Document:

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION S
PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR
SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT,
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF
OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE WARRANT AND THE
UNDERLYING SHARES AND WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND
THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S. PERSON"
ARE AS DEFINED BY REGULATION S UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.

     

    SEARCHLIGHT
MINERALS CORP.

    A
NEVADA CORPORATION

     

    COMMON
STOCK PURCHASE

    WARRANT
CERTIFICATE NUMBER 2008-01-033-001

     

    February
7, 2008

     

    1.           Issuance

     

    THIS IS TO CERTIFY THAT, for
value received, «NAME_OF_SUBSCRIBER_»
of «Address_of_Subscriber»
(the “Holder”), shall have the right to purchase from SEARCHLIGHT MINERALS CORP., a
Nevada corporation (the “Corporation”), «No_of_Warrants» fully paid and
non-assessable shares of the Corporation’s common stock (the “Common Stock”),
subject to further adjustment as set forth in Section 6 hereof, at any time
until 5:00 P.M., Pacific time, on the November 12, 2012 (the
“Expiration Date”) at an exercise price of $1.85 per share (the "Exercise
Price").

     

    2.           Exercise of
Warrants

     

    This
Warrant is exercisable in whole or in partial allotments of no less than 1,000
shares at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check. Upon surrender of this
Warrant Certificate with the annexed Notice of Exercise Form duly executed,
together with payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased.

     

    3.           Reservation of
Shares

     

    The
Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant (the “Warrant Shares”).

     

    4.           Mutilation or Loss of
Warrant

     

    Upon
receipt by the Corporation of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) receipt of reasonably satisfactory indemnification, and (in the
case of mutilation) upon surrender and cancellation of this Warrant, the
Corporation will execute an deliver a
new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              SEARCHLIGHT
      MINERALS CORP.

            	
              2

            	
               

            
	
              Common
      Stock Purchase Warrant

            	 	 
	
              Certificate
      <<Cert_No>>

            	 	 

    

     

     

    5.            Rights of the
Holder

     

    The
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
in the Corporation, either at law or equity, and the rights of the Holder are
limited to those expressed in this Warrant and are not enforceable against the
Corporation except to the extent set forth herein.

     

    6.            Protection Against
Dilution.

     

    The
Exercise Price and the number of shares which can be purchased by the Holder
upon the exercise of this Warrant shall be subject to adjustment in the events
and in the manner following:

     

    
      	
               
      

            	
              (1)

            	
              If
      and whenever the shares at any time outstanding shall be, subdivided into
      a greater or consolidated into a lesser, number of shares, the Exercise
      Price shall be decreased or increased proportionately as the case may be;
      upon any such subdivision or consolidation, the number of shares which can
      be purchased upon the exercise of this warrant certificate shall be
      increased or decreased proportionately as the case may
  be.

            

    

     

    
      	
               
      

            	
              (2)

            	
              In
      case of any capital reorganization or of any reclassification of the
      capital of the Corporation or in case of the consolidation, merger or
      amalgamation of the Corporation with or into any other company, this
      Warrant shall after such capital reorganization, reclassification of
      capital, consolidation, merger or amalgamation confer the right to
      purchase the number of shares or other securities of the Corporation or of
      the Corporation resulting from such capital reorganization,
      reclassification, consolidation, merger or amalgamation, as the case may
      be, to which the Holder of the shares deliverable at the time of such
      capital reorganization, reclassification of capital, consolidation, merger
      or amalgamation, upon the exercise of this Warrant would have been
      entitled. On such capital reorganization, reclassification, consolidation,
      merger or amalgamation appropriate adjustments shall be made in the
      application of the provisions set forth herein with respect to the rights
      and interest thereafter of the Holder of this Warrant so that the
      provisions set forth herein shall thereafter be applicable as nearly as
      may reasonably be in relation to any shares or other securities thereafter
      deliverable on the exercise of this
Warrant.

            

    

     

    
      	
               
      

            	
              (3)

            	
              The
      rights of the Holder evidenced hereby are to purchase shares prior to or
      on the date set out on the face of this Warrant. If there shall, prior to
      the exercise of any of the rights evidenced hereby, be any reorganization
      of the authorized capital of the Corporation by way of consolidation,
      merger, subdivision, amalgamation or otherwise, or the payment of any
      stock dividends, then there shall automatically be an adjustment in either
      or both of the number of shares which may be purchased pursuant hereto or
      the price at which such shares may be purchased so that the rights
      evidenced hereby shall thereafter as reasonably as possible be equivalent
      to those originally granted hereby. The Corporation shall have the sole
      and exclusive power to make such adjustments as it considers necessary and
      desirable.

            

    

     

    
      	
               
      

            	
              (4)

            	
              The
      adjustments provided for herein in the subscription rights represented by
      this Warrant are cumulative.

            

    

     

    7.            Transfer to Comply with the
Securities Act and Other Applicable Securities Legislation

     

    This
Warrant and the Warrant Shares have not been registered under the Securities Act
of 1933, as amended, (the “Securities Act”) and have been issued to the Holder
pursuant to Regulation S of the Securities Act on the representations of the
Holder in a subscription agreement executed by the Holder in favor of
the Corporation. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Securities Act relating to such security or an opinion of
counsel reasonably satisfactory to the Corporation that registration is not
required under the Securities Act. Each certificate for the Warrant, the Warrant
Shares and any other security issued or issuable upon exercise of this Warrant
shall contain a legend on the face thereof, in form and substance satisfactory
to counsel for the Corporation, setting forth the restrictions on transfer
contained in this Section. By acceptance of this certificate, the Holder
acknowledges and agrees that:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              SEARCHLIGHT
      MINERALS CORP.

            	
              3

            	
               

            
	
              Common
      Stock Purchase Warrant

            	 	 
	
              Certificate
      <<Cert_No>>

            	 	 

    

     

     

    
      	
               
      

            	
              (1)

            	
              The
      Holder will only sell the Warrants and the shares issuable upon exercise
      of the Warrants (the “Warrant Shares") only in accordance with the
      provisions of Regulation S of the Securities Act, pursuant to registration
      under the Securities Act, or pursuant to an available exemption from
      registration pursuant to the Securities
Act;

            

    

     

    
      	
               
      

            	
              (2)

            	
              The
      Corporation will refuse to register any transfer of the Warrants and the
      Warrant Shares not made in accordance with the provisions of Regulation S
      of the Securities Act, pursuant to registration under the Securities Act,
      or pursuant to an available exemption from
  registration;

            

    

     

    
      	
               
      

            	
              (3)

            	
              The
      Holder will not engage in hedging transactions except in accordance with
      the Securities Act;

            

    

     

    
      	
               
      

            	
              (4)

            	
              The
      Holder is not entitled to any registration rights with respect to the
      Warrants or the Warrant Shares.

            

    

     

    All
certificates representing the Warrant Shares will be endorsed with the following
legend:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE BEEN ISSUED
IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.”

     

    In
addition, the Holder will comply with all other applicable securities
legislation in addition to the Securities Act to which the Holder is subject in
selling or transferring any Warrants or Warrant Shares and the Corporation may
refuse to register any sale or transfer not in compliance with such other
securities legislation.

     

    8.            Payment of
Taxes

     

    The
Corporation shall not be required to pay any tax or other charge imposed in
connection with the exercise of this Warrant or a permissible transfer involved
in the issuance of any certificate for shares issuable under this Warrant in the
name other than that of the Holder, and in any such case, the Corporation shall
not be required to issue or deliver any stock certificate until such tax or
other charge has been paid or it has been established to the Corporation’s
satisfaction that no such tax or other charge is due.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              SEARCHLIGHT
      MINERALS CORP.

            	
              4

            	
               

            
	
              Common
      Stock Purchase Warrant

            	 	 
	
              Certificate
      <<Cert_No>>

            	 	 

    

     

    
      9.           Notices

    

     

    Any
notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon, (a) by personal delivery or telecopy, or (ii) one
business day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    CORPORATION:

                                  	
                                    SEARCHLIGHT
      MINERALS CORP.

                                  
	 	      
                                    Attention:
      Carl S. Ager, Vice President and Secretary 

                                    2441
      West Horizon Ridge Parkway, Suite 120 

                                    Henderson,
      NV 89052

                                     

                                    Tel:
      (702) 939-5247

                                  
	 	 
	with
      a copy to:	      
                                    BAKER & HOSTETLER LLP
      

                                    Attention:
      Jeffrey P. Berg 

                                    12100
      Wilshire Blvd., 15th
      Floor 

                                    Los
      Angeles, California 90025

                                  
	 	 
	 	Fax:
      (310) 820-8859
	 	 
	HOLDER:	At
      the address set forth
above.

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    10.            Governing
Law

     

    This
Warrant shall be deemed to be a contract made under the laws of the State of
Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

     

    IN WITNESS WHEREOF, the
Corporation has caused this Warrant to be duly executed and delivered by its
duly authorized officer.

     

    SEARCHLIGHT MINERALS CORP.

    by its
authorized signatory:

     

     

    ______________________________________

    Carl
S. Ager

    Vice
President and Secretary

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SUBSCRIPTION
FORM

     

    TO:
SEARCHLIGHT MINERALS CORP.

    A Nevada
Corporation (the “Corporation”)

     

    Dear
Sirs:

     

    The
undersigned (the “Subscriber”) hereby exercises the right to purchase and hereby
subscribes for__________shares of the common stock of Searchlight Minerals Corp.
(the “Shares”) referred to in the Common Stock Purchase Warrant
Certificate <<Cert_No>>
surrendered herewith according to the terms and conditions thereof and
herewith makes payment by cash, certified check or bank draft of the purchase
price in full for the Shares in accordance with the Warrant.

    
       

      Please
issue a certificate for the shares being purchased as follows in the name of the
Subscriber: 

       

      NAME:              
__________________________

    

    (Please
Print) 

     

    ADDRESS:        
__________________________

     

                                
__________________________

     

    The
Subscriber represents and warrants to the Corporation that:

     

    
      	
              (a)

            	
              The
      Subscriber has not offered or sold the Shares within the meaning of the
      United States Securities Act of 1933
      (the “Securities Act”);

            

    

     

    
      	
              (b)

            	
              The
      Subscriber is acquiring the Shares for its own account for investment,
      with no present intention of dividing my interest with others or of
      reselling or otherwise disposing of all or any portion of the
      same;

            

    

     

    
      	
              (c)

            	
              The
      Subscriber does not intend any sale of the Shares either currently or
      after the passage of a fixed or determinable period of time or upon the
      occurrence or non-occurrence of any predetermined event or
      circumstance;

            

    

     

    
      	
              (d)

            	
              The
      Subscriber has no present or contemplated agreement, undertaking,
      arrangement, obligation, indebtedness or commitment providing for or which
      is likely to compel a disposition of the
Shares;

            

    

     

    
      	
              (e)

            	
              The
      Subscriber is not aware of any circumstances presently in existence which
      are likely in the future to prompt a disposition of the
      Shares;

            

    

     

    
      	
              (f)

            	
              The
      Shares were offered to the Subscriber in direct communication between the
      Subscriber and the Corporation and not through any advertisement of any
      kind;

            

    

     

    
      	
              (g)

            	
              The
      Subscriber has the financial means to bear the economic risk of the
      investment which it hereby agrees to
make;

            

    

     

    
      	
              (h)

            	
              This
      subscription form will also confirm the Subscriber’s agreement as
      follows:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (i)

            	
              The
      Subscriber will only sell the Shares in accordance with the provisions of
      Regulation S of the Securities Act pursuant to registration under the
      Securities Act, or pursuant to an available exemption from registration
      pursuant to the Securities Act;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Corporation will refuse to register any transfer of the Shares not made in
      accordance with the provisions of Regulation S of the Securities Act,
      pursuant to registration under the Securities Act, or pursuant to an
      available exemption from
registration;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              The
      Subscriber will not engage in hedging transactions except in accordance
      with the Securities Act;

            

    

     

    
      
        	
              	
                (iv)

              	
                The
      Subscriber has no right to require the Corporation to register the Shares
      under the Securities Act;

              

      

    

     

    
      	
               
      

            	
              (v)

            	
              The
      certificates representing the Shares will be endorsed with the following
      legend:

            

    

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES
MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

     

    
      
        	
              	
                (vi)

              	
                The
      Subscriber is not a U.S. Person, as defined in Regulation S of the
      Securities Act.

              

      

    

     

    Please
deliver a share certificate in respect of the common shares referred to in the
warrant certificate surrendered herewith but not presently subscribed for, to
the Subscriber.

    
       

    

    DATED
this_______day of_____________________,

    

    Signature
of Subscriber:

    

    Name of
Subscriber:

    

    Address
of Subscriber:SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of November 12, 2009, between Searchlight Minerals Corp., a Nevada
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 promulgated thereunder, and pursuant to National Instrument 45-106
Prospectus Registration Exemptions (“NI 45-106”) the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:

     

    ARTICLE
I

    DEFINITIONS

     

    1.1.           Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings set forth in this Section 1.1:

     

    “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 405 under the Securities Act.  With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.

     

    “Business Day” means
any day except Saturday, Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to
close.

     

    “Canadian Accredited
Investor” means an accredited investor as defined in NI
-45-106.

     

    “Canadian Commissions”
means the Canadian securities commissions or regulatory authorities existing in
each province and territory of Canada.

     

    “Canadian Securities
Laws” means collectively, the applicable securities laws of each of the
provinces and territories of Canada, their respective regulations, rulings,
rules, orders and prescribed forms thereunder and the applicable policy
statements published by the Canadian Commissions.

     

    “Closing” means the
closing of the purchase and sale of the Shares and the Warrants pursuant to
Section 2.1.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Closing Date” means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Shares and the Warrants have been satisfied
or waived.

     

    “Commission” means the
United States Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of the Company, $0.001 par value per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time shares of Common
Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, shares of Common Stock.

     

    “Company Counsel”
means Baker & Hostetler LLP, with offices located at 12100 Wilshire
Boulevard, Suite 1500, Los Angeles, California 90025-7120.

     

    “Continuous Disclosure
Reports” shall have the meaning ascribed to such term in Section 3.1(h).

     

    “Dahlman” shall have
the meaning ascribed to such term in Section 5.21.

     

    “Disclosure Schedules”
means the Disclosure Schedules of the Company delivered concurrently
herewith.

     

    “Effective Date” means
the date that the initial Registration Statement filed by the Company pursuant
to the Registration Rights Agreement is first declared effective by the
Commission.

     

    "Encumbrance" or
"Encumbrances"
means Liens and other net profits interests, royalties or overriding royalty
interests, other payments out of production.

     

    “Environmental Laws”
shall have the meaning ascribed to such term in Section
3.1(kk).

     

    “Escrow Agent” means
JPMorgan Chase Bank, N.A..

     

    “Escrow Agreement”
means the escrow agreement entered into prior to the date hereof, by and among
the Company, Dahlman and the Escrow Agent pursuant to which the Purchasers,
shall deposit Subscription Amounts with the Escrow Agent to be applied to the
transactions contemplated hereunder, in the form of Exhibit
D.

     

    “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Exchange Act” means
the United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

     

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants (provided that issuances to consultants shall
not exceed an aggregate of 500,000 shares of Common Stock and Common Stock
Equivalents in any 6 month period, subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of shares of Common Stock that occur after the date of this Agreement) of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established,
(b) Warrant Shares upon the exercise or exchange of  the Warrants
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities and (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person which is, itself or through its subsidiaries, an
operating company in a business similar to and/or compatible with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.

     

    “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

     

    "Governmental Fees"
means all location fees, mining claim rental fees, mining claim maintenance
payments and similar payments required by federal or state law to locate and
hold unpatented mining claims.

     

    “Hazardous Substances”
shall have the meaning ascribed to such term in Section
3.1(kk).

     

    “Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(aa).

     

    “Intellectual Property
Rights” shall have the meaning ascribed to such term in Section 3.1(o).

     

    “Legend Removal Date”
shall have the meaning ascribed to such term in Section 4.1(g).

     

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

     

    “Material Adverse
Effect” shall have the meaning assigned to such term in Section 3.1(b).

     

    “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

     

    “OTCBB” means the OTC
Bulletin Board on which the Common Stock is currently quoted for
trading.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Per Share Purchase
Price” equals $1.25, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

     

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.

     

    “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit A attached
hereto.

     

    “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.

     

    “Regulation D” means
Regulation D as promulgated under the Securities Act.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Securities” means the
Shares, the Warrants and the Warrant Shares.

     

    “Securities Act” means
the United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     

    “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable Common Stock).

     

    “Shares” means the
shares of Common Stock issued or issuable to each Purchaser pursuant to this
Agreement.

     

    “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares and
Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

     

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a), and shall,
where applicable, include any subsidiary of the Company formed or acquired after
the date hereof.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “TS” means Troutman
Sanders LLP, with offices located at 222 Central Park Avenue, Suite 2000,
Virginia Beach, Virginia 23464.

     

    “Trading Day” means
(i) a day on which the Common Stock is traded on a Trading Market or (ii) if the Common Stock is
not listed or quoted on any Trading Market, a day on which the Common Stock is
quoted on the OTCBB; provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i) or (ii) hereof, then Trading Day shall mean
a Business Day.

     

    “Trading Market”
means whichever of
the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global
Select Market, the NASDAQ Global Market or the NASDAQ Capital Market on which
the Common Stock is listed or quoted for trading on the date in
question.

     

    “Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

     

    “Transfer Agent” means
Empire Stock Transfer, Inc., with a mailing address of 1859 Whitney Mesa Drive,
Henderson, Nevada 89014, and a facsimile number of (702) 974-1444 and any
successor transfer agent of the Company.

     

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the
Common Stock is not then listed on a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the
OTCBB; or (c) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Purchasers of a majority in interest of the Shares then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.

     

    “Warrants” means
collectively the Common Stock purchase warrants delivered to the Purchasers in
connection with the Closing in accordance with Section 2.2(b)(ii)
hereof, which have a term of exercise equal to three (3) years from the Closing
Date, in the form of Exhibit B attached
hereto.

     

    “Warrant Shares” means
the shares of Common Stock issuable upon exercise of the
Warrants.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    ARTICLE
II

    PURCHASE
AND SALE

     

    2.1.           Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein
and in accordance with the terms of the Escrow Agreement, substantially
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and the Purchasers, severally and not
jointly, agree to purchase, in the aggregate, up to $16,000,000 of Shares and
Warrants.  Each Purchaser shall deliver to the Escrow Agent, via wire
transfer, a certified check or a personal check, immediately available funds
equal to its Subscription Amount and the Company shall deliver to each Purchaser
its respective Shares and a Warrant as determined pursuant to Section 2.2(b),
and the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 at the
Closing.  Upon satisfaction of the covenants and conditions set forth
in Sections 2.2 and 2.3, the Closing
shall occur at the offices of TS, or such other location as the parties shall
mutually agree.

     

    2.2.           Deliveries.

     

    (a)           On
or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following:

     

    (i)           this
Agreement duly executed by the Company;

     

    (ii)          legal
opinion of Company Counsel in substantially the form of Exhibit C attached
hereto acceptable to the Company and Dahlman;

     

    (iii)         an
updated title insurance policy dated the Closing Date regarding the Clarkdale
Slag Project in a form reasonably satisfactory to Dahlman;

     

    (iv)         a
certificate evidencing the formation and good standing of the Company in the
State of Nevada issued by the Secretary of State of Nevada (or comparable
office) as of a date within five (5) Business Days of the Closing
Date;

     

    (v)          a
certificate evidencing the Company’s qualification as a foreign corporation and
good standing issued by the State of Arizona, as of a date within five (5)
Business Days of the Closing Date; and

     

    (vi)         the
Registration Rights Agreement duly executed by the Company.

     

    (b)           In
accordance with Section 4.14 herein,
following the Closing Date, Company shall deliver or cause to be delivered to
each Purchaser the following:

     

    (i)           a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription
Amount divided by the Per Share Purchase Price, registered in the name of such
Purchaser; and

     

    (ii)          a
Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 50% of the Shares issuable to such Purchaser
pursuant to Section 2.2(b)(i),
with an exercise price equal to $1.85, subject to adjustment therein;
and

     

    (c)           On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

     

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    (i)           this
Agreement duly executed by such Purchaser;

     

    (ii)          such
Purchaser’s Subscription Amount by wire transfer or certified check to the
Company; and

     

    (iii)         the
Registration Rights Agreement duly executed by such Purchaser, including the
Selling Stockholder Questionnaire attached thereto as Annex B.

     

    2.3.           Closing
Conditions.

     

    (a)           The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     

    (i)           the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Purchasers contained herein that have not already been
qualified by materiality, and the accuracy in all respects on the Closing Date
of the representations and warranties of the Purchasers contained herein that
have been qualified by materiality;

     

    (ii)          all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and

     

    (iii)          the
delivery by each Purchaser of the items set forth in Section 2.2(c)
of this Agreement.

     

    (b)           The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

     

    (i)           the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained herein that have not already been qualified
by materiality, and the accuracy in all respects on the Closing Date of the
representations and warranties of the Company contained herein that have been
qualified by materiality;

     

    (ii)          all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed;

     

    (iii)         the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

     

    (iv)         there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof to the Closing Date; and

     

    (v)          from
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission or the OTCBB, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P. shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on the
OTCBB, nor shall a banking moratorium have been declared either by the United
States or New York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in,
any financial market which, in each case, in the reasonable judgment of each
Purchaser, makes it impracticable or inadvisable to purchase the Shares and the
Warrants at the Closing.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

     

    3.1.           Representations and
Warranties of the Company.  Except as set forth in the
Disclosure Schedules delivered to Purchaser by the Company on or prior to the
date of this Agreement, and except as disclosed in the Registration Statement on
Form S-1 (File No. 333-132929), and the related Rule 424(b)(3) prospectus, dated
October 2, 2009, and in the Annual Report on Form 10-K of Company for the year
ended December 31, 2008 (the “Company Form 10-K”)
and the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K of
the Company (the “Company SEC
Filings”), in each case, filed from the date of the filing of the Company
Form 10-K to the date of this Agreement, which Disclosure Schedules and Company
SEC Filings shall be deemed a part hereof and, with respect to the Company SEC
Filings, shall qualify any representation or otherwise made herein, and with
respect to the Disclosure Schedules, shall qualify any representation or
otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the
following representations and warranties to each Purchaser:

     

    (a)           Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).  Except
as set forth on Schedule 3.1(a), the Company
owns, directly or indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

     

    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business in all material respects as
is currently conducted.  Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the operations, results of operations, assets,
properties, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse
Effect” and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (c)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligations of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by general equitable principles and laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by
applicable law.

     

    (d)           No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or, to
the knowledge of the Company, give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

     

    (e)           Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.4 of this
Agreement, (ii) the filing with the Commission of the Registration Statement and
(iii) the filing of Form D with the Commission, Form 45-106F1 with the
applicable Canadian Commissions and such filings as are required to be made
under applicable state securities laws (collectively, the “Required
Approvals”).

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (f)
           Issuance of the
Securities.  The Shares and the Warrants are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the applicable Transaction Documents.  The
Warrant Shares, when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents.  The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and the Warrants.

     

    (g)           Capitalization.  The
capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also
include the number of shares of Common Stock owned beneficially, and of record,
by Affiliates of the Company as of the date hereof. Except as set forth on Schedule 3.1(g), the Company
has not issued any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of employee stock
options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange
Act.  No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as set forth on
Schedule 3.1(g) and as a
result of the purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents other than options with respect to options granted to
employees, consultants, officers and directors of the Company to purchase shares
of Common Stock of the Company.  The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding capital stock of the Company is validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares were issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities.  Except as set forth in Section 3.1(e) above, no
further approval or authorization of any stockholder, the board of directors of
the Company or others is required for the issuance and sale of the
Securities.  Except as set forth on Schedule 3.1(g), there are no
stockholder agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

    
      
         

      

      
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    (h)           Continuous Disclosure
Reports: Financial Statements.  The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the one year preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “Continuous Disclosure
Reports”) on a timely basis or has received a valid extension of such
time of filing and has filed any such Continuous Disclosure Reports prior to the
expiration of any such extension except as disclosed in Schedule 3.1(h).  As
of their respective dates, the Continuous Disclosure Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, except as disclosed in Schedule 3.1(h) and none of
the Continuous Disclosure Reports, when filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
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 the light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the
Continuous Disclosure Reports complied in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing).  Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

     

    (i) 
          Material Changes;
Undisclosed Events, Liabilities or Developments.  Since
December 31, 2008, except as specifically disclosed in a subsequent Continuous
Disclosure Report filed prior to the date hereof, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans. Except as set forth on Schedule 3.1(i),  the
Company does not have pending before the Commission any request for confidential
treatment of information.  Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i), no event,
liability or development has occurred or exists with respect to the Company or
its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading Day prior to
the date that this representation is made.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (j)        
   Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect except as disclosed in Schedule 3.1(j) or in the
Continuous Disclosure Reports.  Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer of the Company.  The Commission has not
issued any stop order or other order suspending the effectiveness of any
document or registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.

     

    (k)           Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a
party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good.  No
executive officer of the Company, to the knowledge of the Company, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company
and its Subsidiaries are in compliance with all federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     

    (l)      
     Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could not
have or reasonably be expected to result in a Material Adverse
Effect.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (m)           Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Continuous Disclosure Reports, except
where the failure to possess such certificates, authorizations and permits could
not reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificates, authorizations, and
permits.

     

    (n)           Title to
Assets.  With respect to the Company and each of the
Subsidiaries, except to the extent that any violation or other matter referred
to in this subparagraph does not have a Material Adverse Effect or as disclosed
on Schedule
3.1(n): (i) with respect to the real property Company and its
Subsidiaries own in fee simple, they are in exclusive possession of, have valid,
enforceable and marketable title to, and own such properties free and clear of
all Encumbrances, except those specifically identified in Schedule 3.1(n), and
which do not, individually or in the aggregate, materially affect the value of
such properties and do not interfere with the use made and proposed to be made
of such properties by the Company or any of its Subsidiaries, (ii) with respect
to the real property in which the Company or its Subsidiaries hold an interest
under leases or other contracts: (A) they are in exclusive possession of such
properties; (B) they have not received any notice of default of any of the terms
or provisions of such leases or other contracts; (C) they have the authority
under such leases or other contracts to perform fully the Company’s obligations
under this Agreement; (D) to the knowledge of the Company and its Subsidiaries,
such leases and other contracts are valid and are in good standing; (E) the
Company and its Subsidiaries have no knowledge of any act or omission or any
condition on the leased properties which could be considered or construed as a
default under any such lease or other contract; and (F) to the knowledge of the
Company and its Subsidiaries, such properties are free and clear of all
Encumbrances, except for those specifically identified in Schedule 3.1(n),
(iii) with respect to unpatented mining claims and millsites located and owned
by the Company and its Subsidiaries, except as provided in Schedule 3.1(n), and
subject to the paramount title of the United States: (A) the unpatented mining
claims were properly laid out and monumented; (B) all required location and
validation work was properly performed; (C) location notices and
certificates were properly recorded and filed with appropriate governmental
agencies; (D) all assessment work required to hold the unpatented mining claims
has been performed and all Governmental Fees have been paid through the
assessment year ending September 1, 2010; (E) all affidavits of assessment work,
evidence of payment of Governmental Fees, and other filings required to maintain
the claims in good standing have been properly and timely recorded or filed with
appropriate governmental agencies, (F) the claims are free and clear of
Encumbrances; and (G) the Company and its Subsidiaries have no knowledge of
conflicting mining claims, provided that  nothing in this subsection
shall be deemed to be a representation or a warranty that any of the unpatented
mining claims contains a valuable mineral deposit, (iv) with respect to
unpatented mining claims and millsites owned by the Company, but not located by
the Company or its Subsidiaries, except as provided in Schedule 3.1(n), and
subject to the paramount title of the United States: (A) all assessment work
required to hold the unpatented mining claims has been performed and all
Governmental Fees have been paid through the assessment year ending September 1,
2010; (B) all affidavits of assessment work, evidence of payment of Governmental
Fees, and other filings required to maintain the claims in good standing have
been properly and timely recorded or filed with appropriate governmental
agencies; (C) the claims are free and clear of Encumbrances; and (D) the Company
and its Subsidiaries have no knowledge of conflicting mining claims, provided
that nothing in this subsection shall be deemed to be a representation or a
warranty that any of the unpatented mining claims contains a valuable discovery
of minerals, (v) other than as disclosed on Schedule 3.1(n), the
Company and its Subsidiaries have good and marketable title to all personal
property owned by the Company, (vi) other than as disclosed on Schedule 3.1(n), the
Company and its Subsidiaries have all necessary surface rights, access rights
and other necessary rights and interests relating to the properties in which the
Company and its Subsidiaries have an interest granting the Company or applicable
Subsidiary the right and ability to explore for minerals, ore and metals for
development purposes as are appropriate in view of the rights and interest
therein of the Company or applicable Subsidiary, with only such exceptions as do
not interfere with the use made by the Company or applicable Subsidiary of the
rights or interest so held, and each of the proprietary interests or rights and
each of the documents, agreements and instruments, and (vii) other than as
disclosed on Schedule
3.1(n), the Company is entitled to extract minerals from its properties
and to do all of the exploration contemplated in the Company SEC
Filings.

    
      
         

      

      
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    (o)           Patents and
Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the Continuous Disclosure Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a notice (written or otherwise) that any of the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person, which could reasonably be expected to result in a Material Adverse
Effect.  To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.  The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     

    (p)           Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to $15,000,000.  Neither the Company nor any
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
respective business without a significant increase in cost. The Company and, if
applicable, each of the Subsidiaries has sufficiently provided for an adequate
reserve related to present or future abandonment and related costs.

     

    (q)           Transactions With Affiliates
and Employees.  Except as set forth in the Continuous
Disclosure Reports, to the knowledge of the Company, none of the officers,
directors or employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as consultants,
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 such officer, director or employee or, to the knowledge of the
Company, any entity in which any such officer, director, or employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.

    
      
         

      

      
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    (r)     
      Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are effective and
applicable to it as of the Closing Date.  The Company and the
Subsidiaries maintain a system of internal accounting controls designed to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company maintains disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and reasonably designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports
it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and
forms.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

     

    (s)           Certain
Fees.  Other than Dahlman, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by the Transaction
Documents.  To the knowledge of the Company, the Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section
(other than for Persons engaged by any Purchaser or its investment advisor) that
may be due in connection with the transactions contemplated by the Transaction
Documents.

     

    (t)    
       Private Placement.
Assuming the accuracy of the Purchasers representations and warranties set forth
in Section 3.2, no registration
under the Securities Act or under Canadian Securities Laws is required for the
offer, sale and issuance of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the OTCBB.

     

    (u)           Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Shares and the Warrants and the exercise price for the Warrant
Shares, will not be or be an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.  The
Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act of 1940, as amended.

    
      
         

      

      
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    (v)           Registration
Rights.  Except as disclosed in Schedule 3.1(v),
other than each of the Purchasers, no Person has any right to cause the Company
to effect the registration under the Securities Act of any
Securities.

     

    (w)           Listing and Maintenance
Requirements.  The Company’s Common Stock is quoted on the
OTCBB and registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration.  Except as set forth
on Schedule 3.1(w), the Company
has not, in the 12 months preceding the date hereof, received notice from the
OTCBB to the effect that the Company is not in compliance with the listing or
maintenance requirements of the OTCBB.  The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

     

    (x)           Application of Takeover
Protections.  The Company and its board of directors have taken
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 Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

     

    (y)           Disclosure.  All
disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Disclosure Schedules to this Agreement, is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2
hereof.

     

    (z)           No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, none of the
Company, its Affiliates, or any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
within the last six months for purposes of the Securities Act which would
require the registration of any such securities under the Securities
Act.

    
      
         

      

      
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    (aa)         Solvency.  Based
on the consolidated financial condition of the Company as of the Closing Date,
after giving effect to the receipt by the Company of the proceeds from the sale
of the Shares and the Warrants hereunder, (i) the fair saleable value of the
Company’s assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known
contingent liabilities, except those set forth on Schedule 3(aa)) as
they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its liabilities when such amounts are required to be
paid.  The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).  The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date.  Schedule 3.1(aa) sets forth as
of the date thereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

     

    (bb)         Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any
Subsidiary.

     

    (cc)         No General
Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares or the Warrants by
any form of “general solicitation” or “general advertising,” as such terms are
defined in Regulation D. The Company has offered the Shares or the Warrants for
sale only to the Purchasers and certain other “accredited investors” within the
meaning of Rule 501(a) under Regulation D.

     

    (dd)         Foreign Corrupt
Practices.  To the knowledge of the Company, neither the
Company, nor any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

    
      
         

      

      
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    (ee)         Accountants.  The
Company’s auditor is Brown Armstrong Paulden McCown Starbuck Thornburgh &
Keeter Accountancy Corporation, Certified Public Accountants.  Such
accounting firm (i) is a registered public accounting firm as required by the
Exchange Act and (ii) has expressed its opinion with respect to the financial
statements included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008.

     

    (ff)           No Disagreements with
Accountants and Lawyers.  There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company which could affect the Company’s ability to perform any
of its obligations under any of the Transaction Documents, and the Company is
current with respect to any fees owed to its accountants and
lawyers.

     

    (gg)         Acknowledgment Regarding
Purchasers’ Purchase of Securities.  The Company acknowledges
and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby.  The Company further acknowledges
that no Purchaser is 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 thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities.  The Company further
represents to each Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

     

    (hh)         Acknowledgement Regarding
Purchaser’s Trading Activity.  Anything in this Agreement or
elsewhere herein to the contrary notwithstanding (except for Sections 3.2(g) and 4.13 hereof), it is
understood and acknowledged by the Company (i) that none of the Purchasers have
been asked by the Company to agree, nor has any Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term; (ii) that past or future open market or other
transactions by any Purchaser, including Short Sales, and specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Purchaser, and counter-parties in “derivative” transactions to
which any such Purchaser is a party, directly or indirectly, presently may have
a “short” position in the Common Stock, and (iv) that each Purchaser shall not
be deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.  The Company further
understands and acknowledges that (a) one or more Purchasers may engage in
hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the exercise
price of the Warrants are being determined and (b) such hedging activities (if
any) could reduce the value of the existing stockholders' equity interests in
the Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction
Documents.

    
      
         

      

      
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    (ii)           Regulation M
Compliance.  The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

     

    (jj)           Form S-3
Eligibility.  The Company reasonably believes that, on the date
of this Agreement, it is eligible to register the resale of the Shares and the
Warrant Shares for resale by the Purchaser on Form S-3 promulgated under the
Securities Act; provided, that if any regulatory shall advise the Company that
it is not so eligible, the Company will be eligible to register the resale of
the Shares and the Warrant Shares for resale by the Purchaser on Form S-1
promulgated under the Securities Act.

     

    (kk)         Environmental
Matters.  With respect to the Company and each of the
Subsidiaries, except to the extent that any violation or other matter referred
to in this subparagraph does not have a Material Adverse Effect or as disclosed
on Schedule
3.1(kk): (i) the Company and its Subsidiaries are in material compliance
with all applicable federal, state or local laws, regulations, orders,
government decrees or ordinances with respect to environmental, health or safety
matters (collectively, “Environmental Laws”);
(ii) the Company and its Subsidiaries have operated its business at all times
and have received, handled, used, stored, treated, shipped and disposed of all
Hazardous Substances in material compliance with Environmental Laws; (iii) the
Company and its Subsidiaries have had no spills, releases, deposits or
discharges of Hazardous Substances into the ground, air or into any body of
water that are the subject of any outstanding cleanup order by a governmental
authority; (iv) no orders, directives or notices have been issued and remain
outstanding with respect to a material violation of any Environmental Laws
relating to the business or assets of the Company and its Subsidiaries; (v) the
Company and its Subsidiaries have not failed to report to the proper federal,
state, local or other political subdivision, government, department, commission,
board, bureau, agency or instrumentality, domestic or foreign the occurrence of
any material violation of any Environmental Laws which is required to be so
reported under Environmental Laws; (vi) the Company and its Subsidiaries hold
all licenses, permits and approvals required under any Environmental Laws in
connection with the operation of its business and the ownership and use of its
assets, all such licenses, permits and approvals are in full force and effect,
and except for (1) notifications and conditions of general application to assets
of the type owned by the Company or its Subsidiaries, and (2) notifications
relating to reclamation, remediation or similar obligations under Environmental
Laws, the Company and its Subsidiaries have not received any notification
pursuant to any Environmental Laws that any work, repairs, construction or
capital expenditures are required to be made by it as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto, or that any license, permit or approval referred to
above is about to be reviewed, made subject to limitation or conditions,
revoked, withdrawn or terminated; and (vii) except as allowed by law, the assets
and properties of the Company and each Subsidiary do not contain any chemical or
other substance that is prohibited or limited by law, or that might pose a
hazard to health or safety (including, but not limited to, asbestos,
asbestos−containing materials, radon gas, urea formaldehyde foam insulation and
polychlorinated biphenyls; or any other substance deemed to be a “hazardous
material,” “toxic substance,” “hazardous substance” or “hazardous waste”
(collectively “Hazardous
Substances”), by, without limiting the generality of the foregoing, the
United States Environmental Protection Agency or in the Resource Conservation
and Recovery Act of 1976, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Hazardous Materials Transportation Act, the Clean
Air Act, the Clean Water Act, the Safe Drinking Water Act, the National
Environmental Policy Act of 1969, the Superfund Amendment and Reauthorization
Act of 1986 and Title III of the Superfund Amendment and Rehabilitation Act,
Nevada Revised Statutes Chapter 40 and Chapter 459, or any and all regulations
promulgated under any such law; or any and all similar or successor
laws.

    
      
         

      

      
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    3.2.          Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows:

     

    (a)           Organization;
Authority.  Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate or similar action on the part of
such Purchaser.  Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligations of such Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by general equitable
principles and laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

     

    (b)           Own
Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act,
Canadian Securities Laws or any applicable state securities law and is acquiring
the Shares and the Warrants as principal for its own account and not with a view
to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act, Canadian Securities Laws or any applicable
state securities law, has no present intention of distributing any of the
Securities in violation of the Securities Act, Canadian Securities Laws or any
applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of the Securities (this representation and warranty not requiring
such Purchaser to hold the Securities for any minimum or other specific term nor
limiting such Purchaser’s right to sell the Securities at any time pursuant to
the Registration Statement or otherwise in compliance with federal and state
securities laws) in violation of the Securities Act, Canadian Securities Laws or
any applicable state securities law.  Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business.

    
      
         

      

      
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    (c)           Purchaser
Status.  At the time such Purchaser was offered the Shares and
the Warrants, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be (a) an “accredited investor” as defined in
Rule 501(a) of Regulation D under the Securities Act, or (b) a Canadian
Accredited Investor.  Such Purchaser is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act.

     

    (d)           Residence.  The
Purchaser is a resident of the jurisdiction disclosed under “Address for Notice
of Purchaser” on the Purchaser’s signature page to this Agreement and has
received and accepted the offer to purchase the Shares and Warrants in such
jurisdiction.  If the Purchaser is resident in Canada as set forth
herein, the Purchaser is or is deemed to be purchasing the Shares and Warrants
pursuant to NI 45-106 as principal for its own account, not for the benefit of
any other person, for investment only and not with a view to the resale or
distribution of all or any of the Securities.  If the Purchaser is
resident in Canada, it is a Canadian Accredited Investor and has concurrently
executed and delivered a Representation Letter in the form attached as Exhibit 1
hereto and has initialed or placed a check mark in Appendix “A” thereto
indicating the Purchaser satisfied one of the categories of Canadian Accredited
Investor set forth therein.

     

    (e)           Experience of Such
Purchaser.  Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Such Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment. Such Purchaser acknowledges
that it has been encouraged to obtain independent legal, income tax and
investment advice with respect to its subscription for, and the restrictions on
resale of, the Securities and accordingly, has had the opportunity to acquire an
understanding of the meanings of all terms contained herein relevant to such
Purchaser for purposes of giving representations, warranties and covenants under
this Agreement.

     

    (f)           General
Solicitation.  Such Purchaser is not purchasing the Shares or
the Warrants as a result of any “general solicitation” or “general advertising,”
as such terms are defined in Regulation D, which includes, but is not limited
to, any advertisement, article, notice or other communication regarding the
Shares or the Warrants published in any newspaper, magazine or similar media or
on the internet or broadcast over television, radio or the internet or presented
at any seminar or any other general solicitation or general
advertisement.

     

    (g)           Short Sales and
Confidentiality Prior To The Date Hereof.  Other than
consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with
such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion
Time”).  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares and the Warrants covered by this Agreement.  Other
than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction).

    
      
         

      

      
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    (h)           Reliance on
Exemptions.  Such Purchaser understands that the Securities are
being offered, sold and issued to it in reliance on specific exemptions from the
prospectus and registration requirements of federal and state securities laws
and Canadian Securities Laws and that the Company is relying upon the truth and
accuracy of, and such Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

     

    (i)    
       No Governmental
Review.  Such Purchaser understands that no 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.

     

    (j)      
     No
Conflicts.  The execution, delivery and performance by such
Purchaser of this Agreement and the Registration Rights Agreement and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents
of such Purchaser (to the extent applicable) (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 such Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment  or decree
(including federal and state securities laws) applicable to such Purchaser,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.

     

    (k)           Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company or such Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding with a
placement agent entered into by or on behalf of such Purchaser.

     

    (l)      
     Prior
Arrangements.  No Person has made to such Purchaser any written
or oral representations (i) that any Person will resell or repurchase the Shares
and the Warrants, (ii) that any person will refund the purchase price of the
Shares and the Warrants, or (iii) as to the future price or value of the Shares
and the Warrants.

    
      
         

      

      
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    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1.          Transfer
Restrictions.

     

    (a)           The
Securities may only be disposed of in compliance with federal and state
securities laws and Canadian Securities Laws.  In connection with any
transfer of Securities other than pursuant to an effective registration
statement or Rule 144, to the Company, to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(f), the Company
may require the transferor thereof to provide to the Company an opinion of
counsel of recognized standing and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  As a condition of
transfer and pursuant to Section 5.7, any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.

     

    (b)           The
Purchaser  acknowledges that the Company is not a “reporting issuer”
(as defined under Canadian Securities Laws) in any jurisdiction in Canada and
the applicable "hold period" in the applicable Canadian jurisdiction will not
commence to run until the Company becomes a reporting issuer in the applicable
jurisdiction (which it has no obligation to become) and that the Securities are
subject to resale restrictions including an indefinite hold period and may not
be resold by purchasers resident in Canada unless an exemption from the
prospectus and registration requirements is available under Canadian Securities
Laws, or a discretionary order or ruling is obtained providing an exemption from
the prospectus and registration requirements of applicable Canadian Securities
Laws.  The Purchaser
further acknowledges that the Company may never become a reporting issuer, and
therefore, the Canadian hold period may never expire and that it should consult
legal counsel in its jurisdiction for full particulars of applicable resale
restrictions.

     

    (c)           The
Purchaser is not, with respect to the Company or any of its affiliates, a
“control person” as defined under Canadian Securities Laws and the purchaser of
the Securities hereunder will not result in the Purchaser becoming a “control
person”.

     

    (d)           The
Purchaser understands that the Shares and Warrants are being offered for sale
only on a "private placement" basis and that the sale and delivery of the Shares
and Warrants is conditional upon such sale being exempt from the requirements as
to the filing of a prospectus or delivery of an offering memorandum in
prescribed form or upon the issuance of such orders, consents or approvals as
may be required to permit such sale without the requirement of filing a
prospectus or delivering an offering memorandum in prescribed form and, as a
consequence:

     

    (i)           the
Purchaser is restricted from using most of the civil remedies available under
Canadian Securities Laws;

     

    (ii)          the
Purchaser  may not receive information that would otherwise be
required to be provided to it under Canadian Securities Laws;

    
      
         

      

      
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    (iii)         the
Company is relieved from certain obligations that would otherwise apply under
Canadian Securities Laws;

     

    (iv)         no
Canadian Commission has reviewed or passed on the merits of the Securities nor
has any Canadian Commission made any recommendation or endorsement with respect
to the Securities;

     

    (v)          there
is no government or other insurance covering the Securities;

     

    (vi)         there
are risks associated with the purchase of the Securities; and

     

    (vii)        there
are restrictions on the ability of the Purchaser or the disclosed principal, as
applicable, to resell the Securities and it is the responsibility of the
Purchaser to find out what those restrictions are and to comply with them before
selling the Securities.

     

    (e)           the
funds representing the Subscription Amount will not represent proceeds of crime
for the purposes of the Proceeds of Crime (Money Laundering)
and Terrorist Financing Act (Canada) (the “PCMLTFA”) and the
Purchaser acknowledges that the Company may in the future be required by law to
disclose the Purchaser’s name and other information relating to this Agreement
and the purchase hereunder, on a confidential basis, pursuant to the
PCMLTFA.  To the best of the Purchaser’s knowledge, none of the funds
representing the Subscription Amount (i) have been or will be derived from or
related to any activity that is deemed criminal under the law of Canada, the
United States of America, or any other jurisdiction, or (ii) are being tendered
on behalf of a person or entity who has not been identified to the
Purchaser.  The Subscriber shall promptly notify the Company if the
Purchaser discovers that any of such representations ceases to be true, and
shall provide the Company with appropriate information in connection
therewith.

     

    (f)           The
Purchasers agree to the imprinting, so long as is required by this Section 4.1(f), of a legend on any of the Securities in the
following form:

     

    THIS
SECURITY AND THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND APPLICABLE
STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL OF RECOGNIZED STANDING TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY,
PROVIDED, HOWEVER, ANY TRANSFER OF THE SECURITY RESULTING FROM SUCH PLEDGE MUST
COMPLY WITH THE FOREGOING.

    
      
         

      

      
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    If the
Purchaser is resident in Canada, the Purchaser further agrees to the imprinting
of a legend on any of Securities in the following form:

     

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF
(i) NOVEMBER 12, 2009, AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN
ANY PROVINCE OR TERRITORY.

     

    The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) of
Regulation D or is a Canadian Accredited Investor and who agrees to be bound by
the provisions of this Agreement and the Registration Rights Agreement and, if
required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties as long as such
transfer complies with applicable federal and state securities
laws.  Except as set forth herein, such a pledge or transfer would not
be subject to approval of the Company and no legal opinion of legal counsel of
the pledgee, secured party or pledgor shall be required in connection therewith;
provided, however, with respect
to any such transfer, the Company may reasonably request information from such
transferee in order to satisfy itself that such transfer is exempt from
registration under the applicable federal and state securities
laws.  Notice shall be required of such pledge.  At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Shares, the Warrants and the Warrant Shares are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder.

     

    (g)           Certificates
evidencing the Shares and the Warrant Shares shall not contain any legend other
than the Canadian legend set forth in Section 4.1(f) hereof with respect to
Purchasers resident in Canada: (i) while a registration statement (including the
Registration Statement) on Form S-1 or Form S-3 covering the resale of such
security is effective under the Securities Act, (ii) following any sale of such
Shares or Warrant Shares while a registration statement (including the
Registration Statement) other than on Form S-1 or Form S-3 (which shall be
covered by clause (i) above) covering the resale of such security is effective
under the Securities Act, or (iii) following any sale of such Shares or Warrant
Shares pursuant to Rule 144, or (iv) if such Shares or Warrant Shares are
eligible for sale under Rule 144 without any restriction, or (v) if such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission).  The Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent if required by the Company’s transfer
agent to effect the removal of legends hereunder.  If all or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Warrant Shares on Form S-1 or
Form S-3 no legend is required hereunder, then such Warrant Shares shall be
issued free of any legend other than the Canadian legend set forth in Section
4.1(f) hereof with respect to Purchasers resident in Canada.  The
Canadian legend may only be removed upon an opinion of counsel that such legend
is no longer required.  The Company agrees at such time as such legend
is no longer required under this Section 4.1(g), it will, no
later than three Trading Days following the delivery by a Purchaser to the
Company or the Company’s transfer agent of a certificate representing Shares or
Warrant Shares issued with a restrictive legend (such third Trading Day, the
“Legend Removal
Date”), together with such documentation and certifications (if
applicable) as the Company may reasonably request in order to provide the basis
for a legal opinion of counsel to the Company to render an appropriate opinion
to remove such a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such shares that is free from all
restrictive and other legends.  The Company may not make any notation
on its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this
Section.  Certificates for Securities subject to legend removal
hereunder shall be transmitted by the transfer agent of the Company to a
Purchaser by crediting the account of such Purchaser’s prime broker with the
Depository Trust Company System or another established clearing corporation
performing similar functions as directed by such Purchaser.

    
      
         

      

      
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    (h)           In
addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares or Warrant Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4.1(g), $10 per
Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day after the 2nd Trading Day
following the Legend Removal Date until such certificate is delivered without a
legend.  Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Company’s failure to deliver certificates representing
any Securities as required by the Transaction Documents, and such Purchaser
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

     

    (i)       
    Each Purchaser, severally and not jointly with the other
Purchasers, agrees that such Purchaser will sell any Securities pursuant to
either the prospectus and registration requirements of the Securities Act or the
prospectus and registration requirements under the Canadian Securities Laws, or
an exemption therefrom, and that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the plan of
distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 4.1 is predicated
upon the Company’s reliance upon this understanding.

     

    4.2.          Furnishing of
Information.  Until the earliest of the time that (i) no
Purchaser owns any Securities or (ii) the Warrants have expired, the Company
covenants to use its best efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.  As long as any Purchaser owns any
Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to the Purchasers and make publicly
available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the
requirements of the exemption provided by Rule 144.

    
      
         

      

      
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    4.3.          Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer, sale or issuance of the Securities
in a manner within six months following the close of this offering that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers.

     

    4.4.          Securities Laws Disclosure;
Publicity.  The Company shall, by 8:30 a.m. (New York City
time) on the Trading Day immediately following the date hereof, issue (i) a
Current Report on Form 8-K disclosing the material terms of the transactions
contemplated hereby, and filing the Transaction Documents as exhibits
thereto.  The Company and Dahlman shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Purchaser shall issue any such press
release or otherwise make any such public statement without the prior consent of
the Company, with respect to any press release of any Purchaser, or without the
prior consent of Dahlman, which shall be the designated representative of each
Purchaser for such purpose, with respect to any press release of the Company,
which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication.  Further, the parties acknowledge and agree that all
such press releases shall conform with the requirements of Rule 135c of the
Securities Act.  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with the registration statement
contemplated by the Registration Rights Agreement and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).

     

    4.5.          Stockholder Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control stock acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the
Purchasers.

    
      
         

      

      
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    4.6.          Non-Public
Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information.  The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

     

    4.7.          Use of
Proceeds.  Except as set forth on Schedule 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and shall not use such proceeds for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices),
or to redeem any shares of Common Stock or Common Stock Equivalents or to settle
any outstanding litigation.

     

    4.8.          Indemnification of
Purchasers.   Subject to the provisions of this Section 4.8, the Company will
indemnify and hold each Purchaser and its directors, officers, stockholders,
members, partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, stockholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser in any
capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or
malfeasance).

     

    4.9.          Reservation of Shares of
Common Stock.  As of the date hereof, the Company has reserved
and the Company shall continue to reserve and keep available at all times, free
of preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue Shares pursuant to this Agreement and
Warrant Shares pursuant to any exercise of the Warrants.   The
Company is authorized to issue 400,000,000 shares of Common Stock.  If
after the Closing Date, the Company amends its articles or certificate of
incorporation or similar charter document to limit the number of shares of
Common Stock that the Company is authorized to issue, it shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.

    
      
         

      

      
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    4.10.        Listing of Common
Stock.  The Company hereby agrees to use best efforts to
maintain the quotation of the Common Stock on the OTCBB. The Company further
agrees, if the Company applies to have the Common Stock traded on any Trading
Market, it will include in such application all of the Shares and Warrant
Shares, and will take such other action as is necessary to cause all of the
Shares and Warrant Shares to be listed or quoted on such Trading Market as
promptly as possible.  The Company will take all action reasonably
necessary to continue the quotation and trading of its Common Stock on the
OTCBB and will
comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the OTCBB.

     

    4.11.        Equal Treatment of
Purchasers.  No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration is also offered to
all of the parties to the Transaction Documents.  For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities.

     

    4.12.        Subsequent Equity
Sales.

     

    (a)           Subject
to the last sentence of this sub-section (a), from the date hereof until the
date the initial Registration Statement is declared effective by the staff of
the Commission, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents. Notwithstanding the foregoing, the
restrictions contemplated in this Section 4.12(a),
shall in no event expire prior to 90 days following the Closing
Date.

     

    (b)           From
the date hereof until such time as no Purchaser holds any of the Securities, the
Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or its Subsidiaries of Common Stock or Common
Stock Equivalent for cash consideration involving a Variable Rate
Transaction.  “Variable Rate
Transaction” means a transaction in which the Company issues or sells (i)
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
Common Stock at any time after the initial issuance of such debt or equity
securities, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt or
equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may sell securities at a
future determined price.  Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.

     

    (c)           Notwithstanding
the foregoing, this Section 4.12
shall not apply in respect of: (i) an Exempt Issuance, except that no Variable
Rate Transaction shall be an Exempt Issuance, or (ii) any transaction with
respect to the Company’s existing stockholder rights plan in effect on the date
of the Purchase Agreement, or as any such stockholder rights plan shall be
amended or restated from time to time thereafter.

    
      
         

      

      
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    4.13.        Short Sales and
Confidentiality After The Date Hereof. Each Purchaser severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales during the period commencing at the Discussion Time and ending at
the time that the transactions contemplated by this Agreement are first publicly
announced following their consummation as described in Section 4.4.  Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, such Purchaser
will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Disclosure Schedules.  Each
Purchaser understands and acknowledges, and agrees, severally and not jointly
with any other Purchaser, to act in a manner that will not violate the positions
of the Commission as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced following their consummation as described in Section 4.4.  Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the covenant set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Agreement.

     

    4.14.        Delivery of Shares and
Warrants After Closing.  The Company shall deliver, or cause to
be delivered, the respective Shares and Warrants purchased by each Purchaser to
such Purchaser within five (5) Trading Days of the Closing Date.

     

    4.15.        Form D; Blue Sky and other
filings.  The Company agrees to timely file a Form D and Form
45-106F1 with respect to the Securities as required under Regulation D and
Canadian Securities Laws and to provide a copy thereof, promptly upon request of
any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws, and shall provide evidence of such
actions promptly upon request of any Purchaser.

     

    4.16.        Capital
Changes.  Until the six month anniversary of the Closing Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares.

     

    
      
        
           

        

        
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    ARTICLE
V

    MISCELLANEOUS

     

    5.1.          Termination.  This
Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations
hereunder only and without any effect whatsoever on the obligations between the
Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before December 31, 2009; provided,
however, that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

     

    5.2.          Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers. The Purchaser
acknowledges and agrees that all costs incurred by the Purchaser (including any
fees and disbursements of any special counsel retained by the Purchaser)
relating to the sale of the Securities to the Purchaser are to be borne by the
Purchaser. The Purchaser, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder, agrees that this subscription is
made for valuable consideration and may not be withdrawn, cancelled, terminated
or revoked by the Purchaser, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder.

     

    5.3.          Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

     

    5.4.          Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    5.5.          Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers of at least 50% of the Shares still held by the
Purchasers or, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

     

    5.6.          Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    5.7.          Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns; provided,
however, the rights under this Agreement shall not be assignable if the
applicable securities are transferred pursuant to (i) an effective registration
statement under the Securities Act, or (ii) Rule 144 under the Securities Act.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by
merger).  Except as set forth herein, any Purchaser may assign any or
all of its rights under this Agreement to any Person to whom such Purchaser
assigns or transfers any Securities provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions of
the Transaction Documents that apply to the “Purchasers.”

     

    5.8.          No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.8.

     

    5.9.          Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, stockholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), 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
improper or is an inconvenient venue for such proceeding.  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
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for 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 other manner
permitted by law.  If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

     

    5.10.        Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Shares and Warrants.

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    5.11.        Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together 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, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

     

    5.12.        Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    5.13.        Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided, however, in the case of a
rescission of an exercise of a Warrant, the Purchaser shall be required to
return any shares of Common Stock delivered in connection with any such
rescinded exercise notice.

     

    5.14.        Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

     

    5.15.        Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    5.16.        Payment Set
Aside.  To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     

    5.17.        Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  Each Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents.  For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through TS.  TS does not
represent any of the Purchasers but only Dahlman, the placement agent for the
transaction. The Company has elected to provide all Purchasers with the same
terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.

     

    5.18.        Liquidated
Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.

     

    5.19.        Construction.  The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

     

    5.20.        Waiver of Jury
Trial.  In any action, suit or proceeding in any jurisdiction
brought by any party against any other party, the parties each knowingly and
intentionally, to the greatest extent permitted by applicable law, hereby
absolutely, unconditionally, irrevocably and expressly waives forever trial by
jury

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    5.21.        Placement
Agent.  The Company acknowledges that it has engaged Dahlman
Rose & Company, LLC (“Dahlman”) as
placement agent in connection with the sale of the Securities and the Company
has agreed to reimburse Dahlman for all actual and reasonable legal fees and
expenses, which amount of such legal fees shall not exceed $65,000, to be paid
at or prior to Closing. The parties hereby agree and acknowledge that Dahlman
shall be entitled to rely on the representations and warranties of the Company
and each Purchaser in Article III as if Dahlman was a signatory to this
Agreement.

     

    5.22.        Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    (Signature
Pages Follow)

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

     

    
      
        
          
            	
                    SEARCHLIGHT
      MINERALS CORP.

                  	 
      	
                    Address for Notice:

                  
	 
      	 
      	 
      
	
                    By:

                  	 
      	 
      	
                    2441
      W. Horizon Ridge Parkway

                  
	 
      	
                    Name:

                  	 
      	
                    Suite
      120

                  
	 
      	
                    Title:

                  	 
      	
                    Henderson,
      NV  89052

                  
	
                    With
      a copy to (which shall not constitute notice):

                  	 
      	

                    Fax:  (702)
      451-4939

                  

          

        

      

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO SRCH SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    Name of
Purchaser:________________________________________________________________________

     

    Signature of Authorized Signatory of
Purchaser: _________________________________________________

     

    Name of
Authorized Signatory:
_______________________________________________________________

     

    Title of
Authorized Signatory:
________________________________________________________________

     

    Email
Address of Purchaser:
_________________________________________________________________

     

    Fax
Number of Purchaser:
___________________________________________________________________

     

    Address
for Notice of Purchaser:
______________________________________________________________

     

    Address
for Delivery of Securities
for Purchaser (if not same as above):

     

    Subscription
Amount: $

    Number of
shares of Common
Stock: __________________________________________________

    Number of
Warrants: ______________________________________________________________

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    EXHIBIT
1

     

    REPRESENTATION
LETTER

     

    TO:                      SEARCHLIGHT
MINERALS CORP. (the
"Corporation")

    AND
TO:            DAHLMAN
ROSE & COMPANY, LLC (the “Agent”)

     

    In
connection with the purchase of securities, by the undersigned subscriber (the
"Subscriber"), the
Subscriber hereby represents, warrants, covenants and certifies to the
Corporation and to the Agent, on its own behalf and on behalf of the disclosed
principal, if applicable, that:

     

    
      	
               
      

            	
              1.

            	
              The
      Subscriber is purchasing the Securities as principal for its own account
      and not for the benefit of any other person or is deemed to be purchasing
      the Securities as principal under applicable securities
    laws;

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      Subscriber is an "accredited investor" within the meaning of National
      Instrument 45-106 "Prospectus and Registration Exemptions" ("NI 45-106") by virtue of
      satisfying the indicated criterion as set out in Appendix "A" to this
      Representation Letter;

            

    

     

    
      	
               
      

            	
              3.

            	
              The
      Subscriber has not been created or used solely to purchase or hold
      securities as an "accredited investor" as described in paragraph (m) of
      the definition of "accredited investor" in NI 45-106, which is reproduced
      in Appendix "A" to this Representation Letter;
  and

            

    

     

    
      	
               
      

            	
              4.

            	
              Upon
      execution of this Exhibit 1 by the Subscriber, this Exhibit 1 shall be
      incorporated into and form a part of the Subscription
      Agreement.

            

    

     

    Dated:  _________________________,
2009

     

    
      
        
          
            
              
                
                  	 
      	 
      
	 
      	
                          Print
      name of Subscriber

                        
	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      
	 
      	 
      	
                          Signature

                        
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                          Print
      name of Signatory (if different from Subscriber)

                        
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                          Title

                        

                

              

            

          

        

      

    

    

    IMPORTANT:  PLEASE
INITIAL THE CATEGORY OR CATEGORIES

    IN
APPENDIX "A" ON THE NEXT PAGE THAT DESCRIBE YOU

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    APPENDIX
"A"

     

    TO
EXHIBIT 2

     

    PLEASE
MARK YOUR INITIALS OR PLACE A CHECKMARK BESIDE THE CATEGORY OF "ACCREDITED
INVESTOR" TO WHICH YOU BELONG.

     

    Accredited Investor - (defined
in National Instrument 45-106) means:

     

    
      
        
          
            
              
                
                  	
                          

                            ______

                          

                        	 	
                          (a)

                        	
                          a
      Canadian financial institution, or a Schedule III bank;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (b)

                        	
                          the
      Business Development Bank of Canada incorporated under the Business Development Bank of
      Canada Act (Canada);

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (c)

                        	
                          a
      subsidiary of any person referred to in paragraphs (a) or (b), if the
      person owns all of the voting securities of the subsidiary, except the
      voting securities required by law to be owned by directors of that
      subsidiary;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (d)

                        	
                          a
      person registered under the securities legislation of a jurisdiction of
      Canada as an adviser or dealer, other than a person registered solely as a
      limited market dealer under one or both of the Securities Act
      (Ontario) or the Securities Act
      (Newfoundland and Labrador);

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (e)

                        	
                          an
      individual registered or formerly registered under the securities
      legislation of a jurisdiction of Canada as a representative of a person
      referred to in paragraph (d);

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (f)

                        	
                          the
      Government of Canada or a jurisdiction of Canada, or any crown
      corporation, agency or wholly owned entity of the Government of Canada or
      a jurisdiction of Canada;

                        
	 
      	 	 
      	
                           
      

                        
	
                          ______

                        	 	
                          (g)

                        	
                          a
      municipality, public board or commission in Canada and a metropolitan
      community, school board, the Comité de gestion de la taxe scolaire de
      l'île de Montréal or an intermunicipal management board in
      Québec;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (h)

                        	
                          any
      national, federal, state, provincial, territorial or municipal government
      of or in any foreign jurisdiction, or any agency of that
      government;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (i)

                        	
                          a
      pension fund that is regulated by either the Office of the Superintendent
      of Financial Institutions (Canada) or a pension commission or similar
      regulatory authority of a jurisdiction of Canada;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (j)

                        	
                          an
      individual who, either alone or with a spouse, beneficially owns, directly
      or indirectly, financial assets having an aggregate realizable value that
      before taxes, but net of any related liabilities, exceeds
      C$1,000,000;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (k)

                        	
                          an
      individual whose net income before taxes exceeded C$200,000 in each of the
      2 most recent calendar years or whose net income before taxes combined
      with that of a spouse exceeded C$300,000 in each of the 2 most recent
      calendar years and who, in either case, reasonably expects to exceed that
      net income level in the current calendar year;

                        
	 
      	 	 
      	 
      
	
                          ______

                        	 	
                          (l)

                        	
                          an
      individual who, either alone or with a spouse, has net assets of at least
      C$5,000,000;

                        

                

              

            

          

        

      

    

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    
      
        
          	
                  ______

                	 	
                  (m)

                	
                  a
      person, other than an individual or investment fund, that has net assets
      of at least C$5,000,000 as shown on its most recently prepared financial
      statements;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (n)

                	
                  an
      investment fund that distributes or has distributed its securities only to
      (i) a person that is or was an accredited investor at the time of the
      distribution, (ii) a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 of NI 45-106 [Minimum amount
      investment], and 2.19 of NI 45-106 [Additional investment in investment
      funds], or (iii) a person described in paragraph (i) or (ii) that acquires
      or acquired securities under section 2.18 of NI 45-106 [Investment fund
      reinvestment];

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (o)

                	
                  an
      investment fund that distributes or has distributed securities under a
      prospectus in a jurisdiction of Canada for which the regulator or, in
      Québec, the securities regulatory authority, has issued a
      receipt;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (p)

                	
                  a
      trust company or trust corporation registered or authorized to carry on
      business under the Trust
      and Loan Companies Act (Canada) or under comparable legislation in
      a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
      fully managed account managed by the trust company or trust corporation,
      as the case may be;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (q)

                	
                  a
      person acting on behalf of a fully managed account managed by that person,
      if that person (i) is registered or authorized to carry on business as an
      adviser or the equivalent under the securities legislation of a
      jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is
      purchasing a security that is not a security of an investment
      fund;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (r)

                	
                  a
      registered charity under the Income Tax Act (Canada)
      that, in regard to the trade, has obtained advice from an eligibility
      adviser or an adviser registered under the securities legislation of the
      jurisdiction of the registered charity to give advice on the securities
      being traded;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (s)

                	
                  an
      entity organized in a foreign jurisdiction that is analogous to any of the
      entities referred to in paragraphs (a) to (d) or paragraph (i) in form and
      function;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (t)

                	
                  a
      person in respect of which all of the owners of interests, direct,
      indirect or beneficial, except the voting securities required by law to be
      owned by directors, are persons that are accredited
    investors;

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (u)

                	
                  an
      investment fund that is advised by a person registered as an adviser or a
      person that is exempt from registration as an adviser;
  or

                
	 
      	 	 
      	 
      
	
                  ______

                	 	
                  (v)

                	
                  a
      person that is recognized or designated by the securities regulatory
      authority or, except in Ontario and Québec, the regulator as (i) an
      accredited investor, or (ii) an exempt purchaser in Alberta or British
      Columbia.

                

        

      

    

    

    NOTE:   The
investor must initial or place a checkmark beside the applicable portion of the
above definition.

     

    For
the purposes hereof:

     

    
      	
               
      

            	
              "affiliate" means an
      issuer connected with another issuer
because

            

    

     

    
      	
               
      

            	
              (i)

            	
              one
      of them is the subsidiary of the other,
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              each
      of them is controlled by the same
person;

            

    

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              (w)

            	
              "bank" means a bank named
      in Schedule I or II of the Bank Act
      (Canada);

            

    

     

    
      	
               
      

            	
              (x)

            	
              "beneficial ownership" of
      securities by a person occurs

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      the purposes of British Columbia securities law, when such securities are
      beneficially owned by

            

    

     

    
      	
               
      

            	
              (A)

            	
              an
      issuer controlled by that person;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              an
      affiliate of that person or an affiliate of an issuer controlled by that
      person;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              for
      the purposes of Alberta securities law, when such securities are
      beneficially owned

            

    

     

    
      	
               
      

            	
              (A)

            	
              by
      a company controlled by that person or an affiliate of that
      company;

            

    

     

    
      	
               
      

            	
              (B)

            	
              by
      an affiliate of that person; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              through
      a trustee, legal representative, agent or other intermediary of that
      person;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              for
      the purposes of Ontario securities law
occurs:

            

    

     

    
      	
               
      

            	
              (A)

            	
              for
      a person, when such securities are beneficially owned by a company
      controlled by that person or an affiliate of the
  company;

            

    

     

    
      	
               
      

            	
              (B)

            	
              for
      a company, when such securities are beneficially owned by its
      affiliates;

            

    

     

    
      	
               
      

            	
              (y)

            	
              "Canadian financial
      institution" means

            

    

     

    
      	
               
      

            	
              (i)

            	
              an
      association governed by the Cooperative Credit
      Associations Act (Canada) or a central cooperative credit society
      for which an order has been made under section 473(1) of that Act,
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      bank, loan corporation, trust company, trust corporation, insurance
      company, treasury branch, credit union, caisse populaire, financial
      services cooperative, or league that, in each case, is authorized by an
      enactment of Canada or a jurisdiction of Canada to carry on business in
      Canada or a jurisdiction of Canada;

            

    

     

    
      	
               
      

            	
              (z)

            	
              "control person" has the
      same meaning as in securities legislation except in Manitoba, Newfoundland
      and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince
      Edward Island and Quebec, where control person means any person that holds
      or is one of a combination of persons that
holds

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      sufficient number of any of the securities of an issuer so as to affect
      materially the control of the issuer,
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              more
      than 20% of the outstanding voting securities of an issuer, except where
      there is evidence showing that the holding of those securities does not
      affect materially the control of the
issuer;

            

    

     

    
      	
               
      

            	
              (aa)

            	
              "director"
      means

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      member of the board of directors of a company or an individual who
      performs similar functions for a company,
and

            

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (ii)

            	
              with
      respect to a person that is not a company, an individual who performs
      functions similar to those of a director of a
  company;

            

    

     

    
      	
               
      

            	
              (bb)

            	
              "eligibility adviser"
      means

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      person that is registered as an investment dealer or in an equivalent
      category of registration under the securities legislation of the
      jurisdiction of a purchaser and authorized to give advice with respect to
      the type of security being distributed,
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      Saskatchewan or Manitoba, also means a lawyer who is a practicing member
      in good standing with a law society of a jurisdiction of Canada or a
      public accountant who is a member in good standing of an institute or
      association of chartered accountants, certified general accountants or
      certified management accountants in a jurisdiction of Canada provided that
      the lawyer or public accountant must
not

            

    

     

    
      	
               
      

            	
              (A)

            	
              have
      a professional, business or personal relationship with the issuer, or any
      of its directors, executive officers, founders, or control persons,
      and

            

    

     

    
      	
               
      

            	
              (B)

            	
              have
      acted for or been retained personally or otherwise as an employee,
      executive officer, director, associate or partner of a person that has
      acted for or been retained by the issuer or any of its directors,
      executive officers, founders or control persons within the previous 12
      months;

            

    

     

    
      	
               
      

            	
              (cc)

            	
              "executive officer"
      means, for an issuer, an individual who
is

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      chair, vice-chair or president,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      vice-president in charge of a principal business unit, division or
      function including sales, finance or
production,

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      officer of the issuer or any of its subsidiaries and who performs a
      policy-making function in respect of the issuer,
  or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              performing
      a policy-making function in respect of the
  issuer;

            

    

     

    
      	
               
      

            	
              (dd)

            	
              "financial assets"
      means

            

    

     

    
      	
               
      

            	
              (i)

            	
              cash,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              securities,
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      contract of insurance, a deposit or an evidence of a deposit that is not a
      security for the purposes of securities
  legislation;

            

    

     

    
      	
               
      

            	
              (ee)

            	
              "foreign jurisdiction"
      means a country other than Canada or a political subdivision of a country
      other than Canada;

            

    

     

    
      	
               
      

            	
              (ff)

            	
              "founder" means, in
      respect of an issuer, a person who,

            

    

     

    
      	
               
      

            	
              (i)

            	
              acting
      alone, in conjunction, or in concert with one or more persons, directly or
      indirectly, takes the initiative in founding, organizing or substantially
      reorganizing the business of the issuer,
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              at
      the time of the trade is actively involved in the business of the
      issuer;

            

    

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (gg)

            	
              "fully managed account"
      means an account of a client for which a person makes the investment
      decisions if that person has full discretion to trade in securities for
      the account without requiring the client's express consent to a
      transaction;

            

    

     

    
      	
               
      

            	
              (hh)

            	
              "jurisdiction" means a
      province or territory of Canada except when used in the term "foreign
      jurisdiction";

            

    

     

    
      	
               
      

            	
              (ii)

            	
              "local jurisdiction"
      means the jurisdiction in which the applicable securities regulatory
      authority is situate;

            

    

     

    
      	
               
      

            	
              (jj)

            	
              "individual" means a
      natural person, but does not
include

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      partnership, unincorporated association, unincorporated syndicate,
      unincorporated organization or a trust,
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      natural person in the person's capacity as trustee, executor,
      administrator or personal or other legal
  representative;

            

    

     

    
      	
               
      

            	
              (kk)

            	
              "mutual fund"
      means:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      Alberta and British Columbia, includes an issuer of securities that
      entitles the holder to receive on demand, or within a specified period
      after demand, an amount computed by reference to the value of a
      proportionate interest in the whole or in part of the net assets,
      including a separate fund or trust account, of the issuer of the
      securities, and, for the purposes of British Columbia securities law, also
      includes

            

    

     

    
      	
               
      

            	
              (A)

            	
              an
      issuer described in an order made by the British Columbia Securities
      Commission pursuant to section 3.2 of the Securities Act (British
      Columbia); and

            

    

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (B)

            	
              an
      issuer that is in a class of prescribed issuers, but does not include an
      issuer, or a class of issuers, described in an order that the British
      Columbia Securities Commission may make under section 3.1 of the
      Securities Act (British Columbia);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              for
      Ontario, an issuer whose primary purpose is to invest money provided by
      its securityholders and whose securities entitle the holder to receive on
      demand, or within a specified period after demand, an amount computed by
      reference to the value of a proportionate interest in the whole or in part
      of the net assets, including a separate fund or trust account of the
      issuer;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              for
      Québec, includes an issuer issuing shares where such issuer must, on the
      request of the holder, redeem them at their net asset
    value.

            

    

     

    
      	
               
      

            	
              (ll)

            	
              "non-redeemable investment
      fund" means an issuer,

            

    

     

    
      	
               
      

            	
              (i)

            	
              whose
      primary purpose is to invest money provided by its
      securityholders,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              that
      does not invest,

            

    

     

    
      	
               
      

            	
              (A)

            	
              for
      the purpose of exercising or seeking to exercise control of an issuer,
      other than an issuer that is a mutual fund or a nonredeemable investment
      fund, or

            

    

     

    
      	
               
      

            	
              (B)

            	
              for
      the purpose of being actively involved in the management of any issuer in
      which it invests, other than an issuer that is a mutual fund or a
      non-redeemable investment fund, and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              that
      is not a mutual fund;

            

    

     

    
      	
               
      

            	
              (mm)

            	
              "person"
      includes

            

    

     

    
      	
               
      

            	
              (i)

            	
              an
      individual,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      corporation,

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      partnership, trust, fund and an association, syndicate, organization or
      other organized group of persons, whether incorporated or not,
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              an
      individual or other person in that person's capacity as a trustee,
      executor, administrator or personal or other legal
      representative;

            

    

     

    
      	
               
      

            	
              (nn)

            	
              "regulator"
      means:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Executive Director, as defined under section 1 of the Securities Act
      (Alberta);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Executive Director, as defined under section 1 of the Securities Act (British
      Columbia); and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              such
      other person as is referred to in Appendix D of National Instrument 14-101
      – Definitions;

            

    

     

    
      	
               
      

            	
              (oo)

            	
              "related liabilities"
      means

            

    

     

    
      	
               
      

            	
              (i)

            	
              liabilities
      incurred or assumed for the purpose of financing the acquisition or
      ownership of financial assets, or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              liabilities
      that are secured by financial
assets;

            

    

     

    
      	
               
      

            	
              (pp)

            	
              "securities legislation"
      means:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      British Columbia, the Securities Act (British
      Columbia) and the regulations and rules under such Act and the blanket
      rulings and orders issued by the British Columbia Securities Commission;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              for
      other Canadian jurisdictions, such other statutes and instruments as are
      listed in Appendix B of National Instrument 14-101
      Definitions;

            

    

     

    
      	
               
      

            	
              (qq)

            	
              "securities regulatory
      authority" means:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      British Columbia, the British Columbia Securities
    Commission;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      respect of any local jurisdiction other than British Columbia, means the
      securities commission or similar regulatory authority listed in Appendix C
      of National Instrument 14-101 –
Definitions;

            

    

     

    
      	
               
      

            	
              (rr)

            	
              "spouse" means, an
      individual who,

            

    

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              is
      married to another individual and is not living separate and apart within
      the meaning of the Divorce Act (Canada),
      from the other individual,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              is
      living with another individual in a marriage-like relationship, including
      a marriage-like relationship between individuals of the same gender,
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              in
      Alberta, is an individual referred to in paragraph (i) or (ii), or is
      an adult interdependent partner within the meaning of the Adult Interdependent
      Relationships Act (Alberta);

            

    

     

    
      	
               
      

            	
              (ss)

            	
              "voting security" means
      any security which:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is
      not a debt security; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              carries
      a voting right either under all circumstances or under some circumstances
      that have occurred and are
continuing;

            

    

     

    
      	
               
      

            	
              (tt)

            	
              a
      person (first person) is considered to "control" another person
      (second person) if

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      first person, directly or indirectly, beneficially owns or exercises
      control or direction over securities of the second person carrying votes
      which, if exercised, would entitle the first person to elect a majority of
      the directors of the second person, unless that first person holds the
      voting securities only to secure an
obligation,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      second person is a partnership, other than a limited partnership, and the
      first person holds more than 50% of the interests of the partnership,
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      second person is a limited partnership and the general partner of the
      limited partnership is the first
person.

            

    

     

    
      
        
        

      

      
        45

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