other necessary steps to cure the Registration Default (which, if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and make available copies of such supplement or amendment to the Investor. The Company shall also promptly notify the Investor (i) when a prospectus or any prospectus supplement or post-effective amendment has 

3

 

been filed, and when the Registration Statement or any post-effective amendment has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate, (iv) in the event the Registration Statement is no longer effective, or (v) if the Registration Statement is stale as a result of the Company’s failure to timely file its financials or otherwise.  

If a Registration Default occurs during the period commencing on the Put Notice Date and ending on the Closing Date, the Company acknowledges that its failure to cure such a Registration Default within ten (10) business days will cause the Investor to suffer damages in an amount that will be difficult to ascertain.

(f)  The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other  suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued,  to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor holding Registrable Securities being sold of the issuance of such order and the  resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding concerning the effectiveness of the Registration Statement.

(g)  The Company shall permit the Investor and one (1) legal counsel, designated by the Investor, to review and comment upon the Registration Statement and all amendments and supplements thereto at least one (1) business day prior to their filing with the SEC.  The Company is not obligated to accept the Investor’s comments and the Company will notify the Investor at least one (1) business day prior to filing the Registration Statement that the Investor’s comment or comments will not be accepted.   However, any postponement of a filing of a Registration Statement or any postponement of a request for acceleration or any postponement of the effective date or effectiveness of a Registration Statement by written request of the Investor (collectively, the "Investor's Delay") shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due the Investor from the Company under any and all agreements of any nature or kind between the Company and the Investor.  The event(s) of an Investor's Delay shall act to suspend all obligations of any kind or nature of the Company under any and all agreements of any nature or kind between the Company and the Investor.   

(h)  Intentionally Omitted.

(i)  The Company shall hold in confidence and not make any disclosure of information concerning the Investor unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement, or (v) the Investor has consented to such disclosure.  The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order covering such information.

(j)  The Company shall use all commercially reasonable efforts to maintain designation and quotation of all the Registrable Securities covered by any Registration Statement on the Principal Market.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(j).

(k)  The Company shall cooperate with the Investor to facilitate the prompt preparation and delivery of certificates representing the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may reasonably request (and after any sales of such Registrable Securities by the Investor, such certificates not bearing any restrictive legend).

4

 

(l)  The Company shall provide a transfer agent for all the Registrable Securities not later than the effective date of the first Registration Statement filed pursuant hereto.

(m)  If requested by the Investor, the Company shall (i) as soon as reasonably practical incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably determines should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably possible after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Investor.

(n)  The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to facilitate the disposition of such Registrable Securities.

(o)  The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

(p)  Within one (1) business day after the Registration Statement which includes Registrable Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities, with copies to the Investor, a written notification that such Registration Statement has been declared effective by the SEC.

Section 4.  OBLIGATIONS OF THE INVESTOR.

(a)  At least five (5) calendar days prior to the first anticipated filing date of the Registration Statement  the Company shall notify the Investor in writing of the information the Company requires from the Investor for the Registration Statement.  It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the Company that information regarding itself, the Registrable Securities and the intended method of disposition of the Registrable Securities as shall reasonably be required to effect the registration of such Registrable Securities and the Investor shall execute such documents in connection with such registration as the Company may reasonably request.  The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant to the Registration Statement, it shall comply with the “Plan of Distribution” section of the then current prospectus relating to such Registration Statement.

(b)  The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder. 

(c)  The Investor agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e).

5

 

Section 5.  EXPENSES OF REGISTRATION.

All expenses, other than underwriting discounts and commissions and other than as set forth in the Investment Agreement, incurred in connection with registrations including comments, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printing and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.  However, the Investor will pay the costs of its own counsel to review the Registration Statement, any amendments thereto, and any correspondence with the SEC.

Section 6.  INDEMNIFICATION.

In the event any Registrable Securities are included in the Registration Statement under this Agreement:

(a)  To the fullest extent permitted by law, the Company, under this Agreement, will, and hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities, the directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any actual losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which the Investor has requested in writing that the Company register or qualify the Shares (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”).  Subject to the restrictions set forth in Section 6(c) the Company shall reimburse the Investor and each such controlling person, promptly as such expenses are incurred and are due and payable, for any actual, reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the Registration Statement of the information furnished to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on (a) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company or (b) the Indemnified Person’s use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus;  (iii) any claims based on the manner of sale of the Registrable Securities by the Investor or of the Investor’s failure to register as a dealer under applicable securities laws; (iv) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and (v) any amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld.  

6

 

Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and  shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement.

(b)  In connection with any Registration Statement in which Investor is participating, the Investor agrees to severally and jointly indemnify, hold harmless and defend, to the  same extent and in the same manner as is set forth in Section 6(a), the Company, each of its  directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s agents (collectively and together with an Indemnified Person, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation is due to (i) the inclusion in the Registration Statement of the written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement, (ii) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company or the Investor’s use of an incorrect prospectus despite being timely advised by the Company in writing not to use such incorrect prospectus; (iii) the Investor’s failure to register as a dealer under applicable securities laws; or (iv) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and, subject to Section 6(c), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall only be liable under this Section 6(b) for  that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. 

(c)  Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  The indemnifying party shall pay for only one (1) separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel shall be selected by the Investor, if the Investor is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable.  The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding affected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any 

7

 

judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

(d)  The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

Section 7.  CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

Section 8.

REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”), provided that the Investor holds any Registrable Securities are eligible for resale under Rule 144 and such information is necessary in order for the Investor to sell such Securities pursuant to Rule 144, the Company agrees to:

(a)

make and keep public information available, as those terms are understood and defined in Rule 144;

(b)

file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company’s obligations under Section 5(c) of the Investment Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(c)

furnish to the Investor, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

Section 9.  NO ASSIGNMENT OF REGISTRATION RIGHTS.

The rights and obligations under this Agreement shall not be assignable.

Section 10.  AMENDMENT OF REGISTRATION RIGHTS.

8

 

The provisions of this Agreement may be amended only with the written consent of the Company and Investor.  

Section 11.  MISCELLANEOUS.

(a)  Any notices or other communications required or permitted to be given under the terms of this Agreement that must be in writing will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or email with the signed document attached in PDF format (provided a confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:

             

Global Earth Energy Inc.

1213 Culbreth Drive

Wilmington, North Carolina 28405

Telephone: (910) 616-0077

Facsimile: (910) 270-6640

 

 

If to the Investor:

Dutchess Opportunity Fund, II, LP

50 Commonwealth Ave, Suite 2

Boston, MA 02116

Telephone: (617) 301-4700

Facsimile:  (617) 249-0947

Each party shall provide five (5) business days prior notice to the other party of any change in address, phone number, facsimile number or e-mail address.

(b)  Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

(c)   This Agreement and the Investment Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.

(d)  This Agreement and the Investment Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

(e)  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.  Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.  This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all the parties had prepared the same.

(f)  This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission or by e-mail delivery of a PDF format  of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

(g)  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may 

9

 

reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(h) In case any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

Section 12.  DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW

All disputes arising under this agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without regard to principles of conflict of laws.  The parties to this agreement will submit all disputes arising under this agreement to arbitration in Boston, Massachusetts before a single arbitrator of the American Arbitration Association (“AAA”).  The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the Commonwealth of Massachusetts.  No party to this agreement will challenge the jurisdiction or venue provisions as provided in this section.  Nothing contained herein shall prevent the party from obtaining an injunction.

*.*.*

10

 

SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement and the Registration Rights Agreement as of the date first written above. 

The undersigned signatory hereby certifies that he has read and understands the Registration Rights Agreement, and the representations made by the undersigned in this Registration Rights Agreement are true and accurate, and agrees to be bound by its terms. 

DUTCHESS OPPORTUNITY FUND, II, LP

By: _________________________________

Douglas H. Leighton

Managing Member of:

Dutchess Capital Management, II, LLC

General Partner to:

Dutchess Opportunity Fund, II, LP

GLOBAL EARTH ENERGY, INC.

				
	 	

By:

	 	  

	  

	  

	SYDNEY HARLAND, Chief Executive Officer 

	  

	 	 	 	  

	 	 	 	 

 

11gpxm10q20100331ex10-1.htm

    
      

    

    
      

    

    Exhibit
10.1

     

    

    EXPLORATION,
DEVELOPMENT AND MINING

    JOINT
VENTURE

    MEMBERS’
AGREEMENT

    AND

    LIMITED
LIABILITY COMPANY

    OPERATING
AGREEMENT

    

    By
And Between

    

    Scorpio
Gold Corporation

    

    And

    

    Scorpio
Gold (US) Corporation

    

    And

    

    Golden
Phoenix Minerals, Inc.

    

    

    Dated
December 31, 2009

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    

    

    MEMBERS’
AGREEMENT

    

    FOR

    

    MINERAL
RIDGE GOLD, LLC

    

    

    

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      	 
      	 
      	
              Page

            
	 
      	 
      	 
      
	
              ARTICLE
      I          DEFINITIONS AND
      CROSS REFERENCES

            	
              2

            
	
              1.1

            	
              Definitions

            	
              2

            
	
              1.2

            	
              Cross
      References

            	
              2

            
	
              ARTICLE
      II        CERTAIN MATTERS CONCERNING
      CONTRIBUTIONS BY MEMBERS

            	
              2

            
	
              2.1

            	
              Initial
      Purchase and Sale of the Properties to be Contributed by
      Members.

            	
              2

            
	
              2.2

            	
              Emergency
      or Unexpected Expenditures

            	
              5

            
	
              ARTICLE
      III       REPRESENTATIONS AND WARRANTIES;
      TITLE TO ASSETS; INDEMNITIES

            	
              5

            
	
              3.1

            	
              Representations
      and Warranties of the Members

            	
              5

            
	
              3.2

            	
              Representations
      and Warranties of GPXM

            	
              6

            
	
              3.3

            	
              Disclosures

            	
              8

            
	
              3.4

            	
              Loss
      of Title

            	
              9

            
	
              3.5

            	
              Limitation
      of Liability

            	
              9

            
	
              3.6

            	
              Indemnification

            	
              9

            
	
              ARTICLE
      IV        INTERESTS OF
      MEMBERS

            	
              10

            
	
              4.1

            	
              Continuing
      Liabilities Upon Adjustments of Ownership Interests

            	
              10

            
	
              4.2

            	
              Continuing
      Obligations and Environmental Liabilities

            	
              10

            
	
              4.3

            	
              Grant
      of Lien and Security Interest

            	
              11

            
	
              4.4

            	
              Subordination
      of Interests

            	
              11

            
	
              ARTICLE
      V         RELATIONSHIP OF THE
      MEMBERS

            	
              11

            
	
              5.1

            	
              Transfer
      or Termination of Rights

            	
              11

            
	
              5.2

            	
              Abandonment
      and Surrender of Properties

            	
              11

            
	
              5.3

            	
              Supplemental
      Business Arrangement

            	
              12

            
	
              5.4

            	
              Implied
      Covenants

            	
              12

            
	
              5.5

            	
              No
      Third Party Beneficiary Rights

            	
              12

            
	
              ARTICLE
      VI        ACQUISITIONS WITHIN AREA OF
      INTEREST

            	
              12

            
	
              6.1

            	
              General

            	
              12

            
	
              6.2

            	
              Notice
      to Non-Acquiring Member

            	
              12

            
	
              6.3

            	
              Option
      Exercised

            	
              13

            
	
              6.4

            	
              Option
      Not Exercised

            	
              13

            
	
              6.5

            	
              Non
      Compete Covenants

            	
              13

            
	
              ARTICLE
      VII      DISPUTES

            	
              13

            
	
              7.1

            	
              Governing
      Law

            	
              13

            
	
              7.2

            	
              Forum
      Selection

            	
              13

            
	
              7.3

            	
              Arbitration

            	
              14

            
	
              7.4

            	
              Dispute
      Resolution

            	
              14

            
	
              ARTICLE
      VIII     GENERAL PROVISIONS

            	
              14

            
	
              8.1

            	
              Notices

            	
              14

            
	
              8.2

            	
              Gender

            	
              16

            
	
              8.3

            	
              Currency

            	
              16

            
	
              8.4

            	
              Headings

            	
              16

            
	
              8.5

            	
              Waiver

            	
              16

            
	
              8.6

            	
              Modification

            	
              16

            
	
              8.7

            	
              Force
      Majeure

            	
              16

            
	
              8.8

            	
              Rule
      Against Perpetuities

            	
              17

            
	
              8.9

            	
              Further
      Assurances

            	
              17

            
	
              8.10

            	
              Entire
      Agreement; Successors and Assigns

            	
              17

            
	
              8.11

            	
              Counterparts

            	
              17

            

    

     

    
      
         

      

      
        -i-

        
          

        

      

      
         

      

    

    

    Attachments

    Attachment
1 – Quitclaim Deed

    Attachment
2 – Bill of Sale

    Attachment
3 – LLC Agreement

    Attachment
4 – Disclosure Schedule

     

    
 

    
      
         

      

      
        -ii-

        
          

        

      

      
         

      

    

    MEMBERS’
AGREEMENT

    OF
THE MEMBERS OF

    MINERAL
RIDGE GOLD, LLC

    a
Nevada Limited Liability Company

    

    This
Members’ Agreement (the “Agreement”) is made as of
December 31, 2009 (“Effective
Date”) between Golden Phoenix Minerals, Inc., a Nevada corporation
(“GPXM”), the address of
which is 1675 East Prater Way, #102, Sparks, Nevada, 89434,  Scorpio
Gold (US) Corporation, a Nevada corporation (“Scorpio US”), the address of
which is 995 Germain Street, Val d’Or, Quebec, J9P 7H7, Canada and Scorpio Gold
Corporation, a British Columbia corporation (“Scorpio Gold”) the address of
which is 995 Germain Street, Val d’Or, Quebec, J9P 7H7, Canada.

    

    RECITALS

    

    A.       
    GPXM owns or controls certain properties in the County
of Esmeralda, State of Nevada, which properties are described in Exhibit A.

    

    B.      
     Scorpio Gold, through its wholly owned subsidiary,
Scorpio US, also owns or controls certain properties described in Exhibit A and wishes to participate
with GPXM in the exploration, evaluation and, if justified, the development and
mining of mineral resources within their combined properties.

    

    C.            GPXM
desires to sell to Scorpio US an undivided seventy percent (70%) interest in the
Properties currently owned by GPXM, with GPXM maintaining an undivided thirty
percent (30%) interest in such Properties, for a purchase price consisting of an
aggregate sum of Three Million Seven Hundred Fifty Thousand Dollars (US
$3,750,000) in cash and delivery to GPXM of that number of newly issued common
shares of capital stock of Scorpio Gold at a deemed price of Cdn $0.50 per
share, having an aggregate deemed value of Three Million Seven Hundred Fifty
Thousand Dollars (US $3,750,000) based upon the average noon rate of exchange as
posted by the Bank of Canada for the ten (10)-business day period ending three
(3) business days prior to the date of the Closing provided for in Section
2.1(b) of this Agreement.

    

    D.      
     GPXM and Scorpio US wish to organize and operate a
limited liability company under the Nevada Limited Liability Company Act,
codified in the Nevada Revised Statutes, Chapter 86, et seq., as the same may be
amended from time to time (the “Act”), to which each shall
agree to contribute its respective ownership interests in the Properties and
certain other Assets, to own the Properties and conduct the operations thereon
contemplated by Recital B. The name of the limited liability company shall be
Mineral Ridge Gold, LLC (the “Company”) and its affairs
shall be governed by that certain Operating Agreement of Mineral Ridge
Gold,  LLC, to be dated as of the date of Closing (the “LLC Agreement”), in
substantially the form attached hereto as Attachment 3 .

    

    NOW
THEREFORE, in consideration of the covenants and conditions contained herein,
GPXM, Scorpio US and Scorpio Gold agree as follows:

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    
 

    ARTICLE
I

    DEFINITIONS
AND CROSS-REFERENCES

    

    1.1           Definitions. The terms defined
herein shall have the defined meaning wherever used in this
Agreement.  Capitalized terms used but not defined in this Agreement
shall have the meanings given thereto in the LLC Agreement and Exhibits
thereto.

    

    1.2           Cross References. Except as
otherwise specified herein, references to exhibits are to Exhibits of the LLC
Agreement. References to “Articles,” “Sections” and “Subsections” refer to
Articles, Sections and Subsections of this Agreement unless indicated
otherwise.  References to “Paragraphs” and “Subparagraphs” refer to
paragraphs and subparagraphs of the referenced Exhibits.

    

    ARTICLE
II

    CERTAIN
MATTERS CONCERNING

    CONTRIBUTIONS
BY MEMBERS

    

    2.1           Initial Purchase and Sale of the
Properties to be Contributed by Members.

     

    (a)           Purchase and
Sale.  Pursuant to the terms of this Agreement, GPXM agrees to
sell and Scorpio US agrees to purchase, an undivided seventy percent (70%)
interest in the Properties and Assets currently owned by GPXM, with GPXM
maintaining an undivided thirty percent (30%) interest, for a purchase price
consisting of an aggregate sum of Three Million Seven Hundred Fifty Thousand
Dollars (US $3,750,000) in cash (less those amounts previously paid by Scorpio
Gold to GPXM referred to as  the Initial Review Payment, Monthly
Payments and Additional Advance pursuant to that certain Letter of Intent dated
May 19, 2009, as subsequently amended (“LOI”) by and between GPXM and
Scorpio Gold, and deliver to GPXM that number of common shares of capital stock
of Scorpio Gold at a deemed price of Cdn $0.50 per share, having an aggregate
deemed value of Three Million Seven Hundred Fifty Thousand Dollars (US
$3,750,000) based upon the average noon rate of exchange as posted by the Bank
of Canada for the ten (10)-business day period ending three (3) business days
prior to the Closing provided for in Section 2.1(b) below (collectively, the
“Purchase
Price”).  The purchase and sale of GPXM’s 70% undivided
interest in the Properties and Assets as set forth above shall be evidenced by a
Quitclaim Deed in substantially the form attached hereto as Attachment 1 and a Bill of
Sale in substantially the form attached hereto as Attachment 2 (the “Purchase”).

     

    (b)           Closing.  Subject
to the terms and conditions of this Agreement, the closing of the Purchase (the
“Closing”) shall take
place on the date that: (i) all Closing Deliverables set forth in Subsection 2.1(b)(i) have been
delivered; and (ii) all Closing Conditions set forth in Subsection 2.1(b)(ii) have
been satisfied in accordance with their terms.

    

    (i)          
  Closing
Deliverables.

     

    (A)           GPXM Closing
Deliverables.  Upon Closing, GPXM will deliver to Scorpio US
and Scorpio Gold : (i) that certain Quitclaim Deed transferring a seventy
percent (70%) undivided interest in the Properties currently owned by GPXM to
Scorpio US; (ii) an executed Bill of Sale in favour of Scorpio US transferring a
70% interest in the Properties; (iii) evidence of the assignment  to
the Company of the Bond; (iv) an executed Bill of Sale in favour of Scorpio US
transferring a 70% interest in all Assets currently owned by GPXM, except for
the Bond; and (v) an executed copy of the LLC Agreement to be effective as of
the date of Closing.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (B)           Scorpio Gold Closing
Deliverables.  Upon Closing, Scorpio Gold will, or will have
Scorpio US as applicable, deliver to GPXM: (i) the aggregate sum of Three
Million Seven Hundred Fifty Thousand Dollars (US $3,750,000) by wire transfer of
same day available funds (less those amounts previously paid by Scorpio Gold to
GPXM referred to as the Initial Review Payment, Monthly Payments and Additional
Advance pursuant to the LOI; (ii) a certificate in GPXM’s name representing that
number of common shares of capital stock of Scorpio Gold at a deemed price of
Cdn $0.50 per share, having an aggregate deemed value of Three Million Seven
Hundred Fifty Thousand Dollars (US $3,750,000) based upon the average noon rate
of exchange as posted by the Bank of Canada for the ten (10)-business day period
ending three (3) business days prior to the Closing; (iii) an executed copy of
the LLC Agreement to be effective as of the date of Closing; (iv) evidence of
the acquisition by Scorpio US or the Company of the Mary Mining Royalty (as
defined in Subsection
2.1(b)(ii)).

     

    (ii)         
  Closing
Conditions.  As a condition to Closing: (A) each party shall
have received, or have waived its rights in writing to receive, each of the
Closing Deliverables of the other party set forth in Subsection 2.1(b)(i) above;
(B) Scorpio Gold shall have received the requisite regulatory approvals of the
TSX Venture Exchange to the completion of the transactions contemplated herein;
(C) Scorpio Gold shall have completed one or more equity or debt financings to
raise minimum gross proceeds of such amounts as are necessary to pay the cash
components of its closing deliverables set forth in Subsection 2.1(b)(i)(B); and
(D) Scorpio Gold, or its nominee, shall have completed the acquisition of the 8%
net smelter returns royalty (the “Mary Mining Royalty”) which applies to 48 of
the unpatented claims that comprise part of the Properties from the owner Mary
Mining Company Inc. (“Mary Mining”) pursuant to the terms of a royalty purchase
agreement between Scorpio Gold and Mary Mining dated October 13, 2009, as
amended, and Scorpio Gold shall have either cancelled the Mary Mining Royalty or
caused the transfer of the Mary Mining Royalty to the Company, as determined by
Scorpio Gold in its sole discretion.

    

    (iii)           Pre and Post Closing
Covenants.  Scorpio Gold agrees to: (A) use its best
commercially reasonable efforts to obtain the requisite regulatory approvals of
the TSX Venture Exchange prior to the Closing; (B) continue to make the Monthly
Payments to GPXM pursuant to the terms of the LOI, in the amount of One Hundred
Thousand Dollars (US $100,000) per month until the Closing, which sums, subject
to Section 2.1(d) are
nonrefundable and shall be credited against the cash portion of the Purchase
Price; and (C) if a Closing has not occurred on or prior to the due date of that
certain Bridge Note dated February 6, 2009 made by GPXM to Crestview Capital
Master, LLC, in the approximate amount of One Million One Hundred Thousand Seven
Hundred Seventy-Four Dollars (US $1,100,774), then Scorpio Gold and GPXM shall
take commercially reasonable steps to extend the due date of the Bridge Note
until the earlier of (1) the Closing or (2) the Bridge Note’s revised maturity
date, if any.  Scorpio Gold and GPXM shall equally share the costs
associated with extending the due date of the Bridge Note as
required.

    

    (c)           Contributions.  Immediately
after the Closing of the Purchase, the Members shall contribute their respective
interests in the Properties and the Assets and Bond and Mary Mining Royalty (or
evidence of cancellation) to the Company pursuant to Section 3.1 of the LLC
Agreement.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    (d)           Termination.   This
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to Closing:

     

    (i)       
     by either Party if within four (4) months from the
Effective Date, the Parties have been unable to satisfy the Closing Conditions
as set forth in Subsection
2.1(b)(ii), provided however, that the right to terminate this Agreement
under this Subsection
2.1(d)(i) shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure of the Purchase to
occur on or before such date and such action or failure to act constitutes a
breach of this Agreement;

     

    (ii)
           by either
Party if earlier than four (4) months from the Effective Date, by mutual written
agreement of the Parties (collectively, the “Termination
Date”).  Notwithstanding the foregoing, the Termination Date may be
extended if agreed to in writing by the Parties;

     

    (iii)           by
either Party if: (A) there shall be a final non-appealable order of a federal or
state court or other court of competent jurisdiction that would in effect
prevent consummation of the Purchase, or (B) there shall be any Law enacted,
promulgated or issued or deemed applicable to the Purchase by any governmental
authority that would make consummation of the Purchase illegal;

     

    (iv)           by
Scorpio US or Scorpio Gold if: (A) Scorpio US and Scorpio Gold are not in
material breach of their representations, warranties, covenants or agreements
under this Agreement, and (B) there has been a breach of any representation,
warranty, covenant or agreement of GPXM set forth in this Agreement such that if
not cured on or prior to the Closing the conditions set forth in Subsection 2.1(b)(ii) and the
Pre-Closing covenants set forth in Subsection 2.1(b)(iii) would
not be satisfied and such breach has not been cured within thirty (30) calendar
days after written notice thereof to GPXM; provided, however, that no cure
period shall be required for a breach which by its nature cannot be
cured

     

    (v)           by
GPXM if: (A) it is not in material breach of its representations, warranties,
covenants or agreements under this Agreement, and (B) there has been a breach of
any representation, warranty, covenant or agreement of Scorpio US or Scorpio
Gold set forth in this Agreement such that if not cured on or prior to the
Closing the conditions set forth in Subsection 2.1(b)(ii) and the
Pre-Closing covenants set forth in Subsection 2.1(b)(iii) would
not be satisfied and such breach has not been cured within thirty (30) calendar
days, excluding any breach of Subsection 2.1(b)(iii)(B) which breach shall be
deemed immediate if it has not been cured within three (3) business days, after
written notice thereof to Scorpio US and Scorpio Gold; provided, however, that
no cure period shall be required for a breach which by its nature cannot be
cured;

     

    (vi)           by
GPXM if prior to Closing it receives a superior, unsolicited proposal from any
person, entity or group in connection with the sale of the Properties or any
interest therein, or any amalgamation, merger, consolidation, arrangement or
sale of all or substantially all of the assets of GPXM, the Properties or the
Assets (an “Acquisition
Proposal”), provided that GPXM is not in material breach of this
Agreement, and further provided that GPXM must provide Scorpio Gold five (5)
business days’ prior written notice of its intention to terminate this
Agreement, during which five (5) business day period, Scorpio Gold must be given
the opportunity to match the superior proposal.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    In the
event this Agreement is terminated pursuant to this Section 2.1(d), and to the
extent applicable, the Parties shall execute or cause to be executed all other
instruments, certificates, notices and documents as may be required for the
termination of the Company as a limited liability company under the laws of the
State of Nevada and to effectuate the transfer of any rights, title or interests
in and to the Properties back to GPXM, Scorpio US or Scorpio Gold, as
applicable.  Furthermore, all fees, payments, and funds previously
advanced by Scorpio Gold to GPXM, including but not limited to the Initial
Review Payment, the Monthly Review Payments and the Additional Advance, shall
remain the property of GPXM.

    

    In the
event that this Agreement is terminated by GPXM pursuant to this Section 2.1.(d)(vi) after the
execution of this Agreement at any time prior to the Closing of the Purchase for
any reason other than the failure of Scorpio Gold or Scorpio US to comply with
the terms of this Agreement in any material respect or to fulfill their
conditions precedent to Subsection
2.1(b)(ii)(B),  GPXM will within five (5) business days of such
termination  pay to Scorpio Gold a cash payment equal to the sum
of:  (A) the Initial Review Payment; (B) the Monthly Payments; (C) the
Additional Advance; and (D) US$ 750,000, it being understood that the Parties
are unable to calculate the actual amount of damages with certainty and are
accepting the payment under this Section 2.1(d)(vi) as liquidated damages in
full satisfaction of all claims and to avoid possible litigation.

    

    2.2           Emergency or Unexpected
Expenditures. In case of emergency, and until an Operating Agreement is
in effect, either Party may take any reasonable action it deems necessary to
protect life or property, to protect the Properties or the Assets or to comply
with Laws.  Prior to Closing, Scorpio Gold or Scorpio US may make
reasonable expenditures on behalf of the Members for unexpected events that are
beyond its reasonable control and that do not result from a breach by it of its
standard of care.  Scorpio Gold or Scorpio US shall
promptly notify GPXM of the emergency or unexpected expenditure, and Scorpio
Gold or Scorpio US shall be reimbursed for all resulting costs by the Members in
proportion to their respective Ownership Interests.

    

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES;

    TITLE
TO PROPERTIES AND ASSETS; INDEMNITIES

    

    3.1           Representations and Warranties of the
Members. As of the Effective Date, each Member warrants and represents to
the other that:

     

    (a)    
       it is a corporation or other entity
duly organized and in good standing in its jurisdiction of formation and is
qualified to do business and is in good standing in those jurisdictions where
necessary in order to carry out the purposes of this Agreement;

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (b)      
     it has the capacity to enter into and perform this
Agreement and all transactions contemplated herein and that all corporate, board
of directors, shareholder, surface and mineral rights owner, lessor, lessee and
other actions and consents required to authorize it to enter into and perform
this Agreement have been properly taken;

     

    (c)      
     it will not breach any other agreement or
arrangement by entering into or performing its obligations under this
Agreement;

     

    (d)           it
is not subject to any governmental order, judgment, decree, debarment, sanction
or Laws that would preclude the permitting or implementation of Operations under
this Agreement;

     

    (e)   
        this Agreement has been duly
executed and delivered by it and is valid and binding upon it in accordance with
its terms; and

     

    (f)        
   Scorpio Gold or Scorpio US has delivered to or made available
for inspection by GPXM all Existing Data in its possession or control, and true
and correct copies of all leases or other contracts relating to the Area of
Interest.

     

    3.2           Representations and Warranties of
GPXM. As of the date immediately prior to the Effective Date, GPXM makes
the following representations and warranties to Scorpio Gold and Scorpio US
that:

     

    (a)           With
respect to those Properties GPXM owns in fee simple, if any, GPXM is in
exclusive possession of and owns such Properties free and clear of all
Encumbrances or defects in title except those specifically identified in Paragraph 1.1 of Exhibit A.

     

    (b)           With
respect to those Properties in which GPXM holds an interest under leases or
other contracts: (i) GPXM is in exclusive possession of such Properties;
(ii) GPXM has not received any notice of default of any of the terms or
provisions of such leases or other contracts; (iii) GPXM has the authority
under such leases or other contracts to perform fully its obligations under this
Agreement; (iv) to GPXM’s knowledge, such leases and other contracts are
valid and are in good standing; (v) GPXM has no knowledge of any act or
omission or any condition on the Properties which could be considered or
construed as a default under any such lease or other contract; and
(vi) such Properties are free and clear of all Encumbrances or defects in
title except for those specifically identified in Paragraph 1.1 of Exhibit A.

     

    (c)           GPXM
has delivered to or made available for inspection by Scorpio Gold all Existing
Data in its possession or control, and true and correct copies of all leases or
other contracts relating to the Properties.

     

    (d)           With
respect to unpatented mining claims and millsites located by GPXM that are
included within the Properties, except as provided in Paragraph 1.1 of Exhibit A and subject to
the paramount title of the United States it  has taken reasonable
steps to ensure that: (i) the unpatented mining claims were properly laid
out and monumented; (ii) all required location and validation work was
properly performed; (iii) location notices and certificates were properly
recorded and filed with appropriate governmental agencies; (iv) all
assessment work required to hold the unpatented mining claims has been performed
and all Governmental Fees have been paid in a manner consistent with that
required of the Manager pursuant to Subsection 9.2(k) of the
LLC Agreement in order to maintain those claims through the assessment year
ending September 1, 2010; (v) all affidavits of assessment work, evidence
of payment of Governmental Fees, and other filings required to maintain the
claims in good standing have been properly and timely recorded or filed with
appropriate governmental agencies; (vi) the claims are free and clear of
Encumbrances or defects in title; and (vii) GPXM has no knowledge of
conflicting mining claims. Nothing in this Subsection, however, shall be deemed
to be a representation or a warranty that any of the unpatented mining claims
contains a valuable mineral deposit.

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (e)       
    With respect to unpatented mining claims and millsites
not located by GPXM but which are included within the Properties, except as
provided in Paragraph
1.1 of Exhibit A
and subject to the paramount title of the United States: (i) all assessment
work required to hold the unpatented mining claims has been performed and all
Governmental Fees have been paid in a manner consistent with that required of
the Manager pursuant to Subsection 9.2(k) of the
LLC Agreement in order to maintain those claims through the assessment year
ending September 1, 2010; (ii) all affidavits of assessment work, evidence
of payment of Governmental Fees, and other filings required to maintain the
claims in good standing have been properly and timely recorded or filed with
appropriate governmental agencies; (iii) the claims are free and clear of
Encumbrances or defects in title; and (iv) GPXM has no knowledge of
conflicting mining claims. Nothing in this Subsection, however, shall be deemed
to be a representation or a warranty that any of the unpatented mining claims
contains a valuable mineral deposit.

     

    (f)       
    With respect to the Properties, there are no pending or
threatened actions, suits, claims or proceedings, and there have been no
previous transactions affecting its interests in the Properties which have not
been for fair consideration.

     

    (g)           Except
as to matters otherwise disclosed in writing to Scorpio Gold prior to the
Effective Date, and as set forth in that certain Disclosure Schedule attached
hereto as Attachment 4:

     

    (i)   
        the conditions existing on or
with respect to the Properties and its ownership and operation of the Properties
are not in violation of any Laws (including without limitation any Environmental
Laws) nor causing or permitting any damage (including Environmental Damage, as
defined below) or impairment to the health, safety, or enjoyment of any person
at or on the Properties or in the general vicinity of the
Properties;

     

    (ii)
           there have
been no past violations by it or to GPXM’s knowledge, by any of its predecessors
in title of any Environmental Laws or other Laws affecting or pertaining to the
Properties, nor any past creation of damage or threatened damage to the air,
soil, surface waters, groundwater, flora, fauna, or other natural resources on,
about or in the general vicinity of the Properties (“Environmental Damage”);
and

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (iii)           GPXM
has not received inquiry from or notice of a pending investigation from any
governmental agency or of any administrative or judicial proceeding concerning
the violation of any Laws.

    

    (h)         
 Except as disclosed in this Agreement, as at the date of this Agreement
and as of the date of Closing, all material agreements pertaining to the
Properties or the Assets to which GPXM is a party or by which it is
bound:  (i)  are valid, binding, in good standing, in full force
and effect in all material respects and enforceable by GPXM in accordance with
their respective terms, subject, however, to limitations with respect to
enforcement imposed by Law in connection with bankruptcy or similar proceedings,
the equitable power of the courts to stay proceedings before them and the
execution of judgments and to the extent that equitable remedies such as
specific performance and injunction are in the discretion of the courts from
which they are sought and (ii) do not, by their terms, require the consent
of any of the parties thereto to this Agreement or the LLC Agreement or any of
the transactions contemplated thereby; and

     

    (i)            Neither
GPXM, nor to GPXM’s knowledge any of its predecessors in interest, has done or
failed to do any act or thing whereby any of the Properties or Assets are or
will be liable or subject to termination, surrender, forfeiture, cancellation,
alienation, reduction, or penalty.

     

    (j) 
          As at the Effective
Date and as of the date of Closing, the Properties and Assets will be free and
clear of any encumbrance of any kind or character whatsoever created by, through
or under GPXM or any of its predecessors in interest, except for those
specifically identified in Paragraph 1.1 of Exhibit A.

     

    The
representations and warranties set forth above shall survive the execution and
delivery of any documents of Transfer provided under this Agreement. For a
representation or warranty made to a Member’s “knowledge,” the term “knowledge”
shall mean actual knowledge on the part of the executive officers of the
representing Member or of facts that would reasonably lead to the indicated
conclusions.

    

    3.3           Disclosures. Each of the
Members represents and warrants that it is unaware of any material facts or
circumstances that have not been disclosed in this Agreement or the LLC
Agreement which should be disclosed to the other Member in order to prevent the
representations and warranties in this Article or Article VI of the LLC
Agreement from being materially misleading. GPXM has disclosed to Scorpio Gold
all information it believes to be relevant concerning the Properties and Assets
and has provided to or made available for inspection by Scorpio Gold all such
information, but does not make any representation or warranty, express or
implied, as to the accuracy or completeness of the information (except as
provided in Section 3.2)
or as to the boundaries or value of the Properties and Assets. Each Member
represents to the other that in negotiating and entering into this Agreement and
the LLC Agreement it has relied solely on its own appraisals and estimates as to
the value of the Properties and Assets and upon its own geologic and engineering
interpretations related thereto.

    

    3.4           Loss of Title.  Any
failure or loss of title to the Properties and Assets, and all costs of
defending title, shall be charged to the Business Account, except that in the
event of costs or losses arising out of or resulting from any breach of the
representations and warranties of GPXM or Scorpio Gold as to title, the
breaching Member shall indemnify the non-breaching Member for such costs and
losses.

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    3.5           Limitation of Liability. The
Members shall not be required to make any contribution to the capital of the
Company except as otherwise provided in this Agreement, nor shall the Members in
their capacity as Members or Manager be bound by, or liable for, any debt,
liability or obligation of the Company whether arising in contract, tort, or
otherwise. The foregoing shall not limit any obligation of a Member to indemnify
the other Member as expressly provided by this Agreement. The Members shall be
under no obligation to restore a deficit Capital Account upon the dissolution of
the Company or the liquidation of any of their Ownership
Interests.  Any obligation herein to contribute capital to the Company
may be compromised by the Members, including by payments by an obligated Member
directly to the other Member.

    

    3.6           Indemnification.

     

    (a)           Each
Member shall indemnify the other Member, its directors, officers, employees,
agents and attorneys, and Affiliates (collectively “Indemnified Party”) from and
against the entire amount of any Material Loss.  A “Material Loss” shall mean all
direct and indirect costs, expenses, damages or liabilities, including
attorneys’ fees and other costs of litigation (either threatened or pending)
arising out of or based on a breach by a Member (“Indemnifying Party”) of any
representation, warranty or covenant contained in this Agreement or the LLC
Agreement, including without limitation:

     

    (i)       
     any action taken for or obligation or
responsibility assumed on behalf of the Company or another Member by a Member or
any of its directors, officers, employees, agents and attorneys, or Affiliates,
in violation of Section 5.1 of the LLC
Agreement;

     

    (ii)       
    failure of a Member or its Affiliates to comply with the
non-compete or Area of Interest provisions of Article VI
hereof;

     

    (iii)           any
Transfer that causes termination of the tax partnership established by Section 5.2 of the LLC
Agreement, against which the transferring Member shall indemnify the
non-transferring Member as provided in Subsection 7.2(e) of the LLC
Agreement and Article V
of Exhibit C;
and

     

    (iv)           failure
of a Member or its Affiliates to comply with the preemptive right under Section 7.3 of the LLC
Agreement and Exhibit
H.

     

    A
Material Loss shall not be deemed to have occurred until an Indemnified Party
incurs losses, costs, damages or liabilities in excess of Twenty-Five Thousand
Dollars ($25,000) relating to breaches of warranties, representations and
covenants contained in this Agreement and the LLC Agreement, in the aggregate.
GPXM’s aggregate liability to all Indemnified Parties under this Section for
breaches of the representations in Subsection 3.2(g) hereof shall
not, however, exceed Seven Million, Five Hundred Thousand Dollars
($7,500,000).

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (b)  
        If any claim or demand is
asserted against an Indemnified Party in respect of which such Indemnified Party
may be entitled to indemnification under this Agreement, written notice of such
claim or demand shall promptly be given to the Indemnifying Party. The
Indemnifying Party shall have the right, but not the obligation, by notifying
the Indemnified Party within thirty (30) days after its receipt of the notice of
the claim or demand, to assume the entire control of (subject to the right of
the Indemnified Party to participate, at the Indemnified Party’s expense and
with counsel of the Indemnified Party’s choice), the defense, compromise, or
settlement of the matter, including, at the Indemnifying Party’s expense,
employment of counsel of the Indemnifying Party’s choice.  Any damages
to the assets or business of the Indemnified Party caused by a failure by the
Indemnifying Party to defend, compromise, or settle a claim or demand in a
reasonable and expeditious manner requested by the Indemnified Party, after the
Indemnifying Party has given notice that it will assume control of the defense,
compromise, or settlement of the matter, shall be included in the damages for
which the Indemnifying Party shall be obligated to indemnify the Indemnified
Party.  Any settlement or compromise of a matter by the Indemnifying
Party shall include a full release of claims against the Indemnified Party which
have arisen out of the indemnified claim or demand.

    

    ARTICLE
IV

    INTERESTS
OF MEMBERS

    

    4.1           Continuing Liabilities Upon
Adjustments of Ownership Interests. Subject to limited liability
protection to Members under Nevada law, any reduction or elimination of either
Member’s Ownership Interest under Section 4.2 of the LLC
Agreement shall not relieve such Member of its share of any liability,
including, without limitation, Continuing Obligations, Environmental Liabilities
and Environmental Compliance, whether arising, before or after such reduction or
elimination, out of acts or omissions occurring or conditions existing prior to
the Effective Date, or out of Operations conducted during the term of this
Agreement but prior to such reduction or elimination, regardless of when any
funds may be expended to satisfy such liability. For purposes of this Section,
such Member’s share of such liability shall be equal to its Ownership Interest
at the time the act or omission giving rise to the liability occurred, after
first taking into account any prior reduction, readjustment and restoration of
Ownership Interests under Sections 10.5, 10.6
and 11.5 of the
LLC Agreement (or, as to such liability arising out of acts or omissions
occurring or conditions existing prior to the Effective Date, equal to such
Member’s initial Ownership Interest). Should the cumulative cost of satisfying
Continuing Obligations be in excess of cumulative amounts accrued or otherwise
charged to the Environmental Compliance Fund as described in Paragraph 2.14 of Exhibit B, each of the Members
shall be liable for its proportionate share (i.e., Ownership Interest at
the time of the act or omission giving rise to such liability occurred), after
first taking into account any reduction, readjustment and restoration of
Ownership Interests under Sections 10.5, 10.6 and 11.5 of the LLC Agreement, of
the cost of satisfying such Continuing Obligations, notwithstanding that either
Member has previously resigned from the Company.

    

    4.2           Continuing Obligations and
Environmental Liabilities. Subject to limited liability protection to
Members under Nevada law, on dissolution of the Company under Section 14.1 of the LLC
Agreement, each Member shall remain liable for its respective share of
liabilities to third parties (whether such arises before or after such
dissolution), including Environmental Liabilities and Continuing Obligations. In
the event of the resignation of a Member pursuant to Section 14.2 of the LLC
Agreement, the resigning Member’s share of such liabilities shall be equal to
its Ownership Interest at the time such liability was incurred, after first
taking into account any reduction, readjustment, and restoration of Ownership
Interests under Sections 10.5, 10.6 and
11.5 of the LLC Agreement (or, as to liabilities arising prior to the
Effective Date, its initial Ownership Interest).

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    4.3           Grant of Lien and Security
Interest.

     

    (a)           Subject
to Section 4.4 hereof,
each Member grants to the other Member a lien upon and a security interest in
its Ownership Interest, including all of its right, title and interest in
the Properties and Assets, whenever acquired or arising, and the proceeds from
and accessions to the foregoing.

     

    (b)           The
liens and security interests granted by Subsection 4.3(a) hereof shall
secure every obligation or liability of the Member granting such lien or
security interest to the other Member created under this Agreement or the LLC
Agreement. Each Member hereby agrees to take all action necessary to perfect
such lien and security interest and hereby appoints the other Member its
attorney-in-fact to execute, file and record all financing statements and other
documents necessary to perfect or maintain such lien and security
interest.

    

    4.4           Subordination of Interests.
Each Member shall, from time to time, take all necessary actions, including
execution of appropriate agreements, to pledge and subordinate its Ownership
Interest, any liens it may hold which are created under this Agreement other
than those created pursuant to Section 4.3 hereof, and any
other right or interest it holds with respect to the Company and the Properties
and Assets (other than any statutory lien of the Manager) to any secured
borrowings for Operations approved by the Management Committee, including any
secured borrowings relating to Project Financing, and any modifications or
renewals thereof.

    

    ARTICLE
V

    RELATIONSHIP
OF THE MEMBERS

    

    5.1           Transfer or Termination of
Rights. Neither Member shall Transfer all or any part of its rights or
obligations under this Agreement, except in conjunction with a transfer or
termination of the Member’s Ownership Interest permitted by the LLC Agreement.
Any such permitted assignment shall be subject to the consent requirements of
Section 7.2 of the LLC
Agreement.  Nothing in this Section 5.1 requires that a
Member’s rights and obligations under this Agreement be assigned in connection
with the transfer of its Ownership Interest.

    

    5.2           Abandonment and Surrender of
Properties. Subject to limited liability protection to Members under
Nevada law, the Member that desires to abandon or surrender all or part of the
Properties pursuant to Section
12.2 of the LLC Agreement shall remain liable to the other Member for its
share (determined by its Ownership Interest as of the date of such abandonment,
after first taking into account any reduction, readjustment, and restoration of
Ownership Interests under Sections 10.5, 10.6 and
11.5 of the LLC Agreement) of any liability with respect to such
Properties, including, without limitation, Continuing Obligations, Environmental
Liabilities and Environmental Compliance, whether accruing before or after such
abandonment, arising out of activities prior to the Effective Date and out of
Operations conducted prior to the date of such abandonment, regardless of when
any funds may be expended to satisfy such liability.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    5.3           Supplemental Business
Arrangement. The Members hereby agree that in the event of a Supplemental
Business Arrangement pursuant to Section 10.9 of the LLC
Agreement, this Agreement shall apply mutatis mutandis to such
business in the same manner as to the LLC Agreement.

     

    5.4           Implied Covenants. There are
no implied covenants contained in this Agreement other than those of good faith
and fair dealing.

     

    5.5           No Third Party Beneficiary
Rights. This Agreement shall be construed to benefit the Members and
their respective successors and assigns only, and shall not be construed to
create third party beneficiary rights in any other party, expressly including
the Company, or in any governmental organization or agency, except to the extent
required to permit indemnification of a non-Member’s Indemnified Party pursuant
to Subsection 3.6(a)
hereof.

    

    ARTICLE
VI

    ACQUISITIONS
WITHIN AREA OF INTEREST

    

    6.1           General. Any interest or right
to acquire any interest in real property or water or mineral or royalty rights
related thereto within the Area of Interest either acquired or proposed to be
acquired during the term of this Agreement by or on behalf of either Member
(“Acquiring Member”) or
any Affiliate of such Member while such Acquiring Member is a member of the
Mineral Ridge Gold, LLC  shall be subject to the terms and provisions
of this Agreement and the Operating Agreement. GPXM and Scorpio Gold and their
respective Affiliates for their separate account shall be free to acquire lands
and interests in lands outside the Area of Interest and to locate mining claims
outside the Area of Interest.  Failure of any Affiliate of either
Member to comply with this Article shall be a breach by such Member of this
Agreement.

    

    6.2           Notice to Non-Acquiring
Member. Within five (5) days after the acquisition or proposed
acquisition, as the case may be, of any interest or the right to acquire any
interest in real property or water or mineral or royalty rights wholly or
partially within the Area of Interest (except real property acquired by the
Manager pursuant to a Program), the Acquiring Member shall notify the other
Member of such acquisition by it or its Affiliate; provided that if the
acquisition of any interest or right to acquire any interest pertains to real
property or water rights partially within the Area of Interest, then all such
real property (i.e.,
the part within the Area of Interest and the part outside the Area of Interest)
shall be subject to this Article. The Acquiring Member’s notice shall describe
in detail the acquisition, the acquiring party if that party is an Affiliate,
the lands and minerals covered thereby, any water rights related thereto, the
cost thereof, and the reasons why the Acquiring Member believes that the
acquisition (or proposed acquisition) of the interest is in the best interests
of the Members under this Agreement.  In addition to such notice, the
Acquiring Member shall make any and all information concerning the relevant
interest available for inspection by the other Member.

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    6.3           Option Exercised. Within five
(5) days after receiving the Acquiring Member’s notice, the other Member may
notify the Acquiring Member of its election to accept a proportionate interest
in the acquired interest equal to its Ownership Interest. Promptly upon such
notice, the Acquiring Member shall convey or cause its Affiliate to convey to
the Members in proportion to their respective Ownership Interests or to the
Company (as agreed by the Members), by special warranty deed all of the
Acquiring Member’s (or its Affiliate’s) interest in such acquired interest, free
and clear of all Encumbrances arising by, through or under the Acquiring Member
(or its Affiliate) other than those to which both Members have
agreed.  Immediately upon such notice, the acquired interest either
shall be subject to a Supplemental Business Arrangement, or if conveyed to the
Company, shall become a part of the Properties for all purposes of this
Agreement and the LLC Agreement. The other Member shall promptly pay to the
Acquiring Member its proportionate share of the latter’s actual out-of-pocket
acquisition costs.

    

    6.4           Option Not Exercised. If the
other Member does not give such notice within the five (5) day period set forth
in Section 6.3 hereof,
it shall have no interest in the acquired interests, and the acquired interests
shall not be a part of the Properties and Assets or continue to be subject to
this Agreement or the LLC Agreement.

    

    6.5           Non-Compete Covenants. Neither
a Member that resigns pursuant to Section 14.2 of the LLC
Agreement, nor any Affiliate of such a Member, shall directly or indirectly
acquire any interest or right to explore or mine, or both, on any property any
part of which is within the Area of Interest for twelve (12) months after the
effective date of resignation.  If a resigning Member, or the
Affiliate of a resigning Member, breaches this Section, such Member shall be
obligated to offer to convey to the non-resigning Member, without cost, any such
property or interest so acquired (or ensure its Affiliate offers to convey the
property or interest to the non-resigning Member, if the acquiring party is the
resigning Member’s Affiliate).  Such offer shall be made in writing
and can be accepted by the non-resigning Member at any time within ten (10) days
after the offer is received by such non-resigning Member. Failure of a Member’s
Affiliate to comply with this Section shall be a breach by such Member of this
Agreement.

    

    ARTICLE
VII

    DISPUTES

    

    7.1           Governing Law. Except for
matters of title to the Properties or their Transfer, which shall be governed by
the law of their situs, this Agreement shall be governed by and interpreted in
accordance with the laws of the State of Nevada, without regard for any conflict
of laws or choice of laws principles that would permit or require the
application of the laws of any other jurisdiction.

    

    7.2           Forum Selection. The Parties
hereby agree to the exclusive jurisdiction of the courts of the State of Nevada,
County of Washoe, in respect of any disagreement relating to this Agreement or
the LLC Agreement.

    

    7.3           Arbitration.  All
claims, disputes and other matters in question arising out of or relating to
this Agreement or the breach or interpretation thereof, will be resolved by
binding arbitration before a sole arbitrator, selected by the mutual agreement
of the parties, to be conducted in Reno, Nevada.  The arbitration will
be administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules.  Any award or decision obtained from any
such arbitration proceeding will be final and binding on the parties, and
judgment upon any award thus obtained may be entered in any court having
jurisdiction thereof.  Nothing herein contained will bar the right of
a party to seek to obtain judicial injunctive relief or other judicial
provisional remedies against threatened or actual conduct that will cause loss
or damages under the usual equity rules including the applicable rules for
obtaining preliminary injunctions and other provisional
remedies.

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    

    7.4           Dispute Resolution. All
disputes arising under or in connection with this Agreement which cannot be
resolved by agreement between the Members shall be resolved in accordance with
applicable Law. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or substantially prevailing Member shall be entitled
to recover reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.

    

    ARTICLE
VIII

    GENERAL
PROVISIONS

    

    8.1           Notices. All notices, payments
and other required or permitted communications (“Notices”) to either Member shall be in
writing, and shall be addressed respectively as follows:

    

    
      	 	
              If
      to GPXM:

            	
              Golden
      Phoenix Minerals, Inc.

            
	 	 
      	
              1675
      E. Prater Way, Suite 102

            
	 	 
      	
              Sparks,
      Nevada 89434, USA

            
	 	 
      	
              Attention:

            	
              David
      A. Caldwell, CEO

            
	 	 
      	
              Telephone:

            	
              (775)
      853-4919

            
	 	 
      	
              Facsimile:

            	
              (775)
      853-4919

            
	 	 
      	 
      	 
      
	 	
              With
      a Copy to:

            	
              Bullivant
      Houser Bailey PC

            
	 	 
      	
              1415
      L Street, Suite 1000

            
	 	 
      	
              Sacramento,
      CA 95814

            
	 	 
      	
              Attention:

            	
              Scott
      E. Bartel, Esq.

            
	 	 
      	
              Facsimile:

            	
              (916)
      930-2501

            
	 	 
      	 
      	 
      
	 	
              If
      to Scorpio Gold or to Scorpio US:

            	 
      	 
      
	 	 
      	
              Scorpio
      Gold Corporation/Scorpio Gold (US)

            
	 	 
      	
              Corporation

            
	 	 
      	
              995
      Germain Street

            
	 	 
      	
              Val
      d’Or, Quebec J9P 7H7

            
	 	 
      	
              Canada

            
	 	 
      	
              Attention:

            	
              Peter
      Hawley, President & CEO

            
	 	 
      	
              Telephone:

            	
              (819)
      825-7618

            
	 	 
      	
              Facsimile:

            	
              (819)
      825-0977

            

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      	 	
              With
      a Copy to:

            	
              Axium
      Law Corporation

            
	 	 
      	
              Suite
      3350, Four Bentall Centre

            
	 	 
      	
              1055
      Dunsmuir Street

            
	 	 
      	
              PO
      Box 49222

            
	 	 
      	
              Vancouver,
      British Columbia

            
	 	 
      	
              V7X
      1L2

            
	 	 
      	
              Attention:

            	
              Rod
      C. McKeen

            
	 	 
      	
              Facsimile:

            	
              (604)
      692-4900

            
	 	 
      	 
      	 
      
	 	
              If
      to Scorpio Gold:

            	
              Scorpio
      Gold Corporation

            
	 	 
      	
              995
      Germain Street

            
	 	 
      	
              Val
      d’Or, Quebec J9P 7H7

            
	 	 
      	
              Canada

            
	 	 
      	
              Attention:

            	
              Peter
      Hawley, President & CEO

            
	 	 
      	
              Telephone:

            	
              (819)
      825-7618

            
	 	 
      	
              Facsimile:

            	
              (819)
      825-0977

            
	 	 
      	 
      	 
      
	 	
              With
      a Copy to:

            	
              Axium
      Law Corporation

            
	 	 
      	
              Suite
      3350, Four Bentall Centre

            
	 	 
      	
              1055
      Dunsmuir Street

            
	 	 
      	
              PO
      Box 49222

            
	 	 
      	
              Vancouver,
      British Columbia

            
	 	 
      	
              V7X
      1L2

            
	 	 
      	
              Attention:

            	
              Rod
      C. McKeen

            
	 	 
      	
              Facsimile:

            	
              (604)
      692-4900

            

    

    

    All
Notices shall be given (a) by personal delivery to the Member; (b) by
electronic communication, capable of producing a printed transmission; or
(c) by overnight or other express courier service. All Notices shall be
effective and shall be deemed given on the date of receipt at the principal
address if received during normal business hours, and, if not received during
normal business hours, on the next business day following receipt, or if by
electronic communication, on the date of such communication. Either Member may
change its address by Notice to the other Member.

    

    8.2           Gender. The singular shall
include the plural, and the plural the singular wherever the context so
requires, and the masculine, the feminine, and the neuter genders shall be
mutually inclusive.

    

    8.3           Currency. All references to
“dollars” or “$” herein shall mean lawful currency of the United States of
America unless otherwise indicated.

    

    8.4           Headings. The subject headings
of the Sections and Subsections of this Agreement and the Paragraphs and
Subparagraphs of the Exhibits to this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of its provisions.

    

    8.5           Waiver. The failure of either
Member to insist on the strict performance of any provision of this Agreement or
to exercise any right, power or remedy upon a breach hereof shall not constitute
a waiver of any provision of this Agreement or limit such Member’s right
thereafter to enforce any provision or exercise any right.

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    

    8.6           Modification. No modification
of this Agreement shall be valid unless made in writing and duly executed by
both Members.

    

    8.7           Force Majeure. Except for the
obligation to make payments when due hereunder, the obligations of a Member
shall be suspended to the extent and for the period that performance is
prevented by any cause, whether foreseeable or unforeseeable, beyond its
reasonable control, including, without limitation, labor disputes (however
arising and whether or not employee demands are reasonable or within the power
of the Member to grant); acts of God; Laws, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of Environmental
Laws; action or inaction by any federal, state or local agency that delays or
prevents the issuance or granting of any approval or authorization required to
conduct Operations beyond the reasonable expectations of the Member seeking the
approval or authorization (including, without limitation, a failure to complete
any review and analysis required by the National Environ­mental Policy Act
or any similar state law within three (3) months of initiation of that process);
acts of war or conditions arising out of or attributable to war, whether
declared or undeclared; riot, civil strife, insurrection or rebellion; fire,
explosion, earthquake, storm, flood, sink holes, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors’ or subcontractors’
shortage of, or inability to obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents; breakdown of
equipment, machinery or facilities; actions by native rights groups,
environmental groups, or other similar special interest groups; or any other
cause whether similar or dissimilar to the foregoing.  The affected
Member shall promptly give notice to the other Member of the suspension of
performance, stating therein the nature of the suspension, the reasons therefor,
and the expected duration thereof. The affected Member shall resume performance
as soon as reasonably possible. During the period of suspension the obligations
of both Members to advance funds pursuant to Article II hereof shall
be reduced to levels consistent with then current Operations.

    

    8.8           Rule Against Perpetuities. The
Members do not intend that there shall be any violation of the Rule Against
Perpetuities, the Rule Against Unreasonable Restraints on the Alienation of
Property, or any similar rule. Accordingly, if any right or option to acquire
any interest in the Properties, in an Ownership Interest, in the Assets, or in
any real property exists under this Agreement, such right or option must be
exercised, if at all, so as to vest such interest within time periods permitted
by applicable rules. If, however, any such violation should inadvertently occur,
the Members hereby agree that a court shall reform that provision in such a way
as to approximate most closely the intent of the Members within the limits
permissible under such rules.

    

    8.9           Further Assurances. Each of
the Members shall take, from time to time and without additional consideration,
such further actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement or as may be reasonably required by lenders in
connection with Project Financing.

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

    8.10           Entire Agreement; Successors and
Assigns. This Agreement contains the entire understanding of the Members
and supersedes all prior agreements and understandings between the Members
relating to the subject matter hereof; provided that nothing in this
Section 8.10 modifies or affects the LLC Agreement and the Members’
obligations thereunder. This Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the
Members.

    

    8.11           Counterparts. This Agreement
may be executed in any number of counterparts, and it shall not be necessary
that the signatures of both Members be contained on any counterpart. Each
counterpart shall be deemed an original, but all counterparts together shall
constitute one and the same instrument.

    

    [Remainder
of Page Intentionally Left Blank.  Signature Page
Follows]

     

     

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

    

    
      	 
      	
              Golden
      Phoenix Minerals, Inc.

            
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Robert
      P. Martin
	 
      	
              Name:

            	
              Robert
      P. Martin

            
	 
      	
              Title:

            	
              President

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Scorpio
      Gold Corporation

            
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Peter
      J. Hawley
	 
      	
              Name:

            	
              Peter
      J. Hawley

            
	 
      	
              Title:

            	
              President
      & Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Scorpio
      Gold (US) Corporation

            
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Peter
      J. Hawley
	 
      	
              Name:

            	
              Peter
      J. Hawley

            
	 
      	
              Title:

            	
              President

            

    

    

    

    

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    Attachment
1

    

    Quitclaim
Deed

     

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    APN:

    

    WHEN
RECORDED MAIL TO and:

    MAIL
PROPERTY TAX STATEMENTS TO:

    

    Scorpio
Gold (US) Corporation

    995
Germain Street

    Val d’Or,
Quebec, J9P 7H7, Canada

    Attention:
Peter Hawley

     

    
      
        

      

QUITCLAIM
DEED

     

    For valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, GOLDEN PHOENIX MINERALS, INC.,
a Nevada corporation, with an address of 1675 E. Prater Way, Suite 102, Sparks,
Nevada  89434, does hereby remise, release and forever quitclaim to
SCORPIO GOLD (US) CORPORATION, a Nevada corporation, with an address
of  995 Germain Street, Val d’Or, Quebec, J9P 7H7, Canada, an
undivided seventy percent (70%) of its right, title and interest in and to that
real property situated in the County of Esmeralda, State of Nevada, bounded and
described as follows:

    

    See
Exhibit “A”

    

    together
with all and singular tenements, hereditaments and appurtenances thereunto
belonging or in anywise appertaining.

    

    WITNESS
my hand this ____ day of ________________, 2010.

    

    
      	 
      	 	
              Golden
      Phoenix Minerals, Inc.,

            
	 
      	 	
              a
      Nevada corporation

            
	 
      	 	 
      	 
      
	 
      	 	
              By:

            	 
      
	
               

            	 	 
      	 
      
	 
      	 	
              Name:

            	
              Robert
      P. Martin

            
	 
      	 	
              Its:

            	
              President

            

    

    

    
      	
              STATE
      OF NEVADA

            	
              )

            
	 
      	
              )ss.

            
	
              COUNTY
      OF ________

            	
              )

            

    

     

    This instrument was acknowledged before
me on ____________________, 2010 by Robert P. Martin, President of Golden
Phoenix Minerals, Inc., a Nevada corporation.

    

    
      	 
      	 
      
	 
      	
              Signature
      of Notarial Officer

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
“A”

    LEGAL
DESCRIPTION

    

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Attachment
2

    

    Bill
of Sale

     

    
 

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    GENERAL
BILL OF SALE AND ASSIGNMENT

     

    This General Bill of Sale and
Assignment (“Bill of Sale”) is made and entered into this ____ day of _________,
2010, by and from Golden Phoenix Minerals, Inc., a Nevada corporation (the
“Seller”), to and in favor of Scorpio Gold (US) Corporation, a Nevada
corporation (“the Purchaser”).  Capitalized terms used herein but not
otherwise defined in this Bill of Sale shall have the meanings assigned to them
as provided in that certain Exploration, Development and Mining Joint Venture
Members’ Agreement dated December 31, 2009 (“Members Agreement”) and that
certain Limited Liability Company Operating Agreement dated as of the date
hereof, by and between Seller and Buyer (the “Agreement”).  The terms
of the Agreement are incorporated herein by reference.

    

    RECITALS

     

    A.     
      Seller and Buyer wish to enter into the
Agreement for the purposes of exploring, evaluating, developing and mining
mineral resources within the Properties.

     

    B.        
   Seller and Buyer wish to enter into this Bill of Sale in order
to effectuate Seller’s grant to and Purchaser’s Initial Contribution of its
seventy percent (70%) interest in the Properties pursuant to the terms and
conditions of the Agreement.

    

    AGREEMENT

     

    NOW, THEREFORE, in consideration of the
foregoing premises, and the mutual promises, covenants and agreements contained
herein and in the Agreement, and for other for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
hereby agree as follows:

    

    1.           In
consideration for:

     

    (i)        
   a cash payment to Seller of USD $3,750,000, less the aggregate
amount of the Initial Review Payment of USD $50,000 and those certain Monthly
Payments of USD $100,000 each, such payments in the aggregate totaling USD
$________, pursuant to the Letter of Intent by and between Seller and Buyer,
dated May 23, 2009; and

     

    (ii)       
    the issuance to Seller of common shares of Buyer at a
deemed price of CDN $0.50 per share having an aggregate deemed value of USD
$3,750,000, based upon the average noon rate of exchange as posted by the Bank
of Canada for the ten (10) business day period ending three (3) business days
prior to the effective date of Agreement;

     

    Seller hereby sells, assigns, transfers
and conveys to Buyer an undivided seventy percent (70%) of its right, title and
interest in and to that real property situated in the County of Esmeralda, State
of Nevada, as more fully set forth and described in that certain Quitclaim Deed
attached hereto as Exhibit A and
incorporated herein.

     

    2.           Subject
to the terms and conditions of the Agreement, Purchaser expressly acknowledges
that neither Seller, nor any of its agents or representatives, has made any
representations, warranties or agreements by or on behalf of Seller as to any
matters concerning the Properties, including, but not limited to, any
representations or warranties whatsoever as to the compliance with any
applicable federal, state or local laws, rules or regulations or any
representations or warranties whatsoever as to the physical condition of the
Properties.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    3.           Nothing
contained in this Bill of Sale shall be construed as an attempt to assign any
contract, claim, demand or right which is nonassignable or which an attempt to
assign would in any way impair, or as an attempt to transfer any property in
case such transfer would be invalid, but Seller covenants to take any such steps
as may be necessary to validate or cause the validation of the transfer of any
property and the assignment of any such contract, claim, demand or right not now
transferable or assignable to which Purchaser is entitled
hereunder.

     

    4.           Furthermore,
Seller hereby agrees that from time to time, if and when requested by Purchaser,
Seller shall execute and deliver, or cause to be executed and delivered, such
documents and instruments, and shall take, or cause to be taken, such further
actions as may be reasonably necessary to carry out the purpose and intent of
this Bill of Sale.

    

    

    [Remainder
of Page Intentionally Blank; Signature Page Follows]

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the undersigned has
executed this Bill of Sale on the day and year first above written.

    

    
      	 
      	
              Golden
      Phoenix Minerals, Inc.,

            
	 
      	
              a
      Nevada corporation

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      Robert P. Martin

            
	 
      	
              Title:
      President

            

    

    

    

    

    
      	
              STATE
      OF

            	
              )

            
	 
      	
              )
      ss.

            
	
              COUNTY
      OF

            	
              )

            

    

     

    On __________________, before me,
__________________________, a Notary Public in and for said County and State,
personally appeared Robert P. Martin, personally known to me or proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the
instrument.

    

    WITNESS my hand and official
seal.

    

    
      	 
      	
               

            
	 
      	
              Notary
      Public in and for said

            
	 
      	
              county
      and State

            

    

    

    

    

    (SEAL)

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    QUITCLAIM
DEED

    

    

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Attachment
3

    

    LLC
Agreement

    

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Attachment
4

    

    DISCLOSURE
SCHEDULE

    

    TO

    EXPLORATION,
DEVELOPMENT AND MINING

    JOINT
VENTURE

    MEMBERS’
AGREEMENT

    By And
Between

    Scorpio
Gold (US) Corporation

    And

    Scorpio
Gold Corporation

    And

    Golden
Phoenix Minerals, Inc.

    

    

    This
Disclosure Schedule is incorporated by reference into Section 3.2(g) of that
certain Members Agreement, dated as of even date herewith, by and among Scorpio
Gold (US) Corporation, a Nevada corporation, Scorpio Gold Corporation, a British
Columbia corporation, and Golden Phoenix Minerals, Inc., a Nevada
corporation.

    

    Section
3.2(g):

    None.

     

     

    SCHEDULE

    Page
1 of 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]