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Unassociated Document

    

      EXECUTION
        COPY

      COMMON
        STOCK PURCHASE AGREEMENT

      

      COMMON
        STOCK PURCHASE AGREEMENT
        (the
“Agreement”), dated as of July 13, 2005, by and between GOLDEN
        PHOENIX MINERALS, INC.,
        a
        Minnesota corporation (the “Company”), and FUSION
        CAPITAL FUND II, LLC,
        an
        Illinois limited liability company (the “Buyer”). Capitalized terms used herein
        and not otherwise defined herein are defined in Section 10 hereof. 

      

      WHEREAS:

      

      Subject
        to the terms and conditions set forth in this Agreement, the Company wishes
        to
        sell to the Buyer, and the Buyer wishes to buy from the Company, up to Six
        Million Two Hundred Thousand Dollars ($6,200,000) of the Company's common
        stock,
        no par value per share (the “Common Stock”). The shares of Common Stock to be
        purchased hereunder are referred to herein as the "Purchase
        Shares."

      

      NOW
        THEREFORE,
        the
        Company and the Buyer hereby agree as follows:

      

      1.
         PURCHASE
        OF COMMON STOCK. 

      

      Subject
        to the terms and conditions set forth in Sections 6, 7 and 9 below, the Company
        hereby agrees to sell to the Buyer, and the Buyer hereby agrees to purchase
        from
        the Company, Purchase Shares as follows:

      

      (a) Commencement
        of Purchases of Common Stock.
        The
        purchase and sale of Purchase Shares hereunder shall commence (the
        "Commencement") within five (5) Trading Days following the date of satisfaction
        of the conditions to the Commencement set forth in Sections 6 and 7 below
        (the
        date of such Commencement, the "Commencement Date") provided, however, that
        on
        the date that the registration statement described in Section 4(a) hereof
        is
        declared effective by the SEC, the Buyer agrees to purchase and the Company
        agrees to sell 1,333,334 Purchase Shares (“Initial Purchase Shares”) at a
        purchase price per share equal to $0.15. Upon receipt of the Initial Purchase
        Shares in certificated form in accordance with Section 4(f) hereof, the Buyer
        shall pay to the Company $200,000 as full payment for the purchase of the
        Initial Purchase Shares.

      .
        

      

      (b) Buyer's
        Purchase Rights and Obligations.
        Subject
        to the Company’s right to suspend purchases under Section 1(d)(ii) hereof, the
        Buyer shall buy Purchase Shares (“Daily Purchases”) on each Trading Day during
        each Monthly Period equal to the Daily Purchase Amount (as defined in Section
        1(c)(i)) at the Purchase Price. From time to time, the Company shall also
        have
        the right but not the obligation, by its delivery to the Buyer of a Block
        Purchase Notice (as defined in Section 1(c)(iv)), to require the Buyer to
        buy
        Purchase Shares (a “Block Purchase”) equal to the Block Purchase Amount (as
        defined in Section 1(c)(iv)) at the Block Purchase Price (as defined in Section
        1(c)(iv)). The
        Buyer
        shall pay to the Company an amount equal to the Purchase Amount with respect
        to
        such Purchase Shares as full payment for the purchase of the Purchase Shares
        so
        received. The Company shall not issue any fraction of a share of Common Stock
        upon any purchase. If the issuance would result in the issuance of a fraction
        of
        a share of Common Stock, the Company shall round such fraction of a share
        of
        Common Stock up or down to the nearest whole share. All payments made under
        this
        Agreement shall be made in lawful money of the United States of America by
        check
        or wire transfer of immediately available funds to such account as the Company
        may from time to time designate by written notice in accordance with the
        provisions of this Agreement. Whenever any amount expressed to be due by
        the
        terms of this Agreement is due on any day that is not a Trading Day, the
        same
        shall instead be due on the next succeeding day which is a Trading
        Day.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c) The
        Daily Purchase Amount; Company's Right to Decrease or Increase the Daily
        Purchase Amount; the Block Purchase Amount.

      

      (i) The
        Daily Purchase Amount.
        As used
        herein the term “Original Daily Purchase Amount” shall mean Twelve Thousand Five
        Hundred Dollars ($12,500) per Trading Day. As used herein, the term “Daily
        Purchase Amount” shall mean initially Twelve Thousand Five Hundred Dollars
        ($12,500) per Trading Day, which amount may be increased or decreased from
        time
        to time pursuant to this Section 1(c).

      

      (ii) Company’s
        Right to Decrease the Daily Purchase Amount.
        The
        Company shall always have the right at any time to decrease the amount of
        the
        Daily Purchase Amount by delivering written notice (a “Daily Purchase Amount
        Decrease Notice”) to the Buyer which notice shall specify the new Daily Purchase
        Amount. The decrease in the Daily Purchase Amount shall become effective
        one
        Trading Day after receipt by the Buyer of the Daily Purchase Amount Decrease
        Notice. Any purchases by the Buyer which have a Purchase Date on or prior
        to the
        first (1st) Trading Day after receipt by the Buyer of a Daily Purchase Amount
        Decrease Notice must be honored by the Company as otherwise provided herein.
        The
        decrease in the Daily Purchase Amount shall remain in effect until the Company
        delivers to the Buyer a Daily Purchase Amount Increase Notice (as defined
        below).

      

      (iii) Company’s
        Right to Increase the Daily Purchase Amount.
        The
        Company shall have the right (but not the obligation) to increase the amount
        of
        the Daily Purchase Amount in accordance with the terms and conditions set
        forth
        in this Section 1(c)(iii) by delivering written notice to the Buyer stating
        the
        new amount of the Daily Purchase Amount (a “Daily Purchase Amount Increase
        Notice”). A Daily Purchase Amount Increase Notice shall be effective five (5)
        Trading Days after receipt by the Buyer. The Company shall always have the
        right
        at any time to increase the amount of the Daily Purchase Amount up to the
        Original Daily Purchase Amount. With respect to increases in the Daily Purchase
        Amount above the Original Daily Purchase Amount, as the market price for
        the
        Common Stock increases the Company shall have the right from time to time
        to
        increase the Daily Purchase Amount as follows. For every $0.10 increase in
        Threshold Price above $0.20 (subject to equitable adjustment for any
        reorganization, recapitalization, non-cash dividend, stock split or other
        similar transaction), the Company shall have the right to increase the Daily
        Purchase Amount by up to an additional $2,500 in excess of the Original Daily
        Purchase Amount. “Threshold Price” for purposes hereof means the lowest Sale
        Price of the Common Stock during the five (5) consecutive Trading Days
        immediately prior to the submission to the Buyer of a Daily Purchase Amount
        Increase Notice (subject to equitable adjustment for any reorganization,
        recapitalization, non-cash dividend, stock split or other similar transaction).
        For example, if the Threshold Price is $0.30, the Company shall have the
        right
        to increase the Daily Purchase Amount to up to $15,000 in the aggregate.
        If the
        Threshold Price is $0.50, the Company shall have the right to increase the
        Daily
        Purchase Amount to up to $20,000 in the aggregate. Any increase in the amount
        of
        the Daily Purchase Amount shall continue in effect until the delivery to
        the
        Buyer of a Daily Purchase Amount Decrease Notice. However, if at any time
        during
        any Trading Day the Sale Price of the Common Stock is below the applicable
        Threshold Price, such increase in the Daily Purchase Amount shall be void
        and
        the Buyer’s obligations to buy Purchase Shares hereunder in excess of the
        applicable maximum Daily Purchase Amount shall be terminated. Thereafter,
        the
        Company shall again have the right to increase the amount of the Daily Purchase
        Amount as set forth herein by delivery of a new Daily Purchase Amount Increase
        Notice only if the Sale Price of the Common Stock is above the applicable
        Threshold Price on each of five (5) consecutive Trading Days immediately
        prior
        to such new Daily Purchase Amount Increase Notice.

      

      
        
          
          

        

        
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      (iv) The
        Block Purchase Amount.
        As used
        herein the term “Block Purchase Amount” shall mean such Purchase Amount as
        specified by the Company in a Block Purchase Notice. As used herein the term
        “Block Purchase Notice” shall mean an irrevocable written notice from the
        Company to the Buyer directing the Buyer to buy the Purchase Amount in Purchase
        Shares as specified by the Company therein at the Block Purchase Price. For
        a
        Block Purchase Notice to be valid the following conditions must be met: (1)
        the
        Block Purchase Amount shall not exceed One Hundred Thousand Dollars ($100,000)
        per Block Purchase Notice, (2) the Company must deliver the Purchase Shares
        on
        the same day as the Block Purchase Notice is delivered and (3) the Sale Price
        of
        the Common Stock must have been above $0.20 (subject to equitable adjustment
        for
        any reorganization, recapitalization, non-cash dividend, stock split or other
        similar transaction) during the ten (10) Trading Days prior to the delivery
        of
        the Block Purchase Notice. The Block Purchase Amount may be increased to
        up to
        $250,000 if the Sale Price of the Common Stock is above $0.35 (subject to
        equitable adjustment for any reorganization, recapitalization, non-cash
        dividend, stock split or other similar transaction) during the ten (10) Trading
        Days prior to the delivery of the Block Purchase Notice. The Block Purchase
        Amount may be increased to up to $500,000 if the Sale Price of the Common
        Stock
        is above $0.60 (subject to equitable adjustment for any reorganization,
        recapitalization, non-cash dividend, stock split or other similar transaction)
        during the ten (10) Trading Days prior to the delivery of the Block Purchase
        Notice. The Company may deliver multiple Block Purchase Notices as it shall
        determine; provided however, at least ten (10) Trading Days must have passed
        since the most recent Block Purchase was completed. As used herein, the term
        “Block Purchase Price” shall mean the lowest Purchase Price during the previous
        fifteen (15) Trading Days prior to the date that the Block Purchase Notice
        was
        received by the Buyer. 

      

      

      (d) Limitations
        on Purchases.

      

      (i) Limitation
        on Beneficial Ownership.
        The
        Buyer shall not have the right or the obligation to purchase shares of Common
        Stock under this Agreement to the extent that after giving effect to such
        purchase the Buyer together with its affiliates would beneficially own in
        excess
        of 9.9% of the outstanding shares of the Common Stock following such purchase.
        For purposes hereof, the number of shares of Common Stock beneficially owned
        by
        the Buyer and its affiliates or acquired by the Buyer and its affiliates,
        as the
        case may be, shall include the number of shares of Common Stock issuable
        in
        connection with a purchase under this Agreement with respect to which the
        determination is being made, but shall exclude the number of shares of Common
        Stock which would be issuable upon (1) a purchase of the remaining Available
        Amount which has not been submitted for purchase, and (2) exercise or conversion
        of the unexercised or unconverted portion of any other securities of the
        Company
        (including, without limitation, any notes or warrants) subject to a limitation
        on conversion or exercise analogous to the limitation contained herein
        beneficially owned by the Buyer and its affiliates. For purposes of this
        Section, in determining the number of outstanding shares of Common Stock
        the
        Buyer may rely on the number of outstanding shares of Common Stock as reflected
        in (1) the Company's most recent Form 10-Q or Form 10-K, as the case may
        be, (2)
        a more recent public announcement by the Company or (3) any other written
        communication by the Company or its Transfer Agent setting forth the number
        of
        shares of Common Stock outstanding. Upon the reasonable written or oral request
        of the Buyer, the Company shall promptly confirm orally and in writing to
        the
        Buyer the number of shares of Common Stock then outstanding. In any case,
        the
        number of outstanding shares of Common Stock shall be determined after giving
        effect to any purchases under this Agreement by the Buyer since the date
        as of
        which such number of outstanding shares of Common Stock was reported. Except
        as
        otherwise set forth herein, for purposes of this Section 1(d)(i), beneficial
        ownership shall be determined in accordance with Section 13(d) of the Securities
        Exchange Act of 1934, as amended.

      

      
        
          
          

        

        
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      (ii) Company's
        Right to Suspend Purchases.
        The
        Company may, at any time, give written notice (a " Daily Purchase Suspension
        Notice") to the Buyer suspending Daily Purchases of Purchase Shares by the
        Buyer
        under this Agreement. The Daily Purchase Suspension Notice shall be effective
        only for Daily Purchases that have a Purchase Date later than one (1) Trading
        Day after receipt of the Daily Purchase Suspension Notice by the Buyer. Any
        Daily Purchase by the Buyer that has a Purchase Date on or prior to the first
        (1st) Trading Day after receipt by the Buyer of a Daily Purchase Suspension
        Notice from the Company must be honored by the Company as otherwise provided
        herein. Such Daily Purchase suspension shall continue in effect until a
        revocation in writing by the Company, at its sole discretion. 

      

      (iii) Purchase
        Price Floor.
        The
        Company shall not affect any sales under this Agreement and the Buyer shall
        not
        have the right nor the obligation to purchase any Purchase Shares under this
        Agreement on any Trading Day where the Purchase Price for any purchases of
        Purchase Shares would be less than the Floor Price. “Floor Price” means $0.10,
        which shall
        be
        appropriately adjusted for any reorganization, recapitalization, non-cash
        dividend, stock split or other similar transaction.

      

      (e) Records
        of Purchases.
        The
        Buyer and the Company shall each maintain records showing the remaining
        Available Amount at any give time and the dates and Purchase Amounts for
        each
        purchase or shall use such other method, reasonably satisfactory to the Buyer
        and the Company.

      

      (f) Taxes.
        The
        Company shall pay any and all transfer, stamp or similar taxes that may be
        payable with respect to the issuance and delivery of any shares of Common
        Stock
        to the Buyer made under this Agreement.

       

      

      

      2. BUYER'S
        REPRESENTATIONS AND WARRANTIES.

      

      The
        Buyer
        represents and warrants to the Company that as of the date hereof and as
        of the
        Commencement Date: 

      

      (a) Investment
        Purpose.
        The
        Buyer is entering into this Agreement and acquiring the Commitment Shares,
        (as
        defined in Section 4(f) hereof) (this Agreement and the Commitment Shares
         are
        collectively referred to herein as the "Securities"), for its own account
        for
        investment only and not with a view towards, or for resale in connection
        with,
        the public sale or distribution thereof; provided however, by making the
        representations herein, the Buyer does not agree to hold any of the Securities
        for any minimum or other specific term.

       

      (b) Accredited
        Investor Status.
        The
        Buyer is an "accredited investor" as that term is defined in Rule 501(a)(3)
        of
        Regulation D.

      

      
        
          
          

        

        
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      (c) Reliance
        on Exemptions.
        The
        Buyer understands that the Securities are being offered and sold to it in
        reliance on specific exemptions from the registration requirements of United
        States federal and state securities laws and that the Company is relying
        in part
        upon the truth and accuracy of, and the Buyer's compliance with, the
        representations, warranties, agreements, acknowledgments and understandings
        of
        the Buyer set forth herein in order to determine the availability of such
        exemptions and the eligibility of the Buyer to acquire the
        Securities.

      

      (d) Information.
        The
        Buyer has been furnished with all materials relating to the business, finances
        and operations of the Company and materials relating to the offer and sale
        of
        the Securities that have been reasonably requested by the Buyer, including,
        without limitation, the SEC Documents (as defined in Section 3(f) hereof).
        The
        Buyer understands that its investment in the Securities involves a high degree
        of risk. The Buyer (i) is able to bear the economic risk of an investment
        in the
        Securities including a total loss, (ii) has such knowledge and experience
        in
        financial and business matters that it is capable of evaluating the merits
        and
        risks of the proposed investment in the Securities and (iii) has had an
        opportunity to ask questions of and receive answers from the officers of
        the
        Company concerning the financial condition and business of the Company and
        others matters related to an investment in the Securities. Neither such
        inquiries nor any other due diligence investigations conducted by the Buyer
        or
        its representatives shall modify, amend or affect the Buyer's right to rely
        on
        the Company's representations and warranties contained in Section 3 below.
        The
        Buyer has sought such accounting, legal and tax advice as it has considered
        necessary to make an informed investment decision with respect to its
        acquisition of the Securities.

      

      (e) No
        Governmental Review.
        The
        Buyer understands that no United States federal or state agency or any other
        government or governmental agency has passed on or made any recommendation
        or
        endorsement of the Securities or the fairness or suitability of the investment
        in the Securities nor have such authorities passed upon or endorsed the merits
        of the offering of the Securities.

      

      (f) Transfer
        or Resale.
        The
        Buyer understands that except as provided in the Registration Rights Agreement
        (as defined in Section 4(a) hereof): (i) the Securities have not been and
        are
        not being registered under the 1933 Act or any state securities laws, and
        may
        not be offered for sale, sold, assigned or transferred unless (A) subsequently
        registered thereunder or (B) an exemption exists permitting such Securities
        to
        be sold, assigned or transferred without such registration; (ii) any sale
        of the
        Securities made in reliance on Rule 144 may be made only in accordance with
        the
        terms of Rule 144 and further, if Rule 144 is not applicable, any resale
        of the
        Securities under circumstances in which the seller (or the person through
        whom
        the sale is made) may be deemed to be an underwriter (as that term is defined
        in
        the 1933 Act) may require compliance with some other exemption under the
        1933
        Act or the rules and regulations of the SEC thereunder; and (iii) neither
        the
        Company nor any other person is under any obligation to register the Securities
        under the 1933 Act or any state securities laws or to comply with the terms
        and
        conditions of any exemption thereunder.

      

      (g) Validity;
        Enforcement.
        This
        Agreement has been duly and validly authorized, executed and delivered on
        behalf
        of the Buyer and is a valid and binding agreement of the Buyer enforceable
        against the Buyer in accordance with its terms, subject as to enforceability
        to
        general principles of equity and to applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation and other similar laws relating to,
        or
        affecting generally, the enforcement of applicable creditors' rights and
        remedies. 

      

      (h) Residency.
        The
        Buyer is a resident of the State of Illinois.

      

      (i) No
        Prior Short Selling.
        The
        Buyer represents and warrants to the Company that at no time prior to the
        date
        of this Agreement has any of the Buyer, its agents, representatives or
        affiliates engaged in or effected, in any manner whatsoever, directly or
        indirectly, any (i) "short sale" (as such term is defined in Rule 3b-3 of
        the
        Securities Exchange Act of 1934, as amended (the "1934 Act")) of the Common
        Stock or (ii) hedging transaction, which establishes a net short position
        with
        respect to the Common Stock.

      

      
        
          
          

        

        
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      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

      

      The
        Company represents and warrants to the Buyer that as of the date hereof and
        as
        of the Commencement Date:

      

      (a) Organization
        and Qualification.
        The
        Company and its "Subsidiaries" (which for purposes of this Agreement means
        any
        entity in which the Company, directly or indirectly, owns 50% or more of
        the
        voting stock or capital stock or other similar equity interests) are
        corporations duly organized and validly existing in good standing under the
        laws
        of the jurisdiction in which they are incorporated, and have the requisite
        corporate power and authority to own their properties and to carry on their
        business as now being conducted. Each of the Company and its Subsidiaries
        is
        duly qualified as a foreign corporation to do business and is in good standing
        in every jurisdiction in which its ownership of property or the nature of
        the
        business conducted by it makes such qualification necessary, except to the
        extent that the failure to be so qualified or be in good standing could not
        reasonably be expected to have a Material Adverse Effect. As used in this
        Agreement, "Material Adverse Effect" means any material adverse effect on
        any
        of: (i) the business, properties, assets, operations, results of operations
        or
        financial condition of the Company and its Subsidiaries, if any, taken as
        a
        whole, or (ii) the authority or ability of the Company to perform its
        obligations under the Transaction Documents (as defined in Section 3(b) hereof).
        The Company has no Subsidiaries except as set forth on Schedule
        3(a).

      

      (b) Authorization;
        Enforcement; Validity.
        (i) The
        Company has the requisite corporate power and authority to enter into and
        perform its obligations under this Agreement, the Registration Rights Agreement
        and each of the other agreements entered into by the parties on the Commencement
        Date and attached hereto as exhibits to this Agreement (collectively, the
        "Transaction Documents"), and to issue the Securities in accordance with
        the
        terms hereof and thereof, (ii) the execution and delivery of the Transaction
        Documents by the Company and the consummation by it of the transactions
        contemplated hereby and thereby, including without limitation, the issuance
        of
        the Commitment Shares and the reservation for issuance and the issuance of
        the
        Purchase Shares issuable under this Agreement, have been duly authorized
        by the
        Company's Board of Directors and no further consent or authorization is required
        by the Company, its Board of Directors or its shareholders, (iii) this Agreement
        has been, and each other Transaction Document shall be on the Commencement
        Date,
        duly executed and delivered by the Company and (iv) this Agreement constitutes,
        and each other Transaction Document upon its execution on behalf of the Company,
        shall constitute, the valid and binding obligations of the Company enforceable
        against the Company in accordance with their terms, except as such
        enforceability may be limited by general principles of equity or applicable
        bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
        laws
        relating to, or affecting generally, the enforcement of creditors' rights
        and
        remedies. The Board of Directors of the Company has approved the resolutions
        (the “Signing Resolutions”) substantially in the form as set forth as
Exhibit
        C-1
        attached
        hereto to authorize this Agreement and the transactions contemplated hereby.
        The
        Signing Resolutions are valid, in full force and effect and have not been
        modified or supplemented in any respect other than by the resolutions set
        forth
        in Exhibit
        C-2
        attached
        hereto regarding the registration statement referred to in Section 4 hereof.
        The
        Company has delivered to the Buyer a true and correct copy of a unanimous
        written consent adopting the Signing Resolutions executed by all of the members
        of the Board of Directors of the Company. No other approvals or consents
        of the
        Company’s Board of Directors and/or shareholders is necessary under applicable
        laws and the Company’s Certificate of Incorporation and/or Bylaws to authorize
        the execution and delivery of this Agreement or any of the transactions
        contemplated hereby, including, but not limited to, the issuance of the
        Commitment Shares and the issuance of the Purchase Shares.

      

      
        
          
          

        

        
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      (c) Capitalization.
        As of
        the date hereof, the authorized capital stock of the Company consists of
        (i)
        200,000,000 shares of Common Stock, of which as of the date hereof, 133,229,658
        shares are issued and outstanding, 0 are held as treasury shares, 12,574,313
        are
        reserved for the F.W. Lewis Obligation, 5,987,676 shares are reserved for
        issuance pursuant to the Company's stock option plans of which no shares
        remain
        available for future grants and 2,275,352 shares are issuable and reserved
        for
        issuance pursuant to securities (other than stock options issued pursuant
        to the
        Company's stock option plans) exercisable or exchangeable for, or convertible
        into, shares of Common Stock and (ii) no shares of Preferred Stock. All of
        such
        outstanding shares have been, or upon issuance will be, validly issued and
        are
        fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no
        shares of the Company's capital stock are subject to preemptive rights or
        any
        other similar rights or any liens or encumbrances suffered or permitted by
        the
        Company, (ii) there are no outstanding debt securities, (iii) there are no
        outstanding options, warrants, scrip, rights to subscribe to, calls or
        commitments of any character whatsoever relating to, or securities or rights
        convertible into, any shares of capital stock of the Company or any of its
        Subsidiaries, or contracts, commitments, understandings or arrangements by
        which
        the Company or any of its Subsidiaries is or may become bound to issue
        additional shares of capital stock of the Company or any of its Subsidiaries
        or
        options, warrants, scrip, rights to subscribe to, calls or commitments of
        any
        character whatsoever relating to, or securities or rights convertible into,
        any
        shares of capital stock of the Company or any of its Subsidiaries, (iv) there
        are no agreements or arrangements under which the Company or any of its
        Subsidiaries is obligated to register the sale of any of their securities
        under
        the 1933 Act (except the Registration Rights Agreement), (v) there are no
        outstanding securities or instruments of the Company or any of its Subsidiaries
        which contain any redemption or similar provisions, and there are no contracts,
        commitments, understandings or arrangements by which the Company or any of
        its
        Subsidiaries is or may become bound to redeem a security of the Company or
        any
        of its Subsidiaries, (vi) there are no securities or instruments containing
        anti-dilution or similar provisions that will be triggered by the issuance
        of
        the Securities as described in this Agreement and (vii) the Company does
        not
        have any stock appreciation rights or "phantom stock" plans or agreements
        or any
        similar plan or agreement. The Company has furnished to the Buyer true and
        correct copies of the Company's Certificate of Incorporation, as amended
        and as
        in effect on the date hereof (the "Certificate of Incorporation"), and the
        Company's By-laws, as amended and as in effect on the date hereof (the
        "By-laws"), and summaries of the terms of all securities convertible into
        or
        exercisable for Common Stock, if any, and copies of any documents containing
        the
        material rights of the holders thereof in respect thereto.

      

      (d) Issuance
        of Securities.
        The
        Commitment Shares have been duly authorized and, upon issuance in accordance
        with the terms hereof, the Commitment Shares shall be (i) validly issued,
        fully
        paid and non-assessable and (ii) free from all taxes, liens and charges with
        respect to the issue thereof. 20,000,000 shares of Common Stock have been
        duly
        authorized and reserved for issuance upon purchase under this Agreement.
        Upon
        issuance and payment therefor in accordance with the terms and conditions
        of
        this Agreement, the Purchase Shares shall be validly issued, fully paid and
        nonassessable and free from all taxes, liens and charges with respect to
        the
        issue thereof, with the holders being entitled to all rights accorded to
        a
        holder of Common Stock.

      

      
        
          
          

        

        
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      (e) No
        Conflicts.
        Except
        as disclosed in Schedule 3(e), the execution, delivery and performance of
        the
        Transaction Documents by the Company and the consummation by the Company
        of the
        transactions contemplated hereby and thereby (including, without limitation,
        the
        reservation for issuance and issuance of the Purchase Shares) will not (i)
        result in a violation of the Certificate of Incorporation, any Certificate
        of
        Designations, Preferences and Rights of any outstanding series of preferred
        stock of the Company or the By-laws or (ii) conflict with, or constitute
        a
        default (or an event which with notice or lapse of time or both would become
        a
        default) under, or give to others any rights of termination, amendment,
        acceleration or cancellation of, any agreement, indenture or instrument to
        which
        the Company or any of its Subsidiaries is a party, or result in a violation
        of
        any law, rule, regulation, order, judgment or decree (including federal and
        state securities laws and regulations and the rules and regulations of the
        Principal Market applicable to the Company or any of its Subsidiaries) or
        by
        which any property or asset of the Company or any of its Subsidiaries is
        bound
        or affected, except in the case of conflicts, defaults and violations under
        clause (ii), which could not reasonably be expected to result in a Material
        Adverse Effect. Except as disclosed in Schedule 3(e), neither the Company
        nor
        its Subsidiaries is in violation of any term of or in default under its
        Certificate of Incorporation, any Certificate of Designation, Preferences
        and
        Rights of any outstanding series of preferred stock of the Company or By-laws
        or
        their organizational charter or by-laws, respectively. Except as disclosed
        in
        Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation
        of any term of or is in default under any material contract, agreement,
        mortgage, indebtedness, indenture, instrument, judgment, decree or order
        or any
        statute, rule or regulation applicable to the Company or its Subsidiaries,
        except for possible conflicts, defaults, terminations or amendments which
        could
        not reasonably be expected to have a Material Adverse Effect. The business
        of
        the Company and its Subsidiaries is not being conducted, and shall not be
        conducted, in violation of any law, ordinance, regulation of any governmental
        entity, except for possible violations, the sanctions for which either
        individually or in the aggregate could not reasonably be expected to have
        a
        Material Adverse Effect. Except as specifically contemplated by this Agreement
        and as required under the 1933 Act or applicable state securities laws, the
        Company is not required to obtain any consent, authorization or order of,
        or
        make any filing or registration with, any court or governmental agency or
        any
        regulatory or self-regulatory agency in order for it to execute, deliver
        or
        perform any of its obligations under or contemplated by the Transaction
        Documents in accordance with the terms hereof or thereof. Except as disclosed
        in
        Schedule 3(e), all consents, authorizations, orders, filings and registrations
        which the Company is required to obtain pursuant to the preceding sentence
        shall
        be obtained or effected on or prior to the Commencement Date. Except as listed
        in Schedule 3(e), since January 1, 2004 the Company has not received nor
        delivered any notices or correspondence from or to the Principal Market.
        The
        Principal Market has not commenced any delisting proceedings against the
        Company.

      

      (f) SEC
        Documents; Financial Statements.
        Except
        as disclosed in Schedule 3(f), since January 1, 2004, the Company has timely
        filed all reports, schedules, forms, statements and other documents required
        to
        be filed by it with the SEC pursuant to the reporting requirements of the
        1934
        Act (all of the foregoing filed prior to the date hereof and all exhibits
        included therein and financial statements and schedules thereto and documents
        incorporated by reference therein being hereinafter referred to as the "SEC
        Documents"). As of their respective dates (except as they have been correctly
        amended), the SEC Documents complied in all material respects with the
        requirements of the 1934 Act and the rules and regulations of the SEC
        promulgated thereunder applicable to the SEC Documents, and none of the SEC
        Documents, at the time they were filed with the SEC (except as they may have
        been properly amended), contained any untrue statement of a material fact
        or
        omitted to state a material fact required to be stated therein or necessary
        in
        order to make the statements therein, in light of the circumstances under
        which
        they were made, not misleading. As of their respective dates (except as they
        have been properly amended), the financial statements of the Company included
        in
        the SEC Documents complied as to form in all material respects with applicable
        accounting requirements and the published rules and regulations of the SEC
        with
        respect thereto. Such financial statements have been prepared in accordance
        with
        generally accepted accounting principles, consistently applied, during the
        periods involved (except (i) as may be otherwise indicated in such financial
        statements or the notes thereto or (ii) in the case of unaudited interim
        statements, to the extent they may exclude footnotes or may be condensed
        or
        summary statements) and fairly present in all material respects the financial
        position of the Company as of the dates thereof and the results of its
        operations and cash flows for the periods then ended (subject, in the case
        of
        unaudited statements, to normal year-end audit adjustments). Except as listed
        in
        Schedule 3(f), the Company has received no notices or correspondence from
        the
        SEC since January 1, 2004. The SEC has not commenced any enforcement proceedings
        against the Company or any of its subsidiaries.

      

      
        
          
          

        

        
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      (g) Absence
        of Certain Changes.
        Except
        as disclosed in Schedule 3(g), since March 31, 2004, there has been no material
        adverse change in the business, properties, operations, financial condition
        or
        results of operations of the Company or its Subsidiaries. The Company has
        not
        taken any steps, and does not currently expect to take any steps, to seek
        protection pursuant to any Bankruptcy Law nor does the Company or any of
        its
        Subsidiaries have any knowledge or reason to believe that its creditors intend
        to initiate involuntary bankruptcy or
        insolvency proceedings. The Company is financially solvent and is generally
        able
        to pay its debts as they become due. 

      

      (h) Absence
        of Litigation.
        There
        is no action, suit, proceeding, inquiry or investigation before or by any
        court,
        public board, government agency, self-regulatory organization or body pending
        or, to the knowledge of the Company or any of its Subsidiaries, threatened
        against or affecting the Company, the Common Stock or any of the Company's
        Subsidiaries or any of the Company's or the Company's Subsidiaries' officers
        or
        directors in their capacities as such, which could reasonably be expected
        to
        have a Material Adverse Effect. A description of each action, suit, proceeding,
        inquiry or investigation before or by any court, public board, government
        agency, self-regulatory organization or body which, as of the date of this
        Agreement, is pending or threatened in writing against or affecting the Company,
        the Common Stock or any of the Company's Subsidiaries or any of the Company's
        or
        the Company's Subsidiaries' officers or directors in their capacities as
        such,
        is set forth in Schedule 3(h).

      

      (i) Acknowledgment
        Regarding Buyer's Status.
        The
        Company acknowledges and agrees that the Buyer is acting solely in the capacity
        of arm's length purchaser with respect to the Transaction Documents and the
        transactions contemplated hereby and thereby. The Company further acknowledges
        that the Buyer is not acting as a financial advisor or fiduciary of the Company
        (or in any similar capacity) with respect to the Transaction Documents and
        the
        transactions contemplated hereby and thereby and any advice given by the
        Buyer
        or any of its representatives or agents in connection with the Transaction
        Documents and the transactions contemplated hereby and thereby is merely
        incidental to the Buyer's purchase of the Securities. The Company further
        represents to the Buyer that the Company's decision to enter into the
        Transaction Documents has been based solely on the independent evaluation
        by the
        Company and its representatives and advisors.

      

      (j) No
        General Solicitation.
        Neither
        the Company, nor any of its affiliates, nor any person acting on its or their
        behalf, has engaged in any form of general solicitation or general advertising
        (within the meaning of Regulation D under the 1933 Act) in connection with
        the
        offer or sale of the Securities.

      

      (k) Intellectual
        Property Rights.
        The
        Company and its Subsidiaries own or possess adequate rights or licenses to
        use
        all material trademarks, trade names, service marks, service mark registrations,
        service names, patents, patent rights, copyrights, inventions, licenses,
        approvals, governmental authorizations, trade secrets and rights necessary
        to
        conduct their respective businesses as now conducted. Except as set forth
        on
        Schedule 3(k), none of the Company's material trademarks, trade names, service
        marks, service mark registrations, service names, patents, patent rights,
        copyrights, inventions, licenses, approvals, government authorizations, trade
        secrets or other intellectual property rights have expired or terminated,
        or, by
        the terms and conditions thereof, could expire or terminate within two years
        from the date of this Agreement. The Company and its Subsidiaries do not
        have
        any knowledge of any infringement by the Company or its Subsidiaries of any
        material trademark, trade name rights, patents, patent rights, copyrights,
        inventions, licenses, service names, service marks, service mark registrations,
        trade secret or other similar rights of others, or of any such development
        of
        similar or identical trade secrets or technical information by others and,
        except as set forth on Schedule 3(k), there is no claim, action or proceeding
        being made or brought against, or to the Company's knowledge, being threatened
        against, the Company or its Subsidiaries regarding trademark, trade name,
        patents, patent rights, invention, copyright, license, service names, service
        marks, service mark registrations, trade secret or other infringement, which
        could reasonably be expected to have a Material Adverse Effect.

      

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      (l) Environmental
        Laws.
        The
        Company and its Subsidiaries (i) are in compliance with any and all applicable
        foreign, federal, state and local laws and regulations relating to the
        protection of human health and safety, the environment or hazardous or toxic
        substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
        have received all permits, licenses or other approvals required of them under
        applicable Environmental Laws to conduct their respective businesses and
        (iii)
        are in compliance with all terms and conditions of any such permit, license
        or
        approval, except where, in each of the three foregoing clauses, the failure
        to
        so comply could not reasonably be expected to have, individually or in the
        aggregate, a Material Adverse Effect.

      

      (m) Title.
        The
        Company and its Subsidiaries have good and marketable title in fee simple
        to all
        real property and good and marketable title to all personal property owned
        by
        them which is material to the business of the Company and its Subsidiaries,
        in
        each case free and clear of all liens, encumbrances and defects except such
        as
        are described in Schedule 3(m) or such as do not materially affect the value
        of
        such property and do not interfere with the use made and proposed to be made
        of
        such property by the Company and any of its Subsidiaries. Any real property
        and
        facilities held under lease by the Company and any of its Subsidiaries are
        held
        by them under valid, subsisting and enforceable leases with such exceptions
        as
        are not material and do not interfere with the use made and proposed to be
        made
        of such property and buildings by the Company and its Subsidiaries.

      

      (n) Insurance.
        The
        Company and each of its Subsidiaries are insured by insurers of recognized
        financial responsibility against such losses and risks and in such amounts
        as
        management of the Company believes to be prudent and customary in the businesses
        in which the Company and its Subsidiaries are engaged. Neither the Company
        nor
        any such Subsidiary has been refused any insurance coverage sought or applied
        for and neither the Company nor any such Subsidiary has any reason to believe
        that it will not be able to renew its existing insurance coverage as and
        when
        such coverage expires or to obtain similar coverage from similar insurers
        as may
        be necessary to continue its business at a cost that would not materially
        and
        adversely affect the condition, financial or otherwise, or the earnings,
        business or operations of the Company and its Subsidiaries, taken as a
        whole.

      

      (o) Regulatory
        Permits.
        The
        Company and its Subsidiaries possess all material certificates, authorizations
        and permits issued by the appropriate federal, state or foreign regulatory
        authorities necessary to conduct their respective businesses, and neither
        the
        Company nor any such Subsidiary has received any notice of proceedings relating
        to the revocation or modification of any such certificate, authorization
        or
        permit.

      

      (p) Tax
        Status.
        The
        Company and each of its Subsidiaries has made or filed all federal and state
        income and all other material tax returns, reports and declarations required
        by
        any jurisdiction to which it is subject (unless and only to the extent that
        the
        Company and each of its Subsidiaries has set aside on its books provisions
        reasonably adequate for the payment of all unpaid and unreported taxes) and
        has
        paid all taxes and other governmental assessments and charges that are material
        in amount, shown or determined to be due on such returns, reports and
        declarations, except those being contested in good faith and has set aside
        on
        its books provision reasonably adequate for the payment of all taxes for
        periods
        subsequent to the periods to which such returns, reports or declarations
        apply.
        There are no unpaid taxes in any material amount claimed to be due by the
        taxing
        authority of any jurisdiction, and the officers of the Company know of no
        basis
        for any such claim.

      

      
        
          
          

        

        
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      (q) Transactions
        With Affiliates.
        Except
        as set forth on Schedule 3(q) and other than the grant or exercise of stock
        options disclosed on Schedule 3(c), none of the officers, directors, or
        employees of the Company is presently a party to any transaction with the
        Company or any of its Subsidiaries (other than for services as employees,
        officers and directors), including any contract, agreement or other arrangement
        providing for the furnishing of services to or by, providing for rental of
        real
        or personal property to or from, or otherwise requiring payments to or from
        any
        officer, director or such employee or, to the knowledge of the Company, any
        corporation, partnership, trust or other entity in which any officer, director,
        or any such employee has an interest or is an officer, director, trustee
        or
        partner.

      

      (r) Application
        of Takeover Protections.
        The
        Company and its board of directors have taken or will take prior to the
        Commencement Date all necessary action, if any, in order to render inapplicable
        any control share acquisition, business combination, poison pill (including
        any
        distribution under a rights agreement) or other similar anti-takeover provision
        under the Certificate of Incorporation or the laws of the state of its
        incorporation which is or could become applicable to the Buyer as a result
        of
        the transactions contemplated by this Agreement, including, without limitation,
        the Company's issuance of the Securities and the Buyer's ownership of the
        Securities.

      

      (s) Foreign
        Corrupt Practices.
        Neither
        the Company, nor any of its Subsidiaries, nor any director, officer, agent,
        employee or other person acting on behalf of the Company or any of its
        Subsidiaries has, in the course of its actions for, or on behalf of, the
        Company, used any corporate funds for any unlawful contribution, gift,
        entertainment or other unlawful expenses relating to political activity;
        made
        any direct or indirect unlawful payment to any foreign or domestic government
        official or employee from corporate funds; violated or is in violation of
        any
        provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended;
        or made
        any unlawful bribe, rebate, payoff, influence payment, kickback or other
        unlawful payment to any foreign or domestic government official or
        employee.

      

      

      4. COVENANTS.

      

      (a) Filing
        of Form 8-K and Registration Statement.
        The
        Company agrees that it shall, on or before 4 P.M. Eastern Time, July 15,
        2005,
        file a Report on Form 8-K disclosing this Agreement and the transaction
        contemplated hereby. The Company shall also file within ten (10) Trading
        Days
        from the date hereof a new registration statement covering only the sale
        of the
        Commitment Shares and at least 20,000,000 Purchase Shares in accordance with
        the
        terms of the Registration Rights Agreement between the Company and the Buyer,
        dated as of the date hereof (“Registration Rights Agreement”). After such
        registration statement is declared effective by the SEC, the Company agrees
        and
        acknowledges that any sales by the Company to the Buyer pursuant to this
        Agreement are
        sales
        of the Company's equity securities in a transaction that is registered under
        the
        1933 Act.

      

      (b) Blue
        Sky.
        The
        Company shall take such action, if any, as is reasonably necessary in order
        to
        obtain an exemption for or to qualify (i) the initial sale of the Commitment
        Shares and any Purchase Shares to the Buyer under this Agreement and (ii)
        any
        subsequent resale of the Commitment Shares and any Purchase Shares by the
        Buyer,
        in each case, under applicable securities or "Blue Sky" laws of the states
        of
        the United States in such states as is reasonably requested by the Buyer
        from
        time to time, and shall provide evidence of any such action so taken to the
        Buyer.

      

      
        
          
          

        

        
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      (c) No
        Variable Priced Financing.
        Other
        than pursuant to this Agreement, the Company agrees that beginning on the
        date
        of this Agreement and ending on the date of termination of this Agreement
        (as
        provided in Section 11(k) hereof), neither the Company nor any of its
        Subsidiaries shall, without the prior written consent of the Buyer, contract
        for
        any equity financing (including any debt financing with an equity component)
        or
        issue any equity securities of the Company or any Subsidiary or securities
        convertible or exchangeable into or for equity securities of the Company
        or any
        Subsidiary (including debt securities with an equity component) which, in
        any
        case (i) are convertible into or exchangeable for an indeterminate number
        of
        shares of common stock, (ii) are convertible into or exchangeable for Common
        Stock at a price which varies with the market price of the Common Stock,
        (iii)
        directly or indirectly provide for any "re-set" or adjustment of the purchase
        price, conversion rate or exercise price after the issuance of the security,
        or
        (iv) contain any "make-whole" provision based upon, directly or indirectly,
        the
        market price of the Common Stock after the issuance of the security, in each
        case, other than reasonable and customary anti-dilution adjustments for issuance
        of shares of Common Stock at a price which is below the market price of the
        Common Stock.

      

      (d) Listing.
        The
        Company shall promptly secure the listing of all of the Purchase Shares and
        Commitment Shares upon each national securities exchange and automated quotation
        system, if any, upon which shares of Common Stock are then listed (subject
        to
        official notice of issuance) and shall maintain, so long as any other shares
        of
        Common Stock shall be so listed, such listing of all such securities from
        time
        to time issuable under the terms of the Transaction Documents. The Company
        shall
        maintain the Common Stock's authorization for quotation on the Principal
        Market.
        Neither the Company nor any of its Subsidiaries shall take any action that
        would
        be reasonably expected to result in the delisting or suspension of the Common
        Stock on the Principal Market. The Company shall promptly, and in no event
        later
        than the following Trading Day, provide to the Buyer copies of any notices
        it
        receives from the Principal Market regarding the continued eligibility of
        the
        Common Stock for listing on such automated quotation system or securities
        exchange. The Company shall pay all fees and expenses in connection with
        satisfying its obligations under this Section.

      

      (e) Limitation
        on Short Sales and Hedging Transactions.
        The
        Buyer agrees that beginning on the date of this Agreement and ending on the
        date
        of termination of this Agreement as provided in Section 11(k), the Buyer
        and its
        agents, representatives and affiliates shall not in any manner whatsoever
        enter
        into or effect, directly or indirectly, any (i) "short sale" (as such term
        is
        defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
        transaction, which establishes a net short position with respect to the Common
        Stock. 

      

      (f) Issuance
        of Commitment Shares; Limitation on Sales of Commitment Shares.
        Immediately upon the execution of this Agreement, the Company shall issue
        to the
        Buyer 2,191,919 shares of Common Stock (the "Commitment Shares").
        The Commitment
        Shares and Initial Purchase Shares shall be issued in certificated form and
        (subject to Section 5 hereof) shall bear the following restrictive
        legend:

      

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
        THE
        SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
        SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
        OR
        APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER’S COUNSEL, IN A
        CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
        STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
        ACT.

      

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      The
        Buyer
        agrees that the Buyer shall not transfer or sell the Commitment Shares until
        the
        earlier of 480 Trading Days (24 Monthly Periods) from the date hereof or
        the
        date on which this Agreement has been terminated, provided, however, that
        such
        restrictions shall not apply: (i) in connection with any transfers to or
        among
        affiliates (as defined in the 1934 Act), (ii) in connection with any pledge
        in
        connection with a bona fide loan or margin account, (iii) in the event that
        the
        Commencement does not occur on or before October 31, 2005, due to the failure
        of
        the Company to satisfy the conditions set forth in Section 7 or (iv) if an
        Event
        of Default has occurred, or any event which, after notice and/or lapse of
        time,
        would become an Event of Default, including any failure by the Company to
        timely
        issue Purchase Shares under this Agreement. Notwithstanding the forgoing,
        the
        Buyer may transfer Commitment Shares to a third party in order to settle
        a sale
        made by the Buyer where the Buyer reasonably expects the Company to deliver
        Purchase Shares to the Buyer under this Agreement so long as the Buyer maintains
        ownership of the same overall number of shares of Common Stock by "replacing"
        the Commitment Shares so transferred with Purchase Shares when the Purchase
        Shares are actually issued by the Company to the Buyer. 

      

      (g) Due
        Diligence.
        The
        Buyer shall have the right, from time to time as the Buyer may reasonably
        deem
        appropriate, to perform reasonable due diligence on the Company during normal
        business hours. The Company and its officers and employees shall provide
        information and reasonably cooperate with the Buyer in connection with any
        reasonable request by the Buyer related to the Buyer's due diligence of the
        Company, including, but not limited to, any such request made by the Buyer
        in
        connection with (i) the filing of the registration statement described in
        Section 4(a) hereof and (ii) the Commencement. Each party hereto agrees not
        to
        disclose any Confidential Information of the other party to any third party
        and
        shall not use the Confidential Information for any purpose other than in
        connection with, or in furtherance of, the transactions contemplated hereby.
        Each party hereto acknowledges that the Confidential Information shall remain
        the property of the disclosing party and agrees that it shall take all
        reasonable measures to protect the secrecy of any Confidential Information
        disclosed by the other party. 

      

      (h) Participation
        Rights.
        For a
        period of 24 months from the date of this Agreement, the Company hereby grants
        to the Buyer a right to participate in the purchase of any New Securities
        (as
        defined below) that the Company may, from time to time, propose to issue
        and
        sell in connection with any financing transaction, as follows. Not later
        than 5
        Trading Days prior to the execution of any definitive documentation relating
        to
        the sale of any New Securities to any person or entity other than the Buyer
        or
        an Affiliate of the Buyer (a “New Person”), the Company shall deliver written
        notice to Buyer of its intent to enter into any such transaction, describing
        the
        New Person and the type of New Securities in reasonable detail, and attaching
        to
        such notice copies of such definitive documentation. The Buyer shall have
        20
        Trading Days after receipt of such notice to purchase up to 25% of such New
        Securities, at the price and on the terms specified in such notice by giving
        written notice to the Company specifying the amount of New Securities to
        be
        purchased by the Buyer. In the event the Company has not sold such New
        Securities to the New Person within 10 Trading Days after notice thereof
        to the
        Buyer, the Company shall not thereafter issue or sell any New Securities
        to any
        New Person without first again complying with this Section. “New Securities”
        shall mean any shares of Common Stock, preferred stock or any other equity
        securities of the Company or securities convertible or exchangeable for equity
        securities of the Company, provided, however, that New Securities shall not
        include, (i) shares of Common Stock issuable upon conversion or exercise
        of any
        securities outstanding as of the date hereof, (ii) shares, options or warrants
        for Common Stock granted to officers, directors and employees of the Company
        pursuant to stock option plans approved by the Board of Directors of the
        Company, (iii) shares of Common Stock or securities convertible or exchangeable
        for Common Stock issued pursuant to the acquisition of another company by
        consolidation, merger, or purchase of all or substantially all of the assets
        of
        such company or (iv) shares of Common Stock or securities convertible or
        exchangeable into shares of Common Stock issued in connection with a strategic
        transaction involving the Company and issued to an entity or an affiliate
        of
        such entity that is engaged in the same or substantially related business
        as the
        Company. The Buyer rights hereunder shall not prohibit or limit the Company
        from
        selling any New Securities so long as the Company makes the same offer to
        the
        Buyer as provided herein. Otherwise the Company shall be prohibited from
        selling
        any New Securities to any New Person until it fully complies
        herewith.

      

      
        
          
          

        

        
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      5. TRANSFER
        AGENT INSTRUCTIONS.

      

      Immediately
        upon the execution of this Agreement, the Company shall deliver to the Transfer
        Agent a letter in the form as set forth as Exhibit
        E
        attached
        hereto with respect to the issuance of the Commitment Shares. On
        the
        Commencement Date, the Company shall cause any restrictive legend on the
        Commitment Shares and Initial Purchase Shares to
        be
        removed and all of the Purchase Shares to be issued under this Agreement
        shall
        be issued without any restrictive legend unless the Buyer expressly consents
        otherwise. The Company shall issue irrevocable instructions to the Transfer
        Agent, and any subsequent transfer agent, to issue Purchase Shares in the
        name
        of the Buyer for the Purchase Shares (the "Irrevocable Transfer Agent
        Instructions"). The Company warrants to the Buyer that no instruction other
        than
        the Irrevocable Transfer Agent Instructions referred to in this Section 5,
        will
        be given by the Company to the Transfer Agent with respect to the Purchase
        Shares and that the Commitment Shares and the Purchase Shares shall otherwise
        be
        freely transferable on the books and records of the Company as and to the
        extent
        provided in this Agreement and the Registration Rights Agreement subject
        to the
        provisions of Section 4(f) in the case of the Commitment Shares.

      

      

      
        	 	
                6.

              	
                CONDITIONS
                  TO THE COMPANY'S OBLIGATION TO COMMENCE SALES OF SHARES OF COMMON
                  STOCK.

              

      

       

      

      The
        obligation of the Company hereunder to commence sales of the Purchase Shares
        is
        subject to the satisfaction of each of the following conditions on or before
        the
        Commencement Date (the date that sales begin) and once such conditions have
        been
        initially satisfied, there shall not be any ongoing obligation to satisfy
        such
        conditions after the Commencement has occurred; provided that these conditions
        are for the Company's sole benefit and may be waived by the Company at any
        time
        in its sole discretion by providing the Buyer with prior written notice
        thereof:

       

      (a) The
        Buyer
        shall have executed each of the Transaction Documents and delivered the same
        to
        the Company. 

      

      (b) Subject
        to the Company's compliance with Section 4(a), a registration statement covering
        the sale of all of the Commitment Shares and at least 20,000,000 Purchase
        Shares
        shall have been declared effective under the 1933 Act by the SEC and no stop
        order with respect to the Registration Statement shall be pending or threatened
        by the SEC. 

      

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      (c) The
        representations and warranties of the Buyer shall be true and correct in
        all
        material respects as of the date when made and as of the Commencement Date
        as
        though made at that time (except for representations and warranties that
        speak
        as of a specific date), and the Buyer shall have performed, satisfied and
        complied in all material respects with the covenants, agreements and conditions
        required by this Agreement to be performed, satisfied or complied with by
        the
        Buyer at or prior to the Commencement Date.

      

      

      
        	 	
                7.

              	
                CONDITIONS
                  TO THE BUYER'S OBLIGATION TO COMMENCE PURCHASES OF SHARES OF COMMON
                  STOCK.

              

      

       

      

      The
        obligation of the Buyer to commence purchases of Purchase Shares under this
        Agreement is subject to the satisfaction of each of the following conditions
        on
        or before the Commencement Date (the date that sales begin) and once such
        conditions have been initially satisfied, there shall not be any ongoing
        obligation to satisfy such conditions after the Commencement has
        occurred:

      

      (a) The
        Company shall have executed each of the Transaction Documents and delivered
        the
        same to the Buyer.

      

      (b) The
        Company shall have issued to the Buyer the Commitment Shares and Initial
        Purchase Shares and shall have removed the restrictive transfer legend from
        the
        certificate representing the Initial Purchase Shares and Commitment Shares.
        

      

      (c) The
        Common Stock shall be authorized for quotation on the Principal Market, trading
        in the Common Stock shall not have been within the last 365 days suspended
        by
        the SEC or the Principal Market and the Purchase Shares and the Commitment
        Shares shall be approved for listing upon the Principal Market.

      

      (d) The
        Buyer
        shall have received the opinions of the Company's legal counsel dated as
        of the
        Commencement Date substantially in the form of Exhibit
        A
        attached
        hereto.

      

      (e) The
        representations and warranties of the Company shall be true and correct in
        all
        material respects (except to the extent that any of such representations
        and
        warranties is already qualified as to materiality in Section 3 above, in
        which
        case, such representations and warranties shall be true and correct without
        further qualification) as of the date when made and as of the Commencement
        Date
        as though made at that time (except for representations and warranties that
        speak as of a specific date) and the Company shall have performed, satisfied
        and
        complied with the covenants, agreements and conditions required by the
        Transaction Documents to be performed, satisfied or complied with by the
        Company
        at or prior to the Commencement Date. The Buyer shall have received a
        certificate, executed by the CEO, President or CFO of the Company, dated
        as of
        the Commencement Date, to the foregoing effect in the form attached hereto
        as
Exhibit
        B.

      

      (f) The
        Board
        of Directors of the Company shall have adopted resolutions in the form attached
        hereto as Exhibit
        C
        which
        shall be in full force and effect without any amendment or supplement thereto
        as
        of the Commencement Date. 

      

      (g) As
        of the
        Commencement Date, the Company shall have reserved out of its authorized
        and
        unissued Common Stock, solely for the purpose of effecting purchases of Purchase
        Shares hereunder, at least 20,000,000 shares of Common Stock.

      

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      (h) The
        Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer
        shall
        have been delivered to and acknowledged in writing by the Company and the
        Company's Transfer Agent.

      

      (i) The
        Company shall have delivered to the Buyer a certificate evidencing the
        incorporation and good standing of the Company in the State of Minnesota
        issued
        by the Secretary of State of the State of Minnesota as of a date within ten
        (10)
        Trading Days of the Commencement Date.

      

      (j) The
        Company shall have delivered to the Buyer a certified copy of the Certificate
        of
        Incorporation as certified by the Secretary of State of the State of Minnesota
        within ten (10) Trading Days of the Commencement Date.

      

      (k) The
        Company shall have delivered to the Buyer a secretary's certificate executed
        by
        the Secretary of the Company, dated as of the Commencement Date, in the form
        attached hereto as Exhibit
        D.

      

      (l) A
        registration statement covering the sale of all of the Commitment Shares
        and at
        least 20,000,000 Purchase Shares shall have been declared effective under
        the
        1933 Act by the SEC and no stop order with respect to the registration statement
        shall be pending or threatened by the SEC. The Company shall have prepared
        and
        delivered to the Buyer a final form of prospectus to be used by the Buyer
        in
        connection with any sales of any Commitment Shares or any Purchase Shares.
        The
        Company shall have made all filings under all applicable federal and state
        securities laws necessary to consummate the issuance of the Commitment Shares
        and the Purchase Shares pursuant to this Agreement in compliance with such
        laws.

      

      (m) No
        Event
        of Default has occurred, or any event which, after notice and/or lapse of
        time,
        would become an Event of Default has occurred.

      

      (n) On
        or
        prior to the Commencement Date, the Company shall take all necessary action,
        if
        any, and such actions as reasonably requested by the Buyer, in order to render
        inapplicable any control share acquisition, business combination, shareholder
        rights plan or poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under the Certificate of Incorporation
        or the laws of the state of its incorporation which is or could become
        applicable to the Buyer as a result of the transactions contemplated by this
        Agreement, including, without limitation, the Company's issuance of the
        Securities and the Buyer's ownership of the Securities.

      

      (o) The
        Company shall have provided the Buyer with the information requested by the
        Buyer in connection with its due diligence requests made prior to, or in
        connection with, the Commencement, in accordance with the terms of Section
        4(g)
        hereof.

      

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      

      
        	 	
                8.

              	
                INDEMNIFICATION.
                  

              

      

      

      In
        consideration of the Buyer's execution and delivery of the Transaction Documents
        and acquiring the Securities hereunder and in addition to all of the Company's
        other obligations under the Transaction Documents, the Company shall defend,
        protect, indemnify and hold harmless the Buyer and all of its affiliates,
        shareholders, officers, directors, employees and direct or indirect investors
        and any of the foregoing person's agents or other representatives (including,
        without limitation, those retained in connection with the transactions
        contemplated by this Agreement) (collectively, the "Indemnitees") from and
        against any and all actions, causes of action, suits, claims, losses, costs,
        penalties, fees, liabilities and damages, and expenses in connection therewith
        (irrespective of whether any such Indemnitee is a party to the action for
        which
        indemnification hereunder is sought), and including reasonable attorneys'
        fees
        and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee
        as
        a result of, or arising out of, or relating to (a) any misrepresentation
        or
        breach of any representation or warranty made by the Company in the Transaction
        Documents or any other certificate, instrument or document contemplated hereby
        or thereby, (b) any breach of any covenant, agreement or obligation of the
        Company contained in the Transaction Documents or any other certificate,
        instrument or document contemplated hereby or thereby, or (c) any cause of
        action, suit or claim brought or made against such Indemnitee and arising
        out of
        or resulting from the execution, delivery, performance or enforcement of
        the
        Transaction Documents or any other certificate, instrument or document
        contemplated hereby or thereby, other than with respect to Indemnified
        Liabilities which directly and primarily result from the gross negligence
        or
        willful misconduct of the Indemnitee. To the extent that the foregoing
        undertaking by the Company may be unenforceable for any reason, the Company
        shall make the maximum contribution to the payment and satisfaction of each
        of
        the Indemnified Liabilities which is permissible under applicable
        law.

      

      

      9. EVENTS
        OF DEFAULT. 

      

      An
        "Event
        of Default" shall be deemed to have occurred at any time as any of the following
        events occurs:

      

      (a) while
        any
        registration statement is required to be maintained effective pursuant to
        the
        terms of the Registration Rights Agreement, the effectiveness of such
        registration statement lapses for any reason (including, without limitation,
        the
        issuance of a stop order) or is unavailable to the Buyer for sale of all
        of the
        Registrable Securities (as defined in the Registration Rights Agreement)
        in
        accordance with the terms of the Registration Rights Agreement, and such
        lapse
        or unavailability continues for a period of five (5) consecutive Trading
        Days or
        for more than an aggregate of twenty (20) Trading Days in any 365-day
        period;

      

      (b) the
        suspension from trading or failure of the Common Stock to be listed on the
        Principal Market for a period of three (3) consecutive Trading
        Days;

      

      (c) the
        delisting of the Company’s Common Stock from the Principal Market, provided,
        however, that the Common Stock is not immediately thereafter trading on the
        New
        York Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
        or
        the American Stock Exchange;

      

      (d) the
        failure for any reason by the Transfer Agent to issue Purchase Shares to
        the
        Buyer within five (5) Trading Days after the applicable Purchase Date which
        the
        Buyer is entitled to receive;

      

      (e) the
        Company breaches any representation, warranty, covenant or other term or
        condition under any Transaction Document if such breach could have a Material
        Adverse Effect and except, in the case of a breach of a covenant which is
        reasonably curable, only if such breach continues for a period of at least
        five
        (5) Trading Days;

      

      (f) if
        any
        Person commences a proceeding against the Company pursuant to or within the
        meaning of any Bankruptcy Law ; 

      

      (g) if
        the
        Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences
        a
        voluntary case, (B) consents to the entry of an order for relief against
        it in
        an involuntary case, (C) consents to the appointment of a Custodian of it
        or for
        all or substantially all of its property, (D) makes a general assignment
        for the
        benefit of its creditors, (E) becomes insolvent, or (F) is generally unable
        to
        pay its debts as the same become due;

      

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      (h) a
        court
        of competent jurisdiction enters an order or decree under any Bankruptcy
        Law
        that (A) is for relief against the Company in an involuntary case, (B) appoints
        a Custodian of the Company or for all or substantially all of its property,
        or
        (C) orders the liquidation of the Company or any Subsidiary; or 

      

      (i) a
        material adverse change in the business, properties, operations, financial
        condition or results of operations of the Company or its
        Subsidiaries;

       

      

      In
        addition to any other rights and remedies under applicable law and this
        Agreement, including the Buyer termination rights under Section 11(k) hereof,
        so
        long as an Event of Default has occurred and is continuing, or if any event
        which, after notice and/or lapse of time, would become an Event of Default,
        has
        occurred and is continuing, or so long as the Purchase Price is below the
        Purchase Price Floor, the Buyer shall not be obligated to purchase any shares
        of
        Common Stock under this Agreement. If pursuant to or within the meaning of
        any
        Bankruptcy Law, the Company commences a voluntary case or any Person commences
        a
        proceeding against the Company, a Custodian is appointed for the Company
        or for
        all or substantially all of its property, or the Company makes a general
        assignment for the benefit of its creditors, (any of which would be an Event
        of
        Default as described in Sections 9(f), 9(g) and 9(h) hereof)
        this Agreement shall automatically terminate without any liability or payment
        to
        the Company without further action or notice by any Person. No such termination
        of this Agreement under Section 11(k)(i) shall affect the Company's or the
        Buyer's obligations under this Agreement with respect to pending purchases
        and
        the Company and the Buyer shall complete their respective obligations with
        respect to any pending purchases under this Agreement.

      

      

      10. CERTAIN
        DEFINED TERMS. 

      

      For
        purposes of this Agreement, the following terms shall have the following
        meanings:

      

      (a) “1933
        Act” means the Securities Act of 1933, as amended.

      

      (b) “Available
        Amount” means initially Six Million Two Hundred Thousand Dollars ($6,200,000) in
        the aggregate which amount shall be reduced by the Purchase Amount each time
        the
        Buyer purchases shares of Common Stock pursuant to Section 1
        hereof.

      

      (c) “Bankruptcy
        Law” means Title 11, U.S. Code, or any similar federal or state law for the
        relief of debtors. 

      

      (d) “Closing
        Sale Price” means, for any security as of any date, the last closing trade price
        for such security on the Principal Market as reported by the Principal Market,
        or, if the Principal Market is not the principal securities exchange or trading
        market for such security, the last closing trade price of such security on
        the
        principal securities exchange or trading market where such security is listed
        or
        traded as reported by the Principal Market. 

      

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      (e) “Confidential
        Information” means any information disclosed by either party to the other party,
        either directly or indirectly, in writing, orally or by inspection of tangible
        objects (including, without limitation, documents, prototypes, samples, plant
        and equipment), which is designated as "Confidential," "Proprietary" or some
        similar designation. Information communicated orally shall be considered
        Confidential Information if such information is confirmed in writing as being
        Confidential Information within ten (10) business days after the initial
        disclosure. Confidential Information may also include information disclosed
        to a
        disclosing party by third parties. Confidential Information shall not, however,
        include any information which (i) was publicly known and made generally
        available in the public domain prior to the time of disclosure by the disclosing
        party; (ii) becomes publicly known and made generally available after disclosure
        by the disclosing party to the receiving party through no action or inaction
        of
        the receiving party; (iii) is already in the possession of the receiving
        party
        at the time of disclosure by the disclosing party as shown by the receiving
        party’s files and records immediately prior to the time of disclosure; (iv) is
        obtained by the receiving party from a third party without a breach of such
        third party’s obligations of confidentiality; (v) is independently developed by
        the receiving party without use of or reference to the disclosing party’s
        Confidential Information, as shown by documents and other competent evidence
        in
        the receiving party’s possession; or (vi) is required by law to be disclosed by
        the receiving party, provided that the receiving party gives the disclosing
        party prompt written notice of such requirement prior to such disclosure
        and
        assistance in obtaining an order protecting the information from public
        disclosure.

      

      (f) “Custodian”
        means any receiver, trustee, assignee, liquidator or similar official under
        any
        Bankruptcy Law.

      

      (g) “Maturity
        Date” means the date that is 480 Trading Days (24 Monthly Periods) from the
        Commencement Date which such date may be extended by up to an additional
        six (6)
        Monthly Periods by the Company, in its sole discretion, by written notice
        to the
        Buyer.

      

      (h) “Monthly
        Period” means each successive 20 Trading Day period commencing with the
        Commencement Date.

       

      (i) “Person”
        means an individual or entity including any limited liability company, a
        partnership, a joint venture, a corporation, a trust, an unincorporated
        organization and a government or any department or agency thereof.

      

      (j) “Principal
        Market” means the Nasdaq OTC Bulletin Board; provided however, that in the event
        the Company’s Common Stock is ever listed or traded on the Nasdaq National
        Market, the Nasdaq SmallCap Market, the New York Stock Exchange or the American
        Stock Exchange, than the “Principal Market” shall mean such other market or
        exchange on which the Company’s Common Stock is then listed or
        traded.

      

      (k) “Purchase
        Amount” means the portion of the Available Amount to be purchased by the Buyer
        pursuant to Section 1 hereof.

      

      (l) “Purchase
        Date” means the actual date that the Buyer is to buy Purchase Shares pursuant
        to
        Section 1 hereof. 

      

      (m) “Purchase
        Price” means, as of any Trading Day the lower of the (A) the lowest Sale Price
        of the Common Stock on such Trading Day and (B) the arithmetic average of
        the
        three (3) lowest Closing Sale Prices for the Common Stock during the twelve
        (12)
        consecutive Trading Days ending on the Trading Day immediately preceding
        such
        date of determination (to be appropriately adjusted for any reorganization,
        recapitalization, non-cash dividend, stock split or other similar
        transaction).

      

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

      (n) “Sale
        Price” means, for any security as of any date, any trade price for such security
        on the Principal Market as reported by the Principal Market, or, if the
        Principal Market is not the principal securities exchange or trading market
        for
        such security, the trade price of such security on the principal securities
        exchange or trading market where such security is listed or traded as reported
        by the Principal Market.

      

      (o) “SEC”
        means the United States Securities and Exchange Commission.

      

      (q) “Transfer
        Agent” means the transfer agent of the Company as set forth in Section 11(f)
        hereof or such other person who is then serving as the transfer agent for
        the
        Company in respect of the Common Stock.

      

      (r) “Trading
        Day” means any day on which the Principal Market is open for trading including
        any day on which the Principal Market is open for trading for a period of
        time
        less than the customary time.

      

      

      11. MISCELLANEOUS.

      

      (a) Governing
        Law; Jurisdiction; Jury Trial.
        The
        corporate laws of the State of Minnesota shall govern all issues concerning
        the
        relative rights of the Company and its shareholders. All other questions
        concerning the construction, validity, enforcement and interpretation of
        this
        Agreement and the other Transaction Documents shall be governed by the internal
        laws of the State of Illinois, without giving effect to any choice of law
        or
        conflict of law provision or rule (whether of the State of Illinois or any
        other
        jurisdictions) that would cause the application of the laws of any jurisdictions
        other than the State of Illinois. Each party hereby irrevocably submits to
        the
        exclusive jurisdiction of the state and federal courts sitting in the City
        of
        Chicago, for the adjudication of any dispute hereunder or under the other
        Transaction Documents or in connection herewith or therewith, or with any
        transaction contemplated hereby or discussed herein, and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        that
        such suit, action or proceeding is brought in an inconvenient forum or that
        the
        venue of such suit, action or proceeding is improper. Each party hereby
        irrevocably waives personal service of process and consents to process being
        served in any such suit, action or proceeding by mailing a copy thereof to
        such
        party at the address for such notices to it under this Agreement and agrees
        that
        such service shall constitute good and sufficient service of process and
        notice
        thereof. Nothing contained herein shall be deemed to limit in any way any
        right
        to serve process in any manner permitted by law. EACH
        PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
        REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
        CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
        CONTEMPLATED HEREBY.

      

      (b) Counterparts.
        This
        Agreement may be executed in two or more identical counterparts, all of which
        shall be considered one and the same agreement and shall become effective
        when
        counterparts have been signed by each party and delivered to the other party;
        provided that a facsimile signature shall be considered due execution and
        shall
        be binding upon the signatory thereto with the same force and effect as if
        the
        signature were an original, not a facsimile signature.

      

      (c) Headings.
        The
        headings of this Agreement are for convenience of reference and shall not
        form
        part of, or affect the interpretation of, this Agreement.

      

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

      (d) Severability.
        If any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement in that jurisdiction
        or the
        validity or enforceability of any provision of this Agreement in any other
        jurisdiction.

      

      (e) Entire
        Agreement; Amendments.
        With
        the exception of the Mutual Nondisclosure Agreement between the parties dated
        as
        of November 1, 2001, this Agreement supersedes all other prior oral or written
        agreements between the Buyer, the Company, their affiliates and persons acting
        on their behalf with respect to the matters discussed herein, and this
        Agreement, the other Transaction Documents and the instruments referenced
        herein
        contain the entire understanding of the parties with respect to the matters
        covered herein and therein and, except as specifically set forth herein or
        therein, neither the Company nor the Buyer makes any representation, warranty,
        covenant or undertaking with respect to such matters. Any provision of this
        Agreement may be amended or modified by mutual agreement of the Company and
        the
        Buyer, and any provision hereof may be waived only by the party against whom
        enforcement is sought. The Company acknowledges and agrees that is has not
        relied on, in any manner whatsoever, any representations or statements, written
        or oral, other than as expressly set forth in this Agreement.

      

      (f) Notices.
        Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered: (i) upon receipt, when delivered personally; (ii) upon
        receipt, when sent by facsimile (provided confirmation of transmission is
        mechanically or electronically generated and kept on file by the sending
        party);
        or (iii) one Trading 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:

      Golden
        Phoenix Minerals, Inc.

      1675
        E.
        Prater Way, Suite 102

      Sparks,
        Nevada 89434

      Telephone: 775-853-4919

      Facsimile: 775-853-5010

      Attention:
         

      

      With
        a
        copy to:

      Kirkpatrick
        & Lockhart LLP

      201
        South
        Biscayne Boulevard, Suite 2000

      Miami,
        FL
        33131

      Telephone: 305-539-3300

      Facsimile: 
        305-358-7095

      Attention: Clayton
        E. Parker, Esq

      

      If
        to the
        Buyer:

      Fusion
        Capital Fund II, LLC

      222
        Merchandise Mart Plaza, Suite 9-112

      Chicago,
        IL 60654

      Telephone: 312-644-6644

      Facsimile: 312-644-6244

      Attention: Steven
        G.
        Martin

      

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      If
        to the
        Transfer Agent:

      Nevada
        Agency & Trust

      50
        W.
        Liberty, Suite 880

      Reno,
        Nevada 89501

      Telephone:
         775-322-0626

      Facsimile: 775-322-5623

      Attention:
         

      

      or
        at
        such other address and/or facsimile number and/or to the attention of such
        other
        person as the recipient party has specified by written notice given to each
        other party three (3) Trading Days prior to the effectiveness of such change.
        Written confirmation of receipt (A) given by the recipient of such notice,
        consent, waiver or other communication, (B) mechanically or electronically
        generated by the sender's facsimile machine containing the time, date, and
        recipient facsimile number or (C) provided by a nationally recognized overnight
        delivery service, shall be rebuttable evidence of personal service, receipt
        by
        facsimile or receipt from a nationally recognized overnight delivery service
        in
        accordance with clause (i), (ii) or (iii) above, respectively.

      

      (g) Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and assigns. The Company shall not assign this
        Agreement or any rights or obligations hereunder without the prior written
        consent of the Buyer, including by merger or consolidation. The Buyer may
        not
        assign its rights or obligations under this Agreement.

      

      (h) No
        Third Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other person.

      

      (i) Publicity.
        The
        Buyer shall have the right to approve before issuance any press release,
        SEC
        filing or any other public disclosure made by or on behalf of the Company
        whatsoever with respect to, in any manner, the Buyer, its purchases hereunder
        or
        any aspect of this Agreement or the transactions contemplated hereby. The
        Company agrees and acknowledges that its failure to fully comply with this
        provision constitutes a material adverse effect on its ability to perform
        its
        obligations under this Agreement. 

      

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

      

      (k) Termination.
        This
        Agreement may be terminated only as follows: 

      

      (i) By
        the
        Buyer any time an Event of Default exists without any liability or payment
        to
        the Company. However, if pursuant to or within the meaning of any Bankruptcy
        Law, the Company commences a voluntary case or any Person commences a proceeding
        against the Company, a Custodian is appointed for the Company or for all
        or
        substantially all of its property, or the Company makes a general assignment
        for
        the benefit of its creditors, (any of which would be an Event of Default
        as
        described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
        automatically terminate without any liability or payment to the Company without
        further action or notice by any Person. No such termination of this Agreement
        under this Section 11(k)(i) shall affect the Company's or the Buyer's
        obligations under this Agreement with respect to pending purchases and the
        Company and the Buyer shall complete their respective obligations with respect
        to any pending purchases under this Agreement. 

      

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

      (ii) In
        the
        event that the Commencement shall not have occurred, the Company shall have
        the
        option to terminate this Agreement for any reason or for no reason without
        liability of any party to any other party.

      

      (iii) In
        the
        event that the Commencement shall not have occurred on or before October
        31,
        2005, due to the failure to satisfy the conditions set forth in Sections
        6 and 7
        above with respect to the Commencement (and the nonbreaching party's failure
        to
        waive such unsatisfied condition(s)), the nonbreaching party shall have the
        option to terminate this Agreement at the close of business on such date
        or
        thereafter without liability of any party to any other party. 

      

      (iv) If
        by the
        Maturity Date (including any extension thereof by the Company pursuant to
        Section 10(g) hereof), for any reason or for no reason the full Available
        Amount
        under this Agreement has not been purchased as provided for in Section 1
        of this
        Agreement, by the Buyer without any liability or payment to the Company.
        

      

      (v) 
        At any
        time after the Commencement Date, the Company shall have the option to terminate
        this Agreement for any reason or for no reason by delivering notice (a “Company
        Termination Notice”) to the Buyer electing to terminate this Agreement without
        any liability or payment to the Buyer. The Company Termination Notice shall
        not
        be effective until one (1) Trading Day after it has been received by the
        Buyer.

      

      (vi) This
        Agreement shall automatically terminate on the date that the Company sells
        and
        the Buyer purchases the full Available Amount as provided herein, without
        any
        action or notice on the part of any party. 

      

      Except
        as
        set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections
        9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this Agreement pursuant
        to this Section 11(k) shall be effected by written notice from the Company
        to
        the Buyer, or the Buyer to the Company, as the case may be, setting forth
        the
        basis for the termination hereof. The representations and warranties of the
        Company and the Buyer contained in Sections 2 and 3 hereof, the indemnification
        provisions set forth in Section 8 hereof and the agreements and covenants
        set
        forth in Section 4(h)
        and Section 11,
        shall
        survive the Commencement and any termination of this Agreement. No termination
        of this Agreement shall affect the Company's or the Buyer's rights or
        obligations (i) under the Registration Rights Agreement which shall survive
        any
        such termination or (ii) under this Agreement with respect to pending purchases
        and the Company and the Buyer shall complete their respective obligations
        with
        respect to any pending purchases under this Agreement.

      

      (l) No
        Financial Advisor, Placement Agent, Broker or Finder.
        The
        Company represents and warrants to the Buyer that it has not engaged any
        financial advisor, placement agent, broker or finder in connection with the
        transactions contemplated hereby. The Buyer represents and warrants to the
        Company that it has not engaged any financial advisor, placement agent, broker
        or finder in connection with the transactions contemplated hereby. The Company
        shall be responsible for the payment of any fees or commissions, if any,
        of any
        financial advisor, placement agent, broker or finder relating to or arising
        out
        of the transactions contemplated hereby. The Company shall pay, and hold
        the
        Buyer harmless against, any liability, loss or expense (including, without
        limitation, attorneys' fees and out of pocket expenses) arising in connection
        with any such claim.

      

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

      (m) No
        Strict Construction.
        The
        language used in this Agreement will be deemed to be the language chosen
        by the
        parties to express their mutual intent, and no rules of strict construction
        will
        be applied against any party.

      

      (n) Remedies,
        Other Obligations, Breaches and Injunctive Relief.
        The
        Buyer’s remedies provided in this Agreement shall be cumulative and in addition
        to all other remedies available to the Buyer under this Agreement, at law
        or in
        equity (including a decree of specific performance and/or other injunctive
        relief), no remedy of the Buyer contained herein shall be deemed a waiver
        of
        compliance with the provisions giving rise to such remedy and nothing herein
        shall limit the Buyer's right to pursue actual damages for any failure by
        the
        Company to comply with the terms of this Agreement. The Company acknowledges
        that a breach by it of its obligations hereunder will cause irreparable harm
        to
        the Buyer and that the remedy at law for any such breach may be inadequate.
        The
        Company therefore agrees that, in the event of any such breach or threatened
        breach, the Buyer shall be entitled, in addition to all other available
        remedies, to an injunction restraining any breach, without the necessity
        of
        showing economic loss and without any bond or other security being
        required.

      

      (o) Changes
        to the Terms of this Agreement.
        This
        Agreement and any provision hereof may only be amended by an instrument in
        writing signed by the Company and the Buyer. The term "Agreement" and all
        reference thereto, as used throughout this instrument, shall mean this
        instrument as originally executed, or if later amended or supplemented, then
        as
        so amended or supplemented.

      

      (p) Enforcement
        Costs.
        If: (i)
        this Agreement is placed by the Buyer in the hands of an attorney for
        enforcement or is enforced by the Buyer through any legal proceeding; or
        (ii) an
        attorney is retained to represent the Buyer in any bankruptcy, reorganization,
        receivership or other proceedings affecting creditors' rights and involving
        a
        claim under this Agreement; or (iii) an attorney is retained to represent
        the
        Buyer in any other proceedings whatsoever in connection with this Agreement,
        then the Company shall pay to the Buyer, as incurred by the Buyer, all
        reasonable costs and expenses including attorneys' fees incurred in connection
        therewith, in addition to all other amounts due hereunder.

      

      (q) Failure
        or Indulgence Not Waiver.
        No
        failure or delay in the exercise of any power, right or privilege hereunder
        shall operate as a waiver thereof, nor shall any single or partial exercise
        of
        any such power, right or privilege preclude other or further exercise thereof
        or
        of any other right, power or privilege.

      

      

      

      *
        * * * *

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        Buyer and the Company have caused this Common Stock Purchase Agreement to
        be
        duly executed as of the date first written above.

      

      

        

        THE
          COMPANY:

        

        GOLDEN
          PHOENIX MINERALS, INC.

        

        By:
          Steven
          Craig                       
          

        Name:
          Steven Craig

        Title:  Vice
          President

        

        

        BUYER:

        

        FUSION
          CAPITAL FUND II, LLC

        BY:
          FUSION CAPITAL PARTNERS, LLC

        BY:
          ROCKLEDGE CAPITAL CORPORATION

        

        By:
          Josh Scheinfeld         
          

        Name:
          Josh Scheinfeld

        Title:
          President

        

        

      
        
          
          

        

        
          -25-Unassociated Document

    EXHIBIT
      4.3

     

    REGISTRATION
      RIGHTS AGREEMENT

    

    REGISTRATION
      RIGHTS AGREEMENT
      (this
      "Agreement"),
      dated
      as of July 13, 2005, by and between GOLDEN
      PHOENIX MINERALS, INC., a
      Minnesota corporation, (the "Company"),
      and
FUSION
      CAPITAL FUND II, LLC
      (together with it permitted assigns, the “Buyer”).
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings set forth in the Common Stock Purchase Agreement by and
      between the parties hereto, dated as of the date hereof (as amended, restated,
      supplemented or otherwise modified from time to time, the "Purchase
      Agreement").

    

    WHEREAS:

    

    A.    The
      Company has agreed, upon the terms and subject to the conditions of the Purchase
      Agreement, to issue to the Buyer (i) up to Six Million Two Hundred Thousand
      Dollars ($6,200,000) of the Company's common stock, no par value per share
      (the
      "Common
      Stock")
      (the
      "Purchase
      Shares"),
      and
      (ii) such number of shares of Common Stock as is required pursuant to Section
      4(f) of the Purchase Agreement (the "Commitment
      Shares");
      and

    

    B.    To
      induce
      the Buyer to enter into the Purchase 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.

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged,
      the Company and the Buyer hereby agree as follows:

    

    1.    DEFINITIONS.

    

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

    

    a.    "Investor"
      means
      the Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9 and any transferee or assignee thereof
      to
      whom a transferee or assignee assigns its rights under this Agreement and who
      agrees to become bound by the provisions of this Agreement in accordance with
      Section 9.

    

    b.    "Person"
      means
      any person or entity including any 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.

    

    c.    "Register,"
      "registered,"
      and
      "registration"
      refer
      to a registration effected by preparing and filing one or more registration
      statements of the Company 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").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    d. "Registrable
      Securities"
      means
      the Purchase Shares (including, without limitation, the Initial Purchase Shares)
      which have been, or which may from time to time be, issued or issuable upon
      purchases of the Available Amount under the Purchase Agreement (without regard
      to any limitation or restriction on purchases) and the Commitment Shares issued
      or issuable to the Investor and any shares of capital stock issued or issuable
      with respect to the Purchase Shares, the Commitment Shares or
      the
      Purchase Agreement as a result of any stock split, stock dividend,
      recapitalization, exchange or similar event or otherwise, without regard to
      any
      limitation on purchases under the Purchase Agreement.

    

    e.    "Registration
      Statement"
      means
      the registration statement of the Company covering only the sale of the
      Registrable Securities.

    

    2.    REGISTRATION.

    

    a.    Mandatory
      Registration.
      The
      Company shall within ten (10) Trading Days from the date hereof file with the
      SEC the Registration Statement. The Registration Statement shall register only
      the Registrable Securities and no other securities of the Company. The Investor
      and its counsel shall have a reasonable opportunity to review and comment upon
      such registration statement or amendment to such registration statement and
      any
      related prospectus prior to its filing with the SEC. Investor shall furnish
      all
      information reasonably requested by the Company for inclusion therein. The
      Company shall use its best efforts to have the Registration Statement or
      amendment declared effective by the SEC at the earliest possible date. The
      Company shall use reasonable best efforts to keep the Registration Statement
      effective pursuant to Rule 415 promulgated under the 1933 Act and available
      for
      sales of all of the Registrable Securities at all times until the earlier of
      (i)
      the date as of which the Investor may sell all of the Registrable Securities
      without restriction pursuant to Rule 144(k) promulgated under the 1933 Act
      (or
      successor thereto) or (ii) the date on which (A) the Investor shall have sold
      all the Registrable Securities and no Available Amount remains under the
      Purchase 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.

    

    b.    Rule
      424 Prospectus.
      The
      Company shall, as required by applicable securities regulations, from time
      to
      time file with the SEC, pursuant to Rule 424 promulgated under the 1933 Act,
      the
      prospectus and prospectus supplements, if any, to be used in connection with
      sales of the Registrable Securities under the Registration Statement. The
      Investor and its counsel shall have a reasonable opportunity to review and
      comment upon such prospectus prior to its filing with the SEC. The Investor
      shall use its reasonable best efforts to comment upon such prospectus within
      one
      (1) Trading Day from the date the Investor receives the final version of such
      prospectus. 

    

    c.    Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under the Registration Statement is
      insufficient to cover all of the Registrable Securities, the Company shall
      amend
      the Registration Statement or file a new registration statement (a ”New
      Registration Statement”),
      so as
      to cover all of such Registrable Securities as soon as practicable, but in
      any
      event not later than ten (10) Trading Days after the necessity therefor arises.
      The Company shall use it reasonable best efforts to cause such amendment and/or
      New Registration Statement to become effective as soon as practicable following
      the filing thereof. 

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    3.    RELATED
      OBLIGATIONS.

    

    With
      respect to the Registration Statement and whenever any Registrable Securities
      are to be registered pursuant to Section 2(b) including on any New Registration
      Statement, the Company shall use its reasonable best efforts to effect the
      registration of the Registrable Securities in accordance with the intended
      method of disposition thereof and, pursuant thereto, the Company shall have
      the
      following obligations:

    

    a.    The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to any 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 the Registration Statement or any New Registration Statement
      effective at all times during the Registration Period, and, during such period,
      comply with the provisions of the 1933 Act with respect to the disposition
      of
      all Registrable Securities of the Company covered by the Registration Statement
      or any New 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 seller or sellers thereof as set forth in such
      registration statement.

    

    b.    The
      Company shall permit the Investor to review and comment upon the Registration
      Statement or any New Registration Statement and all amendments and supplements
      thereto at least two (2) Trading Days prior to their filing with the SEC, and
      not file any document in a form to which Investor reasonably objects. The
      Investor shall use its reasonable best efforts to comment upon the Registration
      Statement or any New Registration Statement and any amendments or supplements
      thereto within two (2) Trading Days from the date the Investor receives the
      final version thereof. The Company shall furnish to the Investor, without charge
      any correspondence from the SEC or the staff of the SEC to the Company or its
      representatives relating to the Registration Statement or any New Registration
      Statement.

    

    c.    Upon
      request of the Investor, the Company shall furnish to the Investor, (i) promptly
      after the same is prepared and filed with the SEC, at least one copy of such
      registration statement and any amendment(s) thereto, including financial
      statements and schedules, all documents incorporated therein by reference and
      all exhibits, (ii) upon the effectiveness of any registration statement, a
      copy
      of the prospectus included in such registration statement and all amendments
      and
      supplements thereto (or such other number of copies as the Investor may
      reasonably request) 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 owned by the Investor.

    

    d.    The
      Company shall use reasonable best efforts to (i) register and qualify the
      Registrable Securities covered by a registration statement under such other
      securities or "blue sky" laws of such jurisdictions 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), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process 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.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    e.    As
      promptly as practicable after becoming aware of such event or facts, the Company
      shall notify the Investor in writing of the happening of any event or existence
      of such facts as a result of which the prospectus included in any registration
      statement, as then in effect, includes an untrue statement of a material fact
      or
      omits 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, and promptly prepare a supplement or amendment to such
      registration statement to correct such untrue statement or omission, and deliver
      a copy of such supplement or amendment to the Investor (or such other number
      of
      copies as the Investor may reasonably request). The Company shall also promptly
      notify the Investor in writing (i) when a prospectus or any prospectus
      supplement or post-effective amendment has been filed, and when a registration
      statement or any post-effective amendment has become effective (notification
      of
      such effectiveness shall be delivered to the Investor by facsimile on the same
      day of such effectiveness and by overnight mail), (ii) of any request by the
      SEC
      for amendments or supplements to any registration statement or related
      prospectus or related information, and (iii) of the Company's reasonable
      determination that a post-effective amendment to a registration statement would
      be appropriate.

    

    f.    The
      Company shall use its reasonable best efforts to prevent the issuance of any
      stop order or other suspension of effectiveness of any registration statement,
      or the suspension of the qualification of any 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 of the issuance of such order and the resolution thereof
      or
      its receipt of actual notice of the initiation or threat of any proceeding
      for
      such purpose.

    

    g.    The
      Company shall (i) cause all the Registrable Securities to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange, or (ii) secure
      designation and quotation of all the Registrable Securities on the Principal
      Market. The Company shall pay all fees and expenses in connection with
      satisfying its obligation under this Section.

    

    h.    The
      Company shall cooperate with the Investor to facilitate the timely preparation
      and delivery of certificates (not bearing any restrictive legend) representing
      the Registrable Securities to be offered pursuant to any registration statement
      and enable such certificates to be in such denominations or amounts as the
      Investor may reasonably request and registered in such names as the Investor
      may
      request.

    

    i.    The
      Company shall at all times provide a transfer agent and registrar with respect
      to its Common Stock.

    

    j.    If
      reasonably requested by the Investor, the Company shall (i) immediately
      incorporate in a prospectus supplement or post-effective amendment such
      information as the Investor believes should be included therein relating to
      the
      sale and distribution of Registrable Securities, including, without limitation,
      information with respect to the number of Registrable Securities being sold,
      the
      purchase price being paid therefor and any other terms of the offering of the
      Registrable Securities; (ii) make all required filings of such prospectus
      supplement or post-effective amendment as soon as 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.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    k.    The
      Company shall use its reasonable best efforts to cause the Registrable
      Securities covered by the any registration statement to be registered with
      or
      approved by such other governmental agencies or authorities as may be necessary
      to consummate the disposition of such Registrable Securities.

    l. Within
      one (1) Trading Day after any registration statement which includes the
      Registrable Securities is ordered effective by the SEC, the Company shall
      deliver, and shall cause legal counsel for the Company to deliver, to the
      transfer agent for such Registrable Securities (with copies to the Investor)
      confirmation that such registration statement has been declared effective by
      the
      SEC in the form attached hereto as Exhibit
      A.
      Thereafter, if requested by the Buyer at any time, the Company shall require
      its
      counsel to deliver to the Buyer a written confirmation whether or not the
      effectiveness of such registration statement has lapsed at any time for any
      reason (including, without limitation, the issuance of a stop order) and whether
      or not the registration statement is current and available to the Buyer for
      sale
      of all of the Registrable Securities.

    

    m.    The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investor of Registrable Securities pursuant to
      any
      registration statement.

    

    4.    OBLIGATIONS
      OF THE INVESTOR.

    

    a.    The
      Company shall notify the Investor in writing of the information the Company
      reasonably requires from the Investor in connection with any registration
      statement hereunder. The Investor shall furnish to the Company such information
      regarding itself, the Registrable Securities held by it and the intended method
      of disposition of the Registrable Securities held by it as shall be reasonably
      required to effect the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.

    

    b.    The
      Investor 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 any notice from the Company of the
      happening of any event or existence of facts 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 3(e). Notwithstanding anything to the contrary, the Company
      shall cause its transfer agent to promptly deliver shares of Common Stock
      without any restrictive legend in accordance with the terms of the Purchase
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which an Investor has entered into a contract for sale prior to the Investor's
      receipt of a 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) and for which the
      Investor has not yet settled.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    5.    EXPENSES
      OF REGISTRATION.

    

    All
      reasonable expenses, other than sales or brokerage commissions, incurred in
      connection with registrations, filings or qualifications pursuant to Sections
      2
      and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company, shall be paid by the Company.

    

    6.    INDEMNIFICATION.

    

    a.    To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend the Investor, each Person, if any, who controls the
      Investor, the members, the directors, officers, partners, employees, agents,
      representatives of the Investor and each Person, if any, who controls the
      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 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, any New 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 Registrable Securities are offered ("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 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, (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
      or
      any New Registration Statement or (iv) any material violation by the Company
      of
      this Agreement (the matters in the foregoing clauses (i) through (iv) being,
      collectively, "Violations").
      The
      Company shall reimburse each Indemnified Person promptly as such expenses are
      incurred and are due and payable, for any 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 by an Indemnified Person arising out of or based upon a Violation which
      occurs in reliance upon and in conformity with information furnished in writing
      to the Company by such Indemnified Person expressly for use in connection with
      the preparation of the Registration Statement, any New Registration Statement
      or
      any such amendment thereof or supplement thereto, if such prospectus was timely
      made available by the Company pursuant to Section 3(c) or Section 3(e); (ii)
      with respect to any superceded prospectus, shall not inure to the benefit of
      any
      such person from whom the person asserting any such Claim purchased the
      Registrable Securities that are the subject thereof (or to the benefit of any
      person controlling such person) if the untrue statement or omission of material
      fact contained in the superceded prospectus was corrected in the revised
      prospectus, as then amended or supplemented, if such revised prospectus was
      timely made available by the Company pursuant to Section 3(c) or Section 3(e),
      and the Indemnified Person was promptly advised in writing not to 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    use
      the
      incorrect prospectus prior to the use giving rise to a violation and such
      Indemnified Person, notwithstanding such advice, used it; (iii) shall not be
      available to the extent such Claim is based on a failure of the Investor to
      deliver or to cause to be delivered the prospectus made available by the
      Company, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(c) or Section 3(e); and (iv) shall not apply to 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. 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 transfer
      of
      the Registrable Securities by the Investor pursuant to Section 9.

    

    b.    In
      connection with the Registration Statement or any New Registration Statement,
      the Investor agrees to severally and not 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 or any New Registration Statement, each Person, if any,
      who controls the Company within the meaning of the 1933 Act or the 1934 Act
      (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 occurs in reliance
      upon and in conformity with written information about the Investor set forth
      on
Exhibit
      B
      attached
      hereto and furnished to the Company by the Investor expressly for use in
      connection with such registration statement; and, subject to Section 6(d),
      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 be liable under
      this Section 6(b) for only that amount of a Claim or Indemnified Damages as
      does
      not exceed the net proceeds to the 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 transfer of the
      Registrable Securities by the Investor pursuant to Section 9. 

    

    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 indemnifying party, the representation by such 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 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
      

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    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 effected 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 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 or litigation. 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
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

    

    e.    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.

    

    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 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 (ii) 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.

    

    8.    REPORTS
      AND DISCLOSURE UNDER THE SECURITIES ACTS.

    

    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"),
      the
      Company agrees, at the Company’s sole expense, 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 and the filing of such reports and other documents
      is required for the applicable provisions of Rule 144; and

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    c.    furnish
      to the Investor so long as the Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company that it has complied with
      the reporting and or disclosure provisions 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.

    

    d.    take
      such
      additional action as is requested by the Investor to enable the Investor to
      sell
      the Registrable Securities pursuant to Rule 144, including, without limitation,
      delivering all such legal opinions, consents, certificates, resolutions and
      instructions to the Company’s Transfer Agent as may be requested from time to
      time by the Investor and otherwise fully cooperate with Investor and Investor’s
      broker to effect such sale of securities pursuant to Rule 144.

    

    The
      Company agrees that damages may be an inadequate remedy for any breach of the
      terms and provisions of this Section 8 and that Investor shall, whether or
      not
      it is pursuing any remedies at law, be entitled to equitable relief in the
      form
      of a preliminary or permanent injunctions, without having to post any bond
      or
      other security, upon any breach or threatened breach of any such terms or
      provisions.

    

    9.    ASSIGNMENT
      OF REGISTRATION RIGHTS.

    

    The
      Company shall not assign this Agreement or any rights or obligations hereunder
      without the prior written consent of the Investor, including by merger or
      consolidation. The Investor may not assign its rights under this Agreement
      without the written consent of the Company, other than to an affiliate of the
      Investor controlled by Steven G. Martin or Joshua B. Scheinfeld.

    

    10.    AMENDMENT
      OF REGISTRATION RIGHTS.

    

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the
      Investor.

    

    11.    MISCELLANEOUS.

    

    a.    A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more Persons with
      respect to the same Registrable Securities, the Company shall act upon the
      basis
      of instructions, notice or election received from the registered owner of such
      Registrable Securities.

    

    b.    Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) Trading 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:

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    If
      to the
      Company:

    Golden
      Phoenix Minerals, Inc.

    1675
      E.
      Prater Way, Suite 102

    Sparks,
      Nevada 89434

    Telephone: 775-853-4919

    Facsimile: 775-853-5010

    Attention:
       __________

    

    With
      a
      copy to:

    Kirkpatrick
      & Lockhart LLP

    201
      South
      Biscayne Boulevard, Suite 2000

    Miami,
      FL
      33131

    Telephone: 305-539-3300

    Facsimile: 305-358-7095

    Attention: Clayton
      E. Parker, Esq.

    

    If
      to the
      Investor:

    Fusion
      Capital Fund II, LLC

    222
      Merchandise Mart Plaza, Suite 9-112

    Chicago,
      IL 60654

    Telephone: 312-644-6644

    Facsimile: 312-644-6244

    Attention: Steven
      G.
      Martin

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) Trading Days prior to the effectiveness of such change.
      Written confirmation of receipt (A) given by the recipient of such notice,
      consent, waiver or other communication, (B) mechanically or electronically
      generated by the sender's facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (C)
      provided by a nationally recognized overnight delivery service, shall be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

    

    c.    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.

    

    d.    The
      corporate laws of the State of Minnesota shall govern all issues concerning
      the
      relative rights of the Company and its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of Illinois,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of Illinois or any other jurisdictions) that would cause
      the application of the laws of any jurisdictions other than the State of
      Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting the City of Chicago, for the adjudication
      of any dispute hereunder or in connection herewith or with any transaction
      contemplated hereby or discussed herein, and hereby irrevocably waives, and
      agrees not to assert in any suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of any such court, that such suit, action
      or proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof to such party at the
      address for such notices to it under this Agreement and agrees 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    that
      such
      service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. If any provision of this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

    

    e.    This
      Agreement, and the Purchase 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. This Agreement and the Purchase
      Agreement supersede all prior agreements and understandings among the parties
      hereto with respect to the subject matter hereof and thereof.

    

    f.    Subject
      to the requirements of Section 9, this Agreement shall inure to the benefit
      of
      and be binding upon the permitted successors and assigns of each of the parties
      hereto.

    

    g.    The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    

    h.    This
      Agreement may be executed in 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 of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

    

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

    

    j.    The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

    

    k.    This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

    

    *
      * * * * *

     

     

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Registration Rights Agreement to be duly executed
      as of
      day and year first above written.

    

    

    

    THE
      COMPANY:

     

    GOLDEN
      PHOENIX MINERALS, INC.

     

     

    By:
/s
      /Steven
      Craig                            
      

    Name:
      Steve Craig

    Title:
      Vice President

     

     

    BUYER:

     

    FUSION
      CAPITAL FUND II, LLC

    BY:
      FUSION CAPITAL PARTNERS, LLC

    BY:
      ROCKLEDGE CAPITAL CORPORATION

     

    By:
      /s/ Josh
      Scheinfeld                           
      

    Name:
      Josh
      Scheinfeld

    Title:
      President

    
 

    
      
        
        

      

      
        -12-

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