Summary of U S PRECIOUS METALS INC

Item 1.01. Entry into a Material Definitive Agreement.

On March 17, 2009, U.S. Precious Metals, Inc. (the "Company") entered into a Rights Agreement (the "Rights Agreement") between the Company and Interwest Transfer Company, Inc., as rights agent (the "Rights Agent"). On March 17, 2009, the Board of Directors of the Company authorized and declared a dividend of one right ("Right") for each share of its Common Stock, par value $0.00001 per share (the "Company Common Stock"), to stockholders of record at the close of business on April 10, 2009 (the "Record Date"), and authorized the issuance of one Right for each share of Company Common Stock issued by the Company (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below). Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share (a "Unit") of Series A Preferred Stock, par value $0.00001 per share (the "Preferred Stock"), at a purchase price of $10.00 per Unit, subject to adjustment. The purchase price is payable in cash or by certified check, cashier's check or money order payable to the Company.

The Certificate of Designation of Preferred Stock of the Company (the "Certificate of Designation") and the Rights Agreement have been filed with the Securities and Exchange Commission as Exhibits 3.1 and 4.1, respectively, to a Registration Statement on Form 8-A dated March 19, 2009. Copies of the Rights Agreement and the Certificate of Designation are available free of charge from the Company. This summary description of the Rights Agreement, the Rights, and the Preferred Stock does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Rights Agreement and the Certificate of Designation, including the definitions therein of certain terms, which Rights Agreement and Certificate of Designation are incorporated herein by reference.

The Rights Agreement

Certificates; Distribution Date. Initially, the Rights will attach to all certificates representing shares of the outstanding Company Common Stock, and no separate Rights Certificates (as defined in the Rights Agreement) will be distributed. Subject to the provisions of the Rights Agreement, the Rights will separate from the Company Common Stock and the "Distribution Date" will occur upon the earlier of (i) ten business days following a public announcement (the date of such announcement being the "Stock Acquisition Date") that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired or otherwise obtained beneficial ownership of 15% or more of the then-outstanding shares of Company Common Stock (or, if the tenth business day after the Stock Acquisition Date occurs before the Record Date, the close of business on the Record Date), and (ii) ten business days (or such later date as may be determined by action of the Board of Directors) following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person. Until the Distribution Date, (i) the Rights will be evidenced by Company Common Stock certificates and will be transferred with and only with such Company Common Stock certificates, (ii) new Company Common Stock certificates issued after the Record Date (also including shares distributed from Treasury) will contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates representing the outstanding Company Common Stock will also constitute the transfer of the Rights associated with the Company Common Stock represented by such certificates.

An "Acquiring Person" does not include certain persons specified in the Rights Agreement.

The Rights are not exercisable until the Distribution Date and will expire at the close of business on March 17, 2010 unless earlier redeemed or exchanged by the Company as described below. Under certain circumstances, as provided in the Rights Agreement, the exercisability of the Rights may be suspended.

As soon as practicable after the Distribution Date, Rights Certificates will be mailed to holders of record of Company Common Stock as of the close of business on the Distribution Date (and to each initial holder of certain shares of Company Common Stock issued after the Distribution Date) and, thereafter, the separate Rights Certificates alone will represent the Rights.

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Item 3.02. Unregistered Sales of Equity Securities.

On March 13, 2009, the Company sold $100,000 of Convertible Promissory Notes (the "Notes"), pursuant to a private offering by the Company of up to $1,500,000 of Notes (the "Offering"), which Offering is not subject to any underwriting discounts or commissions.

At the option of the holder, the Notes may be converted, at any time after June 30, 2009 and on or before the maturity date, into shares of Company common stock ("Common Stock") at a conversion price of $0.30 per share; provided, however, that if the Company is actively negotiating its next financing or if the Company has entered into a definitive agreement providing for a change of control, optional conversion features will not be applicable. The Notes bear simple, annual interest at 16%. The maturity date of the Notes is the earlier of (A) an offering of securities by the Company in a transaction or series of related transactions in which at least $10,000,000 in gross proceeds is received by the Company (a "Qualified Financing"), (B) a change of control of the Company, or
(C) the date that is 2 years after the date of issuance of the applicable Notes.

If, prior to any optional conversion, the Company completes a Qualified Financing or experiences a change of control, the principal and outstanding interest will automatically convert into shares of Common Stock at a conversion price of $0.30 per share.

The Company is relying on Rule 506 of Regulation D as the applicable exemption from the registration requirements of the Securities Act of 1933. The Offering is being made only to "accredited investors," as such term is defined in Rule 501 of Regulation D.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On March 17, 2009, in connection with the Rights Agreement, the Board of Directors of the Company approved the Certificate of Designation setting forth the rights, powers, and preferences of the Preferred Stock. The Company filed the Certificate of Designation with the Secretary of State of Delaware on March 18, 2009.

The summary of rights and preferences of the Preferred Stock set forth in Exhibit C to the Rights Agreement is incorporated into this Item 5.03 by reference and is qualified in its entirety by reference to the full text of the Certificate of Designation. A copy of the Certificate of Designation is attached as Exhibit 3.1 to a Registration Statement on Form 8-A, dated March 19, 2009, and is incorporated herein by reference.