Document:

ex101.htm

     

     

     

     

     

     

     

     

     

     

    ASSET
PURCHASE AGREEMENT

     

     

     

    made
among

     

     

     

    SEABRIDGE
GOLD CORPORATION

     

    PACIFIC
INTERMOUNTAIN GOLD CORPORATION

     

    SEABRIDGE
GOLD INC.

     

    and

     

    CONSTITUTION
MINING CORP.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    April 1,
2010

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    T
A B L E   O F   C O N T E N T S

      
        

      

    

    

      
        	 
      	
                Page

                 

              
	
                PART
      1     INTERPRETATION

              	2
	 
      	 
      
	
                Definitions

              	2
	
                Interpretation

              	5
	
                Schedules

              	6
	 
      	 
      
	
                PART
      2     PURCHASE OF ASSETS

              	7
	 
      	 
      
	
                Purchase

              	7
	
                Payment
      of Additional Deposit and Purchase Price

              	7
	
                Assignment
      of Rights to the Assets 

              	7
	
                Fees
      and Taxes 

              	8
	
                Registration
      Right 

              	8
	 
      	 
      
	
                PART
      3     OBLIGATIONS OF THE
    PURCHASER 

              	9
	 
      	 
      
	
                Obligation
      to Advise of Relinquishment 

              	9
	 
      	 
      
	
                PART
      4      REPRESENTATIONS, WARRANTIES AND COVENANTS
      OF THE VENDORS AND SEA 

              	10
	 
      	 
      
	
                Representations
      and Warranties of Each of the Vendors 

              	10
	
                Representations
      and Warranties of SEA 

              	12
	 
      	 
      
	
                PART
      5      REPRESENTATIONS, WARRANTIES AND COVENANTS
      OF THE PURCHASER 

              	14
	 
      	 
      
	
                Representations
      and Warranties of the Purchaser 

              	14
	
                Confidentiality 

              	17
	
                Additional
      Covenants of the Purchaser 

              	17
	 
      	 
      
	
                PART
      6      CONDITIONS TO
CLOSING 

              	18
	 
      	 
      
	
                Conditions
      to Purchaser’s Obligations to Close

              	18
	 
      	 
      
	
                PART
      7      TERMINATION 

              	19
	 
      	 
      
	
                PART
      8      FURTHER ASSURANCES AND
      ASSISTANCE 

              	19
	 
      	 
      
	
                Further
      Assurances 

              	19
	
                Mutual
      Assistance 

              	20
	 
      	 
      
	
                PART
      9      CLOSING 

              	20
	 
      	 
      
	
                Vendors’
      Closing Deliveries 

              	20
	
                Purchasers’
      Closing Deliveries 

              	20
	 
      	 
      
	
                PART
      10     CLOSING AND CLOSING DATE 

              	21
	 
      	 
      
	
                Closing 

              	21
	
                Concurrent
      Requirements 

              	21
	 
      	 
      
	
                PART
      11      CONFIDENTIALITY OF
    DATA 

              	21
	 
      	 
      
	
                Vendors
      to Maintain the Confidentiality of Data 

              	 21

         

         

        
          
            
            

          

          
            - i
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        	 	Page
	 
      	 
      
	
                PART
      12      INDEMNIFICATION 

              	21
	 
      	 
      
	
                Indemnification
      of Purchaser by Vendors 

              	21
	
                Indemnification
      of Purchaser by SEA 

              	22
	
                Indemnification of
      Vendors and SEA

              	22

         

        	
                PART
      13      GENERAL 

              	24
	 
      	 
      
	
                Survival
      of Representations and Warranties 

              	24
	
                Governing
      Law 

              	24
	
                Attornment 

              	24
	
                Risk
      of Loss 

              	25
	
                Waiver
      by the Purchaser 

              	25
	
                Waiver
      by the Vendors 

              	25
	
                Limitation
      of Waiver 

              	25
	
                Notice 

              	25
	
                Time 

              	26
	
                Enurement

              	26
	
                Entire
      Agreement

              	27

      

      

     

    
      
        
        

      

      
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    ASSET
PURCHASE AGREEMENT

     

    THIS AGREEMENT is made as of
the 1st day
of April, 2010

     

    AMONG:

     

    SEABRIDGE GOLD CORPORATION, a
corporation existing under the laws of Nevada having a registered office at
Suite 260, 6121 Lakeside Drive, Reno, Nevada 89511

     

    (“Seabridge”)

     

    and

     

    PACIFIC INTERMOUNTAIN GOLD
CORPORATION, a corporation existing under the laws of Nevada and having a
registered office at Suite 260, 6121 Lakeside Drive, Reno, Nevada
89511

     

    (“PIGC”)

     

    (Seabridge
and PIGC are referred to collectively as the “Vendors”)

     

    OF THE
FIRST PART

     

    AND:

     

    SEABRIDGE GOLD INC., a
corporation existing under the laws of Canada and having offices at 106 Front
Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1

     

    (“SEA”)

     

    OF THE
SECOND PART

     

    AND:

     

    CONSTITUTION MINING CORP., a
corporation existing under the laws of the State of Delaware and having offices
at Pasaje Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A
Miraflores, Lima, Perú

     

    (the
“Purchaser”)

     

    OF THE
THIRD PART

     

     

    
      
        
        

      

      
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    WHEREAS:

     

    A.    
Seabridge
and PIGC are the owners of leasehold interests to the mineral properties as set
out on Schedule A (the “Leasehold
Properties”);

     

    B.     
Seabridge
and PIGC are the owners of the mineral claims as set out on Schedule B (the
“Claims”);

     

    C.      
PIGC is a
wholly-owned subsidiary of Seabridge;

     

    D.       Seabridge
is a wholly-owned subsidiary of SEA;

     

    E.       
SEA and
the Purchaser entered into a non-binding letter of intent dated December 2, 2009
and an extension to the non-binding letter of intent dated February 24, 2010
(the “LOI”) under which
the Purchaser and SEA set forth terms on which the Purchaser proposed to acquire
and Seabridge and PIGC proposed to sell a 100% interest in the Leasehold
Properties and the Claims in Nevada described in Schedules A and B to this
Agreement (collectively, the “Mineral Properties”);

     

    F.      
The LOI
contemplated that the parties would negotiate a definitive agreement setting
forth binding terms for the acquisition of the Mineral Properties by the
Purchaser; and

     

    G.      
This
Agreement constitutes the definitive agreement contemplated under the
LOI.

     

    THIS AGREEMENT WITNESSES THAT, in consideration of the mutual promises
made herein, the receipt and sufficiency of which the parties acknowledge, the
parties agree as follows:

     

    PART
1

     

    INTERPRETATION

    Definitions

     

    1.1                 
 In and
for the purpose of this Agreement:

     

    (a)    
Affiliate means, with respect
to any person, a corporation in which the person holds more than 50% of the
issued voting share capital;

     

    (b)     Agreement means this Asset
Purchase Agreement, including the Schedules hereto, as from time to time
supplemented or amended by one or more agreements entered into pursuant to the
applicable provisions of this Agreement.

     

    (c)    
Assets means all of
the:

     

    (i)  
  Mineral Properties;

     

    (ii)    Technical
Data; and

     

     

    
      
        
        

      

      
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      (iii)   
Contracts.

    

     

    (d)    Assignment and
Assumption Agreement means the form of agreement attached hereto as
Schedule I as described in §2.3;

     

    (e)    Business Day means any day,
other than a Saturday, Sunday or statutory holiday in Vancouver, British
Columbia;

     

    (f)     Claims has the meaning given
to that term in Recital B;

     

    (g)    Close of Business means 4:30
p.m. Toronto time;

     

    (h)     Closing means the completion
of the sale and purchase of the Assets on the Closing Date pursuant to and in
accordance with the terms and conditions of this Agreement;

     

    (i)     Closing Date means (a) May 20,
2010 or, if the condition set out in §6.1(d) has not been satisfied, or waived
by the Purchaser, by such date, the date that is two Business Days after the
date such condition is satisfied or so waived, or (b) such other date as is
mutually agreed to by the parties.

     

    (j)     Contracts means the agreements
listed in Schedule C;

     

    (k)    Corporations Act means the
Business Corporations
Act (Canada);

     

    (l)     Debenture means a
transferrable convertible debenture in the form set forth in
Schedule J;

     

    (m)   Deposit means the $200,000
paid to Vendors by Purchaser upon the execution of the LOI;

     

    (n)    Encumbrance means a mortgage,
pledge, hypothecation, lien, restriction, easement, right-of-way, encroachment,
title defect, imposition, covenant, condition, right of re-entry, lease,
licence, royalty, security interest or other interest in the minerals or profits
derived from the sale of minerals on the Mineral Properties, assignment, option,
claim or other encumbrance or charge, whether or not registered or registrable,
but does not include a Permitted Encumbrance;

     

    (o)    Environmental Claim means any
and all administrative, regulatory, judicial, or third party actions, suits,
demands, demand letters, orders, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation (written or oral) by any
Person alleging damage to property, personal or bodily injury, or damage, injury
or other adverse effect on the environment, or notice of potential liability
(including, without limitation, potential liability for enforcement,
investigatory costs, clean-up costs, governmental response costs, removal costs,
remedial costs, injunctive relief, natural resources damages, property damages,
personal injuries, contribution, penalties, fines or forfeitures) arising out
of, based on or resulting from circumstances forming the basis of any violation
or alleged violation of any applicable environmental law by Vendors in respect
of the Mineral Properties;

     

    
      
        
        

      

      
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    (p)     Exchange
means the OTC Bulletin Board;

     

    (q)     Knowledge means the actual
knowledge of either Rudi Fronk or William Threlkeld and any knowledge that such
individuals should have following investigation with the appropriate responsible
parties at Seabridge, PIGC or SEA, as the case may be;

     

    (r)      Leasehold Properties has the
meaning given to that term in Recital A;

     

    (s)     Locked-up Shares has the
meaning given to that term in §2.2;

     

    (t)      Lock-up and Legend Removal
Agreement means a lock-up and legend removal agreement in the form set
forth in Schedule D;

     

    (u)     LOI has the meaning given to
that term in Recital E;

     

    (v)     Losses mean any losses,
damages, costs, expenses, liabilities, obligations, actions, demands, judgments,
interest or claims of any kind, including without limitation, reasonable
attorney’s fees, costs of investigation and remediation, punitive damages,
consequential damages or other special damages;

     

    (w)     Mineral Properties has the
meaning given to that term in Recital E;

     

    (x)      Permitted Encumbrances
means:

     

    
      	
              (A)  

            	
              the
      reservations, limitations, exceptions, provisos and conditions expressed
      in the claims underlying the Mineral Properties and the statutory
      exceptions to title of the Mineral
Properties;

            

    

     

    
      	
              (B)  

            	
              the
      royalties and other encumbrances described in, and the obligations arising
      from, the Contracts;

            

    

     

    
      	
              (C)  

            	
              liens
      for property taxes, charges, duties, levies and assessments which are not
      yet due;

            

    

     

    
      	
              (D)  

            	
              undetermined
      or inchoate liens, charges and encumbrances arising in or incurred in the
      ordinary course of business consistent with past practice which have not
      been filed or registered in accordance with applicable law or of which
      written notice has not at the time been duly given in accordance with
      applicable law in each case which relate to obligations not at the time
      due or delinquent; and

            

    

     

    
      	
              (E)  

            	
              liens,
      charges and encumbrances which, in the aggregate, do not materially
      detract from the value of the Assets or materially impair the use of the
      Assets;

            

    

     

     

    
      
        
        

      

      
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    (y)     
Person means an individual, corporation, body corporate, partnership,
joint venture, association, trust or unincorporated organization or a trustee,
executor, administrator or other legal representative;

     

    (z)      Promissory Note means a
promissory note in the form set forth in Schedule K;

     

    (aa)    Purchase Price means the price
to be paid for the Assets, as set out in §2.1 and §2.2;

     

    (bb)   Purchaser Authorizations means
the authorizations, approvals and consents described in Schedule F, which
are required by the Purchaser in order for it to acquire the
Assets;

     

    (cc)   Securities means the Debenture
and the Shares;

     

    (dd)   Shares means the common stock
of the Purchaser, par value $0.001 per share;

     

    (ee)   Tax Act means the Income Tax Act
(Canada);

     

    (ff)    Technical Data means all of
the technical data and correspondence which the Vendors have in respect of the
Mineral Properties including, without limitation, reports, drill core and logs,
metallurgical samples and digital data files;

     

    (gg)   Title Deficiencies means the
discrepancies and deficiencies in title to certain Claims identified in the
letter from Pacific Alluvial Development LLC to Michael Stocker and Gary Artmont
of Constitution Mining dated February 23, 2010;

     

    (hh)   Vendor Authorizations means
the authorizations, approvals and consents described in Schedule E, which
are required by the Vendors in order for them to validly and effectively
transfer the Assets to the Purchaser; and

     

    (ii)     U.S. Securities Act means the
United States Securities Act
of 1933, as amended.

     

    Interpretation

     

    1.2                  
In this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

     

    (a)    
a reference to a Part means a Part of this Agreement and the symbol § followed
by a number or some combination of numbers and letters refers to the section,
paragraph or subparagraph of this Agreement so designated;

     

    (b)     the
headings are for convenience only, do not form a part of this Agreement and are
not intended to interpret, define or limit the scope, extent or intent of this
Agreement or any of its provisions;

     

     

    
      
        
        

      

      
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    (c)     the word
including, when
following a general statement, term or matter, is not to be construed as
limiting such general statement, term or matter to the specific items or matters
set forth or to similar items or matters (whether or not qualified by
non-limiting language such as without limitation or but not limited to or words of
similar import) but rather as permitting the general statement or term to refer
to all other items or matters that could reasonably fall within its broadest
possible scope;

     

    (d)     an
accounting term not otherwise defined herein has the meaning assigned to it, and
every calculation to be made hereunder is to be made, in accordance with
generally accepted Canadian accounting principles applied on a consistent
basis;

     

    (e)      a
reference to currency means United States currency unless specified
otherwise;

     

    (f)       every
payment is to be made by wire or bank draft drawn upon a Canadian chartered bank
payable at par in Toronto, Ontario;

     

    (g)      a
reference to a statute includes all regulations made thereunder, all amendments
to the statute or regulations made thereunder in force from time to time, and
any statute or regulation that supplements or supersedes such statute or
regulations;

     

    (h)      a
reference to a corporate entity includes and is also a reference to any
corporate entity that is a successor to such entity;

     

    (i)       words
importing the masculine gender include the feminine or neuter, words in the
singular include the plural, words importing a corporate entity include
individuals, and vice versa; and

     

    (j)       an action
to be taken pursuant to this Agreement on or before a day which is not a
Business Day may be taken on the next Business Day thereafter, without being
deemed a breach of this Agreement.

     

    Schedules

     

    1.3                 
 The
following are the Schedules to this Agreement:

     

    
      
        	
                Schedule A
      

              	
                 
      - Leasehold Properties

              
	
                Schedule
      B

              	
                 
      - Claims

              
	
                Schedule
      C 

              	
                 
      - Contracts

              
	
                Schedule
      D 

              	
                 
      - Lock-up and Legend Removal Agreement

              
	
                Schedule E

              	
                 
      - Authorizations and Consents Required by the Vendors

              
	
                Schedule
      F

              	
                 
      - Authorizations and Consents Required by the Purchaser

              
	
                Schedule G
      

              	
                 
      - Deliveries of the Vendors at Closing

              
	
                Schedule
      H 

              	
                 
      - Deliveries of the Purchaser at Closing

              
	
                Schedule
      I

              	
                 
      - Assignment and Assumption Agreement

              
	
                Schedule J
      

              	
                 
      - Debenture

              
	
                Schedule K
      

              	
                 
      - Promissory Note

              
	
                Schedule
      L 

              	
                 
      - Allocation of Purchase Price

              
	
                Schedule
      M

              	
                 
      - Reclamation Bonds

              

      

      
        
           

        

        
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    PART
2

     

    PURCHASE
OF ASSETS

     

    Purchase

     

    2.1           Relying
upon the representations and warranties of the Vendors set forth herein, and
subject to the conditions provided herein, at the Closing the Purchaser will
purchase the Assets from the Vendors and the Vendors will transfer the Assets to
the Purchaser on an as is basis, free and clear of all Encumbrances, other than
Permitted Encumbrances, for an aggregate purchase price payable to SEA of
$2,000,000 in cash, 3,000,000 Shares, the Promissory Note and the
Debenture.  The Purchase Price will be allocated among the Assets as
described in Schedule L.

     

    Payment
of Additional Deposit and Purchase Price

     

    2.2           The
Purchase Price shall be paid to SEA on the Closing Date as follows:

     

    (a)    
SEA shall credit the Deposit toward the payment of the Purchase
Price;

     

    (b)     $1,800,000
shall be paid by bank draft or wire transfer to SEA;

     

    (c)     1,000,000
Shares shall be issued to SEA, which shares shall not be subject to any
contractual restriction on transfer;

     

    (d)     2,000,000
Shares (the "Locked-up
Shares") shall be issued to SEA with a legend restricting transfer until
the earlier of thirty-six (36) months from the Closing Date or such date that
additional exploration activity on any one or more of the Mineral Properties
results in an increase in identified “measured and indicated mineral resources”
such that the total number of reportable ounces of “resources” grows to
1,000,000 (inclusive of the existing base of 215,000 ounces), as defined in the
Canadian Institute of Mining, Metallurgy and Petroleum Definition
Standards;

     

    (e)      the
Promissory Note shall be delivered to SEA; and

     

    (f)       the
Debenture shall be delivered to SEA.

     

    Assignment
of Rights to the Assets

     

    2.3          
In
consideration of the delivery of the Purchase Price, the Vendors and the
Purchaser will execute at Closing the Assignment and Assumption Agreement under
which the Vendors shall assign, convey and transfer to the Purchaser all right,
title and interest in and to the Assets and the Purchaser agrees to assume, pay,
satisfy, discharge, perform and fulfill all obligations of the Vendors or SEA
which arise after the Closing Date in respect of the
Contracts.  Furthermore, the Vendors shall deliver to the Purchaser a
duly executed quitclaim deed in respect of the Claims.

     

     

    
      
        
        

      

      
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    Fees
and Taxes

     

    2.4         
The
Purchaser will be liable for and will pay all land and mineral property
registration fees, property transfer taxes, goods and services tax and all other
taxes (but excluding any income taxes or capital gains taxes payable by the
Vendors), duties, transfer fees and other charges customarily payable in
connection with the conveyance and transfer of personal property and mineral
claims.

     

    Registration
Right

     

    2.5         
If the
Purchaser registers any of its securities under the U.S. Securities Act (other
than by a registration on Form S-8, S-4, F-4 or any successor similar forms or
any other form not available for registering “restricted securities” within the
meaning of Rule 144 under the U.S. Securities Act) for sale to the public,
whether or not for sale for its own account, it will each such time, at least
twenty (20) days prior to filing the registration statement, give written notice
to SEA of its intention to do so.  If SEA or an Affiliate of SEA still
holds Shares that are either:

     

    (a)    “restricted
securities” within the meaning of Rule 144 under the U.S. Securities Act;
or

     

    (b)     subject
to transfer restrictions under Rule 144 due to such shareholder’s status as an
“affiliate” of the Purchaser as defined thereunder,

    

    (such
Shares, the “Restricted
Securities”) SEA or its Affiliate, as applicable, shall have the right,
upon the written request by it made within fifteen (15) days thereafter (which
request shall specify the Restricted Securities intended to be disposed of by
SEA or its Affiliate, as applicable, and the intended method of disposition
thereof), to request the Purchaser to register all or part of its Restricted
Securities.  If so requested, the Purchaser agrees to use its
reasonable best efforts to include in such registration under the U.S.
Securities Act (if it proceeds with such registration) all Restricted Securities
which the Purchaser has been so requested to register.  The Purchaser
may defer a registration of Restricted Securities for a period of not more than
180 days, but only if (i) the Purchaser furnishes to SEA or its Affiliate, as
applicable, a certificate signed by the President and Chief Executive Officer of
the Purchaser stating that, in the good faith judgment of the board of directors
of the Purchaser, effecting the requested registration would materially impede
the ability of the Purchaser to consummate a significant transaction (the 180
day deferral period beginning on the date that such certificate is sent to SEA
or its Affiliate, as applicable), and (ii) the Purchaser has not deferred a
filing during the previous 12 month period.

    

    Securities
Matters

     

    2.6

    (a)   
SEA and
the Vendors acknowledge and agree that, other than registrations pursuant to
§2.5, if any, the Securities issued pursuant to this Agreement will not be
registered under the U.S. Securities Act and that such Securities will be issued
to SEA in a private placement transaction effected in reliance on an exemption
from the registration requirements of the U.S. Securities Act and in reliance on
exemptions from the qualification requirements of applicable state securities
laws. 

     

     

    
      
        
        

      

      
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    (b)   
SEA
agrees not to make any disposition of all or any portion of the Securities
issued to it unless such transfer shall be pursuant to registration under the
U.S. Securities Act or pursuant to an available exemption from
registration.  

     

    (c)   
The
Debenture and the certificates representing the Shares issued to SEA hereunder
shall bear, in addition to any other legends required under applicable state
securities laws, a legend in substantially the following form:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES
LAWS.  THESE SECURITIES MAY NOT BE SOLD, OFFERED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE
EFFECT THAT ANY SALE OR TRANSFER OF THESE SECURITIES WILL BE IN COMPLIANCE WITH
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

    

    (d)    
In order
to prevent any transfer from taking place in violation of this Agreement or any
applicable law, SEA and the Vendors acknowledge and agree that Purchaser may
cause a stop transfer order to be placed with Purchaser’s transfer agent with
respect to the Shares issued to SEA.  Purchaser will not be required
to transfer on its books any Shares that have been sold or transferred in
violation of any provision of this Agreement or applicable law.

    

    PART
3

    

    OBLIGATIONS
OF THE PURCHASER

     

    Obligation
to Advise of Relinquishment

     

    3.1            
From and after the Closing Date, the Purchaser shall give SEA written notice not
less than 30 days before it relinquishes, or otherwise permits to lapse, its
interest in any of the Mineral Properties or parts thereof.  The
foregoing covenant is intended to provide the Vendors  with the
opportunity to take action to acquire any such mineral rights upon the rights
being relinquished.

     

    3.2          
Nothing in §3.1 shall require the Purchaser to give notice to SEA of, or
prevent the Purchaser from proceeding with, any option, assignment, sale, joint
venture, transfer or other divestiture of any of the Mineral Properties to any
third party, other than a relinquishment of the Leasehold Properties to the
property owner or permitting a Claim or Claims to lapse, and nothing in this
Agreement shall require such third party purchaser to give notice of any
relinquishment or lapsing of Mineral Properties acquired by such
Purchaser.

     

     

    
      
        
        

      

      
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    PART
4

     

    REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE VENDORS AND SEA

     

    Representations
and Warranties of Each of the Vendors

     

    4.1            
Each of
the Vendors jointly and severally represents and warrants to the Purchaser
that:

     

    (a)     it is a
company incorporated, duly organized and validly existing under the laws of the
State of Nevada;

     

    (b)    
it
is in good standing with respect to its filings required by applicable
law;

     

    (c)     it is
duly qualified to do business and is in good standing under the laws of the
State of Nevada and in each other jurisdiction where it carries on business or
holds assets to carry on that business and hold those assets and has all
corporate power and authority to carry on its business as presently carried
on;

     

    (d)   
it
has the corporate power and authority to execute and deliver this Agreement, to
complete all of the transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations herein set forth;

     

    (e)     this
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by each of the Vendors, the valid and binding
obligations of each of the Vendors, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
the rights of creditors generally and except as limited by the application of
equitable principles when equitable remedies are sought, and by the fact that
rights to indemnity, contribution and waiver, and the ability to sever
unenforceable terms, may be limited by applicable law;

     

    (f)     
Vendors
own good and marketable title to the Assets, free and clear of all Encumbrances,
other than Permitted Encumbrances, and Vendors are in sole possession of, and
have sole control of (except as set forth in or pursuant to the Contracts), the
Assets;

     

    (g)      none of
the execution and delivery of this Agreement, the completion of the transactions
contemplated hereby or the observance and performance by it of its covenants and
obligations herein set forth will:

     

    (i)    
conflict with, or result in a breach of, or violate any of the terms, conditions
or provisions of its articles of incorporation or bylaws;\

     

    (ii)    constitute
or result in a breach or default under any agreement, contract, lease,
indenture, other instrument or commitment to which it is a party, or is subject
or derives benefit from, other than under such agreements, contracts, leases,
indentures, other instruments and commitments with respect to the Vendor
Authorizations which are required, pursuant to the terms of this Agreement, to
be delivered to the Purchaser on Closing;

     

    
      
        
        

      

      
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    (iii)   
will
result in the creation of any Encumbrance of any kind or nature against or with
respect to the Assets (other than Encumbrances created pursuant to this
Agreement);

     

    (iv)    require
any permissions, approvals, waivers or consents of any third Person, or any
declarations, filing or registration with any court, governmental body or agency
or other public or private body, entity, or Person, save and except for those
comprised in the Vendor Authorizations;

     

    (h)    
to the
Knowledge of Vendors, no authorization, approval, order, licence, permit or
consent of any governmental authority, regulatory body or court, of Canada or
the United States or any political subdivision thereof, and no registration
with, declaration or notice to or filing by it with any such governmental
authority, regulatory body or court is required in order for it to;

     

    (i)     incur the
obligations expressed to be incurred by it in or pursuant to this
Agreement;

     

    (ii)    execute
and deliver all other documents and instruments to be delivered by it pursuant
to this Agreement;

     

    (iii)   duly
perform and observe the terms and provisions of this Agreement;

     

    (iv)   consummate
the transactions contemplated by this Agreement, or

     

    (v)    render
this Agreement legal, valid, binding and enforceable against the
Vendors,

     

    save and
except for those comprised in the Vendor Authorizations;

     

    (i)      all
corporate authorizations have been obtained for the execution of this Agreement
and for the performance of its obligations hereunder;

     

    (j)     
collectively,
they own the legal title and a 100% beneficial interest in the Mineral
Properties, free and clear of all Encumbrances other than Permitted
Encumbrances;

     

    (k)     with
respect to the Contracts;

     

    (i)    
each of them is in good standing and in full force and effect and is binding
upon the Vendors;

     

    (ii)     except as
disclosed in writing to the Purchaser, the covenants and conditions contained
therein on the part of the Vendors have been performed and observed by them in
all material respects;

     

    
      
        
        

      

      
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    (iii)    there is
no outstanding material dispute related thereto;

     

    (iv)     to the
Knowledge of Vendors, each other party to each Contract have performed each
material term, covenant, and condition of each Contract which is to be performed
by them at or before the date hereof;

     

    (v)    
on
obtaining the Vendor Authorizations, the Vendors will have all necessary
approvals required for them to lawfully assign the Contracts to the Purchaser as
contemplated by this Agreement; and

     

    (vi)    the
Vendors are not to their Knowledge, in breach of or in default under any term or
condition of any of the Contracts, except for such breaches or defaults, if any,
of which the Purchaser has been given notice and when taken together with any
similar breach or default, would not have a material adverse effect singularly
or in the aggregate on the ownership of the Assets or the conduct of mineral
exploration and development activities on the Mineral Properties by the
Purchaser following the Closing Date;

     

    (l)     to the
Knowledge of the Vendors, the Vendors have not received notice of, or otherwise
become aware of, any action, suit, claim or other proceeding commenced or
pending before any court or governmental commission, department, board,
authority or other administrative agency or officer, which challenges the
Vendors’ rights to any or all of the Mineral Properties;

     

    (m)   the
Vendors have operated their respective Mineral Properties in compliance with
applicable environmental laws in all material respects;

     

    (n)    the
Vendors have not received (nor, to the Knowledge of the Vendors, has there been
threatened) any Environmental Claim, whether from a public or governmental
authority, citizens’ group, employee or any other Person, that alleges that any
of the Mineral Properties is not or may not be in compliance with any applicable
environmental laws;

     

    (o)    the
Contracts represent all of the material agreements, contracts, leases, rights,
other instruments or commitments which the Vendors have entered into in
connection with the Assets that are currently in force; and

     

    (p)    there is
no written or oral agreement, option, understanding or commitment or any right
or privilege capable of becoming an agreement, for the purchase of the Assets
other than this Agreement.

     

    Representations
and Warranties of SEA

     

    4.2               
SEA
represents and warrants to the Purchaser that:

     

    (a)    it is a
company incorporated, duly organized and validly existing under the laws of
Canada;

     

    
      
        
        

      

      
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    (b)     it is in
good standing with respect to its filings required by applicable
law;

     

    (c)     it is
duly qualified to do business and is in good standing under the laws of Canada
and in each other jurisdiction where it carries on business or holds assets to
carry on that business and hold those assets and has all corporate power and
authority to carry on its business as presently carried on;

     

    (d)     
it
has the corporate power and authority to execute and deliver this Agreement, to
complete all of the transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations herein set forth;

     

    (e)    
this
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by SEA, the valid and binding obligations of SEA,
enforceable in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting the rights of creditors generally and except
as limited by the application of equitable principles when equitable remedies
are sought, and by the fact that rights to indemnity, contribution and waiver,
and the ability to sever unenforceable terms, may be limited by applicable
law;

     

    (f)    none of
the execution and delivery of this Agreement, the completion of the transactions
contemplated hereby or the observance and performance by it of its covenants and
obligations herein set forth will:

     

    (i)    conflict
with, or result in a breach of, or violate any of the terms, conditions or
provisions of its articles of incorporation or bylaws; or

     

    (ii)    constitute
or result in a breach or default under any agreement, contract, lease,
indenture, other instrument or commitment to which it is a party, or is subject
or derives benefit from, other than under such agreements, contracts, leases,
indentures, other instruments and commitments with respect to the Vendor
Authorizations which are required, pursuant to the terms of this Agreement, to
be delivered to the Purchaser on Closing;

     

    (iii)   
will
result in the creation of any Encumbrance of any kind or nature against or with
respect to the Assets;

     

    (iv)    require
any permissions, approvals, waivers or consents of any third Person, or any
declarations, filing or registration with any court, governmental body or agency
or other public or private body, entity, or Person, save and except for those
comprised in the Vendor Authorizations;

     

    (g)     to the
Knowledge of SEA, no authorization, approval, order, licence, permit or consent
of any governmental authority, regulatory body or court, of Canada or the United
States or any political subdivision thereof, and no registration with,
declaration or notice to or filing by it with any such governmental authority,
regulatory body or court is required in order for it to;

     

     

    
      
        
        

      

      
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    (i)    incur the
obligations expressed to be incurred by it in or pursuant to this
Agreement;

     

    (ii)   execute
and deliver all other documents and instruments to be delivered by it pursuant
to this Agreement;

     

    (iii)  duly
perform and observe the terms and provisions of this Agreement,

     

    (iv)  consummate
the transactions contemplated by this Agreement, or

     

    (v)  
render
this Agreement legal, valid, binding and enforceable against SEA,

     

    save and
except for those comprised in the Vendor Authorizations; and

     

    (h)     all
corporate authorizations have been obtained for the execution of this Agreement
and for the performance of its obligations hereunder.

     

    Covenants
of the Vendors and SEA

     

    4.3            SEA and
the Vendors shall use their commercially reasonable efforts to correct or
otherwise resolve to the satisfaction of Purchaser, acting reasonably, the Title
Deficiencies prior to May 20, 2010 and shall provide Purchaser with such
documentation and evidence of such corrections or resolutions as Purchaser shall
reasonably request.

     

    4.4            From the
date hereof until the Closing occurs or this Agreement is terminated in
accordance with its terms, neither SEA nor the Vendors will directly or
indirectly, through any director, officer, shareholder, employee, agent,
partner, affiliate, representative or otherwise: (a) solicit, initiate or
encourage the submission of any proposal or offer from any person or party
relating to a sale of all or any part of the Assets, (b) participate in any
discussions or negotiations regarding, assisting or participating in any effort
or attempt by any person or party to do or seek any transaction described in
clause (a) of this §4.4, or (c) enter into any agreement, agreement in principle
or other commitment (whether or not legally binding) relating to any transaction
described in clause (a) of this §4.4.

     

    4.5           
From the
date hereof until the Closing occurs or this Agreement is terminated in
accordance with its terms, neither SEA nor the Vendors shall cause or shall
permit any Encumbrance to attach to any of the Assets.

     

    PART
5

     

    REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PURCHASER

     

    Representations
and Warranties of the Purchaser

     

    5.1           
The
Purchaser represents and warrants to the Vendors that:

     

     

    
      
        
        

      

      
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    (a)      it is a
company incorporated, duly organized and validly existing under the laws of its
incorporating jurisdiction;

     

    (b)      it is in
good standing with respect to its filings required by applicable corporate
legislation;

     

    (c)       the
Purchaser is duly qualified to do business and is in good standing under the
laws of the State of Delaware, the State of Nevada and in each other
jurisdiction where it carries on business or holds assets to carry on that
business and hold those assets and has all corporate power and authority to
carry on its business as presently carried on;

     

    (d)       it has
the corporate power and authority to execute and deliver this Agreement, to
complete all of the transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations herein set forth;

     

    (e)     
this
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by the Purchaser, the valid and binding obligations
of the Purchaser, enforceable in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting the rights of creditors
generally and except as limited by the application of equitable principles when
equitable remedies are sought, and by the fact that rights to indemnity,
contribution and waiver, and the ability to sever unenforceable terms, may be
limited by applicable law;

     

    (f)      
none of
the execution and delivery of this Agreement, the completion of the transactions
contemplated hereby or the observance and performance by it of its covenants and
obligations herein set forth will:

     

    (i)    conflict
with, or result in a breach of, or violate any of the terms, conditions or
provisions of its constating documents; or

     

    (ii)   constitute
or result in a breach or default under any agreement, contract, lease,
indenture, other instrument or commitment to which it is a party, or is subject
or derives benefit from, other than under such agreements, contracts, leases,
indentures, other instruments and commitments with respect to the Purchaser
Authorizations which are required, pursuant to the terms of this Agreement, to
be delivered to the Vendors on Closing;

     

    (g)      
no
authorization, approval, order, licence, permit or consent of any governmental
authority, regulatory body or court, of Canada or the United States or any
political subdivision thereof, and no registration with, declaration or notice
to or filing by it with any such governmental authority, regulatory body or
court is required in order for it to;

     

    (i)     incur the
obligations expressed to be incurred by it in or pursuant to this
Agreement;

     

    (ii)    execute
and deliver all other documents and instruments to be delivered by it pursuant
to this Agreement;

     

     

    
      
        
        

      

      
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    (iii)    duly
perform and observe the terms and provisions of this Agreement, or

     

    (iv)   
render
this Agreement legal, valid, binding and enforceable against the
Purchaser,

     

    save and
except for those comprised in the Purchaser Authorizations;

     

    (h)      all
corporate authorizations have been obtained for the execution of this Agreement
and for the performance of its obligations hereunder;

     

    (i)       the
Purchaser is purchasing the Assets and title thereto in the condition in which
they are in at the time of the due diligence investigations of the Purchaser,
subject only to the Vendor’s representations and warranties contained in this
Agreement;

     

    (j)       the
Purchaser is not relying on any calculations, forecasts, projections or
estimates made by the Vendors in relation to the Assets;

     

    (k)      the
Purchaser has relied on its due diligence review to satisfy itself as to the
state of title to the Mineral Properties and the condition of the Mineral
Properties, including the environmental condition, and the only representations
and warranties made by the Vendors upon which it is relying are set forth
herein;

     

    (l)       the
Purchaser is a reporting issuer under Section 12(g) of the U.S. Securities
Exchange Act of 1934, as amended, and the Shares are quoted on the
Exchange;

     

    (m)     the
Purchaser has obtained all necessary consents and approvals of the Exchange to
the execution and delivery of this Agreement, the completion of the
transactions, including the issuances of Shares, contemplated hereby and the
quotation of such Shares on the Exchange, and has provided a copy of all
correspondence, consents and approvals to, from or of the Exchange in respect
thereof to SEA;

     

    (n)     the
Purchaser is not in default of any material requirement of any applicable
securities laws and, to the knowledge of the Purchaser, neither the United
States Securities and Exchange Commission nor the Exchange, nor any other
regulatory authority having jurisdiction, has issued any order preventing or
suspending trading of any securities of the Purchaser and the Purchaser is
entitled to avail itself of the applicable exemption requirements from
registration available under applicable securities laws in respect of the
issuance of the Shares contemplated in this Agreement;

     

    (o)      the
authorized capital of the Purchaser consists of 300,000,000 shares of
Common Stock and 50,000,000 shares of Preferred Stock, of which 78,947,412
shares of Common Stock and no shares of Preferred Stock are issued and
outstanding as at the date of this Agreement;

     

    
      
        
        

      

      
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      (p)      Since
January 1, 2008, the Purchaser has filed all forms, reports, documents and
information required to be filed by it, whether pursuant to applicable
securities laws or otherwise, with the United States Securities and Exchange
Commission and the Exchange or the applicable regulatory authorities, and no
material change has occurred in relation to the Purchaser which has not been
publicly disclosed.  As of the time of each of such forms, reports,
documents and information: (i) each complied in all material respects with the
requirements of the applicable securities laws; and (ii) none of them contained
any material misrepresentation (as defined in applicable securities laws);
and

       

    

    (q)     Since  January
1, 2008, the Purchaser has filed all financial statements it is required to file
pursuant to the applicable securities laws and said financial statements present
in all material respects the consolidated financial position and the
consolidated results of operations and cash flows of the Purchaser as of the
dates or for the periods presented therein and no adverse material changes have
occurred since date of the Purchaser's most recently filed audited financial
statements.

     

    Confidentiality

     

    5.2             
The
Purchaser agrees that all of the information it obtains in respect of the
Mineral Properties during the period after the date of the LOI and up to
Closing, including reports, maps, sections, drill logs, assay results, studies
and all other technical, accounting and financial records or data (in paper,
physical or electronic form), that has not been publicly disclosed shall be
confidential information and may not be disclosed by the Purchaser or its
directors, officers, employees, consultants or agents (collectively, the “Receiving Party”) to any other
person except (i) where required in accordance with applicable law; (ii) where
such information becomes generally available to the public other than as a
result of a disclosure or other act by the Receiving Party; or (iii) where such
information becomes available to the Receiving Party on a non-confidential basis
from a source other than SEA or one of the Vendors, provided that such source is
not bound by a confidentiality agreement with SEA or one of the
Vendors.  If the Closing of the purchase of the Assets is not
completed for any reason, the Purchaser will return to the Vendors all documents
delivered to the Purchaser by the Vendors in contemplation of the completion of
the purchase of the Assets by Purchaser or certify that destruction of all such
documents has occurred in form and substance satisfactory to the Vendors, acting
reasonably.

     

    Additional
Covenants of the Purchaser

     

    5.3        The
Purchaser covenants to and agrees with the Vendors that upon release of any of
the funds deposited by the Vendors with the Bureau of Land Management, the
United States Department of Interior and the U.S. Forest Service of the U.S.
Department of Agriculture in the aggregate amount of $39,844 in respect of
reclamation bonding requirements, as more particularly set forth in Schedule M
hereto, the Purchaser shall pay to the Vendors all of the amounts so
received.

     

     

     

    
      
        
        

      

      
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    PART
6

     

    CONDITIONS
TO CLOSING

     

    Conditions
to Purchaser’s Obligations to Close

     

    6.1         The
obligation of the Purchaser to complete the purchase of the Assets on the
Closing Date under this Agreement will be subject to the satisfaction of the
following conditions:

     

    (a)      The
representations and warranties made by the Vendors in Sections 4.1(a) through
(f) of this Agreement shall be true and correct as of the date hereof and on the
Closing Date.  All other representations and warranties made by the
Vendors in this Agreement that (a) are not qualified by materiality shall be
true and correct in all material respects when made and as of the Closing Date
and (b) that are qualified by materiality shall be true and correct when made
and as of the Closing Date, in each case as though such representations and
warranties were made or given on and as of the Closing Date.

     

    (b)      
The
representations and warranties made by SEA in Sections 4.2(a) through (e) of
this Agreement shall be true and correct as of the date hereof and on the
Closing Date.  All other representations and warranties made by SEA in
this Agreement that (a) are not qualified by materiality shall be true and
correct in all material respects when made and as of the Closing Date and (b)
that are qualified by materiality shall be true and correct when made and as of
the Closing Date, in each case as though such representations and warranties
were made or given on and as of the Closing Date.

     

    (c)       Each of
SEA and the Vendors shall have in all material respects performed and complied
with all of its agreements and obligations under this Agreement which are to be
performed or complied with prior to the Closing Date.

     

    (d)      The
Vendors shall have corrected or otherwise resolved to the satisfaction of
Purchaser, acting reasonably, the Title Deficiencies and shall have provided
Purchaser with such documentation and evidence of such corrections or
resolutions as Purchaser shall reasonably request.

     

    99. The
Vendors shall have received the Vendor Authorizations, each in a form reasonably
satisfactory to both Vendors and Purchaser.

     

    Conditions
to Vendors’ Obligation to Close

     

    6.2         
The
obligation of the Vendors to complete the sale of the Assets on the Closing Date
under this Agreement will be subject to the satisfaction of the following
conditions:

     

    (a)      The
representations and warranties made by Purchaser in Sections 5.1(a) through (e)
of this Agreement shall be true and correct as of the date hereof and on the
Closing Date.  All other representations and warranties made by
Purchaser in this Agreement that (a) are not qualified by materiality shall be
true and correct in all material respects when made and as of the Closing Date
and (b) that are qualified by materiality shall be true and correct when made
and as of the Closing Date, in each case as though such representations and
warranties were made or given on and as of the Closing Date.

     

    
      
        
        

      

      
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    (b)      Purchaser
shall have in all material respects performed and complied with all of its
agreements and obligations under this Agreement which are to be performed or
complied with prior to the Closing Date.

     

    (c)      The
Vendors shall have received the Vendor Authorizations, each in a form reasonably
satisfactory to both Vendors and Purchaser.

     

     

    PART
7

     

    TERMINATION

     

    7.1           
This
Agreement and the transactions contemplated hereby may be terminated at any time
prior to Closing only as follows and in no other manner:

     

    (a)    By mutual
written consent of the parties;

     

    (b)    By
written notice from Purchaser to SEA and the Vendors if:

     

    (i)     There has
been a material misrepresentation or breach by any Vendor or SEA in the
representations, warranties, agreements or covenants of each of them set forth
herein (disregarding any materiality qualifiers set forth therein);
or

     

    (ii)     The
Closing has not occurred by June 20, 2010 for reasons other than Purchaser’s
failure to perform its obligations hereunder;

     

    (c)    By
written notice from SEA and the Vendors to Purchaser if:

     

    (i)     There has
been a material misrepresentation or breach by Purchaser in the representations,
warranties, agreements or covenants of Purchaser set forth herein (disregarding
any materiality qualifiers set forth therein); or

     

    (ii)     The
Closing has not occurred by June 20, 2010 for reasons other than SEA’s or any
Vendor’s failure to perform its obligations hereunder.

     

    Part
8

     

    FURTHER
ASSURANCES AND ASSISTANCE

     

    Further
Assurances

     

    8.1         
The
Vendors will from time to time after the Closing execute and deliver to the
Purchaser all such conveyances, transfers, assignments and other instruments in
writing and further assurances as the Purchaser will reasonably require from the
Vendors and the Purchaser will execute and deliver to the Vendors all such
agreements of assumption and other instruments in writing and further assurances
as the Vendors may reasonably require from the Purchaser, in order to give
effect to the provisions hereof.

     

     

    
      
        
        

      

      
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    Mutual
Assistance

     

    8.2          
In
connection with the Vendor Authorizations required to be obtained hereunder by
the Vendors, the Purchaser will, at the Purchasers own expense, take such action
as may be reasonably necessary to assist the Vendors and will provide such
information as may be reasonably requested concerning the Purchaser by the
Persons from whom the Vendor Authorizations are required.  The Vendors
will, at the Vendors' own expense, take such action as is reasonably necessary
to assist the Purchaser and will provide such information as may be reasonably
requested by the Persons from whom approval is required for the Purchaser
Authorizations.

     

     

    PART
9

     

    CLOSING

     

    Vendors’
Closing Deliveries

     

    9.1        At
Closing, the Vendors shall deliver or cause to be delivered, as the case may be,
to the Purchaser, in a form satisfactory to Purchaser, all of the following
documents, each properly executed, dated as of the Closing Date by
the  appropriate parties thereto:

     

    (a)      the
documents listed in Schedule G;

     

    (b)      good
standing certificates for each Vendor and SEA for their jurisdiction of
incorporation;

     

    (c)       the
Vendor Authorizations; and

     

    (d)      
such
other documents and instruments as may be reasonably requested by Purchaser,
each in form and substance acceptable to Purchaser and its legal counsel,
necessary to consummate the transaction contemplated herein.

     

    Purchasers’
Closing Deliveries

     

    9.2       
In
addition to the Purchase Price payable pursuant to §2.1 and §2.2 above, at
Closing, the Purchaser shall deliver to Vendors and SEA, as applicable, all of
the following documents, each properly executed, dated as of the Closing Date by
the appropriate parties thereto:

     

    (a)    the
documents and other items described in Schedule H;

     

    (b)    good
standing certificates for Purchaser from the State of Delaware and the State of
Nevada; and

     

     

    
      
        
        

      

      
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    (c)     such
other documents and instruments as may be reasonably requested by Vendors, each
in form and substance acceptable to Vendors and its legal counsel, necessary to
consummate the transaction contemplated herein.

     

    PART
10

     

    CLOSING
AND CLOSING DATE

     

    Closing

     

    10.1         
Closing
will take place at 10:00 a.m. (Vancouver time) on the Closing Date at the
offices of the Vendors’ counsel, DuMoulin Black LLP, in Vancouver, British
Columbia or such other place as the parties may agree.  The Closing is
taking place simultaneously with the execution and delivery of this
Agreement.

     

    Concurrent
Requirements

     

    10.2         
At Closing
each of the parties hereto will deliver to the other such documents and make
such payments of money as are required by the terms of this Agreement to be
delivered or paid at the time of Closing and all matters of delivery of
documents and payment of money by the parties hereto pursuant to this Agreement
and the registration of all appropriate documents in all appropriate public
offices of registration will be deemed to be concurrent requirements such that
nothing is deemed to be completed until everything has been paid, delivered and
registered with respect to the purchase and sale contemplated
herein.

     

     

    PART
11

     

    CONFIDENTIALITY
OF DATA

     

    Vendors
to Maintain the Confidentiality of Data

     

    11.1      
The
Vendors will maintain the confidentiality of the Technical Data for a period of
5 years from the Closing Date.

     

    PART
12

     

    INDEMNIFICATION

     

    Indemnification
of Purchaser by Vendors

     

    12.1      
The
Vendors shall, jointly and severally, indemnify the Purchaser, its directors,
officers, employees, agents and shareholders, harmless from and against and
shall defend promptly Purchaser from and reimburse Purchaser for all Losses
which Purchaser may at any time suffer or incur, or become subject to, as a
result of or in connection with:

     

     

    
      
        
        

      

      
        - 21
-

        
          

        

      

      
        
        

      

    

     

    (a)    
any
breach or inaccuracy of any of the representations and warranties made by the
Vendors in or pursuant to this Agreement;

     

    (b)     any
failure or breach by either Vendor to carry out, perform, satisfy, and discharge
any of its covenants, agreements, undertakings, liabilities, or obligations
under this Agreement; or

     

    (c)     any suit,
action or other proceeding brought by any Person arising out of any of the
matters referred to in this §12.1 of this Agreement.

     

    Indemnification
of Purchaser by SEA

     

    12.2          
SEA shall
indemnify the Purchaser, its directors, officers, employees, agents and
shareholders, harmless from and against and shall defend promptly Purchaser from
and reimburse Purchaser for all Losses which Purchaser may at any time suffer or
incur, or become subject to, as a result of or in connection with:

     

    (a)      any
breach or inaccuracy of any of the representations and warranties made by SEA in
or pursuant to this Agreement;

     

    (b)      any
failure or breach by SEA to carry out, perform, satisfy, and discharge any of
its covenants, agreements, undertakings, liabilities, or obligations under this
Agreement; or

     

    (c)      any suit,
action or other proceeding brought by any Person arising out of any of the
matters referred to in this §12.2 of this Agreement.

     

    Indemnification
of Vendors and SEA

     

    12.3         
Purchaser
shall indemnify and hold Vendors and SEA, their directors, officers, employees,
agents and shareholders, harmless from and against, and shall defend promptly
Vendors and SEA from and reimburse them for, any and all Losses which Vendors
and SEA may at any time suffer or incur, or become subject to, as a result of or
in connection with:

     

    (a)     any
breach or inaccuracy of any of the representations and warranties made by
Purchaser in or pursuant to this Agreement;

     

    (b)     any
failure or breach by Purchaser to carry out, perform, satisfy, and discharge any
of its covenants, agreements, undertakings, liabilities, or obligations under
this Agreement; and

     

    (c)     any suit,
action, or other proceeding brought by any Person arising out of any of the
matters referred to in §12.3 of this Agreement.

     

    Limitations
on Indemnification

     

    
      12.4          
(a)   Vendors'
and SEA's indemnification obligations under §12.1 and §12.2, respectively, are
subject to the following limitations:

    

     

     

    
      
        
        

      

      
        - 22
-

        
          

        

      

      
        
        

      

    

     

    (i)     
Purchaser
shall not be entitled to indemnification pursuant to either §12.1 or §12.2 above
until the total amount of liability under thereunder exceeds $50,000; provided,
that in the event the $50,000 threshold is met, Purchaser shall be entitled to
indemnification for the full amount of such claims, including the first dollar
thereof; and

     

    (ii)     
In
no event shall the aggregate liability of Vendors and SEA pursuant to §12.1 and
§12.2, respectively, exceed $6,000,000.

     

    (b)     Purchaser’s
indemnification obligations under §12.3 are subject to the following
limitations:

     

    (i)      Vendors
and SEA shall not be entitled to indemnification pursuant to §12.3 above until
the total amount of liability thereunder exceeds $50,000; provided, that in the
event the $50,000 threshold is met, Vendors and SEA shall be entitled to
indemnification for the full amount of such claims, including the first dollar
thereof; and

     

    (ii)     In no
event shall the liability of Purchaser pursuant to §12.3 exceed
$6,000,000.

     

    Notice;
Third Party Claims

     

    12.5

     

    (a)      For
purposes of this §12.5, “Indemnified Party” and “Indemnifying Party” shall
refer either to Purchaser or to Vendors or SEA, as applicable.  The
Indemnified Party shall notify the Indemnifying Party in writing of any claim,
demand, action or proceeding for which indemnification will be sought under
§12.1, §12.2 or §12.3, and if such claim, demand, action or proceeding is a
third party claim, demand, action or proceeding, the Indemnifying Party will
have the right at its expense to assume the defense thereof using counsel
reasonably acceptable to the Indemnified Party.  The Indemnified Party
shall have the right:  (i) to participate, at its own expense,
with respect to any such third party claim, demand, action or proceeding that is
being diligently defended by the Indemnifying Party, and (ii) to assume the
defense of such third party claim, demand, action or proceeding, at the cost and
expense of the Indemnifying Party, if the Indemnifying Party fails or ceases to
defend the same.  The assumption of the defense by the Indemnifying
Party shall constitute an admission that such third party claim, demand, action
or proceeding is indemnifiable pursuant to §12.1, §12.2 or §12.3.  The
failure to assume the defense shall in no way affect the Indemnifying Party’s
indemnification obligations pursuant to §12.1, §12.2 or §12.3.

     

    (b)       Each
party defending a claim shall keep the other party informed of the progress of
such claim and shall comply with all reasonable requests for copies of documents
related to the claim and provide to the other party an opportunity, from time to
time, to consult with counsel defending the claim.  In connection with
any such third party claim, demand, action or proceeding, the parties shall
cooperate with each other and provide each other with access to relevant books
and records in their possession.

     

    
      
        
        

      

      
        - 23
-

        
          

        

      

      
        
        

      

    

     

     

    (c)      If a firm
written offer is made to settle any such third party claim, demand, action or
proceeding solely in exchange for monetary sums to be paid by the Indemnifying
Party and the Indemnifying Party proposes to accept such settlement and the
Indemnified Party refuses to consent to such settlement,
then:  (i) the Indemnifying Party shall be excused from, and the
Indemnified Party shall be solely responsible for, all further defense of such
third party claim, demand, action or proceeding; (ii) the maximum liability
of the Indemnifying Party relating to such third party claim, demand, action or
proceeding shall be the amount of the proposed settlement if the amount
thereafter recovered from the Indemnified Party on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement; and (iii) the Indemnified Party shall pay all attorneys’ fees
and legal costs and expenses incurred after rejection of such settlement by the
Indemnified Party, but if the amount thereafter recovered by such third party
from the Indemnified Party is less than the amount of the proposed settlement,
the Indemnified Party shall be reimbursed by the Indemnifying Party for such
attorneys’ fees and legal costs and expenses up to a maximum amount equal to the
difference between the amount recovered by such third party and the amount of
the proposed settlement.

    

     

    PART
13

     

    GENERAL

     

    Survival
of Representations and Warranties

     

    13.1           
All
representations and warranties of Vendors, SEA, and Purchaser contained in this
Agreement or made pursuant to this Agreement shall survive the Closing Date and
the consummation of the transactions contemplated by this Agreement for a period
of two (2) years following the Closing Date, except for the representations and
warranties set forth in §4.1(a) - §4.1(e), §4.2(a) - §4.2(e) and §5.1(a) -
§5.1(e), all of which shall survive indefinitely.

    

    Governing
Law

     

    13.2          
This
Agreement will be governed by and construed in accordance with the laws of
British Columbia and of Canada applicable therein, which will be deemed to be
the proper law hereof.

     

    Attornment

     

    13.3          
The
courts of British Columbia will have exclusive jurisdiction to entertain and
determine all disputes and claims, whether for specific performance, injunction,
declaration or otherwise howsoever both at law and in equity, arising out of or
in any way connected with the construction, breach, or alleged, threatened or
anticipated breach of this Agreement, and will have jurisdiction to hear and
determine all questions as to the validity, existence or enforceability
thereof.

     

     

    
      
        
        

      

      
        - 24
-

        
          

        

      

      
        
        

      

    

     

    Risk
of Loss

     

    13.4          
Risk of
loss with respect to the Assets will remain with and on the Vendors until the
Close of Business on the Closing Date.

     

    Waiver
by the Purchaser

     

    13.5          The
Purchaser may, at their option, waive in whole or in part any or all of the
provisions herein for the benefit of the Purchaser.

     

    Waiver
by the Vendors

     

    13.6         
The
Vendors may, at their option, waive in whole or in part any or all of the
provisions herein for the benefit of the Vendors.

     

    Limitation
of Waiver

     

    13.7         
 No waiver
pursuant to §13.5 or §13.6 of the whole or any part of any provision will
operate as a waiver of any other part thereof or as a waiver of any other
provision.

     

    Notice

     

    13.8         
Any
notice or other communication required or permitted to be given hereunder or for
the purposes hereof will be sufficiently given if delivered to the party to whom
it is given or sent by means of electronic transmission addressed to such
party:

     

    (a)  
    in the case of a notice or other communication to the
Purchaser at:

          
     Pasaje
Mártir Olaya 129, Oficina 1203,

           
    Centro
Empresarial José Pardo Torre A Miraflores,

            
   Lima,
Perú

     

    Attention:
Michael Stocker

     

    With a
copy to:

     

    Quarles
& Brady, LLP

    411 East
Wisconsin Avenue, Suite 2040

    Milwaukee,
Wisconsin  53202

    Attn:  Chad
J. Wiener

    Fax:
414-978-8198

    Email:
chad.wiener@quarles.com

     

    (b)       in the
case of a notice or other communication to the Vendors or SEA at:

               
106
Front Street East, Suite 400

               
Toronto,
Ontario  M5A 1E1

     

    Attention:  President

    Fax:  (416)
367-2711

    

    
      
        
        

      

      
        - 25
-

        
          

        

      

      
        
        

      

    

     

    or at
such other address or number as the party to whom such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this §13.8.  Any notice or other communication
which is delivered or sent by means of electronic transmission will be deemed to
have been given and received on the day after it is delivered or transmitted,
provided that if such day is not a Business Day, the notice or other
communication will be deemed to have been given and received on the next
Business Day following such day.

     

    Time

     

    13.9          
Time will
be of the essence hereof.

     

    Enurement

     

    13.10         
All the
terms and provisions of this Agreement will be binding upon and enure to the
benefit of the parties hereto and their respective successors and
assigns.

     

     

     

     

     

    

     

    [THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

    

    

    
      
        
           

        

        
          - 26
-

          
            

          

        

        
           

        

      

    

    

    

     

    Entire
Agreement

     

    13.11           This
Agreement and the Schedules attached hereto set forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby
and supersede the LOI and all previous agreements and understandings, oral or
written, among the parties or their respective representatives with respect to
the matters herein and will not be modified or amended except by written
agreement signed by the parties to be bound thereby.

     

    IN WITNESS WHEREOF the parties
have duly executed these presents as of the day and year first above
written.

     

    SEABRIDGE
GOLD CORPORATION

     

    

    /s/Rudi
Fronk                                                       

    Rudi Fronk

    Authorized
Signatory

     

    PACIFIC
INTERMOUNTAIN GOLD

    CORPORATION

     

    

    
      /s/Rudi
Fronk                                                       

      Rudi Fronk
Authorized Signatory

     

    SEABRIDGE
GOLD INC.

    
 

    
      /s/Rudi
Fronk                                                       

      Rudi Fronk
Authorized Signatory

     

    CONSTITUTION
MINING CORP.

     

    

    /s/Michael
Stocker                                             

    Michael Stocker

    Authorized
Signatory

     

    

    

    
      
        
           

        

        
          - 27
-

          
            

          

        

        
           

        

      

    

    

    

     

    SCHEDULE
A

     

    LEASEHOLD
PROPERTIES

     

    
      	
              County

            	
              Project

            	
              #
      of

              Claims

            	
              Operator

            	
              Owner(s)

            	
              Notes:

            	
              County

            
	
              Nevada:

            	 
      	 
      	 
      	 
      	 
      	
              Nevada:

            
	
              CHURCHILL

            	
              ARON
      (Aron & Windmill claims)

            	
              20

            	
              SEABRIDGE

            	
              RENEGADE
      (10) + EM CRIST(10)

            	
              Lease
      from Renegade Exploration Inc.

            	
              CHURCHILL

            
	
              ELKO

            	
              MOUNT
      WILSON (W.C. claims)

            	
              8

            	
              PIGCO

            	
              MARGRAF
      et al

            	
              Lease
      from Margraf et al

            	
              ELKO

            
	
              NYE

            	
              RAYS
      (RAYS & SAM claims)

            	
              25

            	
              PIGCO

            	
              DK
      JENNINGS

            	
              Lease
      from Jennings et al

            	
              NYE

            
	
              NYE

            	
              CLIFFORD
      (COUGAR & TERRY claims)

            	
              4

            	
              PIGCO

            	
              AJ
      CLIFFORD et al

            	
              Lease
      from Boscovich and Clifford et al

            	
              NYE

            
	
              NYE

            	
              HANNAPAH
      (DODGE & LORIE claims)

            	
              6

            	
              PIGCO

            	
              BC
      DUTCHER

            	
              Lease
      from Dutcher

            	
              NYE

            
	
              NYE

            	
              McCANN
      (RUBY claim)

            	
              1

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family trust

            	
              NYE

            
	
              NYE

            	
              MERGER
      (RUBY claims)

            	
              3

            	
              PIGCO

            	
              B&M
      BOSCOVICH + RE&GE CLIFFORD

            	
              Lease
      from Boscovich et al

            	
              NYE

            
	
              NYE

            	
              THUNDER
      MTNISILVER ACE (SILVER ACE claim)

            	
              1

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family Trust

            	
              NYE

            
	
              NYE

            	
              THUNDER
      MTN/TOUGH NUT (TOUGH NUT claims)

            	
              2

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family Trust

            	
              NYE

            

    

     

     

     

    

    
      
        
           

        

        
          A -
1

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
B

     

    CLAIMS

     

    
      	
              County

            	
              Project

            	
              #
      of

              Claims

            	
              Operator

            	
              Owner(s)

            	
              Notes:

            	
              County

            
	
              Nevada:

            	 
      	 
      	 
      	 
      	 
      	
              Nevada:

            
	
              CHURCHILL

            	
              WESTGATE
      (M claims)

            	
              98

            	
              SEABRIDGE

            	
              SEABRIDGE

            	 
      	
              CHURCHILL

            
	
              ELKO

            	
              MAVERICK
      NORTH (RE claims)

            	
              28

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ELKO

            
	
              ELKO

            	
              MOUNT
      WILSON (DC claims)

            	
              31

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ELKO

            
	
              ESMERALDA

            	
              CASTLE
      ROCK (CP,JD,NBSS,NEW,DJ,JAZ&WE S claims)

            	
              125

            	
              SEABRIDGE

            	
              PLATORO
      (73) + KENNECOTT (20) + GREAT BASIN (32)

            	
              Agreement
      with Platoro

            	
              ESMERALDA

            
	
              ESMERALDA

            	
              CLAYTON
      RIDGE (LA claims)

            	
              6

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              ESMERALDA

            	
              GILBERT
      SOUTH (CC claims)

            	
              102

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              ESMERALDA

            	
              MILLER'S
      SOUTH (AS claims)

            	
              21

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              HUMBOLDT

            	
              KING'S
      RIVER (AT claims)

            	
              44

            	
              PIGCO

            	
              PIGCO

            	 
      	
              HUMBOLDT

            
	
              MINERAL

            	
              TETON
      (LP claims)

            	
              20

            	
              PIGCO

            	
              PIGCO

            	 
      	
              MINERAL

            
	
              NYE

            	
              B.A.BRECCIA
      (BAB claims)

            	
              18

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              BAXTER
      SPRINGS (BAXTER & PZ claims)

            	
              40

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              BELLEHELLEN
      WEST (YH

              claims)

            	
              18

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              CLIFFORD
      (CM claims)

            	
              64

            	
              PIGCO

            	
              PIGCO

            	
              Castleworth
      Ventures (lessee)

            	
              NYE

            
	
              NYE

            	
              EDEN
      (EN claims)

            	
              21

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              ELLENDALE
      (YC and TF claims)

            	
              168

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              FOUR
      MILE BASIN (KM claims)

            	
              207

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              GEORGE'S
      CANYON (GC claims)

            	
              30

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              GOLDEN
      ARROW SOUTH (GS claims)

            	
              230

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              HANNAPAH
      (HP,HANN & HANNA claims)

            	
              196

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            

       

       

       

      
        
          
          

        

        
          B -
1

          
            

          

        

        
          
          

        

      

       

       

      
        	
                County

              	
                Project

              	
                #
      of

                Claims

              	
                Operator

              	
                Owner(s)

              	
                Notes:

              	
                County

              

      

      	Nevada:	 	 	 	 	 	Nevada:
	
              NYE

            	
              LIBERTY
      SPRINGS (LB claims)

            	
              80

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              MERGER
      (BH claims)

            	
              46

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              MIDWAY
      ISLANDS

            	
              16

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	 
      	
              (KN,MWAY,NY
      & RF claims)

            	 
      	 
      	 
      	 
      	 
      
	
              NYE

            	
              MIDWAY
      NW (DB claims)

            	
              40

            	
              PIGCO

            	
              PLACER
      DOME

            	
              Agreement
      with Placer Dome US Inc.

            	
              NYE

            
	
              NYE

            	
              MIDWAY
      SW (DBS claims)

            	
              47

            	
              PIGCO

            	
              PLACER
      DOME

            	
              Agreement
      with Placer Dome US Inc.

            	
              NYE

            
	
              NYE

            	
              RAYS
      (SE claims)

            	
              62

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              STONEWALL
      (SW claims)

            	
              73

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              THUNDER
      MOUNTAIN (AW

              claims)

            	
              173

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              THUNDER
      MOUNTAIN (AW claims)

            	
              53

            	
              PIGCO

            	
              PIGCO

            	
              Castleworth
      Ventures is registered as lessee

            	
              NYE

            
	
              NYE

            	
              McCANN
      (MC claims)

            	
              24

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            

    

     

    

    
      
        
           

        

        
          B -
2

          
            

          

        

        
           

        

      

    

     

     

    SCHEDULE
C

     

    CONTRACTS

     

    
      	
              1.  

            	
              Mining
      Lease and Agreement – Rays Project among Donald K. Jennnings, Joe Leising
      and Pamela Leising and Pacific Intermountain Gold Corporation (“PIGCO”)
      dated January 3, 2003 relating to the lease of unpatented mining claims in
      Nye County Nevada.

            

    

     

    
      	
              2.  

            	
              Mining
      Lease Agreement among Margraf Explosives, Inc., Mountain View Exploration,
      Inc., Donald M. and Inge M. Duncan Family Trust, 1994 and PIGCO dated
      April 28, 2003 relating to the lease of mining claims in Elko County,
      Nevada.

            

    

     

    
      	
              3.  

            	
              Mining
      Lease and Agreement – Tough Nut Project between Bottom Family Trust and
      PIGCO dated October 10, 2002 relating to the lease of two unpatented
      mining claims in Nye County,
Nevada.

            

    

     

    
      	
              4.  

            	
              Mining
      Lease and Agreement – Silver Ace Project between Limon KL Boscovich and
      the Bottom Family Trust and PIGCO dated October 10, 2002 relating to the
      lease of one unpatented mining claim in Nye County,
  Nevada.

            

    

     

    
      	
              5.  

            	
              Mining
      Lease and Agreement – Merger Project among Bozo Boscovich, William Roy
      Clifford and Gladys E. Clifford and PIGCO dated November 1, 2002 relating
      to the lease of three unpatented mining claims in Nye County
      Nevada.

            

    

     

    
      	
              6.  

            	
              Mining
      Lease and Agreement – Hannapah Project between Bruce C. Dutcher and PIGCO
      dated November 7, 2002 relating to the lease of six unpatented and eight
      patented mining claims in Nye County,
Nevada.

            

    

     

    
      	
              7.  

            	
              Mining
      Lease and Agreement – McCann Project between Bottom Family Trust and PIGCO
      dated October 10, 2002 and amended Oct 10, 2003, relating to the lease of
      one unpatented mining claim in Nye County,
  Nevada.

            

    

     

    
      	
              8.  

            	
              Mining
      Lease and Agreement between Platoro West, Inc., and Seabridge Resources
      Inc., dated August 15, 2000 relating to the lease of unpatented mining
      claims in Esmerelda County, Nevada.

            

    

     

    
      	
              9.  

            	
              Mining
      Lease and Agreement – Aron Project, between Renegade Exploration Inc., and
      Elliot Crist and Seabridge Gold Corporation dated October 9, 2002 relating
      to the lease of unpatented mining claims in Churchill County,
      Nevada.

            

    

     

    
      	
              10.  

            	
              Mining
      Lease and Agreement – Clifford Project among Bozo Boscovich, William Roy
      Clifford and Gladys E. Clifford and PIGCO dated November 1, 2002 relating
      to the lease of three unpatented mining claims in Nye County,
      Nevada.

            

    

     

    
      	
              11.  

            	
              Letter
      Agreement between Placer Dome Exploration Inc. (“PDX”) and PIGCO, undated,
      relating to the DB and DBS groups of unpatented mining claims in Nye
      County, Nevada.

            

    

     

    

    
      
        
           

        

        
          C -
1

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
D

     

    LOCK-UP
AND LEGEND REMOVAL AGREEMENT

     

    THIS
AGREEMENT dated for reference the ● day of 
●,
2010.

     

    BETWEEN:

     

    SEABRIDGE
GOLD INC.

    (hereinafter called the "Undersigned")

     

    AND:

     

    CONSTITUTION
MINING CORP.

    (hereinafter called the "Issuer")

     

    WHEREAS
pursuant to an asset purchase agreement dated April 1, 2010 among the
Undersigned, the Issuer, Seabridge Gold Corporation and Pacific Intermountain
Gold Corporation (the "Asset
Purchase Agreement"), the Issuer agreed to, among other things, issue to
the Undersigned the Locked-up Shares (as that term is defined in the Asset
Purchase Agreement), being 2,000,000 shares in the common stock of the
Purchaser, par value $0.001 per share;

     

    AND
WHEREAS the Undersigned has agreed to certain resale restrictions on the
Locked-up Shares, upon and subject to the terms and conditions hereinafter more
particularly set out;

     

    AND
WHEREAS the Undersigned has agreed that the Locked-up Shares will be issued with
a legend (the "Legend")
restricting transfer pursuant to the terms and conditions of this
Agreement;

     

    NOW
THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and in
consideration of the sum of Ten Dollars ($10.00) now paid by the parties hereto,
each to the other, (the receipt whereof is hereby acknowledged) and in further
consideration of the mutual covenants and conditions hereinafter contained, the
parties hereto agree as follows:

     

    PART
1                      DEFINITIONS

     

    
      1.1.       
In this
Agreement capitalized terms not otherwise defined have the meanings ascribed
thereto in the Asset Purchase Agreement.

    

     

    PART
2                      RESTRICTION
ON TRANSFERS; RELEASE OF SHARES

     

    2.1.       
The
Undersigned shall not sell, deal in, assign, transfer in any manner whatsoever
or agree to sell, deal in, assign or transfer in any manner whatsoever any of
the Locked-up Shares or beneficial ownership of or any interest in them until
the earlier of (i) [●], 2013 [insert date that is thirty-six (36)
months from the Closing Date] or (ii) such date that additional
exploration activity on any one or more of the Mineral Properties (as defined in
the Asset Purchase Agreement) results in a resource estimate (the "Resource Estimate")
demonstrating an increase in identified “measured and indicated mineral
resources” (as defined in the Canadian Institute of Mining, Metallurgy and
Petroleum Definition Standards ("CIM")) such that the total
number of reportable ounces of “resources” (as defined in the CIM) for the
Mineral Properties grows to 1,000,000 (or more) ounces (inclusive of the
existing base of 215,000 ounces), except in the following
circumstances:

     

    
      
        
        

      

      
        D -
1

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (a)  

            	
              to
      another person or persons, including, without limitation, one or more
      Affiliates of the Undersigned, each of whom enters into an agreement with
      the Issuer having the same terms and conditions as this Agreement for the
      balance of the period remaining under this
  Agreement;

            

    

     

    
      	
              (b)  

            	
              as
      a pledge, mortgage or charge to a financial institution as collateral for
      a loan, provided that the certificate(s) representing the Locked-up Shares
      or other evidence of the Locked-up Shares will not be transferred or
      delivered to the financial institution for this purpose.  The
      loan agreement must provide that the Locked-up Shares will remain subject
      to the terms of this Agreement if the lender realizes on the Locked-up
      Shares to satisfy the loan;

            

    

     

    
      	
              (c)  

            	
              in
      the event of a bankruptcy of the Undersigned, the Locked-up Shares may be
      transferred to a trustee in bankruptcy or another person or company
      entitled to Locked-up Shares on bankruptcy provided that prior to the
      transfer, the Issuer receives from the transferee(s) a fully executed
      agreement with the Issuer in the form of this Agreement evidencing the
      transferee's agreement to be bound;

            

    

     

    
      	
              (d)  

            	
              in
      the event of a liquidation, winding-up or receivership of the Undersigned,
      the Locked-up Shares may be transferred to the person or persons entitled
      to receive the Locked-up Shares on liquidation, winding-up or receivership
      provided that prior to the transfer, the Issuer receives a fully executed
      agreement with the Issuer in the form of this Agreement evidencing the
      transferee's agreement to be bound;

            

    

     

    
      	
              (e)  

            	
              the
      transfer is to an institutional or other large investor that wishes to
      purchase a large block of the Locked-up Shares, if consented to by the
      Issuer.  The Undersigned may, by notice in writing delivered to
      the Issuer, request permission for a transfer or sale by the Undersigned
      of all or some portion of the Shares to such an institutional or other
      large investor.  The notice shall specify the name of the
      proposed transferee or purchaser, the number of Locked-up Shares and the
      proposed date of the transfer or purchase.  The Issuer will act
      reasonably and on a timely basis in considering requests under this
      Section 2.1(e).  Before such transfer or sale may occur, the
      institutional or other large investor must first execute an investment
      letter, addressed and delivered to the Issuer, stating that it is
      acquiring the said Locked-up Shares for investment purposes and not for
      the purposes of resale.

            

    

     

    2.2. The
Undersigned agrees and consents to the entry of stop transfer instructions with
the Issuer’s transfer agent and registrar against any transfer of the
Undersigned’s Locked-up Shares not in compliance with the foregoing
restrictions.

     

     

    
      
        
        

      

      
        D -
2

        
          

        

      

      
        
        

      

    

     

     

    PART
3                      RESOURCE
ESTIMATE

     

    3.1.      
If the
results of exploration, if any, of one or more of the Mineral Properties
conducted by or on behalf of the Issuer would reasonably be expected to provide
the basis for the Resource Estimate, the Issuer shall use its commercially
reasonable efforts to complete the Resource Estimate.

     

    3.2.     
The
Issuer shall provide written notice to the Undersigned of the completion of the
Resource Estimate immediately upon completion of the Resource Estimate, if
any.

     

    PART
4                      NOTICE
OF SALES; LEGEND; LEGEND REMOVAL

     

    4.1.      
As
promptly as possible following the day that the Undersigned consummates any
sale, deal in, assignment, transfer in any manner whatsoever or agrees to sell,
deal in, assign or transfer in any manner whatsoever, any of the Locked-up
Shares or beneficial ownership of or any interest in the Locked-up Shares under
Section 2.1 hereof, the Undersigned shall notify the Issuer of such
transaction.

     

    4.2.      
Each of
the Locked-up Shares shall bear a Legend substantially as follows:

     

    The
securities represented by this certificate are subject to certain restrictions
set forth in that certain Lock-up and Legend Removal Agreement, dated as of
[●], 2010, as
may be amended or modified from time to time, by and between Constitution Mining
Corp. and Seabridge Gold Inc.

     

    4.3.     
After
completion by the Issuer of the Resource Estimate, the Undersigned, by notice in
writing delivered to the Issuer, may request that the Legend be removed from the
Locked-up Shares.  Forthwith upon receipt by the Issuer of such a
request, the Issuer shall use its best efforts to have the Legend removed from
the Locked-up Shares, including by instructing the Issuer's transfer agent to
remove the Legend and by paying promptly any fees and expenses associated with
the removal of the Legend.  The Undersigned shall co-operate with the
Issuer in respect of the removal of the Legend, including by presenting the
certificate(s) representing the Locked-up Shares or other evidence of the
Locked-up Shares to the Issuer's transfer agent if necessary.

     

    PART
5                      NOTICES

     

    5.1        
Any
notice or other communication required or permitted to be given hereunder or for
the purposes hereof will be sufficiently given if delivered to the party to whom
it is given or sent by means of electronic transmission addressed to such
party:

     

     

    
      
        
        

      

      
        D -
3

        
          

        

      

      
        
        

      

    

     

     

    (a)   
in the case of a notice or other communication to the Issuer at:

    

    Pasaje
Mártir Olaya 129, Oficina 1203,

    Centro
Empresarial José Pardo Torre A Miraflores,

    Lima,
Perú

     

    Attention:
Michael Stocker

     

    (b)   
in the case of a notice or other communication to the Undersigned
at:

     

    106 Front
Street East, Suite 400

    Toronto,
Ontario  M5A 1E1

     

    Attention:  President

     

    Fax:  (416)
367-2711

     

    or at
such other address or number as the party to whom such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this Section 5.1.  Any notice or other
communication which is delivered or sent by means of electronic transmission
will be deemed to have been given and received on the day after it is delivered
or transmitted, provided that if such day is not a day other than a Saturday,
Sunday or statutory holiday in Vancouver, British Columbia (a "Business Day"), the notice or
other communication will be deemed to have been given and received on the next
Business Day following such day.

     

    PART
6                      GENERAL

     

    6.1.       
This
Agreement shall enure to the benefit of and be binding upon the parties hereto,
their and each of their heirs, executors, administrators, successors and
permitted assigns.

     

    6.2.       
Time
shall be of the essence of this Agreement.

     

    6.3.        
This
Agreement shall be governed by and construed in accordance with the laws of the
Province of British Columbia and the federal laws of Canada applicable therein,
without reference to conflicts of laws.

     

    6.4.        
 This
Agreement, including the schedules hereto, constitutes the entire agreement and
understanding between and among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreement, representation or
understanding with respect thereto.

     

    6.5.         
This
Agreement may not be modified, amended, altered or supplemented, except upon the
execution and delivery of a written agreement executed by all of the parties
hereto.

     

    6.6.         
This
Agreement may be executed in several parts in the same form and such part as so
executed shall together constitute one original agreement, and such parts, if
more than one, shall be read together and construed as if all the signing
parties hereto had executed one copy of this Agreement.

     

    [Remainder
of page intentionally left blank]

     

    

    
      
        
           

        

        
          D -
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            -  -

          

        

      

    

    

    

     

    IN
WITNESS WHEREOF the parties have executed these presents as and from the day and
year first above written.

    

     

    SEABRIDGE
GOLD INC.

    

    Per:____________________________________

               Authorized
signatory

     

    

    CONSTITUTION
MINING CORP.

    

    Per:_______________                                                  

               
Authorized
signatory

     

     

    

     

    

    

    
      
        
           

        

        
          D -
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            -  -

          

        

      

    

    

     

    SCHEDULE
E

     

    

    
      	
              AUTHORIZATIONS
      AND CONSENTS REQUIRED BY THE
VENDORS

            

    

     

    
      	
              1.  

            	
              Consent
      required pursuant to the Mining Lease Agreement among Margraf Explosives,
      Inc., Mountain View Exploration, Inc., Donald M. and Inge M. Duncan Family
      Trust, 1994 and Pacific Intermountain Gold Corporation (“PIGCO”) dated
      April 28, 2003.

            

    

     

    
      	
              2.  

            	
              Agreement
      to be bound pursuant to the Letter Agreement between Placer Dome
      Exploration Inc. (“PDX”) and PIGCO, undated, relating to the DB and DBS
      groups of unpatented mining claims in Nye County,
  Nevada.

            

    

     

     

     

    
 

    
      
        
           

        

        
          E -
1

          
            

          

        

        
           

        

      

    

    

    

     

    SCHEDULE
F

     

     

    AUTHORIZATIONS
AND CONSENTS REQUIRED BY THE PURCHASER

     

     

    None.

     

     

     

    

    

    
      
        
           

        

        
          F -
1

          
            

          

        

        
           

        

      

    

    

    

     

    SCHEDULE
G

     

     

    DELIVERIES
OF THE VENDORS AT CLOSING

     

     

    
      	
              1.  

            	
              Quitclaims
      for the transfer of the Claims to the Purchaser, in form and substance
      acceptable to Purchaser, acting
reasonably.

            

    

     

    
      	
              2.  

            	
              Assignment
      and Assumption Agreement.

            

    

     

    
      	
              3.  

            	
              Lock-up
      and Legend Removal Agreement.

            

    

     

    
      	
              4.  

            	
              A
      certified copy of a resolution of each of Vendors and SEA’s directors
      authorizing the entering into of this Agreement and the sale of the Assets
      provided for in this Agreement.

            

    

     

    
      	
              5.  

            	
              A
      certificate executed by an officer of each Vendor and SEA as to the
      accuracy of their representations and warranties as of the Closing Date
      and as to the compliance with and performance of their covenants and
      obligations to be performed or complied with at or before the
      Closing.

            

    

     

    
      	
              6.  

            	
              Technical
      Data

            

    

     

     

     

    

    

    
      
        
           

        

        
          G -
1

          
            

          

        

        
           

        

      

    

    

    

     

    SCHEDULE
H

     

     

    DELIVERIES
OF THE PURCHASER AT CLOSING

     

     

    

     

    
      	
              1.  

            	
              Assignment
      and Assumption Agreement.

            

    

     

    
      	
              2.  

            	
              Promissory
      Note.

            

    

     

    
      	
              3.  

            	
              Debenture.

            

    

     

    
      	
              4.  

            	
              Lock-up
      and Legend Removal Agreement.

            

    

     

    
      	
              5.  

            	
              A
      certified copy of a resolution of the Purchaser’s directors authorizing
      the entering into of this Agreement and the purchase of the Assets
      provided for in this Agreement.

            

    

     

    
      	
              6.  

            	
              A
      certificate executed by an officer of Purchaser as to the accuracy of its
      representations and warranties as of the Closing date and as to the
      compliance with and performance of its covenants and obligations to be
      performed or complied with at or before the
  Closing.

            

    

     

     

     

    
 

    
      
        
           

        

        
          H -
1

          
            

          

        

        
           

        

      

    

     

     

    SCHEDULE
I

     

    ASSIGNMENT
AND ASSUMPTION AGREEMENT

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        I
- 1

        
          

        

      

      
        
        

      

    

    

    
       

      ASSIGNMENT
AND ASSUMPTION AGREEMENT

    

     

     

    THIS AGREEMENT made as of the
● day of
●,
2010.

     

    AMONG:

     

    SEABRIDGE GOLD CORPORATION, a
corporation existing under the laws of Nevada having a registered office at
Suite 260, 6121 Lakeside Drive, Reno, Nevada 89511

     

    (“Seabridge”)

     

    and

     

    PACIFIC INTERMOUNTAIN GOLD
CORPORATION, a corporation existing under the laws of Nevada and having a
registered office at Suite 260, 6121 Lakeside Drive, Reno, Nevada
89511

     

    (“PIGC”)

     

    (Seabridge
and PIGC are referred to collectively as the “Vendors”)

     

    OF THE
FIRST PART

     

    AND:

     

    SEABRIDGE GOLD INC., a
corporation existing under the laws of Canada and having offices at 106 Front
Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1

     

    (“SEA”)

     

    OF THE
SECOND PART

     

    AND:

     

    CONSTITUTION MINING CORP., a
corporation existing under the laws of the State of Delaware and having offices
at Pasaje Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A
Miraflores, Lima, Perú

     

    (the
“Purchaser”)

     

    OF THE
THIRD PART

     

    

    
      
        
        

      

      
        I -
2

        
          

        

      

      
        
        

      

    

     

    
 

    WHEREAS by an Asset Purchase
Agreement dated April 1, 2010 (the “Purchase Agreement”) made
among the Vendors, SEA and the Purchaser, the Vendors agreed to transfer to the
Purchaser and the Purchaser agreed to purchase, the Assets and the Purchaser
agreed to assume all obligations of the Vendors or SEA which arise under the
Closing Date in respect of the Contracts.

     

    NOW THEREFORE THIS AGREEMENT
WITNESSES that in consideration of the mutual covenants herein contained
and other good and valuable consideration (the receipt and sufficiency of which
is hereby acknowledged by each of the parties) the parties hereto covenant and
agree as follows:

     

    
      	
              1.  

            	
              Definitions

            

    

     

    In this
Agreement:

     

    
      	
              (a)        
        

            	
              terms
      which are defined in the Purchase Agreement which are used and capitalized
      in this Agreement shall have the respective meanings specified in the
      Purchase Agreement except as otherwise defined
  herein;

            

    

     

    
      	
              (b)       
        

            	
              “Assets” means all of the
      (i) Mineral Properties and (ii) Technical
Data;

            

    

     

    
      	
              (c)          

            	
              “Contracts” means the
      agreements listed in Schedule C
hereto;

            

    

     

    
      	
              (d)  
             

            	
              “Mineral Properties”
      means the Leasehold Properties described in Schedule A hereto and the
      Claims described in Schedule B hereto;
and

            

    

     

    
      	
              (e)  
             

            	
              “Technical Data” means
      all of the technical data and correspondence which the Vendors have in
      respect of the Mineral Properties including, without limitation, reports,
      drill core and logs, metallurgical samples and digital data
      files.

            

    

     

    
      	
              2.  

            	
              Assignment

            

    

     

    Each of
the Vendors hereby absolutely assign, convey, transfer and set over unto the
Purchaser,

     

    
      (a)         
 all of
their respective right, title and interest in and to the Assets;
and

       

      (b)           (i)           all
of their respective right, title and interest in and to the
Contracts;

    

     

    
      (i)          
any and
all payments due or accruing due or at any time after the Closing 

                    
Date to become due to the Vendors under the Contracts; and

       

      (ii)         
the
benefit of all guarantees, warranties, indemnities and covenants
made

                   
 or given by the parties to the Contracts other than the
Vendors,

    

     

    with full
power and authority to sue for damages for breach of any warranty or covenant or
for specific performance of covenants in the name of the Vendors.

     

     

    
      
        
        

      

      
        I -
3

        
          

        

      

      
        
        

      

    

     

    
      	
              3.  

            	
              Assumption
      by the Purchaser

            

    

     

    As of the
Closing Date, the Purchaser does hereby assume those obligations and liabilities
of the Vendors under the Contracts which are to be paid, satisfied, discharged,
performed or fulfilled after the Closing Date and which did not arise directly
or indirectly as a result of a default occurring prior to the Closing Date
(which obligations and liabilities are herein called the “Purchaser Assumed
Obligations”) and covenants and agrees with the Vendors and SEA that from
the Closing Date the Purchaser will pay, satisfy, discharge, perform and fulfil
all the Purchaser Assumed Obligations.

     

    
      	
              4.  

            	
              Vendors
      to Hold Property Interests in Trust

            

    

     

    Should
any property or right intended to be transferred hereunder not be transferred to
the Purchaser at the Closing, the Vendors will hold such property or right as
bare trustee in trust for and at the sole cost (without any premium) of the
Purchaser from the Closing Date until such property or right is effectually
transferred.

     

    
      	
              5.  

            	
              Governing
      Law

            

    

     

    This
Agreement shall be governed by and construed in accordance with the laws of the
Province of British Columbia and of Canada applicable to the Province of British
Columbia.

     

    
      	
              6.  

            	
              Further
      Assurances

            

    

     

    Each of
the parties shall at all times hereafter execute and deliver all such further
documents and instruments and shall do such further acts and things as may be
reasonably required to give full effect to this Agreement.

     

    
      	
              7.  

            	
              Inurnment

            

    

     

    This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.

     

    
      	
              8.  

            	
              Counterparts

            

    

     

    This
Agreement may be executed in counterparts and when each party has executed a
counterpart each of such counterparts shall be deemed to be an original and all
of such counterparts when taken together shall constitute one and the same
agreement.

     

    
      	
              9.  

            	
              Execution

            

    

     

    This
Agreement may be executed and delivered by facsimile.

     

    

    [The
remainder of this page intentionally left blank]

    

    
      
        
           

        

        
          I -
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    IN WITNESS WHEREOF this
Agreement has been executed as of the day and year first above
written.

     

    SEABRIDGE
GOLD CORPORATION

     

    

    
                                                                              
 

      Authorized Signatory

    

     

    PACIFIC
INTERMOUNTAIN GOLD

     

    CORPORATION

     

    

    
                                                                                 

      Authorized Signatory

    

     

    SEABRIDGE
GOLD INC.

     

    

    
                                                                                

Authorized Signatory

     

    CONSTITUTION
MINING CORP.

     

    

                                                                              

    Authorized
Signatory

     

    

    
      
        
           

        

        
          I -
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    Schedule
A

     

    Leasehold
Properties

     

    
      	
              County

            	
              Project

            	
              #
      of

              Claims

            	
              Operator

            	
              Owner(s)

            	
              Notes:

            	
              County

            
	
              Nevada:

            	 
      	 
      	 
      	 
      	 
      	
              Nevada:

            
	
              CHURCHILL

            	
              ARON
      (Aron & Windmill claims)

            	
              20

            	
              SEABRIDGE

            	
              RENEGADE
      (10) + EM CRIST(10)

            	
              Lease
      from Renegade Exploration Inc.

            	
              CHURCHILL

            
	
              ELKO

            	
              MOUNT
      WILSON (W.C. claims)

            	
              8

            	
              PIGCO

            	
              MARGRAF
      et al

            	
              Lease
      from Margraf et al

            	
              ELKO

            
	
              NYE

            	
              RAYS
      (RAYS & SAM claims)

            	
              25

            	
              PIGCO

            	
              DK
      JENNINGS

            	
              Lease
      from Jennings et al

            	
              NYE

            
	
              NYE

            	
              CLIFFORD
      (COUGAR & TERRY claims)

            	
              4

            	
              PIGCO

            	
              AJ
      CLIFFORD et al

            	
              Lease
      from Boscovich and Clifford et al

            	
              NYE

            
	
              NYE

            	
              HANNAPAH
      (DODGE & LORIE claims)

            	
              6

            	
              PIGCO

            	
              BC
      DUTCHER

            	
              Lease
      from Dutcher

            	
              NYE

            
	
              NYE

            	
              McCANN
      (RUBY claim)

            	
              1

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family trust

            	
              NYE

            
	
              NYE

            	
              MERGER
      (RUBY claims)

            	
              3

            	
              PIGCO

            	
              B&M
      BOSCOVICH + RE&GE CLIFFORD

            	
              Lease
      from Boscovich et al

            	
              NYE

            
	
              NYE

            	
              THUNDER
      MTNISILVER ACE (SILVER ACE claim)

            	
              1

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family Trust

            	
              NYE

            
	
              NYE

            	
              THUNDER
      MTN/TOUGH NUT (TOUGH NUT claims)

            	
              2

            	
              PIGCO

            	
              L
      BOSCOVICH + BOTTOM FAMILY TRUST

            	
              Lease
      from Bottom Family Trust

            	
              NYE

            

    

     

    

     

    

    

    
      
        
           

        

        
          I -
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    Schedule
B

     

    Claims

     

    
      	
              County

            	
              Project

            	
              #
      of

              Claims

            	
              Operator

            	
              Owner(s)

            	
              Notes:

            	
              County

            
	
              Nevada:

            	 
      	 
      	 
      	 
      	 
      	
              Nevada:

            
	
              CHURCHILL

            	
              WESTGATE
      (M claims)

            	
              98

            	
              SEABRIDGE

            	
              SEABRIDGE

            	 
      	
              CHURCHILL

            
	
              ELKO

            	
              MAVERICK
      NORTH (RE claims)

            	
              28

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ELKO

            
	
              ELKO

            	
              MOUNT
      WILSON (DC claims)

            	
              31

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ELKO

            
	
              ESMERALDA

            	
              CASTLE
      ROCK (CP,JD,NBSS,NEW,DJ,JAZ&WE S claims)

            	
              125

            	
              SEABRIDGE

            	
              PLATORO
      (73) + KENNECOTT (20) + GREAT BASIN (32)

            	
              Agreement
      with Platoro

            	
              ESMERALDA

            
	
              ESMERALDA

            	
              CLAYTON
      RIDGE (LA claims)

            	
              6

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              ESMERALDA

            	
              GILBERT
      SOUTH (CC claims)

            	
              102

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              ESMERALDA

            	
              MILLER'S
      SOUTH (AS claims)

            	
              21

            	
              PIGCO

            	
              PIGCO

            	 
      	
              ESMERALDA

            
	
              HUMBOLDT

            	
              KING'S
      RIVER (AT claims)

            	
              44

            	
              PIGCO

            	
              PIGCO

            	 
      	
              HUMBOLDT

            
	
              MINERAL

            	
              TETON
      (LP claims)

            	
              20

            	
              PIGCO

            	
              PIGCO

            	 
      	
              MINERAL

            
	
              NYE

            	
              B.A.BRECCIA
      (BAB claims)

            	
              18

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              BAXTER
      SPRINGS (BAXTER & PZ claims)

            	
              40

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              BELLEHELLEN
      WEST (YH

              claims)

            	
              18

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              CLIFFORD
      (CM claims)

            	
              64

            	
              PIGCO

            	
              PIGCO

            	
              Castleworth
      Ventures (lessee)

            	
              NYE

            
	
              NYE

            	
              EDEN
      (EN claims)

            	
              21

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              ELLENDALE
      (YC and TF claims)

            	
              168

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              FOUR
      MILE BASIN (KM claims)

            	
              207

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              GEORGE'S
      CANYON (GC claims)

            	
              30

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              GOLDEN
      ARROW SOUTH (GS claims)

            	
              230

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              HANNAPAH
      (HP,HANN & HANNA claims)

            	
              196

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              LIBERTY
      SPRINGS (LB claims)

            	
              80

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              MERGER
      (BH claims)

            	
              46

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              MIDWAY
      ISLANDS

            	
              16

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	 
      	
              (KN,MWAY,NY
      & RF claims)

            	 
      	 
      	 
      	 
      	 
      
	
              NYE

            	
              MIDWAY
      NW (DB claims)

            	
              40

            	
              PIGCO

            	
              PLACER
      DOME

            	
              Agreement
      with Placer Dome US Inc.

            	
              NYE

            
	
              NYE

            	
              MIDWAY
      SW (DBS claims)

            	
              47

            	
              PIGCO

            	
              PLACER
      DOME

            	
              Agreement
      with Placer Dome US Inc.

            	
              NYE

            
	
              NYE

            	
              RAYS
      (SE claims)

            	
              62

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              STONEWALL
      (SW claims)

            	
              73

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              THUNDER
      MOUNTAIN (AW

              claims)

            	
              173

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            
	
              NYE

            	
              THUNDER
      MOUNTAIN (AW claims)

            	
              53

            	
              PIGCO

            	
              PIGCO

            	
              Castleworth
      Ventures is registered as lessee

            	
              NYE

            
	
              NYE

            	
              McCANN
      (MC claims)

            	
              24

            	
              PIGCO

            	
              PIGCO

            	 
      	
              NYE

            

    

     

    

    
      
        
           

        

        
          I -
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    Schedule
C

     

    Contracts

     

    
      	
              1.  

            	
              Mining
      Lease and Agreement – Rays Project among Donald K. Jennnings, Joe Leising
      and Pamela Leising and Pacific Intermountain Gold Corporation (“PIGCO”)
      dated January 3, 2003 relating to the lease of unpatented mining claims in
      Nye County Nevada.

            

    

     

    
      	
              2.  

            	
              Mining
      Lease Agreement among Margraf Explosives, Inc., Mountain View Exploration,
      Inc., Donald M. and Inge M. Duncan Family Trust, 1994 and PIGCO dated
      April 28, 2003 relating to the lease of mining claims in Elko County,
      Nevada.

            

    

     

    
      	
              3.  

            	
              Mining
      Lease and Agreement – Tough Nut Project between Bottom Family Trust and
      PIGCO dated October 10, 2002 relating to the lease of two unpatented
      mining claims in Nye County,
Nevada.

            

    

     

    
      	
              4.  

            	
              Mining
      Lease and Agreement – Silver Ace Project between Limon KL Boscovich and
      the Bottom Family Trust and PIGCO dated October 10, 2002 relating to the
      lease of one unpatented mining claim in Nye County,
  Nevada.

            

    

     

    
      	
              5.  

            	
              Mining
      Lease and Agreement – Merger Project among Bozo Boscovich, William Roy
      Clifford and Gladys E. Clifford and PIGCO dated November 1, 2002 relating
      to the lease of three unpatented mining claims in Nye County
      Nevada.

            

    

     

    
      	
              6.  

            	
              Mining
      Lease and Agreement – Hannapah Project between Bruce C. Dutcher and PIGCO
      dated November 7, 2002 relating to the lease of six unpatented and eight
      patented mining claims in Nye County,
Nevada.

            

    

     

    
      	
              7.  

            	
              Mining
      Lease and Agreement – McCann Project between Bottom Family Trust and PIGCO
      dated October 10, 2002 and amended Oct 10, 2003, relating to the lease of
      one unpatented mining claim in Nye County,
  Nevada.

            

    

     

    
      	
              8.  

            	
              Mining
      Lease and Agreement between Platoro West, Inc., and Seabridge Resources
      Inc., dated August 15, 2000 relating to the lease of unpatented mining
      claims in Esmerelda County, Nevada.

            

    

     

    
      	
              9.  

            	
              Mining
      Lease and Agreement – Aron Project, between Renegade Exploration Inc., and
      Elliot Crist and Seabridge Gold Corporation dated October 9, 2002 relating
      to the lease of unpatented mining claims in Churchill County,
      Nevada.

            

    

     

    
      	
              10.  

            	
              Mining
      Lease and Agreement – Clifford Project among Bozo Boscovich, William Roy
      Clifford and Gladys E. Clifford and PIGCO dated November 1, 2002 relating
      to the lease of three unpatented mining claims in Nye County,
      Nevada.

            

    

     

    
      	
              11.  

            	
              Letter
      Agreement between Placer Dome Exploration Inc. (“PDX”) and PIGCO, undated,
      relating to the DB and DBS groups of unpatented mining claims in Nye
      County, Nevada.

            

    

     

     

    

    
      
        
           

        

        
          I -
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    SCHEDULE
J

     

     

    DEBENTURE

     

    

    

      
        
           

        

        
          J -
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      NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
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, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD 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 TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

       

      UNLESS PERMITTED UNDER CANADIAN
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) ●, 2010, AND (II) THE ISSUER BECAME A
REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.

       

      CONSTITUTION
MINING CORP.

       

      (Organized
under the laws of Delaware)

       

      US$1,000,000

       

      Secured
8% Convertible Debenture due ●,
2012

       

      

      For value
received, CONSTITUTION MINING
CORP. (the "Corporation"), of Pasaje
Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A
Miraflores, Lima, Perú, hereby acknowledges itself indebted to and promises to
pay to SEABRIDGE GOLD
INC., at 106 Front Street East, Suite 400, Toronto, Ontario, Canada M5A
1E1 (the "Holder"), on
●, 2012,
$1,000,000 in lawful money of the United States of America (unless this
Debenture shall have been previously redeemed or converted in accordance with
the terms and conditions attached hereto as Schedule "A" and forming part hereof
(the "Terms and
Conditions")) and to pay interest on such Principal Amount at a rate of
eight per cent per annum (8%) until paid commencing on the date of this
Debenture, as provided in the Terms and Conditions.  This Debenture is
convertible, at the option of the Holder, into Common Shares and is redeemable
at the option of the Corporation, upon and subject to the provisions and
conditions contained in the Terms and Conditions. The Schedules and the Exhibits
attached hereto are incorporated in this Debenture by reference and are deemed
to be an integral part hereof. The Corporation waives presentment, demand for
performance, notice of non-performance, notice of dishonour, protest and notice
of protest and any other notice in respect of this Debenture.

       

      Capitalized
words in this Debenture, not otherwise defined herein, have the meanings
ascribed to such words in the Terms and Conditions.

       

      IN WITNESS WHEREOF the
Corporation has caused this Debenture to be executed by its duly authorized
officer as of the ● day of ●,
2010.

       

      CONSTITUTION
MINING CORP.

       

      Per:_____________________________

                  
Authorized Signing Officer

      
        
           

        

        
          J -
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      SCHEDULE
"A"

      Terms
and Conditions applicable to Secured 8% Convertible Debenture

      dated
as of ●, 2010
issued by

       

      CONSTITUTION
MINING CORP.

       

      ARTICLE
1

       

      INTERPRETATION

       

      1.1         
Defined
Terms

       

      In
addition to the terms parenthetically defined herein, in this Debenture the
following terms shall have the following meanings respectively:

       

      "affiliates" means, in relation
to any Person, any other Person that controls, is controlled by or is under
common control with the first mentioned Person, and for the purposes of this
definition and references in this Debenture to "affiliate", "control" means the possession,
directly or indirectly, by such Person of the power to direct or cause the
direction of the management and policies of the first mentioned Person, whether
through the ownership of voting securities or otherwise;

       

      "Business Day" means any day, other
than Saturday, Sunday or any statutory holiday in the city of Toronto,
Ontario;

       

      "Capital Reorganization" has
the meaning attributed to such term in Subsection 3.3(d);

       

      "Change in Control" means the
acquisition of beneficial voting control or direction over 50.1% or more of the
issued and outstanding Common Shares, calculated on a fully diluted basis,
excluding any acquisition of Common Shares by Seabridge Gold Inc. or any of its
affiliates;

       

      "Closing Market Price" at any
date means the closing price per share for Common Shares on or through, as
applicable, the Principal Market;

       

      "Common Share
Reorganization" has the meaning
attributed to such term in Subsection 3.3(a);

       

      "Common Shares" means the shares of
Common Stock in the capital of the Corporation, as such shares exist as at the
Date of Issue; provided that, in the event of a subdivision, redivision,
reduction, combination or consolidation thereof, or successive such
subdivisions, redivisions, reductions, combinations or consolidations, then,
subject to adjustments, if any, having been made in accordance with Section 3.3,
shall thereafter mean the shares resulting from such subdivision, redivision,
reduction, combination or consolidation;

       

      "Conversion Price" has the meaning
attributed to such term in Subsection 3.1(a);

       

      "Convertible Security" has the
meaning attributed to such term in Subsection 3.3(b);

       

      "Date of Conversion" has the meaning
attributed to such term in Subsection 3.2(b);

       

      "Date of Issue" means the date
hereof;

       

      "Debenture" means this secured
convertible debenture of the Corporation due on the Maturity Date;

       

      
        
          
          

        

        
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      "Debts" means cash amounts
borrowed by the Corporation and, without duplication, amounts owed by the
Corporation under promissory notes, debentures, bonds, obligations,
responsibilities, expenses (including trade payables) or other instruments
evidencing indebtedness of the Corporation;

       

      "Default" means any event or
condition that constitutes an Event of Default or that would constitute an Event
of Default except for satisfaction of any condition subsequent required to make
the event or condition an Event of Default, including giving of any notice,
passage of time, or both;

       

      "Event of Default" has the meaning
attributed to such term in Section 6.1;

       

      "Holder" means the original
holder of the Debenture or any successor, transferee or assignee of the original
holder or any future Holder;

       

      "including" means including
without limitation;

       

      "Interest Rate" means 8% per annum
(subject to increase as set forth in Section 2.2), calculated annually and
payable as set forth in Section 2.2;

       

      "Material Adverse Change" means
any change (or any condition, event or development involving a prospective
change) in the business, operations, results of operations, assets,
capitalization, financial condition, prospects, licenses, permits, concessions,
rights, liabilities or privileges, whether contractual or otherwise, of the
Corporation, that is, or could reasonably be expected to be, materially adverse
to the business or financial condition of the Corporation;

       

      "Maturity Date" has the meaning
attributed to such term in Section 2.3;

       

      "Mineral Properties" has the meaning
attributed to such term in the Purchase Agreement;

       

      "Obligations" means the
aggregate of all indebtedness, obligations and liabilities, direct or indirect,
absolute or contingent, matured or not, of the Corporation to the Holder
wheresoever and howsoever incurred and whether incurred arising pursuant to this
Debenture and whether incurred prior to, at the time of, or subsequent to the
execution hereof, whether incurred alone or with another or others, including
extensions and renewals;

       

      "Optional Conversion" has the meaning
attributed to such term in Subsection 3.1(b);

       

      "Person" means any individual,
partnership, limited partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal personal
representative, government or governmental authority or entity, however
designated or constituted;

       

      "Principal Amount" means $1,000,000 in
lawful money of United States of America, less the amount of any principal which
has been redeemed, repaid or satisfied by the conversion of such principal, or
portion thereof, into Common Shares from time to time pursuant to this
Debenture;

       

      "Principal Market" means such
stock exchange or quotation system on or through which the Common Shares are
listed or quoted which has the highest trading volume in the calendar month
immediately preceding such date, being as at the date hereof the OTC Bulletin
Board;

       

      "Purchase Agreement" means the
Asset Purchase Agreement dated March 31, 2010 among the Corporation, the Holder,
Seabridge Gold Corporation and Pacific Intermountain Gold
Corporation;

       

       

      
        
          
          

        

        
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      "Redemption Date" with respect to the
Debenture, means the date specified in a Redemption Notice as the date on which
the outstanding Principal Amount of the Debenture will be redeemed by the
Corporation;

       

      "Redemption Notice" has the
meaning attributed to such term in Section 4.1;

       

      "Redemption Price" has the meaning
attributed to such term in Section 4.1;

       

      "Rights", "Rights Offering" and "Rights Period" have the respective
meanings attributed to such terms in Subsection 3.3(b);

       

      "Security Agreement" means the
Security Agreement contemplated under the Purchase Agreement;

       

      "Time of Expiry" means 4:00 p.m. (Toronto
time) on the Maturity Date or, if there is an uncured Event of Default in effect
at such time, such time shall automatically be extended to the time the
Principal Amount of the Debenture and all other Obligations owing to the Holder
have been paid in full;

       

      "Trading Day" means a day on which the
Principal Market is open for the trading of securities;

       

      "Transfer Form" means the form of
transfer substantially as annexed as Exhibit "1" hereto;

       

      1.2        
Exhibits

       

      The
following are the Exhibits which form part of this Debenture:

       

      Exhibit
"1":                                Form
of Transfer

      Exhibit
"2":                                Form
of Election of Conversion Privilege

      

       

      1.3        
Statutory
References

       

      Any
reference in this Debenture to a statute shall be deemed to be a reference to
such statute as amended, re-enacted or replaced from time to time.

       

      1.4        
Gender
and Number

       

      Unless
the context otherwise requires, words importing the singular include the plural
and vice-versa and words importing gender include all genders.

       

      1.5        
Monetary
References

       

      Any
reference in this Debenture to "Dollars", "dollars" or the symbol "$" shall be
deemed to be a reference to lawful money of the United States of
America.

       

      1.6      
Day
Not a Business Day

       

      In the
event that any day on which any action is required to be taken hereunder is not
a Business Day, then such action shall be required to be taken on the requisite
time on the first Business Day thereafter.

       

       

      
        
          
          

        

        
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      1.7   
Invalidity
of Provisions

       

      Each of
the provisions contained in this Debenture is distinct and severable and a
declaration of invalidity or unenforceability of any such provision by a court
of competent jurisdiction shall not affect the validity or enforceability of any
other provision hereof.

       

      1.8    
Governing
Law

       

      This
Debenture shall be governed by and construed in accordance with the laws of the
Province of British Columbia and the laws of Canada applicable therein,
governing contracts made and to be performed wholly therein, and without
reference to its principles governing the choice or conflict of laws. The
parties hereto irrevocably submit to the exclusive jurisdiction of the courts of
the Province of British Columbia, sitting in the City of Vancouver, with respect
to any dispute related to or arising from this Debenture.

       

      1.9    
Assignment

       

      Subject
to the restrictions on, and requirements for, transfer prescribed herein, the
rights and obligations of the Corporation and the Holder shall be binding upon
and shall enure to the benefit of their respective successors, heirs, executors,
administrators and permitted transferees and assigns.  This Debenture
may not be assigned by the Corporation.  This Debenture may be
assigned by the Holder without the prior consent of the Corporation, subject to
compliance with applicable securities legislation.

       

      ARTICLE
2

      THE
NOTE

       

      2.1   
Status

       

      This
Debenture constitutes a direct, general and unconditional obligation of the
Corporation.

       

      2.2 
Interest

       

      
        	
                (a)  

              	
                The
      Principal Amount due under this Debenture shall bear interest at the
      Interest Rate from the Date of Issue to the earlier of the Maturity Date
      and the Date of Conversion (in respect of such Principal Amount then being
      converted, subject to the provisions in Article 3). Interest shall accrue
      on the outstanding Principal Amount from day to day both before and after
      default, demand, maturity and judgment, for the actual number of days
      elapsed on the basis of a year of 365 days. Where the calendar year of
      calculation contains 366 days, interest hereunder shall be expressed as a
      yearly rate for purposes of the Interest Act (Canada)
      as such rate multiplied by 366 and divided by 365. Such interest shall be
      payable in quarterly payments in arrears on the last day of each calendar
      quarter of each year in an amount determined by reference to the number of
      days in the applicable quarter and the Principal Amount outstanding on
      each such day, with the first such payment to fall due on March 31, 2010
      and, for greater certainty, shall be payable before as well as after
      default.

              

      

       

      
        	
                (b) 

              	
                Upon
      the occurrence of an Event of Default, the Interest Rate shall be
      increased to 15% per annum effective as of the date of such Event of
      Default.  Such 15% per annum interest rate shall remain in
      effect for as long as the Event of Default exists, and thereafter shall
      revert to 8% per annum effective as of the date such Event of Default no
      longer exists.

              

      

       

       

      
        
          
          

        

        
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      2.3    
Maturity
Date

       

      The
Debenture shall mature and the Principal Amount hereof shall become payable on
●, 2012 (the
"Maturity Date") (unless
this Debenture shall have been previously redeemed or converted in full in
accordance with the provisions hereof).

       

      2.4     
Transfer
and Legending of the Debenture and the Underlying Securities

       

      
        	
                (a)  

              	
                Subject
      to any restriction under applicable law or policy of any applicable
      regulatory body, the Holder may at any time and from time to time have the
      Debenture or any portion of the Principal Amount thereof
      transferred.

              

      

       

      
        	
                (b)  

              	
                The
      transferor of the Debenture or any portion of the Principal Amount thereof
      shall duly complete and execute a Transfer
Form.

              

      

       

      
        	
                (c)  

              	
                The
      Corporation shall not be charged with notice of or be bound to see to the
      execution of any trust, whether express, implied or constructive, in
      respect of the Debenture, except where the Corporation is required to take
      notice by statute or order of a court of competent jurisdiction and in
      such case the Corporation may transfer the Debenture on the direction of
      the holder thereof, whether named as trustee or otherwise, as though that
      Person were the beneficial owner
thereof.

              

      

       

      
        	
                (d)  

              	
                The
      Holder shall not be permitted to transfer the Debenture or issue or
      transfer any Common Shares issuable on conversion of the Debenture unless
      the Holder can demonstrate to the Corporation that such transfer or issue
      is not in connection with any transfers or conversions which are otherwise
      not in compliance with: (a) the Securities Act and the regulations
      thereunder if applicable, (b) the Securities Act
      (Ontario) and the rules and regulations thereunder, (c) applicable
      securities laws and regulations of other relevant jurisdictions, and (d)
      the policies of the Principal
Market.

              

      

       

      The
Holder acknowledges that this Debenture and the securities underlying the
Debenture are subject to resale restrictions in the United States and Canada,
except as permitted by applicable securities laws and the terms of this
Debenture and acknowledges that the certificates representing the Common Shares
issuable upon the conversion of this Debenture will, in addition to any other
legends required under applicable securities laws, bear the following legends
denoting the restrictions on transfer:

       

      THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, SATISFACTORY TO THE BOARD OF
DIRECTORS, THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THAT SUCH
TRANSFER WILL NOT RESULT IN ANY VIOLATION OF THE LAW.

       

      UNLESS
PERMITTED UNDER CANADIAN 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) ●, 2010, AND (II)
THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.

       

      
        
          
          

        

        
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      2.5    
Ownership
of Debenture

       

      
        	
                (a)  

              	
                The
      Holder of this Debenture shall be deemed to be the owner thereof for all
      purposes and payment of or on account of the principal of the Debenture
      shall be made only to or upon the order in writing of the Holder thereof
      and such payment shall be a complete discharge to the Corporation for the
      amounts so paid.

              

      

       

      
        	
                (b)  

              	
                The
      Holder for the time being of the Debenture shall be entitled to the
      principal evidenced by the Debenture, free from all equities or rights of
      set-off or counterclaim between the Corporation and the Holder thereof
      (except any equities of which the Corporation is required to take notice
      by law) and all Persons may act accordingly and a permitted transferee of
      the Debenture shall, after the Transfer Form is recorded by the
      Corporation and upon compliance with all other conditions contained in the
      Debenture or by law or by any policy of any regulatory body, be deemed to
      be owner of such Debenture free from all equities or rights of set-off or
      counterclaim between the Corporation and the transferor or any previous
      Holder thereof, save in respect of equities of which the Corporation is
      required to take notice by statute or by order of a court of competent
      jurisdiction. Delivery to the Holder by the Corporation or the receipt by
      the Holder of the principal monies and interest evidenced by the Debenture
      or the Common Shares issuable on the conversion of this Debenture, if any,
      shall be a good discharge to the Corporation of its obligations hereunder
      and the Corporation shall not be bound to enquire into the title of the
      Holder, save as ordered by a Court of competent jurisdiction or as
      required by statute.

              

      

       

      2.6     
Replacement
of Debenture

       

      If the
Debenture shall
become mutilated or be lost, stolen or destroyed and in the absence of notice
that such Debenture has been acquired by a purchaser in good faith, the
Corporation will issue and deliver a new Debenture upon surrender and
cancellation of the mutilated Debenture, or, in the case of a lost, stolen or
destroyed Debenture, in lieu of and in substitution for the same.  In
case of loss, theft or destruction, the applicant for a new Debenture shall
furnish to the Corporation such evidence of such loss, theft or destruction as
shall be satisfactory to the Corporation in its discretion and shall also
furnish an indemnity in amount and form satisfactory to the Corporation, acting
reasonably. The applicant shall pay all reasonable expenses incidental to the
issuance of any such new Debenture.

       

      2.7   
Application
of Funds

       

      Any
monies that are paid, from time to time, to the Holder pursuant to this
Debenture shall be applied firstly, to indebtedness hereunder other than on
account of interest and principal; secondly, on account of accrued and unpaid
interest; and thirdly, to any outstanding Principal Amount.

       

      ARTICLE
3

      CONVERSION

       

      3.1  
Optional
Conversion

       

      
        	
                (a)  

              	
                The
      conversion price for each Common Share to be issued upon the conversion of
      the Debenture is $1.00, subject to adjustment as provided in this Article
      3 (the "Conversion
      Price").

              

      

       

      
        	
                (b)  

              	
                Subject
      to and upon compliance with the provisions of this Article 3, the Holder
      of the Debenture shall have the right, at its option, at any time after
      the thirtieth (30th)
      day prior to the Time of Expiry, to convert such Debenture, or any portion
      of the Principal Amount thereof which is $10,000 or an integral multiple
      of $10,000, plus accrued and unpaid interest, into Common Shares at the
      Conversion Price (an "Optional
      Conversion").

              

      

       

       

      
        
          
          

        

        
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                (c)  

              	
                The
      number of Common Shares to be issued to the Holder upon an Optional
      Conversion shall be determined by dividing the amount to be converted by
      the Conversion Price.

              

      

       

      
        	
                (d)  

              	
                In
      the event of an Optional Conversion, the accrued and unpaid interest on
      the converted portion of the Principal Amount of the Debenture will be
      paid in cash (and/or Common Shares in accordance with Subsection 3.1(b))
      within three Business Days of Date of
  Conversion.

              

      

       

      3.2    
Manner
of Exercise of Right to Convert

       

      
        	
                (a)  

              	
                The
      Holder of the Debenture wishing to convert such Debenture in whole or in
      part into Common Shares as an Optional Conversion shall provide to the
      Corporation, at its office in the City of Lima, Peru, written notice (an
      "Option Conversion Notice") in form and substance satisfactory to the
      Corporation, acting reasonably, substantially in the form of Exhibit "2"
      annexed hereto, duly executed by the Holder, its legal representatives or
      its attorney duly appointed by an instrument in form and substance
      satisfactory to the Corporation, acting reasonably, exercising its right
      to convert such Debenture in accordance with the provisions of this
      Article 3.  Thereupon the Holder or, subject to payment of all
      applicable stamp taxes, security transfer taxes or other governmental
      charges and compliance with all reasonable requirements of the
      Corporation, its nominee or assignee, shall be entitled to be entered in
      the books of the Corporation as at the Date of Conversion (or such later
      date as is specified in Subsection 3.2(b)) as the registered holder of the
      number of Common Shares so converted in accordance with the provisions
      hereof and within five Business Days thereafter, the Corporation shall
      deliver to the Holder or, subject as aforesaid, its nominee or assignee,
      certificates for such Common Shares and a cheque for any amounts payable
      under Section 2.2, Subsection 3.1(d) or Section
  3.5.

              

      

       

      
        	
                (b)  

              	
                For
      the purposes hereof, an Option Conversion Notice shall be deemed to be
      received by the Corporation on the date (the "Date of Conversion") of
      deemed receipt in accordance with Section 7.1 of this Agreement, provided
      that if the Option Conversion Notice is deemed to have been received on a
      day on which the register of Common Shares is closed, the Person entitled
      to receive Common Shares shall become the holder of record of such Common
      Shares as at the date on which such register is next
    reopened.

              

      

       

      
        	
                (c)  

              	
                Any
      part, being $10,000 or an integral multiple thereof plus accrued interest,
      of the Debenture may be converted as provided herein and all references in
      this Debenture to conversion of the Debenture shall be deemed to include
      conversion of such parts.

              

      

       

      
        	
                (d)  

              	
                The
      Common Shares issued upon conversion shall rank equally with all other
      issued and outstanding Common Shares as of the Date of Conversion or such
      later date as such Holder shall become the holder of record of such Common
      Shares pursuant to Subsection 3.2(b), from which applicable date they will
      for all purposes be and be deemed to be issued and outstanding as fully
      paid and non-assessable Common
Shares.

              

      

       

      3.3   
Adjustment
of Conversion Price

       

      The
Conversion Price will be subject to adjustment from time to time in the events
and in the manner provided as follows:

       

      
        
          
          

        

        
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                (a)  

              	
                If
      and whenever at any time after the date hereof, and prior to the Time of
      Expiry, the Corporation:

              

      

       

      
        	
                (i)  

              	
                subdivides,
      re-divides or changes its then outstanding Common Shares into a greater
      number of Common Shares;

              

      

       

      
        	
                (ii)  

              	
                reduces,
      combines or consolidates its then outstanding Common Shares into a lesser
      number of Common Shares; or

              

      

       

      
        	
                (iii)  

              	
                issues
      Common Shares or securities exchangeable for or convertible into Common
      Shares to the holders of all or substantially all of the then outstanding
      Common Shares by way of a stock dividend or other
      distribution,

              

      

       

      (any of
such events in clauses (i), (ii) and (iii) of this Subsection 3.3(a) being
called a "Common Share
Reorganization"), then the Conversion Price shall be adjusted effective
immediately after the effective date of any such event in clauses (i) or (ii)
above or record date at which the holders of Common Shares are determined for
the purpose of any such dividend or distribution in clause (iii) above, as the
case may be, by multiplying the Conversion Price in effect immediately prior to
such effective date or record date, as the case may be, by a fraction, the
numerator of which will be the number of Common Shares outstanding on such
effective date or record date, as the case may be, before giving effect to such
Common Share Reorganization and the denominator of which will be the number of
Common Shares outstanding immediately after giving effect to such Common Share
Reorganization (including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common Shares that
would have been outstanding had all such securities been exchanged for or
converted into Common Shares on such effective date or record date, subject to
amendment such that after expiry of rights of exchange or conversion only those
Common Shares actually issued on exchange or conversion are
included).

       

      
        	
                (b)  

              	
                If
      and whenever at any time after the date hereof, and prior to the Time of
      Expiry the Corporation fixes a record date for the issue of rights,
      options or warrants to all or substantially all the holders of Common
      Shares (the "Rights") under which
      such holders are entitled, during a period expiring not more than 45 days
      after the date of such issue (the "Rights Period"), to
      subscribe for or purchase Common Shares or securities convertible,
      exercisable or exchangeable into Common Shares (each, a "Convertible Security")
      at a price per share (or having a conversion, exercise or exchange price
      per share during the Rights Period to the holder in the case of securities
      exchangeable for or convertible into Common Shares) of less than 85% of
      the Current Market Price (as defined below) on the earlier of the record
      date and the date on which the Corporation announces its intention to make
      such issuance (any such issuance being herein called a "Rights Offering"), then the
      Conversion Price shall be adjusted, subject to acceptance of the Principal
      Market, if required, effective immediately after the end of the Rights
      Period to a price determined by multiplying the Conversion Price in effect
      immediately prior to the record date by a
  fraction:

              

      

       

      
        	
                (i)  

              	
                the
      numerator of which will be the aggregate
of:

              

      

       

      
        	
                (A)  

              	
                the
      total number of Common Shares outstanding immediately prior to the record
      date for the Rights Offering; plus

              

      

       

      
        	
                (B)  

              	
                a
      number determined by dividing (a) the product of the total number of
      Common Shares issued or subscribed for during the Rights Period upon the
      exercise of the rights, warrants or options under the Rights Offering (or
      in the case of securities convertible, exercisable or exchangeable into
      equity securities, assuming the conversion, exercise or exchange of such
      securities), and the price at which such Common Shares are offered,
      converted, exercised or exchanged, as applicable, by (b) the Current
      Market Price of the Common Shares as of the record date for the Rights
      Offering, and

              

      

       

       

      
        
          
          

        

        
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                (ii)  

              	
                the
      denominator of which will be the total number of Common Shares outstanding
      after giving effect to the Rights Offering and including the number of
      Common Shares actually issued or subscribed for during the Rights Period
      upon exercise of the rights, warrants or options under the Rights Offering
      (or in the case of securities convertible, exercisable or exchangeable
      into equity securities, the Common Shares issuable upon the conversion,
      exercise or exchange of such
securities).

              

      

       

      For the
purposes of this Subsection 3.3(b), "Current Market Price", at any date, means the
last closing price per Common Share at which the Common Shares have traded: (a)
on the Principal Market; or (b) if the Common Shares are not quoted on the
Principal Market, on any stock exchange or over the counter market upon which
the Common Shares are then listed or quoted for trading, (in either case on
which at least 500
Common Shares are traded in board lots). In the case of any Rights Offering that
includes more than one type of security, adjustments shall only be made in
respect of those types of securities actually sold and which are issued or
issuable at less than 85% of the Current Market Price and separate and
successive calculations shall be made in respect of each such type of
security.

       

      If the
Holder has exercised the right to convert the Principal Amount of the Debenture
(or any portion thereof) into Common Shares in accordance with this Article 3
during the period beginning immediately after the record date for a Rights
Offering and ending on the last day of the Rights Period for the Rights
Offering, the Holder will, in addition to the Common Shares to which the Holder
would otherwise be entitled upon such conversion, be entitled to that number of
additional Common Shares equal to the difference between the number of Common
Shares received on such conversion and the number of Common Shares that would
have been received if the Conversion Price, as adjusted for such Rights Offering
pursuant to this Subsection 3.3(b), had applied when the Holder exercised the
right to convert; provided that the provisions of Section 3.5 will be applicable
to any fractional interest in a Common Share to which such Holder might
otherwise be entitled under the foregoing provisions of this Subsection 3.3(b).
Such additional Common Shares will be deemed to have been issued to the Holder
immediately following the end of the Rights Period and certificates for such
additional Common Shares will be delivered to such Holder within five Business
Days following the end of the Rights Period. To the extent that any such rights,
options or warrants are not so exercised on or before the expiry thereof, the
Conversion Price will be readjusted to the Conversion Price which would then be
in effect based on the number of Common Shares (or the securities convertible
into or exchangeable for Common Shares) actually delivered on the exercise of
such rights, options or warrants.

       

      
        	
                (c)  

              	
                If
      and whenever at any time after the date hereof and prior to the Time of
      Expiry, the Corporation fixes a record date for the issue or the
      distribution to holders of all or substantially all the then outstanding
      Common Shares of (i) securities of the Corporation, including rights,
      options or warrants to acquire securities of the Corporation (other than
      those referred to in Subsection 3.3(b) above) or (ii) any property or
      other assets, including evidences of indebtedness, and if such issuance or
      distribution does not constitute a dividend paid in the ordinary course, a
      Common Share Reorganization or a Rights Offering (any of such non-excluded
      events being called a "Special Distribution"),
      the Conversion Price shall be adjusted effective immediately after such
      record date to a price determined by multiplying the Conversion Price in
      effect on such record date by a
fraction:

              

      

       

       

      
        
          
          

        

        
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                (i)  

              	
                the
      numerator of which will be:

              

      

       

      
        	
                (A)  

              	
                the
      product of the number of Common Shares outstanding on such record date and
      the Current Market Price of the Common Shares on such record date;
      less

              

      

       

      
        	
                (B)  

              	
                subject
      to the prior written consent of the Principal Market, if applicable, the
      excess, if any, of (a) the fair market value, as determined by action by
      the Corporation's board of directors (whose determination will be
      conclusive), to the holders of Common Shares of such securities or
      property or other assets so issued or distributed in the Special
      Distribution over (b) the fair market value of the consideration received
      therefore by
      the Corporation from the holders of Common Shares, as determined by the
      Corporation's board of directors (whose determination will be conclusive);
      and

              

      

       

      
        	
                (ii)  

              	
                the
      denominator of which will be the product of the number of Common Shares
      outstanding on such record date and the Current Market Price of the Common
      Shares on such record date.

              

      

       

      To the
extent that any Special Distribution is not so made, the Conversion Price will
be readjusted effective immediately to the Conversion Price which would then be
in effect based upon such securities or property or other assets as actually
distributed.

       

      
        	
                (d)  

              	
                If
      and whenever at any time after the date hereof, and prior to the Time of
      Expiry, there is a capital reorganization of the Corporation or a
      reclassification or other change in the Common Shares at any time
      outstanding (other than a Common Share Reorganization), or a
      consolidation, amalgamation or merger of the Corporation with or into any
      other corporation or other entity (other than a consolidation,
      amalgamation or merger which does not result in any reclassification of
      the outstanding Common Shares or a change of the Common Shares into other
      Securities), or a transfer of all or substantially all of the
      Corporation's undertaking and assets as an entirety or substantially as an
      entirety to another corporation or other entity in which the holders of
      Common Shares are entitled to receive shares, other securities or other
      property (any of such events being called a "Capital
      Reorganization"), the Holder who
      exercises the right to convert the Debenture into Common Shares pursuant
      to the Debenture then held after the effective date of such Capital
      Reorganization will be entitled to receive, and will accept for the same
      aggregate consideration in lieu of the number of Common Shares to which
      such Holder was previously entitled upon such conversion, the aggregate
      number of shares, warrants, other securities or other property or cash
      which such Holder would have been entitled to receive as a result of
      such Capital Reorganization if, on the effective date thereof, the Holder
      had been the registered holder of the number of Common Shares to which
      such Holder was previously entitled upon conversion subject to adjustment
      thereafter in accordance with provisions the same, as nearly possible, as
      those contained in this Article 3. The Corporation will take all steps
      necessary to ensure that, on a Capital Reorganization, the Holder will
      receive the aggregate number of shares, warrants, other securities or
      other property or cash to which it is entitled as a result of the Capital
      Reorganization. Appropriate adjustments will be made as a result of any
      such Capital Reorganization in the application of the provisions set forth
      in this Article 3 with respect to the rights and interests thereafter of
      the Holder of the Debenture to the end that the provisions set forth in
      this Article 3 will thereafter correspondingly be made applicable as
      nearly as may reasonably be in relation to any shares, warrants, other
      securities or other property thereafter deliverable upon the conversion of
      any Debenture.

              

      

       

       

      
        
          
          

        

        
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      Subject
to the prior written consent of the Principal Market, if applicable, any such
adjustment will be made by and set forth in an instrument supplemental hereto
approved by action of the board of directors of the Corporation and will for all
purposes be conclusively deemed to be an appropriate adjustment.

       

      
        	
                (e)  

              	
                If
      the purchase price provided for in any rights, options or warrants (the
      "Rights Offering
      Price") referred to in Subsections 3.3(b) or 3.3(c) is decreased,
      the Conversion Price will forthwith be changed so as to decrease the
      Conversion Price to the Conversion Price that would have been obtained if
      the adjustment to the Conversion Price made under such Subsections, as the
      case may be, with respect to such rights, options or warrants had been
      made on the basis of the Rights Offering Price as so decreased, provided
      that the terms of this Subsection 3.3(e) will not apply to any decrease in
      the Rights Offering Price resulting from terms in any such rights, options
      or warrants designed to prevent dilution except to the extent that the
      resulting decrease in the Conversion Price under this Subsection 3.3(e)
      would be greater than the decrease, if any, in the Conversion Price to be
      made under the terms of this Section 3.3 by virtue of the occurrence of
      the event giving rise to such decrease in the Rights Offering
      Price.

              

      

       

      
        	
                (f)  

              	
                In
      any case in which this Section 3.3 requires that an adjustment become
      effective immediately after a record date for an event referred to herein,
      the Corporation may defer, until the occurrence of such event, issuing to
      the Holder of any Debenture converted after such record date and before
      the occurrence of such event the additional Common Shares issuable upon
      such conversion by reason of the adjustment required by such event;
      provided, however, that the Corporation shall deliver to such Holder an
      appropriate instrument evidencing such Holder's right to receive such
      additional Common Shares upon the occurrence of such event and the right
      to receive any distributions made on such additional Common Shares
      declared in favour of holders of record of Common Shares on and after the
      Date of Conversion or such later date on which such Holder would, but for
      the provisions of this Subsection 3.3(f), have become the holder of record
      of such additional Common Shares pursuant to Subsection
      3.2(a).

              

      

       

      3.4       
Rules
Regarding Calculation of Adjustment of Conversion Price

       

      For the
purposes of Section 3.3:

       

      
        	
                (a)  

              	
                The
      adjustments provided for in Section 3.3 are cumulative and will be
      computed to the nearest one-tenth of one cent and will be made
      successively whenever an event referred to therein occurs, subject to the
      remaining provisions of this Section
3.3.

              

      

       

      
        	
                (b)  

              	
                No
      adjustment in the Conversion Price will be required unless such adjustment
      would result in a change of at least 1% in the prevailing Conversion
      Price; provided, however, that any adjustments which, except for the
      provisions of this Subsection 3.4(b), would otherwise have been required
      to be made, will be carried forward and taken into account in any
      subsequent adjustment.

              

      

       

      
        	
                (c)  

              	
                No
      adjustment in the Conversion Price will be made in respect of any event
      described in Section 3.3 if the Holder is entitled to participate (and did
      so participate) in such event on the same terms, mutatis mutandis, as if
      it had converted its Debenture prior to or on the effective date or record
      date of such event. Any such participation will be subject to the prior
      consent of the Principal Market on which the Common Shares are listed or
      quoted for unlisted trading
      privileges, or were listed in the year prior to the occurrence of the
      event described in this Subsection 3.4(c), if
  applicable.

              

      

       

       

      
        
          
          

        

        
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                (d)  

              	
                If
      at any time a dispute arises with respect to adjustments provided for in
      Section 3.3, subject to the prior written consent of the Principal Market,
      if applicable, such dispute will be conclusively determined by a firm of
      independent chartered accountants (who may be the Corporation's auditors)
      and any such determination will be binding upon the Corporation, the
      Holder and shareholders of the
Corporation.

              

      

       

      
        	
                (e)  

              	
                If
      the Corporation sets a record date to take any action and thereafter and
      before the taking of such action, legally abandons its plan to take such
      action, then no adjustment in the Conversion Price shall be
      made.

              

      

       

      
        	
                (f)  

              	
                In
      the absence of a resolution of the Corporation's board of directors fixing
      a record date for a Capital Reorganization, Special Distribution or Rights
      Offering, the Corporation shall be deemed to have fixed as a record date
      therefor the date on which the Capital Reorganization, Special
      Distribution or Rights Offering is
affected.

              

      

       

      3.5   
No
Requirement to Issue Fractional Shares

       

      The
Corporation shall not be required to issue fractional Common Shares upon the
conversion of the Debenture. If more than one Debenture is converted at one time
by the same Holder, the number of whole Common Shares issuable upon conversion
thereof shall be computed on the basis of the aggregate Principal Amount of the
Debentures to be converted plus accrued interest. If any fractional interest in
a Common Share, would, except for the provisions of this Section 3.5, be
deliverable upon any conversion of the Debenture, the Corporation shall, in lieu
of delivering any certificate of such fractional interest, satisfy such
fractional interest by paying to the Holder an amount in lawful money of the
United States of America equal to the value of such fractional interest based
upon the Closing Market Price of the Common Shares on the Business Day preceding
the Date of Conversion.

       

      3.6    
Corporation
to Reserve Shares

       

      The
Corporation covenants that it will at all times reserve and keep available out
of its authorized Common Shares (if the number thereof is or becomes limited)
solely for the purpose of issue upon conversion of the Debenture as provided
herein, and conditionally issue to the Holder who may exercise its conversion
rights hereunder, such number of Common Shares as shall then be issuable upon
the conversion of the Debenture. All Common Shares which shall be so issuable
shall be duly and validly issued as fully paid and non-assessable.

       

      3.7    
Cancellation
of Converted Debenture

       

      The
Debenture, upon conversion in whole of the Debenture shall be forthwith
cancelled by the Corporation and, subject to Subsection 3.2(c), no Debenture
shall be issued in substitution therefor. Upon any partial conversion of this
Debenture, concurrently with the issuance to the Holder of the Common Shares
issued in connection with such conversion, this Debenture shall be cancelled and
a new Debenture shall be issued to the Holder in the same form but showing the
remaining outstanding Principal Amount owing.

       

       

      
        
          
          

        

        
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      3.8   
Certificate
as to Adjustment

       

      The
Corporation shall from time to time, immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in Section 3.3,
deliver a certificate of an officer of the Corporation to the Holder specifying
the nature of the event requiring the same and certifying the amount of the
adjustment or readjustment necessitated thereby and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based. Except in respect of any subdivision, redivision, reduction, combination
or consolidation of the Common Shares, the Corporation shall forthwith give
notice to the Holder specifying the event requiring such adjustment or
readjustment and the amount thereof, including the resulting Conversion Price;
provided that if the Corporation has given notice under Section 3.9 covering all
the relevant facts in respect of such event, no such notice need be given under
this Section 3.8.

       

      3.9   
Notice
of Special Matters

       

      The
Corporation covenants that, so long as the Debenture remains outstanding, it
will give notice to the Holder of its intention to fix a record date for any
event referred to in Subsections 3.3(a), 3.3(b), 3.3(c) or 3.3(d) (other than
the subdivision, redivision, reduction, combination or consolidation of Common
Shares) or a cash dividend (other than a dividend paid in the ordinary course)
which may give rise to an adjustment in the Conversion Price, and such notice
shall specify the particulars of such event and the record date and the
effective date for such event; provided that the Corporation shall only be
required to specify in such notice such particulars of such event as shall have
been fixed and determined on the date on which such notice is given. Such notice
shall be given not less than 14 days prior to the applicable record
date.

       

      ARTICLE
4

      REDEMPTION

       

      4.1    
Optional
Redemption

       

      Subject
as hereinafter provided, the Corporation shall have the right to redeem at its
option, in the manner provided for in this Article 4 and at any time after the
Date of Issue and prior to the Maturity Date, but subject to the Holder’s rights
under Article 3 if the Redemption Notice is delivered after the thirtieth
(30th) day
before the Time of Expiry, in whole but not in part, the Principal Amount then
outstanding of the Debenture upon payment in lawful money of the United States
of America to the Holder of 125% of such Principal Amount (the "Redemption Price") together with accrued
and unpaid interest to and including the Redemption Date. The Corporation shall
give not less than 15 days' prior written notice (the "Redemption Notice") of the
Corporation's election to redeem such Principal Amount to the
Holder.

       

      4.2     
Places
of Payment

       

      The
Redemption Price shall be payable at the address of the Holder at Toronto,
Ontario or such other address as the Holder may advise in writing from time to
time.

       

       

      
        
          
          

        

        
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      4.3    
Notice
of Redemption

       

      The
Redemption Notice shall specify the Redemption Date (which shall be no more than
forty-five (45) days from the date of the Redemption Notice) and the place of
payment and shall state that interest upon the Redemption Price shall cease to be
payable from and after the Redemption Date.

       

      4.4     
Payment
of Redemption Price

       

      Upon
notice being given in accordance with Sections 4.1, 4.3 and 7.2, the Redemption
Price together with accrued and unpaid interest on the amount to be redeemed to
and including the Redemption Date, shall be and become due and payable on the
Redemption Date and with the same effect as if it were the Maturity Date,
anything therein or herein to the contrary notwithstanding and, from and after
such Redemption Date, interest upon the Principal Amount so becoming due and
payable shall cease unless payment of the Redemption Price together with accrued
and unpaid interest to, but excluding the Redemption Date, shall not be
made.

       

      4.5     
Cancellation
of Redeemed Debenture

       

      This
Debenture, upon redemption in full by the Corporation pursuant to this Article
4, shall be forthwith cancelled by the Corporation and not
re-issued.

       

      ARTICLE
5

      COVENANTS
OF THE CORPORATION AND RESTRICTIONS ON CORPORATE ACTIONS

       

      5.1   
General
Covenants

       

      The
Corporation hereby covenants with the Holder as follows:

       

      
        	
                (a)  

              	
                the
      Corporation will duly and punctually pay or cause to be paid to the Holder
      all amounts specified hereunder (and, in case of default, interest on the
      amount in default) on the dates, at the places, and in the manner set
      forth herein;

              

      

       

      
        	
                (b)  

              	
                the
      Corporation will duly and punctually perform and carry out all of the acts
      or things to be done by it, and perform all covenants required to be
      performed by it, as provided in this Debenture;
  and

              

      

       

       

      
        
          
          

        

        
          J -
16

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                the
      Corporation shall immediately notify the Holder in writing of the full
      details of:

              

      

       

      
        	
                (i)  

              	
                any
      Default or Event of Default in accordance with Section 6.2;
      and

              

      

       

      
        	
                (ii)  

              	
                any
      claim, litigation or proceeding before any court, administrative board or
      other tribunal which either does or could have a material adverse effect
      on the Corporation.

              

      

       

      5.2   
Specific
Covenants

       

      The
Corporation hereby further covenants with the Holder that:

       

      
        	
                (a)  

              	
                all
      Common Shares which shall be issued upon an Optional Conversion shall be
      issued as fully paid and non-assessable in the capital of the
      Corporation;

              

      

       

      
        	
                (b)  

              	
                it
      will at all times maintain its corporate existence and will carry on and
      conduct its business in a proper and efficient manner; provided, however,
      that nothing herein contained shall prevent the Corporation from ceasing
      to operate any business or property if, in the opinion of its board of
      directors, it shall be advisable and in the best interests of the
      Corporation to do so and it is not otherwise restricted from doing so
      under the terms of this Debenture;

              

      

       

       

      
        
          
          

        

        
          J -
17

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                it
      will use commercially reasonable efforts to maintain the listing of the
      Common Shares (including the Common Shares issuable pursuant to the terms
      of the Debenture) on or through the OTC Bulletin Board or another more
      senior stock exchange;

              

      

       

      
        	
                (d)  

              	
                it
      will at all times, so long as the Debenture remains outstanding, not take
      any action which would have the effect of preventing the Holder from
      converting the Debenture or receiving any of the Common Shares upon such
      conversion;

              

      

       

      
        	
                (e)  

              	
                it
      will make all requisite filings, including filings with appropriate
      securities commissions and stock exchanges, in connection with the
      creation and sale of the Debenture, the conversion of the Debenture and
      the issue of the underlying Common
Shares;

              

      

       

      
        	
                (f)  

              	
                it
      will use its best efforts to comply with, satisfy and fulfil promptly all
      prerequisites, conditions and requirements imposed by or arising out of
      legal, regulatory and administrative requirements applicable to the
      Corporation with respect to the consummation of the transactions
      contemplated hereby, including filing or causing to be filed all
      documents, certificates, opinions, forms or undertakings required to be
      filed by the Corporation in connection with the purchase and sale of the
      Debenture, the issuance of the Common Shares in accordance with the terms
      of the Debenture and the listing and posting for trading of such Common
      Shares on the OTC Bulletin Board or another more senior stock exchange;
      and

              

      

       

      
        	
                (g)  

              	
                the
      Corporation, at the request and sole discretion of the Holder, will,
      promptly after any such request, assist the Holder in the registration or
      recording of such agreements and instruments in such public registry
      offices in United States of America or in the State of Nevada, or any
      other jurisdiction as the Holder, acting reasonably, deems necessary to
      give full force and effect to the security granted by the Corporation to
      the Holder under the Security
Agreement.

              

      

       

      

       

      ARTICLE
6

      DEFAULT
AND ENFORCEMENT

       

      6.1   
Events
of Default

       

      Each of
the following events is hereinafter sometimes referred to as an "Event of
Default":

       

      
        	
                (a)  

              	
                Non-payment: if the
      Corporation fails to pay: (i) the Principal Amount due in respect of the
      Debenture before the tenth (10th) Business Day after the Maturity Date or
      the Redemption Date, as the case may be; or (ii) any amount of interest or
      any other amount specified hereunder, each in respect of the Debenture
      before the seventh Business Day after the due date for payment
      thereof;

              

      

       

      
        	
                (b)  

              	
                Breach of other
      obligations: if the Corporation
      shall neglect to observe or perform any other covenant, agreement or
      condition contained in the Debenture on its part to be observed or
      performed and, after notice in writing has been given by the Holder to the
      Corporation specifying such default and requiring the Corporation to
      remedy the same, the Corporation shall fail to make good such default
      within a period of ten (10) days (except that no cure period shall be
      provided for a breach which by its nature cannot be cured), unless the
      Holder (having regard to the subject matter of the default) shall have
      agreed to a longer period, and in such event, within the period agreed to
      by the Holder;

              

      

       

       

      
        
          
          

        

        
          J -
18

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                Security
      Unenforceable:  if any security provided to the Holder or
      a collateral agent thereof becomes invalid, illegal or
      unenforceable;

              

      

       

      
        	
                (d)  

              	
                Security Enforced: a secured party
      gives notice of its intention to take or takes possession, or a receiver,
      manager or other similar officer is appointed, of the whole or any
      substantial part of the Mineral
Properties;

              

      

       

      
        	
                (e)  

              	
                Insolvency, etc.: if the Corporation
      shall make a general assignment for the benefit of its creditors or a
      notice of intention to make a bankruptcy proposal, or shall become
      insolvent, or shall be declared or adjudged bankrupt, or a receiving order
      shall be made against the Corporation unless same is being contested in
      good faith and is dismissed, stayed or withdrawn within 30 days thereof,
      or if a liquidator, trustee in bankruptcy, receiver, receiver and manager
      or any other officer with similar powers shall be appointed to the
      Corporation or of all of its property or the Mineral Properties unless
      same is being contested in good faith and is dismissed, stayed or
      withdrawn within thirty (30) days thereof, or if the Corporation shall
      propose a compromise, arrangement, or reorganization under legislation of
      any jurisdiction providing for the reorganization or winding-up of
      corporations or business entities or providing for an agreement,
      composition, extension or adjustment with its creditors; or the
      Corporation shall admit in writing its inability to pay its debts
      generally as they become due or shall take corporate action in furtherance
      of any of the aforesaid purposes;
and

              

      

       

      
        	
                (f)  

              	
                Winding-up etc.: if an order shall
      be made or an effective resolution passed for the winding-up, liquidation
      or dissolution of the Corporation.

              

      

       

      6.2    
Notice
of Events of Default

       

      If an
Event of Default shall occur and is continuing the Corporation shall immediately
give notice thereof to the Holder. In addition, the Corporation shall promptly
give notice upon the happening of any event that would become an Event of
Default with the passage of any time period specified in any Subsection of
Section 6.1.

       

      Where
notice of the occurrence of an Event of Default has been given and the Event of
Default is thereafter cured, notice that the Event of Default is no longer
continuing shall be given by the Corporation to the Holder within five (5)
Business Days after the Corporation becomes aware that the Event of Default has
been cured. For certainty, such Event of Default shall continue until such time
as such notice of such Event of Default having been cured is received by the
Holder in accordance with Section 7.2 and only if at the time of receipt of such
notice such Event of Default has in fact been cured.

       

      6.3    
Acceleration
on Default

       

      If any
Event of Default has occurred and is continuing, the Holder may at any time in
its discretion, by notice in writing to the Corporation declare the Principal
Amount of the Debenture and any other Obligations to be due and payable and the
same shall forthwith become immediately due and payable to such Holder, anything
herein contained to the contrary notwithstanding.

       

       

      
        
          
          

        

        
          J -
19

          
            

          

        

        
          
          

        

      

       

      6.4   
Remedies

       

      Upon the
occurrence of an Event of Default, and upon an acceleration pursuant to Section
6.3, the Holder may, forthwith or at any time thereafter and without notice to
the Corporation, except as required by this Debenture, commence legal action to
enforce payment or performance of any or all of the Obligations. The remedies
provided in this Section 6.4 are cumulative and in addition to (and not in
substitution for, exclusive of nor dependent on) any other remedies contained
herein or in the Security Agreement or any other existing or future security
document granted by the Corporation to the Holder and to all other remedies
existing at law or in equity or by statute.

       

      6.5   
Expenses
of Enforcement

       

      The
Corporation agrees to indemnify the Holder for all reasonable costs and expenses
of the Holder, its agents, advisers and consultants (including legal fees and
disbursements on a solicitor and its own client basis) incurred with respect to
the exercise by the Holder of any of its rights, remedies and powers under this
Debenture, and such costs and expenses shall be added to and form part of the
Obligations.

       

      6.6    
Set
Off

       

      Without
in any way limiting any other rights or remedies available to the Holder, the
Holder shall have the right (but shall not be obligated), at any time and from
time to time after the occurrence of an Event of Default, to set off against the
Obligations or any of them, deposits (general or special) or monies held by the
Holder or any other indebtedness owing by the Holder to, or held by, the Holder
for the credit of, the Corporation, regardless of the currency in which such
indebtedness is denominated and notwithstanding that such indebtedness is not
then due.

       

      6.7    
Waiver

       

      No delay
by the Holder in exercising any power or privilege hereunder, nor the single or
partial exercise of any power or privilege hereunder, shall preclude any other
or further exercise thereof, or the exercise of any other power or privilege
hereunder.

       

      ARTICLE
7

      NOTICES

       

      7.1    
Notice
to the Corporation

       

      Any
notice or other communication required or permitted to be given to the
Corporation under the provisions of this Debenture shall be in writing and shall
be valid and effective if delivered personally to, or subject to Section 7.3, if
given by first class mail, postage prepaid, addressed to the Corporation at its
offices at Pasaje Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo
Torre A Miraflores, Lima, Perú, Attention: President. Any notice so given or
delivered by hand shall be deemed to have been given on the date upon which it
is delivered or if given by registered mail, shall be deemed to have been given
on the fifth Business Day after such letter has been mailed, as the case may be.
The Corporation may from time to time notify the Holder of a change in address
which thereafter, until changed by further notice, shall be the address of the
Corporation for all purposes of the Debenture.

       

       

      
        
          
          

        

        
          J -
20

          
            

          

        

        
          
          

        

      

       

      7.2   
Notice
to Holder

       

      Except as
otherwise expressly provided herein, all notices to be given hereunder to the
Holder with respect to the Debenture shall be in writing and shall be valid and
effective if such notice is given by facsimile or other means of electronic
communication or if delivered personally to, or subject to Section 7.3, if given
by first class mail, postage prepaid, addressed to the Holder at 106 Front
Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1 Attention: President,
facsimile no.: (416) 367-2711. Any notice so given or delivered if sent by
facsimile or other means of electronic communication, shall be deemed to have
been received on the Business Day of the sending, or if delivered by hand shall
be deemed to have been given on the day upon which it is delivered, or if given
by registered mail, shall be deemed to have been given on the fifth (5th)
Business Day after such letter has been mailed, as the case may be. The Holder
may from time to time notify the Corporation of a change in address which
thereafter, until changed by further notice, shall be the address of the Holder
for all purposes of the Debenture.

       

      7.3    
Mail
Service Interruption

       

      If, by
reason of any actual or threatened interruption of mail service due to strike,
lock-out or otherwise, any notice to be given to the Holder or to the
Corporation would be unlikely to reach its destination in a timely manner, such
notice shall be valid and effective only if delivered by facsimile or other
electronic communication or personally in accordance with Sections 7.1 or 7.2,
as the case may be.

       

      ARTICLE
8

      GENERAL
PROVISIONS

       

      8.1     
Further
Assurances

       

      The
Corporation shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, such further acts, deeds, mortgages,
transfers, assurances or other documents as the Holder shall reasonably
require.

       

      8.2    
Term

       

      This
Debenture shall become effective according to its terms immediately upon the
execution hereof by the Corporation and shall continue as security for the
Obligations until all of the Obligations are paid and performed in full and this
note is terminated.

       

      8.3     
Non-Substitution

       

      This
Debenture is in addition to and not in substitution for any other agreement made
between the Holder and the Corporation whether before or after the execution of
this Debenture.

       

      8.4     
No
Merger

       

      Neither
the taking of any action suit or proceeding, judicial or extra-judicial, nor the
exercise of any power of seizure or disposition shall extinguish the liability
of the Corporation to pay and perform the Obligations nor shall the acceptance
of any payment constitute or create any novation. No covenant, representation or
warranty of the Corporation herein shall merge in any judgment.

       

       

      
        
          
          

        

        
          J -
21

          
            

          

        

        
          
          

        

      

       

      8.5  
Entire Agreement

       

      There are
no representations, agreements, warranties, conditions, covenants or terms,
express or implied, collateral or otherwise, affecting this Debenture or the
Corporation's obligations and liabilities hereunder other than express herein
and in the Security Agreement.  To the extent that the terms of this
Debenture and those of the Security Agreement conflict, the Security Agreement
shall prevail.

       

      8.6 Time
of Essence

       

      Time
shall be of the essence in this Debenture in all respects.

       

      
        
           

        

        
          J -
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      EXHIBIT
"1"

       

      FORM
OF TRANSFER

       

      Re:
Convertible Debenture of Constitution Mining Corp. due ● ,
2012

       

      For value
received, __________________________ (the "Holder") hereby assigns and
transfers unto ____________________________________of
___________________________ US$_________________ of the Principal Amount of the
within Debenture registered in the name of the Holder including the rights
thereunder to the accrued and unpaid interest on such Principal Amount and
hereby irrevocably constitutes and appoints ________________________ attorney to
transfer the said Debenture with full powers of substitution in the
premises.

       

      DATED
________________, 20___ in the presence of
__________________________

       

      
        	_________________________________	_____________________________________
	
                Signature
      Guaranteed

              	
                
                  Signature
      of Authorized Signatory of the
Holder

                

              

      

      

      Instructions:

       

      In order
to transfer all or part of the Principal Amount of the Debenture, then the
Holder must complete, sign and/or deliver:

       

      
        	
                1.  

              	
                this
      Transfer Form;

              

      

       

      
        	
                2.  

              	
                the
      Debenture; and

              

      

       

      
        	
                3.  

              	
                such
      other certificates or opinions as the Corporation may reasonably require
      to evidence compliance with applicable securities legislation in Canada or
      the United States.

              

      

       

      If all or
part of the Principal Amount of the Debenture is transferred, the Holder's
signature on the Transfer Form must be signature guaranteed by a Canadian
Chartered bank or an eligible guarantor institution with membership in an
approved signature guarantee medallion program.

       

      
        
           

        

        
          J -
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      EXHIBIT
"2"

       

      FORM
OF ELECTION OF CONVERSION PRIVILEGE

       

      TO:        CONSTITUTION
MINING CORP. (the "Corporation")

      Pasaje Mártir Olaya 129, Oficina
1203,

      Centro
Empresarial José Pardo Torre A Miraflores,

      Lima,
Perú

       

       

                     
Principal amount converted: US$__________________ (US$10,000 or integral
multiple thereof only)

       

      The
undersigned holder (the "Holder") hereby irrevocably
elects to convert the above-noted Principal Amount and $● of interest accrued
thereon of the Secured 8% Convertible Debenture dated as of the [●] day of ●, 2010 into Common
Shares of the Corporation at the Conversion Price in accordance with the Terms
and Conditions of the Debenture and directs that the certificates for such
Common Shares be registered and delivered as follows:

       

      Registration
of Common Shares

       

      Name:        
_______________________________

       

      Address:   
_______________________________

       

                         
_______________________________

       

      Address
for Delivery of

      Common
Shares:                             
_______________________________

      

      Capitalized
terms used herein but not otherwise defined herein shall have the meaning
ascribed to such terms in the Debenture.

       

       

      _______________________________

      Name of
Holder

       

      _______________________________

      Date

       

      _______________________________

      Authorized
Signatory

       

      _______________________________

      Name of
Authorized Signatory Title

       

       

      
        	
                 
      

              	
                **

              	
                Include
      signature guarantee if the Common Shares are to be registered in a name
      other than the Holder.

              

      

      

       

      
        
           

        

        
          J -
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    SCHEDULE
K

     

    PROMISSORY
NOTE

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        K -
1

        
          

        

      

      
        
        

      

    

     

     

    PROMISSORY
NOTE

    
       

      
        	
                                   
      ●,
      2010

              	
                US$1,000,000

              

      

      

                        
FOR VALUE RECEIVED, Constitution Mining Corp., a corporation incorporated under
the laws of the State of Delaware (the "Corporation"), hereby
unconditionally promises to pay on ●, 2011, to or to
the order of Seabridge Gold Inc. (the "Holder"), the sum of
US$1,000,000 (the "Principal"), and to pay
interest on Principal (or any lesser amount outstanding if a prepayment of the
Principal has occurred prior to the maturity date) at the rate of 8% per annum
(calculated on the basis of a 365 day year) commencing on the date of this
Promissory Note until full and final payment.  Interest accruing and
due hereunder shall be payable at maturity of this Promissory Note on ●,
2011.  All payments of interest and Principal shall be made in lawful
money of the United States of America and in immediately available funds, at the
principal offices of the Holder at 106 Front Street East, Suite 400, Toronto,
Ontario, Canada M5A 1E1, or such other place as the Holder may direct in
writing.  The Principal or any part thereof may be prepaid at any time
by the Corporation without penalty.

    

     

    The Corporation will pay on demand
all costs of collection and legal fees basis paid or incurred by the Holder in
enforcing the obligations of the Corporation hereunder.

     

    The Corporation waives presentment for
demand, notice of dishonor, protest and notice of protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or
enforcement of this Promissory Note.

     

    No delay or omission on the part of the
Holder in exercising any right hereunder shall operate as a waiver of such right
or any other right under this Promissory Note.  No waiver of any right
shall be effective unless in writing and signed by the Holder, nor shall a
waiver on one occasion be construed as a bar to or waiver of any such right on
any future occasion. This Promissory Note shall become effective when it has
been executed and delivered. Time shall be of the essence of this Promissory
Note in all respects. This Promissory Note evidences indebtedness incurred
under, and is subject to the terms and provisions, of the Asset Purchase
Agreement dated April 1, 2010 between the Corporation, Holder and the other
parties signatory thereto.

     

    This Promissory Note shall enure to the
benefit of the Holder and its successors and assigns and shall be binding upon
the Corporation and its successors and permitted assigns.  The
Corporation shall not be entitled to sell, transfer, assign, change or otherwise
dispose of the Promissory Note or any of its obligations or liabilities under
this Promissory Note without the prior written consent of the
Holder.

     

     

    
      
        
        

      

      
        K -
2

        
          

        

      

      
        
        

      

    

     

    This Promissory Note shall be governed
by and construed in accordance with the laws in force from time to time in the
Province of British Columbia, Canada and the laws of Canada applicable in that
Province, without regard to its choice of law principles.

     

    Dated this [●] day of ●,
2010.

    CONSTITUTION MINING
CORP.

     

     

    By: _________________________________ 

    Name:   Michael
Stocker

    Title:    
President & Chief Executive Officer

     

    

    By:__________________________________ 

    Name:    Kenneth
Phillippe

    Title:     
Chief Financial Officer

    

    

    

    
      
        
           

        

        
          K -
3

          
            

          

        

        
           

        

      

    

     

    
      
        SCHEDULE
L

         

        ALLOCATION
OF THE PURCHASE PRICE

         

        
          	 
      	
                  County

                	
                  Project

                	
                  #
      of Claims

                	
                  Percentage
      of Purchase Price allocated

                
	
                  A

                	
                  Churchill

                	
                  Aron

                	
                  20

                	
                  1%

                
	 
      	
                  Churchill

                	
                  Westgate

                	
                  98

                
	
                  B

                	
                  Elko

                	
                  Maverick
      North

                	
                  28

                	
                  1%

                
	 
      	
                  Elko

                	
                  Mount
      Wilson

                	
                  31

                
	 
      	
                  Elko

                	
                  Mount
      Wilson

                	
                  8

                
	
                  C

                	
                  Esmeralda

                	
                  Castle
      Rock

                	
                  125

                	
                  65%

                
	 
      	
                  Esmeralda

                	
                  Clayton
      Ridge

                	
                  6

                	
                  1%

                
	 
      	
                  Esmeralda

                	
                  Gilbert
      South

                	
                  102

                
	 
      	
                  Esmeralda

                	
                  Miller’s
      South

                	
                  21

                
	
                  D

                	
                  Humboldt

                	
                  Golden
      Shears

                	
                  9

                	
                  1%

                
	 
      	
                  Humboldt

                	
                  King’s
      River

                	
                  44

                
	 
      	
                  Mineral

                	
                  Teton

                	
                  20

                
	
                  E

                	
                  NYE

                	
                  B.A.
      Breccia

                	
                  18

                	
                  2%

                
	 
      	
                  NYE

                	
                  Baxter
      Springs

                	
                  40

                
	 
      	
                  NYE

                	
                  Bellehellen
      West

                	
                  18

                
	 
      	
                  NYE

                	
                  Clifford

                	
                  64

                
	 
      	
                  NYE

                	
                  Eden

                	
                  21

                
	 
      	
                  NYE

                	
                  Ellendale

                	
                  168

                
	
                  F

                	
                  NYE

                	
                  Four
      Mile Basin

                	
                  207

                	
                  10%

                
	
                  G

                	
                  NYE

                	
                  George’s
      Canyon

                	
                  30

                	
                  0%

                
	
                  H

                	
                  NYE

                	
                  Golden
      Arrow South

                	
                  230

                	
                  5%

                
	
                  I

                	
                  NYE

                	
                  Hannapah

                	
                  196

                	
                  5%

                
	 
      	
                  NYE

                	
                  Hannapah

                	
                  8

                
	 
      	
                  NYE

                	
                  Hannapah

                	
                  6

                
	
                  J

                	
                  NYE

                	
                  Liberty
      Springs

                	
                  80

                	
                  1%

                
	 
      	
                  NYE

                	
                  Merger

                	
                  46

                

           

           

           

          
            
              
              

            

            
              L -
1

              
                

              

            

            
              
              

            

          

           

           

           

          
            	 
      	
                    County

                  	
                    Project

                  	
                    #
      of Claims

                  	
                    Percentage
      of Purchase Price allocated

                  

          

          	
                  K

                	
                  NYE

                	
                  Midway
      Islands

                	
                  16

                	
                  1%

                
	 
      	
                  NYE

                	
                  Midway
      NW

                	
                  40

                
	 
      	
                  NYE

                	
                  Midway
      SW

                	
                  47

                
	
                  L

                	
                  NYE

                	
                  Rays

                	
                  62

                	
                  1%

                
	 
      	
                  NYE

                	
                  Rays

                	
                  25

                
	
                  M

                	
                  NYE

                	
                  Stonewall

                	
                  73

                	
                  5%

                
	 
      	
                  NYE

                	
                  Thunder
      Mountain

                	
                  173

                
	 
      	
                  NYE

                	
                  Thunder
      Mountain

                	
                  53

                
	 
      	
                  NYE

                	
                  Thunder
      Mtn/Silver Ace

                	
                  1

                
	 
      	
                  NYE

                	
                  Thunder
      Mtn/Tough Nut

                	
                  2

                
	
                  N

                	
                  NYE

                	
                  Clifford

                	
                  4

                	
                  1%

                
	 
      	
                  NYE

                	
                  McCann

                	
                  1

                
	 
      	
                  NYE

                	
                  McCann

                	
                  24

                
	 
      	
                  NYE

                	
                  Merger

                	
                  3

                
	
                  O

                	
                  Pershing

                	
                  Willow

                	
                  6

                	
                  0%

                

        

         

        

        
          
            
            

          

          
            L -
2

            
              

            

          

          
            
            

          

        

      

    

    
 

     

    SCHEDULE
M

     

     

    RECLAMATION
BONDS

     

    

    
      	
              Project
      Name

            	
              Current
      Bond

            	
              Type
      of Disturbance

            	
              Estimated
      Cost

            	
              Anticipated
      Completion

            
	
              Thunder
      Mtn., NV

            	
              $2,000

            	
              Drill
      Site Reclamation

            	
              US$0

            	
              Site
      awaiting confirmation of revegetation

            
	
              Tobin
      Basin, NV

            	
              $722

            	
              Drill
      Site Reclamation

            	
              US$0

            	
              Site
      awaiting confirmation of revegetation

            
	
              Golden
      Arrow, NV

            	
              $18,422

            	
              Drill
      Site Reclamation

            	
              US$0

            	
              Drill
      site reclaimed in Q4 2008 awaiting confirmation of
      revegetation

            
	
              Clifford,
      NV

            	
              $5,200

            	
              Drill
      Site Reclamation

            	
              US$0

            	
              Drill
      site reclaimed in Q4 2008 awaiting confirmation of
      revegetation

            
	
              NV
      4-Mile

            	
              $13,500

            	
              Drill
      Site Reclamation

            	
              US$0

            	
              Proposed
      work has never been commenced

            
	
              Total

            	
              $39,844.00

            	 
      	 
      	 
      

    

    

     

    
 

    
      
        
           

        

        
          M -
1ex10_1.htm

EXHIBIT 10.1

 

ENERGYCONNECT GROUP, INC.

INCENTIVE PLAN

	
1.

	
PURPOSE

The purpose of this Incentive Plan (the “Plan”) is to drive superior performance of EnergyConnect Group, Inc. (the “Company”) and its affiliates and operating units to align, motivate and reward eligible employees by making a portion of their cash compensation dependent on the achievement of certain performance goals related to such performance and to retain key executives.

	
2.

	
EFFECTIVE DATE

The Plan is effective for the Company’s 2010 fiscal year beginning January 3, 2010 and ending January 1, 2011.  This Plan is limited in time and will automatically expire on January 1, 2011 (except to the extent that provisions of the Plan must be applied after such expiration date in order to properly administer the Plan thereafter).  This Plan also supercedes all prior bonus or commission incentive plans with respect to employees eligible to participate in this Plan or any written or verbal representations regarding the subject matter of the Plan.

	
3.

	
ADMINISTRATION

	
(a)

	
The Plan shall be administered by the Board of Directors of the Company or the Compensation Committee thereof (the “Administrator”).  The Administrator shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which employees are eligible to participate in the Plan, (ii) establish target bonus amounts and Performance Goals (as defined below) for such target bonus amounts for each Performance Period (as defined below) under the Plan, (iii) prescribe all of the terms and conditions applicable to Plan bonuses hereunder, (iv) determine the extent of the achievement of the Performance Goals and the amount of bonuses to be paid hereunder, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.

	
(b)

	
The Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.

	
(c)

	
All determinations and decisions made by the Administrator and any delegate thereof pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

	
(d)

	
The Company shall communicate individually with each participant in the Plan regarding his or her level of participation in the Plan.

  

  

  

	
4.

	
ELIGIBILITY

Officers and key executives of the Company designated by the Administrator to participate in the Plan shall be eligible to participate in this Plan, provided the Administrator has not, in its sole discretion, withdrawn such designation and he or she meets the following conditions (each such person is referred to herein as a “Participant”):

	
(a)

	
is a full-time regular employee of the Company as of the last day of the applicable Performance Period;

	
(b)

	
has not entered into an agreement relating to termination of his or her employment with the Company (other than an employment agreement or offer letter, change of control agreement, or equity compensation agreement that provides for certain benefits in connection with the Participant’s future termination of employment); and

	
(c)

	
is not subject to disciplinary action, is in good standing with the Company and is not subject to a performance improvement plan.

	
5.

	
PERFORMANCE PERIODS AND PERFORMANCE GOALS

	
(a)

	
The Administrator shall establish the performance period or periods for the Plan, which may include the Company’s fiscal year and/or a portion of the Company’s fiscal year (“Performance Periods”).  The Administrator may establish multiple Performance Periods under the Plan and such Performance Periods may be successive or may overlap.

	
(b)

	
The Administrator shall establish performance goals for each Performance Period, which may include certain corporate and strategic business objectives and/or a Participant’s individual performance and contribution to the Company.  Corporate objectives may include, but shall not be limited to, one or more objective measurable performance factors as determined by the Administrator, including, but not limited to: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) debt or debt-to-equity; (xiii) accounts receivable; (xiv) writeoffs; (xv) cash; (xvi) assets; (xvii) liquidity; (xviii) operations; (xvix) product development; (xx) regulatory activity; (xxi) management; (xxii) human resources; (xxiii) corporate governance; (xxiv) information technology; (xxv) business development; (xxvi) strategic alliances, licensing and partnering; (xxvii) mergers and acquisitions or divestitures; and/or (xxviii) financings, each with respect to the Company and/or one or more of its affiliates or operating units.  Such Performance Goal(s) shall be established by the Administrator no later than ninety (90) days after the start of the applicable Performance Period or, if earlier, the date that twenty five percent (25%) of the applicable Performance Period has lapsed.

	
(c)

	
Bonuses paid to Participants pursuant to the Plan may take into account other factors which may not be performance based.

  

2

  

	
6.

	
AMOUNT OF BONUS

With respect to each Participant, the Administrator will establish an individual target bonus amounts (which may be based on the Participant’s base salary for the Performance Period).  Such target bonus amounts shall be established by the Administrator no later than ninety (90) days after the start of the applicable Performance Period or, if earlier, the date that twenty five percent (25%) of the applicable Performance Period has lapsed.

If a target bonus is measured by reference to a Participant’s base salary for a Performance Period, base salary shall be the Participant’s base salary actually paid to the Participant for the Performance Period.  Except as otherwise required by applicable law, base salary shall not include salary paid during any paid leave of absence or any variable forms of compensation including, but not limited to, overtime, on-call pay, lead premiums, shift differentials, bonuses, incentive compensation, commissions, stock options, restricted stock units, restricted stock, stock appreciation rights, or expense allowances or reimbursements.  Nothing in the Plan, or arising as a result of a Participant’s participation in the Plan, shall prevent the Company from changing a Participant’s base salary at any time based on such factors as the Company shall in its discretion determine appropriate.

Bonuses may be pro-rated on any basis determined appropriate in the Administrator’s sole discretion, including, but not limited to, in connection with transfers to new positions or new locations, new hires, Participants on a leave of absence for all or any portion of a Performance Period, or Participants working less than full-time.  The Administrator reserves the right, in its sole discretion, to reduce or eliminate the amount of a bonus otherwise payable to a Participant with respect to any Performance Period.

	
7.

	
PAYMENT OF BONUS

(a)      A Participant must be on the Company’s payroll at the end of the applicable Performance Period in order to be eligible to receive a bonus for such Performance Period.

(b)      Bonus payments under the Plan shall be made in cash.

(c)      Any distribution made under the Plan shall occur as soon as practicable following the end of the applicable Performance Period and, in any event, by March 15, 2011; provided, that no bonus shall become payable with respect to any Performance Period until the applicable results have been verified by the Company’s independent auditors (if required) and the Administrator determines that the underlying terms and conditions of the bonus have been satisfied.

  

3

  

	
8.

	
GENERAL

(a)      Each Participant shall be required to make adequate provision for federal, state or other applicable tax, withholding obligations, required deductions or other payments, if any, which arise in connection with any bonus or bonus opportunity under this Plan, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.

(b)      Nothing in the Plan shall confer upon any Participant the right to continued employment with the Company or any of its affiliates, or affect in any way the right of the Company or any affiliate to terminate the Participant’s employment at any time, and for any reason, or change the Participant’s responsibilities.

(c)      Bonus opportunities under the Plan represent unfunded and unsecured obligations of the Company and a holder of any right hereunder in respect of any bonus shall have no rights other than those of a general unsecured creditor of the Company.

(d)      A Participant’s rights and interests under the Plan, or any amounts payable under the Plan, may not be assigned, pledged, or transferred except, in the event of a Participant’s death, to a designated beneficiary as may be permitted by the Administrator, or in the absence of such designation, by will or the laws of descent and distribution.

(e)      Each member of the Administrator and each employee of the Company or an affiliate who is delegated a duty under the Plan shall be indemnified and held harmless by the Company from and against any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by him in satisfaction of judgment in any such action, suit or proceeding against him, provided such loss, cost, liability or expense is not attributable to such person’s willful misconduct.  Any person seeking indemnification under this provisions shall give the Company prompt notice of any claim and shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

(f)      The expenses of administering the Plan shall be borne by the Company.

(g)      The Administrator may amend, suspend or terminate the Plan at any time, without regard to whether the amendment, suspension or termination occurs prior to, during or following any Performance Period.

(h)      The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any bonus, shall be determined in accordance with the laws of the State of Oregon (without giving effect to principles of conflicts of laws thereof).

  

4

  

(i)      In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(j)      The Plan, and any resolutions of the Administrator in adopting or administering the Plan, is the entire understanding between the Company and the Participant regarding the subject matter of the Plan and supersedes all prior bonus or commission incentive plans or any written or verbal representations regarding the subject matter of the Plan.  Participation in the Plan during a Performance Period will not convey any entitlement to participate in this or future plans or to the same or similar bonus benefits.  Payments under the Plan are an extraordinary item of compensation that is outside the normal or expected compensation for the purpose of calculating any extra benefits, termination, severance, redundancy, end-of-service premiums, bonuses, long-service awards, overtime premiums, pension or retirement benefits or other similar payment.

 

 

5

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