Neither THIS OPTION nor the shares issuable upon exercise of the option HAve
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE ACT OR THE LAWS OF THE APPLICABLE
STATE OR A “NO ACTION” OR INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND
ITS COUNSEL, TO THE EFFECT THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE ACT AND SUCH STATE STATUTES.

 

White Mountain Titanium Corporation

 

STOCK OPTION AGREEMENT

  

White Mountain Titanium Corporation, a Nevada corporation (the “Company”),
desiring to afford an opportunity to Wei Lu (the “Grantee”) to purchase certain
shares of the Company’s common stock (the “Common Stock”), to provide the
Grantee with an added incentive to serve as a director of the Company, hereby
grants to the Grantee, and the Grantee hereby accepts, an option to purchase the
number of such shares specified below, during the term ending at midnight
(prevailing local time at the Company’s principal offices) on the expiration
date of this option specified below, at the option exercise price specified
below, subject to and upon the following terms and conditions:

  

1.           Grant of Option. The Company hereby irrevocable grants to Grantee
the right and option to purchase all or any part of an aggregate of 82,500
shares of Common Stock on the terms and conditions hereof (the “Option”). This
Option is not intended to be and shall not be treated as an incentive stock
option under Section 422 of the Internal Revenue Code.

 

2.           Exercise Price. The exercise price of this Option shall be $1.00
per share.

 

3.           Expiration Date. This Option shall expire five years from the
commencement of the term of appointment as director on June 30, 2013.

 

4.           Method of Exercise. This Option may be exercised by delivery of a
notice of exercise, a form of which is attached hereto as Exhibit “A” and
incorporated herein by this reference, setting forth the number of Options to be
exercised together with either:

 

a.           A certified check or bank check payable to the order of the Company
in the amount of the full exercise price of the Common Stock being purchased;

 

 

 

 

b.           Shares of Common Stock of the Company already owned by the Grantee
equal to the exercise price with the Common Stock valued at its fair market
value based on the closing sale price for the Common Stock on the day last
preceding the date of the exercise of such Option, as reported on the OTC
Bulletin Board; provided that, if the Common Stock is not quoted on the OTC
Bulletin Board, as reported on the principal national security exchange or
quotation system on which such security is quoted or listed or admitted for
trading, or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the closing bid price of such security
on the over-the-counter market as reported by Bloomberg LP or similar generally
accepted reporting service, as the case may be;

 

c.           Options granted hereby valued at the amount by which the fair
market value (as determined in accordance with subparagraph (b) above) of the
Common Stock subject to these options exceeds the exercise or purchase price
provided on such options; or

 

d.           Cancellation of debt owed by the Company to the Grantee, including
debt incurred for professional services rendered, employment relationships, or
otherwise, upon presentation of an invoice for services provided to the Company.

 

As soon as practicable after receipt by the Company of such notice, a
certificate or certificates representing such shares of Common Stock shall be
issued in the name of the Grantee, or, if the Grantee shall so request in the
notice exercising the Option, in the name of the Grantee and another person
jointly, with right of survivorship, and shall be delivered to the Grantee. If
this Option is not exercised with respect to all Common Stock subject hereto,
Grantee shall be entitled to receive a similar Option of like tenor covering the
number of shares of Common Stock with respect to which this Option shall not
have been exercised.

 

5.           Shareholder’s Rights. The Grantee shall have the rights of a
shareholder only with respect to Common Stock fully paid for by Grantee under
this Option.

 

6.           Transferability. Except upon the prior written consent of the
Company, the Option shall be exercisable only by the Grantee and shall not be
assignable or transferable, in whole or in part, other than by will or by the
laws of descent and distribution. Any such transfer shall be accompanied by an
assignment of interest form, attached hereto as Exhibit “B” and incorporated
herein, whereby the transferee agrees to be bound by the terms of this Option.

 

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7.           Adjustment to Number of Shares of Common Stock. In the event that
the number of shares of Common Stock of the Company from time to time issued and
outstanding is increased pursuant to a stock split or a stock dividend, the
number of shares of Common Stock then covered by this Option shall be increased
proportionately, with no increase in the total purchase price of the shares then
so covered. In the event that the number of shares of Common Stock of the
Company from time to time issued and outstanding is reduced by a combination or
consolidation of shares, the number of shares of Common Stock then covered by
this Option shall be reduced proportionately, with no reduction in the total
purchase price of the shares then so covered. In the event that the Company
should transfer assets to another corporation and distribute the stock of such
other corporation without the surrender of Common Stock of the Company, and if
such distribution is not taxable as a dividend and no gain or loss is recognized
by reason of section 355 of the Internal Revenue Code, or any amendment or
successor statute of like tenor, then the total purchase price of the Common
Stock then covered by each outstanding Option shall be reduced by an amount that
bears the same ratio to the total purchase price then in effect as the market
value of the stock distributed in respect of a share of the Common Stock of the
Company, immediately following the distribution, bears to the aggregate of the
market value at such time of a share of the Common Stock of the Company plus the
stock distributed in respect thereof. In the event that the Company distributes
the stock of a subsidiary to its shareholders, makes a distribution of a major
portion of its assets, or otherwise distributes significant portion of the value
of its issued and outstanding Common Stock to its shareholders, the number of
shares then subject to this Option, or the exercise price of this Option, may be
adjusted in the reasonable discretion of the Board or a duly authorized
committee. All such adjustments shall be made by the Board or duly authorized
committee, whose determination upon the same, absent demonstrable error, shall
be final and binding. No fractional shares shall be issued, and any fractional
shares resulting from the computations pursuant to this section shall be
eliminated from this Option. No adjustment shall be made for cash dividends, for
the issuance of additional shares of Common Stock for consideration approved by
the Board, or for the issuance to stockholders of rights to subscribe for
additional Common Stock or other securities.

 

8.           Withholding. If the exercise of this Option is subject to
withholding taxes, such requirements may, at the discretion of the Board or a
duly authorized committee, and to the extent permitted by the then governing
provisions of law, be met (i) by the holder of this Option either delivering
shares of Common Stock or canceling Options with a fair market value equal to
such requirements, such fair market value to be determined by the Board; (ii) by
the Company withholding shares of Common Stock subject to this Option with a
fair market value equal to such requirements, such fair market value to be
determined by the Board; (iii) by the Grantee delivering with the Form of
Exercise funds equal to the amount of such taxes; or (iv) by the Company making
such withholding payments and the Grantee reimbursing the Company such amount
paid within 10 days after written demand therefor from the Company. In no event,
however, shall the Company be permitted to require payment from the Grantee in
excess of the maximum required tax withholding rates.

 

9.           Availability of Shares. During the term of this Option, the Company
shall at all times reserve for issuance the number of shares of Common Stock
subject to this Option.

 

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10.         Requirements of Law. By accepting this Option, the Grantee
represents and agrees for himself and his transferees that, unless a
registration statement under the Securities Act of 1933 is in effect as to
shares purchased upon any exercise of this Option, (a) any and all shares so
purchased shall be acquired for his personal account and not with a view to or
for sale in connection with any distribution, and (b) each notice of the
exercise of any portion of this Option shall be accompanied by a representation
and warranty in writing, signed by the person entitled to exercise the same,
that the shares are being so acquired in good faith for his personal account and
not with a view to or for sale in connection with any distribution. No
certificate or certificates for shares of stock purchased upon exercise of this
Option shall be issued and delivered unless and until, in the opinion of legal
counsel for the Company, such securities may be issued and delivered without
causing the Company to be in violation of or incur any liability under any
federal, state, or other securities law or any other requirement of law or of
any regulatory body having jurisdiction over the Company. The Grantee, for
himself and his transferees, agrees to provide information reasonably requested
by the Company in order to satisfy the requirements of any exemption from the
registration provisions of federal or state securities laws.

 

11.         No Right of Employment. Nothing contained in this Option shall be
construed as conferring on the Grantee any right to continue or remain as an
employee of the Company or its subsidiaries.

 

13.         Miscellaneous

 

a.           Notices. All communications provided for herein shall be in writing
and shall be deemed to be given or made when served personally or when deposited
in the United States mail, certified return receipt requested, addressed as
follows, or at such other address as shall be designated by any party hereto in
written notice to the other party hereto delivered pursuant to this subsection:

 

Grantee: At the address set forth on the signature page.     Company: Enrique
Foster Sur 20, Piso 19   Las Condes, Santiago   Chile     with copy to: Ronald
N. Vance   Attorney at Law   1656 Reunion Avenue   Suite 250   South Jordan, UT
84095

 

b.           Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party shall
pay all costs and expenses, including a reasonable attorney’s fee, which may
arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by statute.

 

c.           Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.

 

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d.           Partial Invalidity. If any term, covenant, condition, or provision
of this Agreement or the application thereof to any person or circumstance shall
to any extent be invalid or unenforceable, the remainder of this Agreement or
application of such term or provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition, or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.

 

e.           Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions, and
preliminary agreements between the parties hereto relating to the subject matter
of this Agreement.

 

f.            Interpretation of Agreement. This Agreement shall be interpreted
and construed as if equally drafted by all parties hereto.

 

g.           Survival of Covenants, Etc. All covenants, representations, and
warranties made herein to any party, or in any statement or document delivered
to any party hereto, shall survive the making of this Agreement and shall remain
in full force and effect until the obligations of such party hereunder have been
fully satisfied.

 

h.           Further Action. The parties hereto agree to execute and deliver
such additional documents and to take such other and further action as may be
required to carry out fully the transactions contemplated herein.

 

i.            Amendment. This Agreement or any provision hereof may not be
changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom enforcement
of the change, waiver, termination, or discharge is sought.

 

j.            Full Knowledge. By their signatures, the parties acknowledge that
they have carefully read and fully understand the terms and conditions of this
Agreement, that each party has had the benefit of counsel, or has been advised
to obtain counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.

 

k.          Headings. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.

 

l.            Counterparts. This Agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.

 

IN WITNESS WHEREOF, each of the parties hereto has executed this document the
respective day and year set forth below.

 

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Company:   White Mountain Titanium Corporation       Date:  March 5, 2009 By /s/
Brian Flower         Its: Executive Chairman

 

Grantee:       Date:  March 5, 2009 /s/ Wei Lu   Wei Lu       120 Lindon Street
  Address   Needham, MA 02492        

   

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EXHIBIT “A”

 

FORM OF EXERCISE

(To be signed only upon exercise of Option)

 

To: White Mountain Titanium Corporation (the “Company”)

 

The undersigned, the owner of the attached Option, hereby irrevocable elects to
exercise the purchase rights represented by the Option for, and to purchase
thereunder, __________________ shares of Common Stock of the Company.

 

1.           Payment. Enclosed is payment of the exercise price of the Common
Stock to be acquired in the following form of payment:

 

a.   A certified check or bank check in the amount of $__________________;

b.   ___________________ shares of Common Stock valued at
$_______________________;

c.   Cancellation of __________________ options valued at $__________________;
and/or

d.   Cancellation of debt in the amount of $_______________.

 

2.           Certificate Information. Please have the certificate(s) registered
in the name of ______________________ and delivered to
________________________________________. If this exercise does not include all
of the Common Stock covered by the attached Option, please deliver a new Option
of like tenor for the balance of the Common Stock to the undersigned at the
foregoing address.

 

3.          Restricted Securities. The shares of Common Stock issued pursuant to
this exercise have not been registered under the Securities Act and are being
issued to the undersigned in reliance upon the exemption from such registration
as noted below. The undersigned hereby confirms that he has been informed that
the shares are restricted securities under the Securities Act and may not be
resold or transferred unless they are first registered under the Federal
securities laws or unless an exemption from such registration is available.
Accordingly, the undersigned acknowledges that he is prepared to hold the shares
for an indefinite period. The shares are being issued under the Securities Act
pursuant to (check the applicable box):

 

¨the exemption in Rule 504;

¨the exemption in Rule 505;

¨the exemption in Rule 506;

¨the exemption in Section 4(2);

¨the exemption in Section 4(6);

¨a Regulation A Offering Circular, dated _____________;

   

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¨other: ________________________________.

  

4.           Restrictions on Disposition of Shares. The undersigned shall make
no disposition of the shares unless and until the undersigned shall have:

 

(a)          provided the Company with a written summary of the terms and
conditions of the proposed disposition.

 

(b)          complied with all requirements of this Agreement applicable to the
disposition of the shares.

 

(c)          provided the Company with written assurances, in form and substance
satisfactory to the Company, that (i) the proposed disposition does not require
registration of the shares under the Securities Act, or (ii) all appropriate
action necessary for compliance with the registration requirements of the
Securities Act or any exemption from registration available under the Securities
Act (including Rule 144) has been taken.

 

The Company shall not be required (i) to transfer on its books any shares which
have been sold or transferred in violation of the provisions of this Agreement,
or, (ii) to treat as the owner of the shares, or otherwise to accord voting,
dividend or liquidation rights to, any transferee to whom the shares have been
transferred in contravention of this Agreement.

 

5.           The stock certificates for the shares shall be endorsed with
restrictive legends substantially similar to the following:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS OR UNTIL REGISTERED UNDER THE
SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER OF THE SECURITIES SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

DATED this ___________ day of ____________________ 200____.

 

      Signature of Grantee

 

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EXHIBIT “B”

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

               

(Please print or type name and address)

 

Please insert social security or other identifying number:
_________________________

 

_____________ of the Options represented by this Stock Option Agreement, and
hereby irrevocably constitutes and appoints any officer of the Company or its
transfer agent and registrar as lawful Attorney to transfer this Option on the
books of the Company, with full power of substitution in the premises.

 

Dated: ____________, 200___

      Signature of Registered Owner           Print Name       IMPORTANT: Every
registered owner of this Option must sign it to assign or otherwise transfer the
Options.  The above signature or signatures must correspond with the name or
names of the registered owner of the Options on the books and records of the
Company in every particular, without alteration, enlargement or any change
whatever.

 

The undersigned transferee hereby agrees to be bound by the terms and conditions
of the Stock Option Agreement dated February 6th, 2009, by and between the
Company and John May

Dated: ____________, 200___

      Signature of Transferee           Print Name

 

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