EXHIBIT 10.6
 
 
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT")
RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO
ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT").
 
NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS,
AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY,
IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE U.S. SECURITIES ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE U.S. SECURITIES ACT.
 
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Non U.S. Subscribers)
 

TO:
DIGITAL VALLEYS CORP. (the “Company”)

 
Attn: David Brow

 
1100 Dexter Ave. North, Suite 100

 
Seattle, Washington 98109

 
USA

 
Purchase of Units
 
1.  
SUBSCRIPTION

 
1.1   The undersigned (the “Subscriber”) hereby irrevocably subscribes (the
“Subscription”) for and agrees to purchase from DIGITAL VALLEYS CORP. (the
“Company”) Units of the Company (the “Units”) at a price of $0.25 per Unit, in
the aggregate investment amount set forth in “Aggregate Subscription Amount”
below.   Each Unit consists of one share of common stock of the Company (a
“Common Share”) and one common share purchase warrant (a “Warrant”), each
Warrant exercisable to acquire one share of common stock of the Company (a
“Warrant Share”) at an exercise price of $0.50 per Warrant Share for a period of
2 years (collectively the Common Shares, the Warrants and the Warrant Shares are
referred to herein as the “Securities”).  The Subscriber agrees to be bound by
the terms and conditions set forth in this Agreement, including without
limitation the representations, warranties and covenants set forth in the
applicable schedules attached thereto. The Subscriber further agrees, without
limitation, that the Corporation may rely upon the Subscriber’s representations,
warranties and covenants contained in such documents.  All figures are in United
States Dollars unless otherwise specified.
 
1.2   The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Units.  Subject to the terms hereof, the
Subscription will be effective upon its acceptance by the Company.
 
1.3   Unless otherwise provided, all dollar amounts referred to in this
Subscription Agreement are in lawful money of the United States of America.
 
 
 
 

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2.  
PAYMENT

 
2.1   The Subscription Proceeds must accompany this Subscription and shall be
wired directly to the Company's bank account in accordance with the wire
instructions attached hereto as Schedule A.
 
2.2   The Subscriber acknowledges and agrees that this Subscription Agreement,
the Subscription Proceeds and any other documents delivered in connection
herewith will be held by the Company's lawyers on behalf of the Company.  In the
event that this Subscription Agreement is not accepted by the Company for
whatever reason within 30 days of the delivery of an executed Subscription
Agreement by the Subscriber, this Subscription Agreement, the Subscription
Proceeds and any other documents delivered in connection herewith will be
returned to the Subscriber at the address of the Subscriber as set forth in this
Subscription Agreement.
 
2.3   Where the Subscription Proceeds are paid to the Company, the Company is
entitled to treat such Subscription Proceeds as an interest free loan to the
Company until such time as the Subscription is accepted and the certificates
representing the Shares have been issued to the Subscriber.
 
3.  
DOCUMENTS REQUIRED FROM SUBSCRIBER

 
3.1   The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Subscription Agreement.
 
3.2   The Subscriber shall complete, sign and return to the Company as soon as
possible, on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, the OTC Bulletin
Board, stock exchanges and applicable law.
 
4.  
CLOSING

 
4.1   Closing of the offering of the Units (the "Closing") shall occur
immediately upon bank receipt of the Subscription Proceeds.  The Warrant
certificate will be in the form attached hereto as Schedule B.
 
5.  
ACKNOWLEDGEMENTS OF SUBSCRIBER

 
5.1   The Subscriber acknowledges and agrees that:
 
(a)  
none of the Securities have been or will be registered under the U.S. Securities
Act, or under any state securities or "blue sky" laws of any state of the United
States, and, unless so registered, may not be offered or sold in the United
States or, directly or indirectly, to U.S. Persons, as that term is defined in
Regulation S under the U.S. Securities Act ("Regulation S"), except in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the U.S. Securities Act, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act and in each case only in accordance with
applicable state and provincial securities laws;

 
(b)  
the Company has not undertaken, and will have no obligation, to register any of
the Securities under the U.S. Securities Act or any other securities
legislation;

 
(c)  
the Subscriber has received and carefully read this Subscription Agreement;

 
(d)  
at the time of subscription, Subscriber reviewed the economic consequences of
the purchase of the Securities with its attorney and/or other financial advisor,
was afforded access to the books and records of the Corporation, conducted an
independent investigation of the business of the Corporation, and was fully
familiar with the financial affairs of the Corporation.   Subscriber consulted
with its counsel with respect to the U.S. Securities Act and applicable federal
and state securities laws. The Corporation has not provided the Subscriber with
any representations, statements, or warranties as to the Securities.  Subscriber
has had access to the Corporation’s

 
 
 

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periodic public filings with the United States Securities and Exchange
Commission (“the “SEC”) available electronically on EDGAR at www.sec.gov and has
been provided a copy of such filings if so requested;

 
 
(e)  
the Subscriber has been advised that the Company has held an annual and general
meeting of its shareholders on June 6, 2011, in which the shareholders voted to
approve resolutions to: (i) elect a director; (ii) amend the Articles of
Incorporation to change the name of Digital Valleys Corp. to American Bakken
Energy Corp., or such other similar name that is legally available; and (iii)
amend the bylaws of Digital Valleys Corp. (the “Bylaws”) to: (A) permit the
president, the chief executive officer (“CEO”), a majority of the members of the
board of directors of Digital Valleys Corp. (the “Board”), or a majority of the
stockholders of the Corporation to request a special meeting of the
stockholders; (B) reduce quorum for a meeting of the shareholders to
shareholders holding 1/3 of the outstanding shares of the Corporation; (C)
reduce the number of stockholders required for a vote by written consent to a
majority of stockholders; (D) permit the president, CEO, or a majority of the
Board to call a special meeting of the Board; (E) permit the Board to fill
vacancies of the Board; (F) permit the appointment of a CEO and a chief
financial officer (“CFO”) and to provide the CEO and CFO with authority; and (G)
permit the Board to amend the Bylaws.  The actions approved by the shareholders
are anticipated to be effective as soon as practicable;

 
(f)  
the Subscriber has been advised that the Board approved resolutions authorizing
the acquistion (the “Acquisition”) of JHE Holdings, LLC, a Texas limited
liability company and holder of certain oil and gas assets in Texas (“JHE”),
from High Plains Oil, LLC, a Nevada limited liability company controlled by a to
be appointed director (“High Plains”), under the terms of a Membership Purchase
Agreement.  Under the terms of the Membership Purchase Agreement, the Company
has agreed, among other things, to (i) assume obligations under a promissory
note, dated January 1, 2011 (“Note”), in the principal amount of $7,500,000,
including an installment payment of $1,000,000 on closing of the Acquisition;
(ii) assume a pledge the membership interests in JHE and grant a security
interest in the assets of JHE to secure the Note ; (iii) permit High Plains to
retain a 10% interest in the assets of JHE; (iv) issue 1,000,000 shares of
common stock to High Plains and 600,000 shares of common stock to the former
owners of JHE; (v) pay $240,000 ($100,000 at closing of the Acquistion and the
balance in three installments) to a consultant of High Plains in connection with
the Acquisition; and (vi) close the Acquisition on or about June 10, 2011  The
Subscriber has further been advised that information related to the Acquisition
and this offering is confidential until publicly disclosed in the the Company’s
SEC filings;

 
(g)  
Proceeds of this offering are anticipated to be used to fund the payment
obligations in connection with the Acquisition, transaction expenses and costs,
pay outstanding liabilities and for general working capital purposes;

 
(h)  
the Subscriber and the Subscriber's advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from the Company in connection with the
sale of the Securities hereunder, and to obtain additional information, to the
extent possessed or obtainable by the Company without unreasonable effort or
expense;

 
(i)  
the books and records of the Company were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by Subscribers
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the sale of the Securities
hereunder have been made available for inspection by the Subscriber, the
Subscriber's attorney and/or advisor(s);

 
(j)  
all of the information which the Subscriber has provided to the Company is
correct and complete as of the date the Subscription Agreement is signed, and if
there should be any change in such information prior to this Subscription
Agreement being executed by the Company, the Subscriber will immediately provide
the Company with such information;

 
 
 
 

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(k)  
the Company is entitled to rely on the representations and warranties and the
statements and answers of the Subscriber contained in this Subscription
Agreement and the Subscriber will hold harmless the Company from any loss or
damage it or they may suffer as a result of the Subscriber's failure to
correctly complete this Subscription Agreement;

 
(l)  
the Subscriber will indemnify and hold harmless the Company and, where
applicable, its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document furnished by the
Subscriber to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Subscriber to comply with any covenant
or agreement made by the Subscriber to the Company in connection therewith;

 
(m)  
the Subscriber has been advised to consult the Subscriber's own legal, tax and
other advisors with respect to the merits and risks of an investment in the
Securities and with respect to applicable resale restrictions, and it is solely
responsible (and the Company is not in any way responsible) for compliance with:

 
(i)             
any applicable laws of the jurisdiction in which the Subscriber is resident in
connection with the distribution of the Securities hereunder, and

 
(ii)            
applicable resale restrictions;

 
(n)  
in addition to resale restrictions imposed under U.S. securities laws, there are
additional restrictions on the Subscriber's ability to resell the Securities
under the Securities Act;

 
(o)  
the Subscriber has not acquired the Securities as a result of, and will not
itself engage in, any "directed selling efforts" (as defined in Regulation S
under the U.S. Securities Act) in the United States in respect of any of the
Securities which would include any activities undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning the market
in the United States for the resale of any of the Securities; provided, however,
that the Subscriber may sell or otherwise dispose of any of the Securities
pursuant to registration of any of the Securities pursuant to the U.S.
Securities Act and any applicable state securities laws or under an exemption
from such registration requirements and as otherwise provided herein;

 
(p)  
none of the Securities are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber that any
of the Securities will become listed on any stock exchange or automated dealer
quotation system, except that currently certain market makers make market in the
common shares of the Company on the OTC Bulletin Board;

 
(q)  
that resale of any of the Securities in Canada is restricted except pursuant to
an exemption from applicable securities legislation;

 
(r)  
the Company has advised the Subscriber that the Company is relying on an
exemption from the requirements to provide the Subscriber with a prospectus to
sell the Securities and, as a consequence of acquiring the Securities pursuant
to such exemption certain protections, rights and remedies provided by any and
all applicable securities legislation including statutory rights of rescission
or damages, will not be available to the Subscriber;

 
(s)  
the Subscriber is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Securities as principal for its own
account, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in such Securities;

 
 
 

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(t)  
the Company will refuse to register the transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the U.S. Securities Act or pursuant to an available
exemption from the registration requirements of the U.S. Securities Act and in
each case in accordance with applicable state securities laws;

 
(u)  
neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Securities or has reviewed
any documents in connection with the sale of the Securities hereunder;

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

 
(w)  
the issuance and sale of the Securities to the Subscriber will not be completed
if it would be unlawful or if, in the discretion of the Company acting
reasonably, it is not in the best interests of the Company;

 
(x)  
the statutory and regulatory basis for the exemption claimed for the offer and
sale of the Securities, although in technical compliance with Regulation S,
would not be available if the offering is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act; and

 
(y)  
this Subscription Agreement is not enforceable by the Subscriber unless it has
been accepted by the Company.

 
6.  
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER

 
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
 
(a)  
the Subscriber is not a U.S. Person;

 
(b)  
the Subscriber is not acquiring the Securities for the account or benefit of,
directly or indirectly, any U.S. Person;

 
(c)  
the Subscriber is resident in the jurisdiction set out under the heading "Name
and Address of Subscriber" on the signature page of this Subscription Agreement;

 
(d)  
the sale of the Securities to the Subscriber as contemplated by the delivery of
this Subscription Agreement, the acceptance of it by the Company and the
issuance of the Securities to the Subscriber complies with all applicable laws
of the Subscriber’s jurisdiction of residence or domicile and will not cause the
Company to become subject to or comply with any disclosure, prospectus or
reporting requirements under any such applicable laws;

 
(e)  
if the Subscriber is resident outside of Canada, the Subscriber:

 
(i)             
is knowledgeable of, or has been independently advised as to, the applicable
securities laws of the securities regulators having application in the
jurisdiction in which the Subscriber is resident (the “International
Jurisdiction”) which would apply to the acquisition of the Securities;

 
(ii)            
the Subscriber is purchasing the Securities pursuant to exemptions from
prospectus or equivalent requirements under applicable securities laws or, if
such is not applicable, the Subscriber is permitted to purchase the Securities
under the applicable securities laws of the securities regulators in the
International Jurisdiction without the need to rely on any exemptions;

 
 
 
 

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(iii)           
the applicable securities laws of the authorities in the International
Jurisdiction do not require the Company to make any filings or seek any
approvals of any kind whatsoever from any securities regulator of any kind
whatsoever in the International Jurisdiction in connection with the issue and
sale or resale of the Securities; and

 
(iv)           
the purchase of the Securities by the Subscriber does not trigger:

 
A.            
any obligation to prepare and file a prospectus or similar document, or any
other report with respect to such purchase in the International Jurisdiction; or

 
B.            
any continuous disclosure reporting obligation of the Company in the
International Jurisdiction; and

 
the Subscriber will, if requested by the Company, deliver to the Company and the
Agent a certificate or opinion of local counsel from the International
Jurisdiction which will confirm the matters referred to in subparagraphs (ii),
(iii) and (iv) above to the satisfaction of the Company, acting reasonably;
 
(f)  
the Subscriber is purchasing the Securities as principal for investment only and
not with a view to, or for, resale, distribution or fractionalization thereof,
in whole or in part, and, in particular, it has no intention to distribute
either directly or indirectly any of the Securities in the United States or to
U.S. Persons;

 
(g)  
the Subscriber is outside the United States when receiving and executing this
Subscription Agreement;

 
(h)  
the Subscriber is aware that an investment in the Company is speculative and
involves certain risks, including the possible loss of the investment;

 
(i)  
the Subscriber has made an independent examination and investigation of an
investment in the Securities and the Company and has depended on the advice of
its legal and financial advisors and agrees that the Company will not be
responsible in anyway whatsoever for the Subscriber's decision to invest in the
Securities and the Company;

 
(j)  
the Subscriber has the requisite knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
investment in the Securities and the Company;

 
(k)  
the Subscriber understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgements, representations and agreements
contained in this Subscription Agreement and agrees that if any of such
acknowledgements, representations and agreements are no longer accurate or have
been breached, it shall promptly notify the Company;

 
(l)  
the Subscriber has the legal capacity and competence to enter into and execute
this Subscription Agreement and to take all actions required pursuant hereto
and, if the Subscriber is a corporation, it is duly incorporated and validly
subsisting under the laws of its jurisdiction of incorporation and all necessary
approvals by its directors, shareholders and others have been obtained to
authorize execution and performance of this Subscription Agreement on behalf of
the Subscriber;

 
(m)  
the entering into of this Subscription Agreement and the transactions
contemplated hereby do not result in the violation of any of the terms and
provisions of any law applicable to, or the constating documents of, the
Subscriber or of any agreement, written or oral, to which the Subscriber may be
a party or by which the Subscriber is or may be bound;

 
 
 
 

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(n)  
the Subscriber has duly executed and delivered this Subscription Agreement and
it constitutes a valid and binding agreement of the Subscriber enforceable
against the Subscriber;

 
(o)  
the Subscriber is not an underwriter of, or dealer in, the common shares of the
Company, nor is the Subscriber participating, pursuant to a contractual
agreement or otherwise, in the distribution of the Securities;

 
(p)  
the Subscriber understands and agrees that none of the Securities have been
registered under the U.S. Securities Act, or under any state securities or "blue
sky" laws of any state of the United States, and, unless so registered, may not
be offered or sold in the United States or, directly or indirectly, to U.S.
Persons except in accordance with the provisions of Regulation S, pursuant to an
effective registration statement under the U.S. Securities Act, or pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act;

 
(q)  
the Subscriber understands and agrees that offers and sales of any of the
Securities shall only be made in compliance with the safe harbor provisions set
forth in Regulation S, pursuant to the registration provisions of the U.S.
Securities Act or an exemption therefrom;

 
(r)  
the Subscriber understands and agrees not to engage in any hedging transactions
involving any of the Securities unless such transactions are in compliance with
the provisions of the U.S. Securities Act and in each case only in accordance
with applicable state and provincial securities laws;

 
(s)  
the Subscriber understands and agrees that the Company will refuse to register
any transfer of the Securities not made in accordance with the provisions of
Regulation S, pursuant to an effective registration statement under the U.S.
Securities Act or pursuant to an available exemption from the registration
requirements of the U.S. Securities Act;

 
(t)  
the Subscriber (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of evaluating the
merits and risks of its prospective investment in the Securities; and (iii) has
the ability to bear the economic risks of its prospective investment and can
afford the complete loss of such investment;

 
(u)  
if the Subscriber is acquiring the Securities as a fiduciary or agent for one or
more investor accounts, it has sole investment discretion with respect to each
such account and it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of such account;

 
(v)  
the Subscriber understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgments, representations and agreements
contained in Sections 5 and 6 hereof and agrees that if any of such
acknowledgments, representations and agreements are no longer accurate or have
been breached, it shall promptly notify the Company;

 
(w)  
the Subscriber acknowledges that it has not acquired the Securities as a result
of, and will not itself engage in, any "directed selling efforts" (as defined in
Regulation S under the U.S. Securities Act) in the United States in respect of
any of the Securities which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of any of the
Securities; provided, however, that the Subscriber may sell or otherwise dispose
of any of the Securities pursuant to registration of any of the Securities
pursuant to the U.S. Securities Act and any applicable state securities laws or
under an exemption from such registration requirements and as otherwise provided
herein;

 
(x)  
the Subscriber is not aware of any advertisement of any of the Securities and is
not acquiring the Securities as a result of any form of general solicitation or
general advertising including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; and

 
 
 
 

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(y)  
no person has made to the Subscriber any written or oral representations:

 
(i)             
that any person will resell or repurchase any of the Securities;

 
(ii)            
that any person will refund the purchase price of any of the Securities;

 
(iii)           
as to the future price or value of any of the Securities; or

 
(iv)           
that any of the Securities will be listed and posted for trading on any stock
exchange or automated dealer quotation system or that application has been made
to list and post any of the Securities of the Company on any stock exchange or
automated dealer quotation system, except that currently certain market makers
make market in the common shares of the Company on the OTC Bulletin Board.

 
6.2   In this Subscription Agreement, the term "U.S. Person" shall have the
meaning ascribed thereto in Regulation S.
 
7.  
REPRESENTATIONS AND WARRANTIES WILL BE RELIED UPON BY THE COMPANY

 
7.1   The Subscriber acknowledges that the representations and warranties
contained herein are made by it with the intention that such representations and
warranties may be relied upon by the Company and its legal counsel in
determining the Subscriber's eligibility to purchase the Securities under
applicable securities legislation, or (if applicable) the eligibility of others
on whose behalf it is contracting hereunder to purchase the Securities under
applicable securities legislation.  The Subscriber further agrees that by
accepting delivery of the certificates representing the Securities on the
Closing Date, it will be representing and warranting that the representations
and warranties contained herein are true and correct as at the Closing Date with
the same force and effect as if they had been made by the Subscriber on the
Closing Date and that they will survive the purchase by the Subscriber of
Securities and will continue in full force and effect notwithstanding any
subsequent disposition by the Subscriber of such Securities.
 
8.  
RESALE RESTRICTIONS

 
8.1   The Subscriber acknowledges that any resale of the Securities will be
subject to resale restrictions contained in the securities legislation
applicable to each Subscriber or proposed transferee.  The Subscriber
acknowledges that the Securities have not been registered under the U.S.
Securities Act of the securities laws of any state of the United States and that
the Company does not intend to register same under the U.S. Securities Act, or
the securities laws of any such state and has no obligation to do so.  The
Securities may not be offered or sold in the United States unless registered in
accordance with federal securities laws and all applicable state and provincial
securities laws or exemptions from such registration requirements are available.
 
8.2   The Subscriber acknowledges that the Certificates representing the
Securities delivered pursuant to this Subscription shall bear a legend in the
following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE
EXEMPTION FROM THE REGISTRATION
 
 
 
 

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REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN ACCORDANCE WITH RULE 144
THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S.
SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER
AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE
CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF
EXEMPTION, REASONABLY SATISFACTORY TO THE CORPORATION.  HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH U.S. SECURITIES LAWS.”
 
if the certificates representing the Securities have been held for a period of
at least six months and if Rule 144 under the U.S. Securities Act is applicable
(there being no representations by the Corporation that Rule 144 is applicable),
then the undersigned may make sales of the Securities only under the terms and
conditions prescribed by Rule 144 of the U.S. Securities Act or other exemptions
therefrom.  The Company shall use commercially reasonable efforts to cause its
legal counsel to deliver an opinion or such other documentation as may
reasonably be required to effect sales of the Securities under Rule 144.
 
8.3   Subscriber acknowledges that if the Company is deemed to be a “shell
company” as that term is defined under the U.S. Securities Act, then the
applicable hold period of the Company’s securities under Rule 144 of the U.S.
Securities Act will be one year from the date the Company ceases to be a “shell
company” and files Form 10 type information with the SEC.
 
8.4   Subscriber acknowledges that the Warrants may not be exercised by or for
the account or benefit of a U.S. Person or a person in the United States unless
the Warrants and the Warrant Shares issuable upon exercise of the Warrants are
registered under the U.S. Securities Act and the securities laws of all
applicable states or an exemption is available from the registration
requirements of such laws, and the holder has furnished an opinion of counsel
satisfactory to the Corporation to such effect.  Subscriber acknowledges and
agrees that upon the original issuance of the Warrants, and until such time as
it is no longer required under applicable requirements of the U.S. Securities
Act or applicable state securities laws, all certificates representing the
Warrants and all certificates issued in exchange therefor or in substitution
thereof, shall bear the following legend:
 
“THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.  THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR
FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSON IN THE UNITED STATES AND
THE UNDERLYING SHARES MAY NOT BE DELIVERED WITHIN THE UNITED STATES UNLESS THE
WARRANT AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE, AND THE HOLDER HAS DELIVERED AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH
EFFECT.  “UNITED STATES” AND “U.S. PERSON” ARE USED HEREIN AS SUCH TERMS ARE
DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”
 
 
 
 

--------------------------------------------------------------------------------

- 10 -
 
 
9.  
NO REGISTRATION RIGHTS

 
9.1   The Company has no immediate intention to file a registration statement
under the U.S. Securities Act with the SEC.
 
10.  
ACKNOWLEDGEMENT AND WAIVER

 
10.1   The Subscriber has acknowledged that the decision to purchase the
Securities was solely made on the basis of publicly available information.  The
Subscriber hereby waives, to the fullest extent permitted by law, any rights of
withdrawal, rescission or compensation for damages to which the Subscriber might
be entitled in connection with the distribution of any of the Securities.
 
11.  
LEGENDING AND REGISTRATION OF SUBJECT SECURITIES

 
11.1   The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing any of the Securities to the effect that the
Securities represented by such certificates are subject to a hold period and may
not be traded until the expiry of such hold period except as permitted by
applicable securities legislation.
 
11.2   The Subscriber hereby acknowledges and agrees to the Company making a
notation on its records or giving instructions to the registrar and transfer
agent of the Company in order to implement the restrictions on transfer set
forth and described in this Subscription Agreement.
 
12.  
COLLECTION OF PERSONAL INFORMATION

 
12.1   The Subscriber acknowledges and consents to the fact that the Company is
collecting the Subscriber’s personal information for the purpose of fulfilling
this Subscription Agreement and completing the Offering.  The Subscriber's
personal information (and, if applicable, the personal information of those on
whose behalf the Subscriber is contracting hereunder) may be disclosed by the
Company to (a) stock exchanges or securities regulatory authorities, (b) the
Company's registrar and transfer agent, (c) tax authorities, (d) authorities
pursuant to the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (PATRIOT ACT) and (e)
any of the other parties involved in the Offering, including legal counsel, and
may be included in record books in connection with the Offering.  By executing
this Subscription Agreement, the Subscriber is deemed to be consenting to the
foregoing collection, use and disclosure of the Subscriber's personal
information (and, if applicable, the personal information of those on whose
behalf the Subscriber is contracting hereunder) and to the retention of such
personal information for as long as permitted or required by law or business
practice.  Notwithstanding that the Subscriber may be purchasing Securities as
agent on behalf of an undisclosed principal, the Subscriber agrees to provide,
on request, particulars as to the identity of such undisclosed principal as may
be required by the Company in order to comply with the foregoing.
 
13.  
COSTS

 
13.1   The Subscriber acknowledges and agrees that all costs and expenses
incurred by the Subscriber (including any fees and disbursements of any special
counsel retained by the Subscriber) relating to the purchase of the Securities
shall be borne by the Subscriber.
 
14.  
GOVERNING LAW

 
14.1   This Subscription Agreement is governed by the laws of the State of
Nevada and the federal laws applicable therein.
 
15.  
SURVIVAL

 
15.1   This Subscription Agreement, including without limitation the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties hereto
notwithstanding the completion of the purchase of the Securities by the
Subscriber pursuant hereto.
 
 
 
 

--------------------------------------------------------------------------------

- 11 -
 
 
16.  
ASSIGNMENT

 
16.1   This Subscription Agreement is not transferable or assignable.
 
17.  
EXECUTION

 
17.1   The Company shall be entitled to rely on delivery by facsimile machine of
an executed copy of this Subscription Agreement and acceptance by the Company of
such facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
 
18.  
SEVERABILITY

 
18.1   The invalidity or unenforceability of any particular provision of this
Subscription Agreement shall not affect or limit the validity or enforceability
of the remaining provisions of this Subscription Agreement.
 
19.  
ENTIRE AGREEMENT

 
19.1   Except as expressly provided in this Subscription Agreement and in the
agreements, instruments and other documents contemplated or provided for herein,
this Subscription Agreement contains the entire agreement between the parties
with respect to the sale of the Securities and there are no other terms,
conditions, representations or warranties, whether expressed, implied, oral or
written, by statute or common law, by the Company or by anyone else.
 
20.  
NOTICES

 
20.1   All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication.  Notices to the Subscriber and the Company shall be
directed to it at the respective address in this Subscription Agreement.
 
21.  
COUNTERPARTS

 
21.1   This Subscription Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall constitute an
original and all of which together shall constitute one instrument.
 
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement
as of the date of acceptance by the Company.
 

 
Please print all information (other than signatures), as applicable, in the
space provided below
 

 

  ____________________________________________  
 
Number of
Units:  ________________________________                                                                       
(Name of Subscriber)
       
=
Account Reference (if applicable):
________________                                  
   
 
By:  _______________________________________
 
   Aggregate Subscription Amount:  US$ ______________________________
(insert total subscription amount in US$)
Authorized Signature
         

 
 
 

--------------------------------------------------------------------------------

- 12 -
 
 
 
___________________________________________________
(Official Capacity or Title – if the Subscriber is not an individual)
 
___________________________________________________
(Name of individual whose signature appears above if different than the name of
the subscriber printed above.)
 
___________________________________________________
(Subscriber’s Address, including Municipality and Province)
 
___________________________________________________
S.I.N. or Taxation Account of Subscriber
 
___________________________________________________
(Telephone Number) (Email Address)
 
 
If the Subscriber is signing as agent for a principal (beneficial purchaser) and
is not purchasing as trustee or agent for accounts fully managed by it, complete
the following:
 
___________________________________________________
(Name of Principal)
 
___________________________________________________
(Principal’s Address)
 
___________________________________________________
 
     
 
Account Registration Information:
 
___________________________________________________
(Name)
 
___________________________________________________
(Account Reference, if applicable)
 
___________________________________________________
(Address, including Postal Code)
 
 
Delivery Instructions as set forth below:
 
___________________________________________________
(Name)
 
___________________________________________________
(Account Reference, if applicable)
 
___________________________________________________
(Address)
 
___________________________________________________
(Contact Name)              (Telephone Number)
 

 
 
 
 
 

--------------------------------------------------------------------------------

- 13 -

 
A C C E P T A N C E
 
The above-mentioned Subscription Agreement in respect of the Units is hereby
accepted by DIGITAL VALLEYS CORP.
 

 
DATED at ________________________________________, the _______ day of
__________________, 2011.
 
 
DIGITAL VALLEYS CORP.
 
 
 
Per:                  
    Authorized Signatory
 
 
 
 
 
 

--------------------------------------------------------------------------------

 

 
SCHEDULE A
 
 
INSTRUCTIONS FOR WIRING FUNDS TO DIGITAL VALLEYS CORP.
 
 

 
 

--------------------------------------------------------------------------------

 
 

Exhibit B

Form of Warrant Certificate

 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN
ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND
REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS,
PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO
THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS.
 
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.  THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR
FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSON IN THE UNITED STATES AND
THE UNDERLYING SHARES MAY NOT BE DELIVERED WITHIN THE UNITED STATES UNLESS THE
WARRANT AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE, AND THE HOLDER HAS DELIVERED AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH
EFFECT.  “UNITED STATES” AND “U.S. PERSON” ARE USED HEREIN AS SUCH TERMS ARE
DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
 
WARRANTS
 
DIGITAL VALLEYS CORP.
 
(A Nevada Corporation)
CERTIFICATE NUMBER: 2011 SERIES A – ●
Warrants representing
the Right to Purchase
«Number» Common Shares

 
WARRANTS FOR PURCHASE OF COMMON SHARES
 
THIS IS TO CERTIFY THAT, for value received «Name», «Address» (hereinafter
called the “holder”) is entitled to subscribe for and purchase «Number» fully
paid and non-assessable common shares (“Common Shares”) in the capital of
DIGITAL VALLEYS CORP. (hereinafter called the “Company”) at any time on or
before 5:00 PM (PST) on  [2 years from Closing] at a price of $0.50 per Common
Share, subject to adjustment and to the provisions and terms and conditions
herein set forth.  The Warrants will be void and of no value after 5:00 PM (PST)
on  [2 years from Closing] (the “Expiry Time”).
 
The Warrants and the Common Shares issuable upon exercise hereof have not been
and will not be registered under the U.S. Securities Act or the securities laws
of any state of the United States.  The Warrants may not be exercised in
 
 
Exhibit B - 1
 

--------------------------------------------------------------------------------

 
 
the United States or by or for the account or benefit of a U.S. Person or a
person in the United States and the underlying Common Shares may not be
delivered within the United States unless the underlying Common Shares to be
delivered upon exercise of these Warrants have been registered under the U.S.
Securities Act and the securities laws of all applicable states of the United
States or an exemption from such registration requirements is available, and the
holder has delivered to the Company an opinion of counsel in form and substance
satisfactory to the Company to such effect.  “United States” and “U.S. Person”
are used herein as such terms are defined by Regulation S under the U.S.
Securities Act.
 
The rights to acquire Common Shares granted by this certificate (the “Warrant
Certificate”) may be exercised by the holder, subject to the terms and
conditions hereof, in whole or in part (but not as to a fractional Common
Share), by surrender of this Warrant Certificate and the duly completed and
executed Exercise Form attached hereto as Appendix A to the offices of the
Company located at 1100 Dexter Ave. North, Suite 100, Seattle, WA  98109, USA
(or such other address as the Company may designate in writing), accompanied by
a certified cheque, bank draft or money order payable in lawful money of the
United States to or to the order of the Company in payment of an amount equal to
the purchase price of the number of Common Shares for which Warrants are then
exercised.  See attached Appendix C for instructions on how to exercise Warrants
represented by this Warrant Certificate.
 
Surrender of this Warrant Certificate and the duly completed Exercise Form with
payment of the purchase price as provided above will be deemed to have been
effected only on personal delivery thereof to, or if sent by mail or other means
of transmission on actual receipt thereof by, the Company at the offices of the
Company.
 
In the event of any exercise of the rights represented by this Warrant
Certificate, certificates representing the Common Shares so subscribed for shall
be delivered to the holder at the address specified in the Exercise Form within
a reasonable time, not exceeding five days after the rights represented by this
Warrant Certificate have been so exercised.  If fewer Common Shares are
purchased than the number that can be purchased pursuant to this Warrant
Certificate, unless the Warrants have expired, a new warrant certificate
granting the right to acquire that number of Common Shares, if any, with respect
to which the Warrants have not then been exercised shall also be issued to the
holder within such time.  The Company shall not be required to issue fractional
Common Shares upon the exercise of all or any part of the Warrants and the
holder will not be entitled to a cash payment in lieu of any such fractional
interest.

The Warrants represented by this Warrant Certificate may only be exercised by or
for the account or benefit of a holder who, at the time of exercise, either:
 
a.  
represents to the Company, pursuant to subparagraph 1 of the attached Exercise
Form, that (i) at the time of exercise of the Warrants the holder is not within
the United States, (ii) the holder is not exercising the Warrants for the
account or benefit of a U.S. Person or person in the United States, and (iii)
the delivery of the underlying Common Shares will not be to an address in the
United States;

b.  
represents to the Company, pursuant to subparagraph 2 of the attached Exercise
Form, that (i) the holder is a U.S. Purchaser (as such term is defined in the
subscription agreement pursuant to which the holder purchased the Warrants from
the Company (the “Subscription Agreement”), (ii) the holder was the original
subscriber for the Warrants from the Company, and (iii) the representations,
warranties and covenants set forth in the Subscription Agreement are true and
correct on the date of exercise, including specifically the representations and
warranties in Schedule A to the Subscription Agreement; or

c.  
provides, pursuant to subparagraph 3 of the attached Exercise Form, a written
opinion of counsel satisfactory to the Company that the Common Shares to be
delivered upon exercise of the Warrants have been registered under the U.S.
Securities Act and the securities laws of all applicable states of the United
States or are exempt from such registration requirements.

Unless the Common Shares issuable upon the exercise of the Warrants are
registered under the U.S. Securities Act and the securities laws of all
applicable states of the United States and the holder has provided a written
opinion of counsel satisfactory to the Company to such effect, all certificates
representing Common Shares will bear the following legend:
 
 
Exhibit B - 2
 

--------------------------------------------------------------------------------

 
 
 
 
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN
ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND
REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS,
PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO
THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS”.
 
The Company covenants and agrees that all Common Shares which may be issued upon
the exercise of the rights represented by this Warrant Certificate will, upon
issuance, be fully paid and non-assessable and free of all liens, charges and
encumbrances.  The Company further covenants and agrees that during the period
within which the rights represented by this Warrant Certificate may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of Common Shares to provide for the exercise of the rights
represented by this Warrant Certificate.
 
THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO IN THIS WARRANT
CERTIFICATE:
 
1.   Adjustment of Subscription and Purchase Rights.  The original purchase
price in effect and the number and type of securities purchasable under the
Warrants at any date shall be subject to adjustment from time to time as
follows:
 
(a)  
If and whenever at any time prior to the Expiry Time, the Company shall
(i) subdivide or redivide the outstanding Common Shares into a greater number of
shares, (ii) reduce, combine or consolidate the outstanding Common Shares into a
smaller number of shares, or (iii) issue Common Shares to the holders of all or
substantially all of the outstanding Common Shares by way of a stock dividend,
the exercise price in effect on the effective date of any such event shall be
adjusted immediately after such event or on the record date for such issue of
Common Shares by way of stock dividend, as the case may be, so that it shall
equal the amount determined by multiplying the purchase price in effect
immediately prior to such event by a fraction, of which the numerator shall be
the total number of Common Shares outstanding immediately prior to such event
and of which the denominator shall be the total number of Common Shares
outstanding immediately after such event; and the number of Common Shares which
the holder is entitled to purchase upon exercise of each Warrant shall be
adjusted at the same time by multiplying the number by the inverse of the
aforesaid fraction; such adjustments shall be made successively whenever any
event referred to in this subsection (a) shall occur; any such issue of Common
Shares by way of a stock dividend shall be deemed to have been made on the
record date for the stock dividend for the purpose of calculating the number of
outstanding Common Shares immediately after such event under this subsection (a)
and subsection (e) of this Section.

 
(b)  
If and whenever at any time prior to the Expiry Time, the Company shall fix a
record date for the issuance of rights, options or warrants to all or
substantially all of the holders of the outstanding Common Shares, entitling
them, for a period expiring not more than 45 days after such record date, to
subscribe for or purchase Common Shares (or securities convertible into or
exchangeable for Common Shares) at a price per share (or having a conversion or
exchange price per share) less

 
 
 
Exhibit B - 3
 

--------------------------------------------------------------------------------

 
 
 
than 95% of the Current Market Price on such record date, the purchase price
shall be adjusted immediately after such record date so that it shall equal the
price determined by multiplying the purchase price in effect on such record date
by a fraction, of which the numerator shall be the total number of Common Shares
outstanding on such record date plus the number arrived at by dividing the
aggregate price of the total number of additional Common Shares offered for
subscription or purchase (or the aggregate conversion or exchange price of the
convertible or exchangeable securities so offered) by such Current Market Price,
and of which the denominator shall be the total number of Common Shares
outstanding on such record date plus the total number of additional Common
Shares offered for subscription or purchase (or into which the convertible or
exchangeable securities so offered are convertible or exchangeable); and the
number of Common Shares which the holder is entitled to purchase upon exercise
of each Warrant shall be adjusted at the same time by multiplying the number by
the inverse of the aforesaid fraction; any Common Shares owned by or held for
the account of the Company or any subsidiary of the Company shall be deemed not
to be outstanding for the purpose of any such computation; such adjustment shall
be made successively whenever such a record date is fixed; to the extent that
any such rights, options or warrants are not so issued or any such rights,
options or warrants are not exercised prior to the expiration thereof, the
purchase price shall then be re-adjusted to the exercise price which would then
be in effect based upon the number and aggregate price of Common Shares (or
securities convertible into or exchangeable for Common Shares) actually issued
upon the exercise of such rights, options or warrants, as the case may be.

 
 
(c)  
If and whenever at any time prior to the Expiry Time, the Company shall fix a
record date for the making of a distribution to all or substantially all the
holders of its outstanding Common Shares of: (i) shares of any class other than
Common Shares, other than shares distributed to holders of Common Shares
pursuant to their exercise of options to receive dividends in the form of such
shares in lieu of Dividends Paid in the Ordinary Course on the Common Shares and
other than the issue of Common Shares to the holders of all or substantially all
of the outstanding Common Shares by way of a stock dividend, or (ii) subject to
paragraph 1(b), rights, options or warrants (excluding rights exercisable for 45
days or less) or (iii) evidence of its indebtedness, or (iv) assets (excluding
Dividends Paid in the Ordinary Course), including shares of other corporations,
then, in each such case, the purchase price shall be adjusted immediately after
such record date so that it shall equal the price determined by multiplying the
purchase price in effect on such record date by a fraction, of which the
numerator shall be  the greater of:  (i) one; and (ii) the total number of
Common Shares outstanding on such record date multiplied by the Current Market
Price per Common Share on such record date, less the fair market value (as
determined by the board of directors of the Company, acting reasonably, which
determination, absent manifest error, shall be conclusive) of such shares or
rights, options or warrants or evidences or indebtedness or assets so
distributed, and of which the denominator shall be the total number of Common
Shares outstanding on such record date multiplied by such Current Market Price
per Common Share; and the number of Common Shares which the holder is entitled
to purchase upon exercise of each Warrant shall be adjusted at the same time by
multiplying the number by the inverse of the aforesaid fraction; any Common
Shares owned by or held for the account of the Company shall be deemed not to be
outstanding for the purpose of any such computation; such adjustment shall be
made successively whenever such a record date is fixed; to the extent that such
distribution is not so made, the exercise price shall be re-adjusted to the
exercise price which would then be in effect if such record date had not been
fixed or to the exercise price which would then be in effect based upon such
shares or rights, options or warrants or evidences of indebtedness or assets
actually distributed, as the case may be, and in clause (iv) the term “Dividends
Paid in the Ordinary Course” shall include the value of any securities or other
property or assets distributed in lieu of cash Dividends Paid in the Ordinary
Course.

 
(d)  
If and whenever at any time prior to the Expiry Time, there is a
reclassification of the Common Shares at any time outstanding or a change of the
Common Shares into other shares or a capital reorganization of the Company not
covered in subsection (a) of this section or a consolidation, amalgamation or
merger of the Company with or into any other corporation or a sale of the
property and assets of the Company as or substantially as an entirety to any
other person, a holder

 
 
Exhibit B - 4
 

--------------------------------------------------------------------------------

 
 
 
holding Warrants represented by this Warrant Certificate which have not been
exercised prior to the effective date of such reclassification, capital
reorganization, consolidation, amalgamation, merger or sale shall thereafter,
upon the exercise of such Warrants, be entitled to receive and shall accept in
lieu of the number of Common Shares, as then constituted, to which the holder
was previously entitled upon exercise of the Warrants, but for the same
aggregate consideration payable therefore, the number of shares or other
securities or property of the Company or of the corporation resulting from such
reclassification, consolidation, amalgamation or merger or of the person to
which such sale may be made, as the case may be, that such holder would have
been entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, merger or sale of, on the effective date thereof,
as if the holder had been the registered holder of the number of Common Shares
to which the holder was previously entitled upon due exercise of the Warrants;
and in any case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Warrant Certificate with respect
to the rights and interests thereafter of the holders of the Warrants to the end
that the provisions set forth in this Warrant Certificate shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares or securities or property to which the holder may be entitled upon
the exercise of such Warrants thereafter.

 
(e)  
The adjustments required under the terms of this Warrant Certificate upon the
occurrence of any of the events referred to herein shall become effective
immediately after a record date for such event, and the Company may defer, until
the occurrence of such event, issuing to the holder of any Warrants exercised
after such record date and before the occurrence of such event the kind and
amount of shares, other securities or property to which it would be entitled
upon such exercise by reason of the adjustment required by such event; provided,
however, that the Company shall deliver to such holder an appropriate instrument
evidencing such holder’s right to receive the kind and amount of shares, other
securities or property to which it would be entitled upon the occurrence of the
event requiring such adjustment and the right to receive any distributions made
or declared in favour of holders of record of Common Shares as constituted from
time to time on and after such date as the holder would, but for the provisions
of this subsection (e), have received, or become entitled to receive, on such
exercise.

 
(f)  
The adjustments provided for in this Warrant Certificate are cumulative and
shall apply to successive subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting in any
adjustment under the provisions of this Warrant Certificate provided that,
notwithstanding any other provision of this Section, no adjustment of the
purchase price or number of Common Shares, as then constituted, purchasable
shall be required unless such adjustment would require an increase or decrease,
of at least 1% in the purchase price or the number of Common Shares, as then
constituted, purchasable then in effect; provided however, that any adjustments
which by reason of this subsection (f) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.

 
(g)  
In the event of any question arising with respect to the adjustments provided in
this Warrant Certificate, such question shall, absent manifest error, be
conclusively determined by a firm of chartered accountants appointed by the
Company (who may be the auditors of the Company) and acceptable to the holder,
acting reasonably, with the assistance of legal counsel, who may be legal
counsel to the Company; such accountants shall have access to all necessary
records of the Company and such determination shall be binding upon the Company
and the holder.

 
2.   Definitions.
 
In this Warrant Certificate:
 
(a)  
“Current Market Price” per Common Share or Participating Share at any date shall
be the closing price per share for such shares on a day before such date on
OTCBB (or if the Common Shares are not listed on such stock exchange, on such
other exchange on which the Common Shares are listed as may be selected for such
purpose by the directors of the Company, or if the Common Shares are not listed
on any stock exchange, then on the over the counter market);

 
 
Exhibit B - 5
 

--------------------------------------------------------------------------------

 
 
(b)  
“Common Shares” means the Company’s presently authorized common voting shares
without par value and shall also include any other authorized classes of shares
in the capital of the Company which do not have special rights and restrictions
attaching fixed dividends thereto and limiting the participation of holders of
shares of such classes in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company;

 
(c)  
“Dividends Paid in the Ordinary Course” means cash dividends declared payable on
the Common Shares in any fiscal year of the Company to the extent that such cash
dividends do not exceed, in the aggregate, the greatest of:  (i) 50% of the
retained earnings of the Company at the end of the immediately preceding fiscal
year; (ii) 150% of the aggregate amount and/or value of dividends declared
payable by the Company on the Common Shares in its immediately preceding fiscal
year; and (iii) 100% of the net earnings of the Company, before extraordinary
items, for its immediately preceding fiscal year (versus the amount or value of
all dividends paid or payable in respect of such fiscal year which credited net
earnings) to be as shown in the audited consolidated financial statements of the
Company for such preceding fiscal year or, if there are no audited financial
statements with respect to such period, computed in accordance with generally
accepted accounting principles consistent with the applications made in
preparation of the most recent audited consolidated financial statements of the
Company, and for such purpose the amounts of any dividend paid in shares shall
be the aggregate deemed issue price of such shares and the amount of any
dividend paid in other than cash or shares shall be the fair market value of
such dividend as declared by resolution passed by the board of directors of the
Company; and

 

3.   Restriction on Exercise.  Notwithstanding any other provision hereof, no
Holder shall exercise these Warrants, if as a result of such conversion the
holder would then become a “beneficial owner” (as determined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of more than 4.99% of the
issued and outstanding Common Stock.  For greater certainty, the Warrants shall
not be exercisable by the Holder or redeemed by the Company, if, after giving
effect to such exercise, the holder of such securities, together with its
affiliates, would in aggregate beneficially own, or exercise control or
direction over that number of voting securities of the Company which is 4.99% or
greater of the total issued and outstanding voting securities of the Company,
immediately after giving effect to such exercise; provided, however, that upon a
holder of these Warrants providing the Company with a Waiver Notice that such
holder would like to waive the provisions of this paragraph 3 with regard to any
or all shares of Common Stock issuable upon exercise of these Warrants, this
paragraph 3 shall be of no force or effect with regard to those shares of Common
Stock referenced in the Waiver Notice; provided, further, that this provision
shall be of no further force or effect during the sixty-one (61) days
immediately preceding the expiration of the term of these Warrants.
 
4.   No Rights of Shareholders.  The Warrants shall not entitle the holder to
any rights as a shareholder of the Company, including without limitation, voting
rights.
 
5.   Transferability.  The Holder agrees that it will not transfer, hypothecate,
sell, assign, pledge or encumber any Warrants or Warrant Shares unless such
securities are registered under the U.S. Securities Act and registered or
qualified under any applicable state securities laws or such transfer is
effected pursuant to an available exemption from registration.  Transfer of the
Warrants can be undertaken by delivery of the Warrant Transfer Form, attached as
Appendix B hereto, to the Company at the Company’s offices.  The Company
undertakes to use commercially reasonable efforts to effect such transfer and
issue a Warrant Certificate in the name of the transferee within 3 business days
of receipt thereof.  The Company reserves the right to refuse to transfer any
Warrant if such transfer would be in violation of any securities laws, including
but not limited to the U.S. Securities Act.
 
6.   Reporting Issuer. So long as the Warrants evidenced by this Warrant
Certificate remain outstanding, the Company covenants that it shall do or cause
to be done all things necessary to maintain its status as a reporting issuer not
in default with the United States Securities and Exchange Commission.
 
 
Exhibit B - 6
 

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7.   New Certificate.  This Warrant Certificate is exchangeable, upon the
surrender hereof by the holder to the Company, for a new Warrant Certificate of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of Common Shares which may be subscribed for and purchased hereunder,
each of such new Warrant Certificates to represent the right to subscribe for
and purchase such number of Common Shares as shall be designated by the holder
at the time of such surrender.
 
8.   Loss, Mutilation, Destruction or Theft of Warrants.  In case this Warrant
Certificate shall become mutilated or be lost, destroyed or stolen, the Company,
subject to applicable law, shall issue and deliver a new Warrant Certificate
representing the Warrants of like date and tenor as the one mutilated, lost,
destroyed or stolen upon surrender of and in place of and upon cancellation of
the mutilated Warrant Certificate or in lieu of and in substitution for the
lost, destroyed or stolen Warrant Certificate.  The applicant for the issue of a
new Warrant Certificate representing the Warrants pursuant to this Section shall
bear the cost of the issue thereof and in case of loss, destruction or theft
shall, as a condition precedent to the issue thereof, furnish to the Company
such evidence of ownership and of the loss, destruction or theft of the Warrant
Certificate so lost, destroyed or stolen as shall be satisfactory to the
Company, acting reasonably, and the applicant may also be required to furnish an
indemnity in amount and form satisfactory to the Company, acting reasonably, and
shall pay the reasonable charges of the Company in connection therewith.
 
9.   Governing Law.  The Warrants evidenced hereby shall be governed by and
construed in accordance with the laws of the State of Nevada.
 
10.   Time.  Time shall be of the essence hereof.
 
 
IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be
executed by a duly authorized officer as of the ____ day of June, 2011.
 
 

  DIGITAL VALLEYS CORP.           Per:  ________________________________________
               Authorized Signatory

 
 
 
 
 
 
 
Exhibit B - 7
 

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APPENDIX “A”
 
EXERCISE FORM
 
TO:           DIGITAL VALLEYS CORP.
 
The undersigned hereby exercises the right to purchase and hereby subscribes for
____________ Common Shares in the capital of DIGITAL VALLEYS CORP. (the
“Company”) (or such number of other securities or property to which this Warrant
entitles the undersigned in lieu thereof or in addition thereto under the
provisions of the attached Warrant Certificate).
 
In connection with this exercise, the undersigned hereby (check one):
 
_____1.
represents to the Company that (i) at the time of exercise of this Warrant the
undersigned is not within the United States, (ii) the undersigned is not
exercising this Warrants for the account or benefit of a U.S. Person or person
in the United States, and (iii) the delivery of the underlying Common Shares
will not be to an address in the United States;

 
_____2.
represents to the Company that (i) the undersigned is a U.S. Purchaser (as such
term is defined in the subscription agreement pursuant to which the undersigned
purchased this Warrant from the Company (the “Subscription Agreement”), (ii) the
undersigned was the original subscriber for the Warrants from the Company, and
(iii) the representations, warranties and covenants set forth in the
Subscription Agreement are true and correct on the date of exercise of this
Warrant, including specifically the representations and warranties in Schedule A
to the Subscription Agreement; or

 
_____3.
confirms that the undersigned is tendering with this exercise form a written
opinion of counsel satisfactory to the Company to the effect that the securities
to be delivered upon exercise of this Warrant have been registered under the
United States Securities Act of 1933, as amended, (the "U.S. Securities Act")
and the securities laws of all applicable states of the United States or are
exempt from such registration requirements.

 
 “United States” and “U.S. person” are as defined by Regulation S under the U.S.
Securities Act.
 
The undersigned holder understands that unless the Common Shares issuable upon
the exercise of the Warrants are registered under the 1933 Act and the
securities laws of all applicable states of the United States and the
undersigned has provided a written opinion of counsel satisfactory to the
Company to such effect, the certificate representing the Common Shares issued
upon exercise of this Warrant will bear the following restrictive legend:
 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN
ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND
REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS,
PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO
THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS”.
 
 
 
Appendix A to Exhibit B - 1
 

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If any Warrants represented by this Warrant certificate are not being exercised,
a new Warrant certificate will be issued and delivered with the Common Share
certificates.
 
Please issue a certificate for the Common Shares being purchased as follows in
the name of the undersigned.
 
DATED at ______________________________ this _________ day of _________________,
______.
 
 
___________________________________________
Signature Witnessed (see instructions to
Warrantholders)
___________________________________________
Signature of Warrantholder (to be the same as appears on
the face of this Warrant Certificate) or authorized signing
officer if a corporation
   
Name of Warrantholder:
___________________________________________    
Address (please print):
___________________________________________
___________________________________________ 

 
 
 
 

 
 
 
Appendix A to Exhibit B - 2
 

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APPENDIX “B”
 
WARRANT TRANSFER FORM
 
 

 TO: DIGITAL VALLEYS CORP.   Dated ___________ ___, _____

 
   

FOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers
unto_____________________________(the "Assignee"),

(please type or print in block letters)

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(insert address)

its right to purchase up to __________ shares of Common Stock represented by
these Warrants and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.

Signature:   ___________________________________________                                                                        

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
U.S. SECURITIES ACT AND ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE
OFFER AND SALE OF SECURITIES.

To be completed by transferee.

In connection with this transfer: (check one):

______
The undersigned transferee hereby certifies that (i) it is not a U.S. Person and
was not offered the Warrants while in the United States and did not execute this
certificate while within the United States, (ii) it is not acquiring any of the
Warrants represented by this Warrant Certificate by or on behalf of any U.S.
person or person within the United States, and (iii) it has in all other
respects complied with the terms of Regulation S of the United States Securities
Act of 1933, as amended (the “US Securities Act”), or any successor rule or
regulation of the United States Securities and Exchange Commission as presently
in effect.

______
The undersigned transferee is delivering a written opinion of U.S. counsel to
the effect that this transfer of Warrants has been registered under the U.S.
Securities Act or are exempt from registration thereunder.

 

   Signature:  ___________________________________________    

 
 
Appendix B to Exhibit B - 1
 

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APPENDIX “C”
 
INSTRUCTIONS TO WARRANTHOLDERS
 
TO EXERCISE:
 
To exercise Warrants, the Warrantholder must complete, sign and deliver the
Exercise Form, attached as Appendix A and deliver the Warrant Certificate(s) to
DIGITAL VALLEYS CORP. (the “Company”) at the address set forth below indicating
the number of Common Shares to be acquired.  In such case, the signature of such
registered holder on the Exercise Form must be witnessed.
 
GENERAL:
 
For the protection of the holder, it would be prudent to use registered mail if
forwarding documents by mail.
 
If the Exercise Form is signed by a trustee, executor, administrator, curator,
guardian, attorney, officer of a corporation or any person acting in a fiduciary
or representative capacity, the Warrant Certificate must also be accompanied by
evidence of authority to sign satisfactory to the Company.
 
The address of the Company is:
 

DIGITAL VALLEYS CORP.
1100 Dexter Ave. North, Suite 100
Seattle, Washington 98109
USA
 
 
 
 
 
Appendix C to Exhibit B - 1
 

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