LEXARIA CORP

2010 EQUITY COMPENSATION PLAN

I.

ESTABLISHMENT OF PLAN; DEFINITIONS

1.

Purpose.

The purpose of the Corporation’s 2010 Equity Compensation Plan is to encourage
certain, officers, employees, directors and consultants of the Corporation to
acquire and hold stock in the Corporation as an added incentive to remain with
the Corporation and to increase their efforts in promoting the interests of the
Corporation and to enable the Corporation to attract and retain capable
individuals.

2.

Definitions.

Unless the context clearly indicates otherwise, the following terms shall have
the meanings set forth below:

(a) “Award” shall mean the grant of any Stock Option, Stock Appreciation Right
or Stock

Award pursuant to the Plan.

(b)

"Board" shall mean the Board of Directors of the Corporation.

(c)

"Code" shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time.

(d)

"Committee" shall mean a committee made up of at least two members of the Board
whose members shall, from time to time, be appointed by the Board. If a
Committee has not been appointed by the Board, “Committee” shall mean the Board.

(e)

 "Corporation" shall mean LEXARIA CORP., a Nevada corporation.

(f)

 "Consultants" shall mean individuals or entities who provide services to the
Corporation who are not Employees or Directors.

(g)

 "Directors" shall mean those members of the Board of Directors of the
Corporation who are not Employees.

(h)

 "Disability" shall mean a medically determinable physical or mental condition
which

causes an Employee, Director or Consultant to be unable to engage in any
substantial gainful activity and which can be expected to result in death or to
be of long-continued and indefinite duration.

(i) "Employee" shall mean any common law employee, including officers, of the
Corporation as determined under the Code and the Treasury Regulations
thereunder.

(j) "Fair Market Value" with regards to the grant of Stock Options shall mean
(i) if the Stock is listed on a national securities exchange, the mean between
the highest and lowest sales prices for the Stock on such date, or, if no such
prices are reported for such day, then on the next preceding day on which there
were reported prices; (ii) if the Stock is not listed on a national securities
exchange, the closing price for the shares on such date, or if no such prices
are reported for such day, then on the next preceding day on which there were
reported prices; or (iii) as determined in good faith by the Board. “Fair Market
Value” with regards to Stock Awards shall be determined by the Board, in good
faith and in its sole discretion.

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(k) "Grantee" shall mean an officer, Employee, Director or Consultant granted a
Stock Option or Stock Award under this Plan.

(l) "Incentive Stock Option" shall mean an option granted pursuant to the
Incentive Stock

Option provisions as set forth in Part II of this Plan.

(m) "Non-Qualified Stock Option" shall mean an option granted pursuant to the
Non-Qualified Stock Option provisions as set forth in Part III of this Plan.

(n) "Plan" shall mean the 2010 Equity Compensation Plan as set forth herein and
as amended from time to time.

(o) "Restricted Stock" shall mean Stock which is issued pursuant to the
Restricted Stock as set forth in Part IV of this Plan.

(p) "Stock" shall mean authorized but unissued shares of the Common Stock of the
Corporation or reacquired shares of the Corporation's Common Stock.

(q) "Stock Appreciation Right" shall mean a stock appreciation right granted
pursuant to the Stock Appreciation Right provisions as set forth in Part II and
III of this Plan.

(r) "Stock Award" shall mean an award of Restricted granted pursuant to this
Plan.

(s) "Stock Option" shall mean an option granted pursuant to the Plan to purchase
shares of Stock.

(t) “Subsidiary” shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with and including the Corporation, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50 percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

(u) "Ten Percent Shareholder" shall mean an Employee who at the time a Stock
Option is granted owns stock possessing more than ten percent (10%) of the total
combined voting power of all stock of the Corporation or of its parent or
subsidiary corporation.

3.

Shares of Stock Subject to the Plan.

Subject to the provisions of Paragraph 2 of Part V of the Plan, the Stock which
may be issued or transferred pursuant to Stock Options and Stock Awards granted
under the Plan and the Stock which is subject to outstanding but unexercised
Stock Options under the Plan shall not exceed 1,800,000 shares in the aggregate.
If a Stock Option shall expire and terminate for any reason, in whole or in
part, without being exercised or, if Stock Awards are forfeited because the
restrictions with respect to such Stock Awards shall not have been met or have
lapsed, the number of shares of Stock which are no longer outstanding as Stock
Awards or subject to Stock Options may again become available for the grant of
Stock Awards or Stock Options. There shall be no terms and conditions in a Stock
Award or Stock Option which provide that the exercise of an Incentive Stock
Option reduces the number of shares of Stock for which an outstanding
Non-Qualified Stock Option may be exercised; and there shall be no terms and
conditions in a Stock Award or Stock Option which provide that the exercise of a
Non-Qualified Stock Option reduces the number of shares of Stock for which an
outstanding Incentive Stock Option may be exercised.

4.

Administration of the Plan.

The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to it, to
determine the terms and provisions of Stock Option agreements, and to make all
other determinations necessary or advisable for the administration of the Plan.
Any controversy or claim arising out of or related to this Plan shall be
determined unilaterally by and at the sole discretion of the Committee.

 

 

 

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5.

Amendment or Termination. The Board may, at any time, alter, amend, suspend,
discontinue, or terminate this Plan; provided, however, that such action shall
not adversely affect the right of Grantees to Stock Awards or Stock Options
previously granted and no amendment, without the approval of the stockholders of
the Corporation, shall increase the maximum number of shares which may be
awarded under the Plan in the aggregate, materially increase the benefits
accruing to Grantees under the Plan, change the class of Employees eligible to
receive options under the Plan, or materially modify the eligibility
requirements for participation in the Plan.

6.

Effective Date and Duration of the Plan. The effective date of the Plan is the
date on which the Plan is adopted by the Board. If the stockholders of the
Corporation do not approve the Plan within 12 months after the Board's adoption
of the Plan, any Incentive Stock Options granted under the Plan will be treated
as Non-Qualified Stock Options.  Unless sooner terminated as provided herein,
the Plan shall terminate ten years after the earlier of the Plan's adoption by
the Board and approval by the Company's stockholders.

7.

General.

(a)

Each Stock Option, Stock Award and Stock Appreciation Right shall be evidenced
by a written instrument (which may be in the form of a unanimous written consent
of the Board)  containing such terms and conditions, not inconsistent with this
Plan, as the Committee shall approve.

(b) The granting of a Stock Option, Stock Award or Stock Appreciation Right in
any year

shall not give the Grantee any right to similar grants in future years or any
right to be retained in the

employ of the Corporation, and all Employees shall remain subject to discharge
to the same extent as if the Plan were not in effect.

(c) No officer, Employee, Director or Consultant and no beneficiary or other
person claiming

under or through him, shall have any right, title or interest by reason of any
Stock Option or any Stock Award to any particular assets of the Corporation, or
any shares of Stock allocated or reserved for the purposes of the Plan or
subject to any Stock Option or any Stock Award except as set forth herein. The
Corporation shall not be required to establish any fund or make any other
segregation of assets to assure the payment of any Stock Option or Stock Award.

(d) No right under the Plan shall be subject to anticipation, sale, assignment,
pledge, encumbrance, or charge except by will or the laws of descent and
distribution, and a Stock Option shall be exercisable during the Grantee's
lifetime only by the Grantee or his conservator.

(e) Notwithstanding any other provision of this Plan or agreements made pursuant
thereto, the Corporation's obligation to issue or deliver any certificate or
certificates for shares of Stock under a Stock Option or Stock Award, and the
transferability of Stock acquired by exercise of a Stock Option or grant of a
Stock Award, shall be subject to all of the following conditions:

(i) Any registration or other qualification of such shares under any state or
federal  law or regulation, or the maintaining in effect of any such
registration or other qualification which the Board shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable; and

(ii) The obtaining of any other consent, approval, or permit from any state or
federal

governmental agency which the Board shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable.

(f) All payments to Grantees or to their legal representatives shall be subject
to any applicable tax, community property, or other statutes or regulations of
the United States or of any state or country having jurisdiction thereof. The
Grantee may be required to pay to the Corporation the amount of any withholding
taxes which the Corporation is required to withhold with respect to a Stock
Option or its exercise or a Stock Award. In the event that such payment is not
made when due, the Corporation shall have the right to deduct, to the extent
permitted by law, from any payment of any kind otherwise due to such person all
or part of the amount required to be withheld.

 

 

 

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(g) In the case of a grant of a Stock Option or Stock Award to any Employee of a
subsidiary

of the Corporation, the Corporation may, if the Committee so directs, issue or
transfer the shares, if any, covered by the Stock Option or Stock Award to the
subsidiary, for such lawful consideration as the Committee may specify, upon the
condition or understanding that the subsidiary will transfer the shares to the
Employee in accordance with the terms of the Stock Option or Stock Award
specified by the Committee pursuant to the provisions of the Plan. For purposes
of this Section, a subsidiary shall mean any subsidiary corporation of the
Corporation as defined in Section 424 of the Code.

(h) A Grantee entitled to Stock as a result of the exercise of a Stock Option or
grant of a Stock Award shall not be deemed for any purpose to be, or have rights
as, a shareholder of the Corporation by virtue of such exercise, except to the
extent a stock certificate is issued therefor and then only from the date such
certificate is issued. No adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued. The Corporation shall issue any stock
certificates required to be issued in connection with the exercise of a Stock
Option with reasonable promptness after such exercise.

(i) The grant or exercise of Stock Options granted under the Plan or the grant
of a Stock

Award under the Plan shall be subject to, and shall in all respects comply with,
applicable law relating to such grant or exercise, or to the number of shares of
Stock which may be beneficially owned or held by any Grantee.

(j) The Corporation intends that the Plan shall comply with the requirements of
Rule 16b-3 (the “Rule”) under the Securities Exchange Act of 1934, as amended,
during the term of this Plan. Should any additional provisions be necessary for
the Plan to comply with the requirements of the Rule, the Board may amend this
Plan to add to or modify the provisions of this Plan accordingly.

(k) The Corporation intends that the Plan shall comply with the requirements of
Section 409A

of the Code, to the extent applicable. Should any changes to the Plan be
necessary for the Plan to comply with the requirements of Code Section 409A the
Board may amend this Plan to add to or modify the provisions of this Plan
accordingly.

(l) The Corporation will seek stockholder approval in the manner and to the
degree required

under Applicable Laws. If the Corporation fails to obtain stockholder approval
of the Plan within twelve (12) months after the date this Plan is adopted by the
Board, pursuant to Section 422 of the Code, any Option granted as an Incentive
Option at any time under the Plan will not qualify as an Incentive Option within
the meaning of the Code and will be deemed to be a Non-Qualified Option.

II. INCENTIVE STOCK OPTION PROVISIONS

1. Granting of Incentive Stock Options.

(a) Only Employees of the Corporation shall be eligible to receive Incentive
Stock Options

under the Plan. Officers, Directors and Consultants of the Corporation who are
not also Employees shall not be eligible to receive Incentive Stock Options.

(b) The purchase price of each share of Stock subject to an Incentive Stock
Option shall not

be less than 100% of the Fair Market Value of a share of the Stock on the date
the Incentive Stock Option is granted; provided, however, that the purchase
price of each share of Stock subject to an Incentive Stock Option granted to a
Ten Percent Shareholder shall not be less than 110% of the Fair Market Value of
a share of the Stock on the date the Incentive Stock Option is granted.

(c) No Incentive Stock Option shall be exercisable more than ten years from the
date the

Incentive Stock Option was granted; provided, however, that an Incentive Stock
Option granted to a Ten Percent Shareholder shall not be exercisable more than
five years from the date the Incentive Stock Option was granted.

 

 

 

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(d) The Committee shall determine and designate from time to time those
Employees who are to be granted Incentive Stock Options and specify the number
of shares subject to each Incentive Stock Option.

(e) The Committee, in its sole discretion, shall determine whether any
particular Incentive

Stock Option shall become exercisable in one or more installments, specify the
installment dates, and, within the limitations herein provided, determine the
total period during which the Incentive Stock Option is exercisable. Further,
the Committee may make such other provisions as may appear generally acceptable
or desirable to the Committee or necessary to qualify its grants under the
provisions of Section 422 of the Code.

(f) The Committee may grant at any time new Incentive Stock Options to an
Employee who

has previously received Incentive Stock Options or other options whether such
prior Incentive Stock

Options or other options are still outstanding, have previously been exercised
in whole or in part, or are cancelled in connection with the issuance of new
Incentive Stock Options. The purchase price of the new Incentive Stock Options
may be established by the Committee without regard to the existing Incentive
Stock Options or other options.

(g) Notwithstanding any other provisions hereof, the aggregate Fair Market Value
(determined at the time the option is granted) of the Stock with respect to
which Incentive Stock Options are exercisable for the first time by the Employee
during any calendar year (under all such plans of the Grantee's employer
corporation and its parent and subsidiary corporation) shall not exceed
$100,000.

2.

Exercise of Incentive Stock Options. The option price of an Incentive Stock
Option shall be

payable on exercise of the option (i) in cash or by check, bank draft or postal
or express money order, (ii) by the surrender of Stock then owned by the
Grantee, (iii) the proceeds of a loan from an independent broker-dealer whereby
the loan is secured by the option or the stock to be received upon exercise, or
(iv) any combination of the foregoing; provided, that each such method and time
for payment and each such borrowing and terms and conditions of repayment shall
then be permitted by and be in compliance with applicable law. Shares of Stock
so surrendered in accordance with clause (ii) or (iv) shall be valued at the
Fair Market Value thereof on the date of exercise, surrender of such Stock to be
evidenced by delivery of the certificate(s) representing such shares in such
manner, and endorsed in such form, or accompanied by stock powers endorsed in
such form, as the Committee may determine.

3.

Termination of Employment.

(a) If a Grantee's employment with the Corporation is terminated other than by
Disability or

death, the terms of any then outstanding Incentive Stock Option held by the
Grantee shall extend for a period ending on the earlier of the date on which
such Stock Option would otherwise expire or three months after such termination
of employment, and such Stock Option shall be exercisable to the extent it was
exercisable as of such last date of employment.

(b) If a Grantee's employment with the Corporation is terminated by reason of
Disability, the

term of any then outstanding Incentive Stock Option held by the Grantee shall
extend for a period ending on the earlier of the date on which such Stock Option
would otherwise expire or twelve months after such termination of employment,
and such Stock Option shall be exercisable to the extent it was exercisable as
of such last date of employment.

 

 

 

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(c) If a Grantee's employment with the Corporation is terminated by reason of
death, the

representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months after such date of death, to exercise any then outstanding Incentive
Stock Options in whole or in part. If a Grantee dies without having fully
exercised any then outstanding Incentive Stock Options, the representative of
his estate or beneficiaries thereof to whom the Stock Option has been
transferred shall have the right to exercise such Stock Options in whole or in
part.

4.

Stock Appreciation Rights

(a)

Grant. Stock Appreciation Rights related to all or any portion of an Incentive
Stock

Option may be granted by the Committee to any Grantee in connection with the
grant of an Incentive Stock Option or unexercised portion thereof held by the
Grantee at any time and from time to time during the term thereof. Each Stock
Appreciation Right shall be granted at least at Fair Market Value on the date of
grant and be subject to such terms and conditions not inconsistent with the
provisions of this Part II as shall be determined by the Committee and included
in the agreement relating to such Stock Appreciation Right, subject in any
event, however, to the following terms and conditions of this Section 4. Each
Stock Appreciation Right may include limitations as to the time when such Stock
Appreciation Right becomes exercisable and when it ceases to be exercisable that
are more restrictive than the limitations on the exercise of the Incentive Stock
Option to which it relates.

(b)

Exercise. No Stock Appreciation Right shall be exercisable with respect to such
related Incentive Stock Option or portion thereof unless such Incentive Stock
Option or portion shall itself be exercisable at that time. A Stock Appreciation
Right shall be exercised only upon surrender of the related Incentive Stock
Option or portion thereof in respect of which the Stock Appreciation Right is
then being exercised.

(c)

Amount of Payment. On exercise of a Stock Appreciation Right, a Grantee shall be

entitled to receive an amount equal to the product of (i) the amount by which
the Fair Market Value of a share of Stock on the date of exercise of the Stock
Appreciation Right exceeds the option price per share specified in the related
Incentive Stock Option and (ii) the number of shares of Stock in respect of
which the Stock Appreciation Right shall have been exercised.

(d)

Form of Payment. Stock Appreciation Rights may be settled in Stock, cash or a

combination thereof. The number of shares of Stock to be distributed shall be
the largest whole number obtained by dividing the amount otherwise distributable
in respect of such settlement by the Fair Market Value of a share of Stock on
the date of exercise of the Stock Appreciation Right. The value of fractional
shares of Stock shall be paid in cash.

(e)

 Effect of Exercise of Right or Related Option. If the related Incentive Stock
Option is

exercised in whole or in part, then the Stock Appreciation Right with respect to
the Stock purchased

pursuant to such exercise (but not with respect to any unpurchased Stock) shall
be terminated as of the date of exercise if such Stock Appreciation Right is not
exercised on such date.

(f)

Non-transferability. A Stock Appreciation Right shall not be transferable or
assignable by the Grantee other than by will or the laws of descent and
distribution, and shall be exercisable during theGrantee's lifetime only by the
Grantee.

(g) Termination of Employment. If the Grantee ceases to be an Employee of the
Corporation

for any reason, each outstanding Stock Appreciation Right shall be exercisable
for such period and to such extent as the related Incentive Stock Option or
portion thereof.

 

 

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III. NON-QUALIFIED STOCK OPTION PROVISIONS

1.

Granting of Stock Options.

(a) Officers, Employees, Directors and Consultants shall be eligible to receive
Non-Qualified

Stock Options under the Plan.

(b) The Committee shall determine and designate from time to time those
officers, Employees, Directors and Consultants who are to be granted
Non-Qualified Stock Options and the amount subject to each Non-Qualified Stock
Option.

(c) The Committee may grant at any time new Non-Qualified Stock Options to an
Employee,

Director or Consultant who has previously received Non-Qualified Stock Options
or other Stock Options, whether such prior Non-Qualified Stock Options or other
Stock Options are still outstanding, have previously been exercised in whole or
in part, or are cancelled in connection with the issuance of new Non-Qualified
Stock Options.

(d) The Committee shall determine the purchase price of each share of Stock
subject to a

Non-Qualified Stock Option. Such price shall not be less than 100% of the Fair
Market Value of such Stock on the date the Non-Qualified Stock Option is
granted.

(e) The Committee, in its sole discretion, shall determine whether any
particular

Non-Qualified Stock Option shall become exercisable in one or more installments,
specify the instalment dates, and, within the limitations herein provided,
determine the total period during which the Non-Qualified Stock Option is
exercisable. Further, the Committee may make such other provisions as may appear
generally acceptable or desirable to the Committee, including the extension of a
Non-Qualified Stock Option, provided that such extension does not extend the
option beyond the period specified in paragraph (f) below.

(f) No Non-Qualified Stock Option shall be exercisable more than ten years from
the date

such option is granted.

2.

 Exercise of Stock Options. The option price of a Non-Qualified Stock Option
shall be payable on exercise of the Stock Option (i) in cash or by check, bank
draft or postal or express money order, (ii) by the surrender of Stock then
owned by the Grantee, (iii) the proceeds of a loan from an independent
broker-dealer whereby the loan is secured by the option or the stock to be
received upon exercise, or (iv) any combination of the foregoing; provided, that
each such method and time for payment and each such borrowing and terms and
conditions of repayment shall then be permitted by and be in compliance with
applicable law. Shares of Stock so surrendered in accordance with clause (ii) or
(iv) shall be valued at the Fair Market Value thereof on the date of exercise,
surrender of such Stock to be evidenced by delivery of the certificate(s)
representing such

shares in such manner, and endorsed in such form, or accompanied by stock powers
endorsed in such form, as the Committee may determine.

3.

Termination of Relationship.

(a) If a Grantee's employment with the Corporation is terminated, a Director
Grantee ceases to be a Director, or a Consultant Grantee ceases to be a
Consultant, other than by reason of Disability or death, the terms of any then
outstanding Non-Qualified Stock Option held by the Grantee shall extend for a
period ending on the earlier of the date established by the Committee at the
time of grant or three months after the Grantee's last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of the date of termination of
employment or cessation of being a Director or Consultant.

(b) If a Grantee's employment is terminated by reason of Disability, a Director
Grantee ceases to be a Director by reason of Disability or a Consultant Grantee
ceases to be a Consultant by reason of Disability, the term of any then
outstanding Non-Qualified Stock Option held by the Grantee shall extend for a
period ending on the earlier of the date on which such Stock Option would
otherwise expire or twelve months after the Grantee's last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of such last date of employment
or cessation of being a Director or Consultant.

(c) If a Grantee's employment is terminated by reason of death, a Director
Grantee ceases to be a Director by reason of death or a Consultant Grantee
ceases to be a Consultant by reason of death, the representative of his estate
or beneficiaries thereof to whom the Stock Option has been transferred shall
have the right during the period ending on the earlier of the date on which such
Stock Option would otherwise expire or twelve months following his death to
exercise any then outstanding Non-Qualified Stock Options in whole or in part.
If a Grantee dies without having fully exercised any then outstanding
Non-Qualified Stock Options, the representative of his estate or beneficiaries
thereof to whom the Stock Option has been transferred shall have the right to
exercise such Stock Options in whole or in part.

4.

Stock Appreciation Rights

(a) Grant. Stock Appreciation Rights related to all or any portion of a
Non-Qualified Stock

Option may be granted by the Committee to any Grantee in connection with the
grant of a Non-Qualified Stock Option or unexercised portion thereof held by the
Grantee at any time and from time to time during the term thereof. Each Stock
Appreciation Right shall be granted at least at Fair Market Value on the date of
grant and be subject to such terms and conditions not inconsistent with the
provisions of this Part III as shall be determined by the Committee and included
in the agreement relating to such Stock Appreciation Right, subject in any
event, however, to the following terms and conditions of this Section 4. Each
Stock Appreciation Right may include limitations as to the time when such Stock
Appreciation Right becomes exercisable and when it ceases to be exercisable that
are more restrictive than the limitations on the exercise of the Non-Qualified
Stock Option to which it relates.

(b) Exercise. No Stock Appreciation Right shall be exercisable with respect to
such related

Non-Qualified Stock Option or portion thereof unless such Non-Qualified Stock
Option or portion shall itself be exercisable at that time. A Stock Appreciation
Right shall be exercised only upon surrender of the related Non-Qualified Stock
Option or portion thereof in respect of which the Stock Appreciation Right is
then being exercised.

 

 

 

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(c) Amount of Payment. On exercise of a Stock Appreciation Right, a Grantee
shall be

entitled to receive an amount equal to the product of (i) the amount by which
the Fair Market Value of a share of Stock on the date of exercise of the Stock
Appreciation Right exceeds the option price per share specified in the related
Non-Qualified Stock Option and (ii) the number of shares of Stock in respect of
which the Stock Appreciation Right shall have been exercised.

(d) Form of Payment. Stock Appreciation Rights may only be settled in Stock,
cash or any

combination thereof. The number of shares of Stock to be distributed shall be
the largest whole number obtained by dividing the amount otherwise distributable
in respect of such settlement by the Fair Market Value of a share of Stock on
the date of exercise of the Stock Appreciation Right. The value of fractional
shares of Stock shall be paid in cash.

(e) Effect of Exercise of Right or Related Option. If the related Non-Qualified
Stock Option

is exercised in whole or in part, then the Stock Appreciation Right with respect
to the Stock purchased pursuant to such exercise (but not with respect to any
unpurchased Stock) shall be terminated as of the date of exercise if such Stock
Appreciation Right is not exercised on such date.

(f) Non-transferability. A Stock Appreciation Right shall not be transferable or
assignable by

the Grantee other than by will or the laws of descent and distribution, and
shall be exercisable during the Grantee's lifetime only by the Grantee.

(g) Termination of Employment. If the Grantee ceases to be an officer, Employee,
Director or

Consultant of the Corporation for any reason, each outstanding Stock
Appreciation Right shall be

exercisable for such period and to such extent as the related Non-Qualified
Stock Option or portion thereof.

 

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IV. RESTRICTED STOCK AWARDS

1.

Grant of Restricted Stock.

(a) Officers, Employees, Directors and Consultants shall be eligible to receive
grants of Restricted Stock under the Plan.

(b) The Committee shall determine and designate from time to time those
officers, Employees, Directors and Consultants who are to be granted Restricted
Stock and the number of shares of Stock subject to such Stock Award.

(c) The Committee, in its sole discretion, shall make such terms and conditions
applicable to

the grant of Restricted Stock as may appear generally acceptable or desirable to
the Committee.

2.

Termination of Relationship.

(a) If a Grantee's employment with the Corporation, a Director Grantee ceases to
be a

Director, or a Consultant Grantee ceases to be a Consultant, prior to the lapse
of any restrictions applicable to the Restricted Stock such Stock shall be
forfeited and the Grantee shall return the certificates representing such Stock
to the Corporation.

(b) If the restrictions applicable to a grant of Restricted Stock shall lapse,
the Grantee shall

hold such Stock free and clear of all such restrictions except as otherwise
provided in the Plan.

V. ADJUSTMENTS UPON MERGER, REORGANIZATION, DISSOLUTION OR CHANGE IN

CONTROL

1.

Substitution of Options. In the event of a corporate merger or consolidation, or
the acquisition by the Corporation of property or stock of an acquired
corporation or any reorganization or other transaction qualifying under Section
424 of the Code, the Committee may, in accordance with the provisions of that
Section, substitute Stock Options, Stock Awards and Stock Appreciation Rights
under this Plan for Stock Options, Stock Awards and Stock Appreciation Rights
under the plan of the acquired corporation provided (i) the excess of the
aggregate Fair Market Value of the shares of Stock subject to Stock Option
immediately after the substitution over the aggregate option price of such Stock
is not more than the similar excess immediately before such substitution and
(ii) the new Stock Option does not give the Grantee additional benefits,
including any extension of the exercise period. Alternatively, the Committee may
provide, that each Stock Option, Stock Award and Stock Appreciation Right
granted under the Plan shall terminate as of a date to be fixed by the Board;
provided, that no less than thirty days written notice of the date so fixed
shall be given to each holder, and each holder shall have the right, during the
period of fifteen days preceding such termination, to exercise the Stock
Options, Stock Awards and Stock Appreciation Rights as to all

or any part of the Stock covered thereby, including Stock as to which such would
not otherwise be exercisable.

2.

Adjustment Provisions.

(a) In the event that a dividend shall be declared upon the Stock payable in
shares of the

Corporation's common stock, the number of shares of Stock then subject to any
Stock Option or Stock Award outstanding under the Plan and the number of shares
reserved for the grant of Stock Options or Stock Awards pursuant to the Plan
shall be adjusted by adding to each such share the number of shares which would
be distributable in respect thereof if such shares had been outstanding on the
date fixed for determining the shareholders of the Corporation entitled to
receive such share dividend.

 

 

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(b) If the shares of Stock outstanding are changed into or exchanged for a
different number or class or other securities of the Corporation or of another
corporation, whether through split-up, merger, consolidation, reorganization,
reclassification or recapitalization then there shall be substituted for each
share of Stock subject to any such Stock Option or Stock Award and for each
share of Stock reserved for the grant of Stock Options or Stock Awards pursuant
to the Plan the number and kind of shares or other securities into which each
outstanding share of Stock shall have been so changed or for which each share
shall have been exchanged.

(c) In the event there shall be any change, other than as specified above in
this Section 2, in

the number or kind of outstanding shares of Stock or of any shares or other
securities into which such shares shall have been changed or for which they
shall have been exchanged, then if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares theretofore reserved for the grant of Stock Options or Stock
Awards pursuant to the Plan and of the shares then subject to Stock Options or
Stock Awards, such adjustment shall be made by the Board and shall be effective
and binding for all purposes of the Plan and of each Stock Option and Stock
Award outstanding thereunder.

(d) Each Stock Appreciation Right outstanding at the time of any adjustment
pursuant to this

Section 2 and the number of outstanding Stock Appreciation Rights, shall be
adjusted, changed or

exchanged in the same manner as related Stock Options.

(e) In the case of any such substitution or adjustment as provided for in this
Section 2, the

option price set forth in each outstanding Stock Option for each share covered
thereby prior to such

substitution or adjustment will be the option price for all shares or other
securities which shall have been substituted for such share or to which such
share shall have been adjusted pursuant to this Section 2, and the price per
share shall be adjusted accordingly.

(f) No adjustment or substitution provided for in this Section 2 shall require
the Corporation

to sell a fractional share, and the total substitution or adjustment with
respect to each outstanding Stock Option shall be limited accordingly.

(g) Upon any adjustment made pursuant to this Section 2 the Corporation will,
upon request,

deliver to the Grantee a certificate setting forth the option price thereafter
in effect and the number and kind of shares or other securities thereafter
purchasable on the exercise of such Stock Option.

3.

Dissolution or Liquidation. In the event of a proposed dissolution or
liquidation of the

Corporation, to the extent an Award has not been previously exercised, it will
terminate immediately prior to the consummation of such proposed action.

4.

Change in Control. Notwithstanding Sections 1 and 2 above, in the event of a
Change of Control (as defined below), except as otherwise determined by the
Board, the Grantee shall fully vest in and have the right to exercise the Awards
as to all of the Stock, including Stock as to which it would not otherwise be
vested or exercisable. If an Award becomes fully vested and exercisable as the
result of a Change of Control, the Committee shall notify the Grantee in writing
or electronically prior to the Change of Control that the Award shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Award shall terminate upon the expiration of such period. For
purposes of this Agreement, a “Change of Control” means the happening of any of
the following events:

(a) When any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities

Exchange Act of 1934, as amended (“Exchange Act”) (other than the Corporation, a
Subsidiary or a

Corporation employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Corporation
representing fifty percent (50%) or more of the combined voting power of the
Corporation’s then outstanding securities entitled to vote generally in the
election of directors; or

 

 

 

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(b) The stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Corporation approve an agreement for the sale or disposition by the Corporation
of all or substantially all the Corporation’s assets; or

(c) A change in the composition of the Board of the Corporation, as a result of
which fewer

than a majority of the directors are Incumbent Directors. “Incumbent Directors”
shall mean directors who either (A) are directors of the Corporation as of the
date the Plan is approved by the stockholders, or (B) are elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Corporation).

VI. INDEMNIFICATION

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnifiedand held harmless by the Corporation against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, notion,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan or
any Award agreement and against and from any and all amounts paid by him or her
in settlement thereof, with the Corporation’s approval, or paid by him or her in
settlement thereof, with the Corporation’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Corporation an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her 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 Corporation’s Articles of

Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Corporation may have to indemnify them or hold them harmless.

VII. CONDITIONS UPON ISSUANCE OF SHARES

1.

Legal Compliance. Stock shall not be issued pursuant to the exercise of an Award
unless the

exercise of such Award and the issuance and delivery of Stock shall comply with
applicable laws and shall be further subject to the approval of counsel for the
Corporation with respect to such compliance.

2.

Investment Representations. As a condition to the exercise of an Award, the
Corporation may require the Grantee exercising such Award to represent and
warrant at the time of any such exercise that the Stock is being purchased only
for investment and without any present intention to sell or distribute such
Stock if, in the opinion of counsel for the Corporation, such a representation
is required.

3.

No Rights as Stockholder. No Grantee will have any of the rights of a
stockholder with respect to any Stock until the Stock is issued to the said
Grantee. After Stock is issued to the Grantee, the Grantee will be a stockholder
and will have all the rights of a stockholder with respect to such Stock,
including the right to vote and receive all dividends or other distributions
made or paid with respect to such Stock.

 

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VIII. LEGAL CONSTRUCTION

1.

Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

2.

Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, such 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.

3.

Requirements of Law. The granting of Awards and the issuance of Stock under the
Plan shall be subject to all applicable laws.

4.

Governing Law. The Plan and all Award agreements shall be construed in
accordance with and governed by the laws of the Province of British Columbia.

5.

Captions. Captions are provided herein for convenience only, and shall not serve
as a basis for interpretation or construction of the Plan.

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