Document:

EXHIBIT 10.26
                                FORM OF DEBENTURE

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

AMOUNT                                            $120,000
DEBENTURE NUMBER                                  JUNE-2002-101
ISSUANCE DATE                                     JUNE 12, 2002
MATURITY DATE                                     JUNE 12, 2004

     FOR VALUE RECEIVED, CAN-CAL Resources, Ltd., a Nevada corporation (the
"Company"), hereby promises to pay DUTCHESS PRIVATE EQUITIES FUND, L.P. (the
"Holder") on June 12, 2004, (the "Maturity Date"), the principal amount of One
Hundred Twenty Thousand Dollars ($120,000) U.S., and to pay interest on the
principal amount hereof, in such amounts, at such times and on such terms and
conditions as are specified herein.

Article 1. Interest

     The Company shall pay interest on the unpaid principal amount of this
Debenture (the "Debenture") at the time of each conversion until the principal
amount hereof is paid in full or has been converted. The Debentures shall pay
eight percent (8%) cumulative interest, in cash or in shares of common stock,
par value $.001 per share, of the Company ("Common Stock"), at the Company's
option, at the time of each conversion. The closing shall be deemed to have
occurred on the date the funds (less advisory fees, escrow fees and attorney
fees) are received by the Company (the "Closing Date"). If the interest is to be
paid in cash, the Company shall make such payment within five (5) business days
of the date of conversion. If the interest is to be paid in Common Stock, said
Common Stock shall be delivered to the Holder, or per Holder's instructions,
within five (5) business days of the date of conversion. The Debentures are
subject to automatic conversion at the end of two (2) years from the date of
issuance at which time all Debentures outstanding will be automatically
converted based upon the formula set forth in Section 3.2.

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Article 2. Method of Payment

     This Debenture must be surrendered to the Company in order for the Holder
to receive payment of the principal amount hereof. The Company shall have the
option of paying the interest on this Debenture in United States dollars or in
Common Stock upon conversion pursuant to Article 1 hereof. The Company may draw
a check for the payment of interest to the order of the Holder of this Debenture
and mail it to the Holder's address as shown on the Register (as defined in
Section 7.2 below). Interest and principal payments shall be subject to
withholding under applicable United States Federal Internal Revenue Service
Regulations.

Article 3.  Conversion

     Section 3.1. Conversion Privilege

     (a) The Holder of this Debenture shall have the right to convert it into
shares of Common Stock at any time following the Closing Date and which is
before the close of business on the Maturity Date, except as set forth in
Section 3.1(c) below. The number of shares of Common Stock issuable upon the
conversion of this Debenture is determined pursuant to Section 3.2 and rounding
the result to the nearest whole share.

     (b) Less than all of the principal amount of this Debenture may be
converted into Common Stock if the portion converted is $5,000 or a whole
multiple of $5,000 and the provisions of this Article 3 that apply to the
conversion of all of the Debenture shall also apply to the conversion of a
portion of it. This Debenture may not be converted, whether in whole or in part,
except in accordance with Article 3.

     (c) In the event all or any portion of this Debenture remains outstanding
on the Maturity Date, the unconverted portion of such Debenture will
automatically be converted into shares of Common Stock on such date in the
manner set forth in Section 3.2.

     Section 3.2. Conversion Procedure.

     (a) Debentures. Upon receipt by the Company or its designated attorney of a
facsimile or original of Holder's signed Notice of Conversion (See Exhibit A
attached hereto) preceded by, together with or followed by receipt of the
original Debenture to be converted in whole or in part in the manner set forth
in 3.2(b) below, the Company shall instruct its transfer agent to issue one or
more Certificates representing that number of shares of Common Stock into which
the Debenture is convertible. The Company shall act as Registrar and shall
maintain an appropriate ledger containing the necessary information with respect
to each Debenture.

     (b) Conversion Procedures. The face amount of this Debenture may be
converted, in whole or in part, anytime following the Closing Date. Such
conversion shall be effectuated by surrendering to the Company, or its attorney,
this Debenture to be converted together with a facsimile or original of the
signed Notice of Conversion which evidences Holder's intention to convert the
Debenture indicated. The date on which the Notice of Conversion is effective
("Conversion Date") shall be deemed to be the date on which the Holder has
delivered to the Company a facsimile or original of the signed Notice of
Conversion, as long as the original

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Debenture(s) to be converted are received by the Company within five (5)
business days thereafter. Notwithstanding the above, any Notice of Conversion
not received by 5:00 P.M. EST, shall be deemed to have been received the next
business day.

     (c) Common Stock to be Issued. Upon the conversion of any Debentures and
upon receipt by the Company or its attorney of a facsimile or original of
Holder's signed Notice of Conversion the Company shall instruct its transfer
agent to issue stock certificates without restrictive legend or stop transfer
instructions, if at that time the Registration Statement has been deemed
effective (or with proper restrictive legend if the Registration Statement has
not as yet been declared effective), in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion, as applicable. The Company warrants that no instructions, other than
these instructions, have been given or will be given to the transfer agent and
that the Common Stock shall otherwise be freely resold, except as may be set
forth herein.

     (d) Conversion Rate. Holder is entitled to convert the face amount of this
Debenture, plus accrued interest, anytime following the Closing Date, at the
lesser of (i) $0.41; (ii) 100% of the average of the lowest five (5) closing bid
prices during the fifteen (15) trading days prior to the Closing Date or (iii)
80% of the average of the three (3) lowest closing bid prices during the fifteen
(15) trading days prior to conversion, each being referred to as the "Conversion
Price". No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share.

     (e) Nothing contained in this Debenture shall be deemed to establish or
require the payment of interest to the Holder at a rate in excess of the maximum
rate permitted by governing law. In the event that the rate of interest required
to be paid exceeds the maximum rate permitted by governing law, the rate of
interest required to be paid thereunder shall be automatically reduced to the
maximum rate permitted under the governing law and such excess shall be returned
with reasonable promptness by the Holder to the Company.

     (f) It shall be the Company's responsibility to take all necessary actions
and to bear all such costs to issue the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter to the
transfer agent, if so required. The person in whose name the certificate of
Common Stock is to be registered shall be treated as a shareholder of record on
and after the conversion date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Holder a new Debenture equal
to the unconverted amount, if so requested in writing by Holder.

     (g) Within five (5) business days after receipt of the documentation
referred to above in Section 3.2(b), the Company shall deliver a certificate, in
accordance with Section 3.2(c) for the number of shares of Common Stock issuable
upon the conversion. In the event the Company does not make delivery of the
Common Stock, as instructed by Holder, within five (5) business days after the
Conversion Date, then in such event the Company shall pay to Holder one percent
(1%) in cash, of the dollar value of the Debentures being converted per each day
after the fifth (5th) business day following the Conversion Date that the Common
Stock is not delivered to the Purchaser.

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     The Company acknowledges that its failure to deliver the Common Stock
within five (5) business days after the Conversion Date will cause the Holder to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Debenture a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of this
Debenture.

     To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 3.2(g) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 3.2(g) shall not
apply but instead the provisions of Section 3.2(h) shall apply.

     The Company shall make any payments incurred under this Section 3.2(g) in
immediately available funds within five (5) business days from the date the
Common Stock is fully delivered. Nothing herein shall limit a Holder's right to
pursue actual damages or cancel the conversion for the Company's failure to
issue and deliver Common Stock to the Holder within five (5) business days after
the Conversion Date.

     (h) The Company shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have available all
Common Stock necessary to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock (or alternative shares of Common Stock as may be
contributed by Stockholders) available to effect, in full, a conversion of the
Debentures (a "Conversion Default", the date of such default being referred to
herein as the "Conversion Default Date"), the Company shall issue to the Holder
all of the shares of Common Stock which are available, and the Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted Debentures"), may be deemed null and void upon written notice sent
by the Holder to the Company. The Company shall provide notice of such
Conversion Default ("Notice of Conversion Default") to all existing Holders of
outstanding Debentures, by facsimile, within three (3) business day of such
default (with the original delivered by overnight or two day courier), and the
Holder shall give notice to the Company by facsimile within five business days
of receipt of the original Notice of Conversion Default (with the original
delivered by overnight or two day courier) of its election to either nullify or
confirm the Notice of Conversion.

         The Company agrees to pay to all Holders of outstanding Debentures
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Holder where N = the number
of days from the Conversion Default Date to the date (the "Authorization Date")
that the Company authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of

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Common Stock have been authorized, the Authorization Date and the amount of
Holder's accrued Conversion Default Payments. The accrued Conversion Default
shall be paid in cash or shall be convertible into Common Stock at the
Conversion Rate, upon written notice sent by the Holder to the Company, which
Conversion Default shall be payable as follows: (i) in the event Holder elects
to take such payment in cash, cash payments shall be made to such Holder of
outstanding Debentures by the fifth day of the following calendar month, or (ii)
in the event Holder elects to take such payment in stock, the Holder may convert
such payment amount into Common Stock at the conversion rate set forth in
section 3.2(d) at anytime after the 5th day of the calendar month following the
month in which the Authorization Notice was received, until the expiration of
the mandatory two (2) year conversion period.

     The Company acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Holder to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture. Nothing herein shall limit the Holder's
right to pursue actual damages for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock.

     (i) If, by the fifth (5th) business day after the Conversion Date of any
portion of the Debentures to be converted (the "Delivery Date"), the transfer
agent fails for any reason to deliver the Common Stock upon conversion by the
Holder and after such Delivery Date, the Holder purchases, in an open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") solely
in order to make delivery in satisfaction of a sale of Common Stock by the
Holder (the "Sold Shares"), which delivery such Holder anticipated to make using
the Common Stock issuable upon conversion (a "Buy-In"), the Company shall pay to
the Holder, in addition to any other amounts due to Holder pursuant to this
Debenture, and not in lieu thereof, the Buy-In Adjustment Amount (as defined
below). The "Buy In Adjustment Amount" is the amount equal to the excess, if
any, of (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Holder from the sale of the Sold Shares.
The Company shall pay the Buy-In Adjustment Amount to the Holder in immediately
available funds within five (5) business days of written demand by the Holder.
By way of illustration and not in limitation of the foregoing, if the Holder
purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which the Company will be required to pay to the Holder will be $1,000.

     (j) The Company shall furnish to Holder such number of prospectuses and
other documents incidental to the registration of the shares of Common Stock
underlying the Debentures, including any amendment of or supplements thereto.

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     (k) Limitation on Issuance of Shares. If the Company's Common Stock becomes
listed on the Nasdaq SmallCap Market after the issuance of the Debentures, the
Company may be limited in the number of shares of Common Stock it may issue by
virtue of (X) the number of authorized shares or (Y) the applicable rules and
regulations of the principal securities market on which the Common Stock is
listed or traded, including, but not necessarily limited to, NASDAQ Rule
4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable (collectively, the
"Cap Regulations"). Without limiting the other provisions thereof, the
Debentures shall provide that (i) the Company will take all steps reasonably
necessary to be in a position to issue shares of Common Stock on conversion of
the Debentures without violating the Cap Regulations and (ii) if, despite taking
such steps, the Company still cannot issue such shares of Common Stock without
violating the Cap Regulations, the holder of a Debenture which cannot be
converted as result of the Cap Regulations (each such Debenture, an "Unconverted
Debenture") shall have the right to elect either of the following remedies:

          (x) if permitted by the Cap Regulations, require the Company to
     issue shares of Common Stock in accordance with such holder's Notice
     of Conversion at a conversion purchase price equal to the average of
     the closing bid price per share of Common Stock for any five (5)
     consecutive trading days (subject to certain equitable adjustments for
     certain events occurring during such period) during the sixty (60)
     trading days immediately preceding the Conversion Date; or

          (y) require the Company to redeem each Unconverted Debenture for
     an amount (the "Redemption Amount"), payable in cash, equal to the sum
     of (i) one hundred thirty-three percent (133%) of the principal of an
     Unconverted Debenture, plus (ii) any accrued but unpaid interest
     thereon through and including the date (the "Redemption Date") on
     which the Redemption Amount is paid to the holder.

     A holder of an Unconverted Debenture may elect one of the above remedies
with respect to a portion of such Unconverted Debenture and the other remedy
with respect to other portions of the Unconverted Debenture. The Debentures
shall contain provisions substantially consistent with the above terms, with
such additional provisions as may be consented to by the Holder. The provisions
of this section are not intended to limit the scope of the provisions otherwise
included in the Debentures.

     (l) Limitation on Amount of Conversion and Ownership. Notwithstanding
anything to the contrary in this Debenture, in no event shall the Holder be
entitled to convert that amount of Debenture, and in no event shall the Company
permit that amount of conversion, into that number of shares, which when added
to the sum of the number of shares of Common Stock beneficially owned, (as such
term is defined under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act of 1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99% of the number of shares of Common Stock outstanding on the Conversion
Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act. In the
event that the number of shares of Common Stock outstanding as determined in
accordance with Section 13(d) of the 1934 Act is different on any Conversion
Date than it was on the Closing Date, then the number of shares of Common Stock
outstanding on such Conversion Date shall govern for purposes of

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determining whether the Holder would be acquiring beneficial ownership of more
than 4.99% of the number of shares of Common Stock outstanding on such
Conversion Date.

     (m) Legend. The Holder acknowledges that each certificate representing the
Debentures, and the Common Stock unless registered pursuant to the Registration
Rights Agreement, shall be stamped or otherwise imprinted with a legend
substantially in the following form:

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
     SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
     EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, (ii) TO THE EXTENT APPLICABLE,
     RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO
     THE DISPOSITION OF SECURITIES), OR (iii) IF AN EXEMPTION FROM
     REGISTRATION UNDER SUCH ACT IS AVAILABLE.

     (n) Prior to conversion of all the Debentures and exercise of all the
Warrants, if at anytime the conversion of all the Debentures and exercise of all
the Warrants outstanding would result in an insufficient number of authorized
shares of Common Stock being available to cover all the conversions, then in
such event, the Company will move to call and hold a shareholder's meeting or
have shareholder action with written consent of the proper number of
shareholders within thirty (30) days of such event, or such greater period of
time if statutorily required or reasonably necessary as regards standard
brokerage house and/or SEC requirements and/or procedures, for the purpose of
authorizing additional shares of Common Stock to facilitate the conversions. In
such an event management of the Company shall recommend to all shareholders to
vote their shares in favor of increasing the authorized number of shares of
Common Stock. Management of the Company shall vote all of its shares of Common
Stock in favor of increasing the number of shares of authorized Common Stock.
Company represents and warrants that under no circumstances will it deny or
prevent Holder's right to convert the Debentures as permitted under the terms of
this Subscription Agreement or the Registration Rights Agreement. Nothing in
this Section shall limit the obligation of the Company to make the payments set
forth in Section 3.2(g). In the event the Company's shareholder's meeting does
not result in the necessary authorization, the Company shall redeem the
outstanding Debentures for an amount equal to (x) the sum of the principal of
the outstanding Debentures plus accrued interest thereon multiplied by (y) 133%.

     (o) Redemption. The Company shall use its best efforts to file an amended
Registration Statement (such as a Form S-1, Form S-2, Form S-3, etc) with the
SEC covering all underlying shares within 45 calendar days of closing date. The
Company shall use its best efforts to have the Registration Statement declared
effective within 105 calendar days following the closing date. The Company must
also respond to any comments from SEC regarding the registration within 15
calendar days. In the event that the Company (a) does not have the Registration
Statement filed within 45 calendar days of Closing Date; (b) does not have the
Registration Statement declared effective within 105 calendar days following the
Closing Date or (c) does not respond to any comments from SEC regarding the
registration within 15 calendar days following receipt

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from the SEC, then in such event, in the Investor's sole and absolute discretion
pursuant to written notice sent to the Company, the Company must issue put
notices to draw down on the equity line with the proceeds being credited against
120% of the principal amount owed on the Debenture, plus accrued interest, and
such draw downs shall continue until the earlier of the date the Debenture is
redeemed in full or the date the Registration Statement is declared effective.

     Section 3.3. Fractional Shares. The Company shall not issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
conversion of this Debenture. Instead, the Company shall round up or down, as
the case may be, to the nearest whole share.

     Section 3.4. Taxes on Conversion. The Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion of this Debenture. However, the Holder shall pay any
such tax which is due because the shares are issued in a name other than its
name.

     Section 3.5. Company to Reserve Stock. The Company shall reserve the number
of shares of Common Stock required pursuant to and upon the terms set forth in
the Subscription Agreement to permit the conversion of this Debenture. All
shares of Common Stock which may be issued upon the conversion hereof shall upon
issuance be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof.

     Section 3.6. Restrictions on Sale. This Debenture has not been registered
under the Securities Act of 1933, as amended, (the "Act") and is being issued
under Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
Act. This Debenture and the Common Stock issuable upon the conversion thereof
may only be sold pursuant to registration under or an exemption from the Act.

     Section 3.7. Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.

Article 4.  Mergers

     The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes in
writing the obligations of the Company under this Debenture and immediately
after such transaction no Event of Default exists. Any reference herein to the
Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written assumption.

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Article 5.  Reports

     The Company will mail to the Holder hereof at its address as shown on the
Register a copy of any annual, quarterly or current report that it files with
the Securities and Exchange Commission promptly after the filing thereof and a
copy of any annual, quarterly or other report or proxy statement that it gives
to its shareholders generally at the time such report or statement is sent to
shareholders.

Article 6.  Defaults and Remedies

     Section 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture by
conversion into Common Stock within ten (10) business days of the Maturity Date,
upon redemption or otherwise, (b) the Company does not make a payment, other
than a payment of principal, for a period of five (5) business days thereafter,
(c) any of the Company's representations or warranties contained in the
Subscription Agreement or this Debenture were false when made or the Company
fails to comply with any of its other agreements in the Subscription Agreement
or this Debenture and such failure continues for the period and after the notice
specified below, (d) the Company pursuant to or within the meaning of any
Bankruptcy Law (as hereinafter defined): (i) commences a voluntary case; (ii)
consents to the entry of an order for relief against it in an involuntary case;
(iii) consents to the appointment of a Custodian (as hereinafter defined) of it
or for all or substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors or (v) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for
relief against the Company in an involuntary case; (B) appoints a Custodian of
the Company or for all or substantially all of its property or (C) orders the
liquidation of the Company, and the order or decree remains unstayed and in
effect for sixty (60) calendar days, (e) the Company's Common Stock is suspended
or no longer listed on any recognized exchange including electronic
over-the-counter bulletin board for in excess of five (5) consecutive trading
days. As used in this Section 6.1, the term "Bankruptcy Law" means Title 11 of
the United States Code or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. A default under clause (c) above
is not an Event of Default until the holders of at least 25% of the aggregate
principal amount of the Debentures outstanding notify the Company of such
default and the Company does not cure it within thirty (30) business days after
the receipt of such notice, unless the Company commences to cure such default
within such period, which must specify the default, demand that it be remedied
and state that it is a "Notice of Default".

     Section 6.2. Acceleration. If an Event of Default occurs and is continuing,
the Holder hereof by notice to the Company, may declare the remaining principal
amount of this Debenture, together with all accrued interest and any liquidated
damages, to be due and payable. Upon such declaration, the remaining principal
amount shall be due and payable immediately.

         Section 6.3 Concerning Seniority. Except as disclosed in the Company's
SEC filings, no indebtedness of the Company is senior to this Debenture in right
of payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise.

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     Section 6.4 Liquidation Value. The liquidation value of this Debenture
shall be equal to 125% of the outstanding balance remaining on this Debenture
plus accrued but unpaid interest and liquidated damages.

Article 7.  Registered Debentures

     Section 7.1. Series. This Debenture is one of a numbered series of
Debentures which are identical except as to the principal amount and date of
issuance thereof. Such Debentures are referred to herein collectively as the
"Debentures". The Debentures shall be issued in whole multiples of $5,000.

     Section 7.2. Record Ownership. The Company, or its attorney, shall maintain
a register of the holders of the Debentures (the "Register") showing their names
and addresses and the serial numbers and principal amounts of Debentures issued
to them. The Register may be maintained in electronic, magnetic or other
computerized form. The Company may treat the person named as the Holder of this
Debenture in the Register as the sole owner of this Debenture. The Holder of
this Debenture is the person exclusively entitled to receive payments of
interest on this Debenture, receive notifications with respect to this
Debenture, convert it into Common Stock and otherwise exercise all of the rights
and powers as the absolute owner hereof.

     Section 7.3. Worn or Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delivered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or verification
as the Company may request.

Article 8.  Notice.

     Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Debenture must be in writing and
will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided a confirmation
of transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

                                       10
<PAGE>

If to the Company:

     CAN-CAL Resources, Ltd.
     8221 Cretan Blue Lane
     Las Vegas, NV 89128
     Attention: Ronald D. Sloan, President
     Telephone:    702-243-1849
     Facsimile:    702-243-1869

     With a copy to:
     The Law Office of Stephen E. Rounds
     4635 East Eighteenth Avenue
     Denver, Colorado USA 80220
     Attention:  Stephen E. Rounds, Esq.
     Telephone:    303-377-6997
     Facsimile:    303-377-0231

If to the Investor:

     At the address listed in the Questionnaire.

     With a copy to:
     Joseph B. LaRocco, Esq.
     49 Locust Avenue, Suite 107
     New Canaan, CT 06840
     Telephone:  203-966-0566
     Facsimile:  203-966-0363

     Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.

Article 9.  Time

     Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. A "business day" shall
mean a day on which the banks in New York are not required or allowed to be
closed.

                                       11
<PAGE>

Article 10.  No Assignment

     This Debenture shall not be assignable.

Article 11.  Rules of Construction.

     In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in the Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.

Article 12.  Governing Law

     The validity, terms, performance and enforcement of this Debenture shall be
governed and construed by the provisions hereof and in accordance with the laws
of the State of Nevada applicable to agreements that are negotiated, executed,
delivered and performed solely in the State of Nevada.

Article 13. Litigation

     (a) Forum Selection and Consent to Jurisdiction. Any litigation arising out
of, under, or in connection with, this Debenture or any course of conduct,
course of dealing, statements (whether oral or written) or actions of the
Company or Holder shall be brought and maintained exclusively in the courts of
the State of New York. The Company hereby expressly and irrevocably submits to
the jurisdiction of the state and federal courts of the State of New York for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service of process
by registered mail, postage prepaid, or by personal service within or without
the State of New York. The Company hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in any inconvenient forum. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Debenture.

     (b) Waiver of Jury Trial. The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this Debenture, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the Company.
The Company acknowledges and agrees that it has received full and sufficient

                                       12
<PAGE>

consideration for this provision and that this provision is a material
inducement for the Holder purchasing this Debenture.

     (c) Governing Law. The terms of this Debenture shall be governed by and
construed and enforced in accordance with the laws of the State of Nevada
without regard to the conflicts of laws principles thereof.

     IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date first written above.

                                            CAN-CAL Resources, Ltd.

                                            By    /s/  Ronald D. Sloan
                                              ----------------------------------
                                            Name:   Ronald D. Sloan
                                            Title:  President

                                       13
<PAGE>

                                    EXHIBIT C

                              NOTICE OF CONVERSION

  (To be Executed by the Registered owner in order to Convert the Debentures.)

     The undersigned hereby irrevocably elects, as of ______________, 200_ to
convert $__________ of Convertible Debentures into Common Stock of CAN-CAL
Resources, Ltd. (the "Company") according to the conditions set forth in the
Debenture dated June of 2002, and issued by the Company.

This conversion is being made for an immediate sale.

Date of Conversion_________________________________________________

Applicable Conversion Price________________________________________

Number of Shares Issuable upon this conversion_____________________

Name (Print) ______________________________________________________

Address____________________________________________________________

___________________________________________________________________

Phone_______________________   Fax_________________________________

                                   By: ____________________________

                                       14
<PAGE>EXHIBIT 10.27

THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

                             CAN-CAL RESOURCES, INC.

                                     WARRANT

                              Dated: June __, 2002

Can-Cal Resources, Inc., a corporation organized under the laws of the State of
Nevada (the "Company"), hereby certifies that, for value received from DUTCHESS
PRIVATE EQUITIES FUND, L.P. ("Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company up to a total of Fifty Thousand
(50,000) shares of Common Stock, $.001 par value per share (the "Common Stock"),
of the Company (each such share, a "Warrant Share" and all such shares, the
"Warrant Shares") at an exercise price equal to the lesser of 110% of the 5-day
average closing bid price for the 5 trading days (i) immediately preceding the
date of issuance or (ii) 180 calendar days after the date of funding, but if the
180 calendar day is not a trading day then the first trading day after the 180th
calendar day shall be used (as adjusted from time to time as provided in Section
8, the "Exercise Price"). The Warrant may be exercised anytime after its
issuance. The Warrant may be exercised on a cashless basis pursuant to Section
9, but only in the sole and absolute discretion of the Company. This Warrant
will expire on the third (3rd) anniversary of its issuance (the "Expiration
Date"), and is subject to the following terms and conditions:

          1.   Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

          2.   Registration of Transfers and Exchanges.

               (a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant to the
Transfer Agent or to the Company at the office specified in or pursuant to
Section 3(b). Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued

                                       1
<PAGE>

to the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance of such transferee of all of the rights
and obligations of a holder of a Warrant.

               (b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.

          3.   Duration and Exercise of Warrants.

               (a) This Warrant shall be exercisable by the registered Holder on
any business day before 5:00 P.M., New York City time, at any time and from time
to time on or after the date hereof to and including the Expiration Date. At
5:00 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem this
Warrant without the prior written consent of the Holder.

               (b) Subject to Sections 2(b), 6 and 10, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 12 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise (as defined in this subsection) of this Warrant.

               A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.

               (c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.

     In the event the Common Stock representing the Warrant Shares is not
delivered per the written instructions of the Purchaser, within 10 (ten)
business days after the

                                       2
<PAGE>

Notice of Election and Warrant is received by the Company (the "Delivery Date"),
then in such event the Company shall pay to Holder one-half percent (0.5%) in
cash, of the dollar value of the Warrant Shares to be issued per each day after
the Delivery Date that the Warrant Shares are not delivered.

     The Company acknowledges that its failure to deliver the Warrant Shares by
the Delivery Date will cause the Holder to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Warrant a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Warrant.

     To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section is due to the unavailability of authorized but unissued
shares of Common Stock, the provisions of this Section 3 shall not apply but
instead the provisions of Section 7 shall apply.

     The Company shall make any payments incurred under this Section 3 in
immediately available funds within ten (10) business days from the date of
issuance of the applicable Warrant Shares. Nothing herein shall limit Holder's
right to pursue actual damages or cancel the Notice of Election for the
Company's failure to issue and deliver Common Stock to the Holder within ten
(10) business days following the Delivery Date.

          4. Piggyback Registration Rights. During the term of this Warrant, the
Company may not file any registration statement with the Securities and Exchange
Commission (other than registration statements of the Company filed on Form S-8
or Form S-4, each as promulgated under the Securities Act, pursuant to which the
Company is registering securities pursuant to a Company employee benefit plan or
pursuant to a merger, acquisition or similar transaction including supplements
thereto, but not additionally filed registration statements in respect of such
securities) at any time when there is not an effective registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder (unless the Warrant Shares are otherwise freely
transferable without volume restrictions pursuant to Rule 144(k) promulgated
under the Act), unless the Company provides the Holder with not less than twenty
(20) calendar days notice of its intention to file such registration statement
and provides the Holder the option to include any or all of the applicable
Warrant Shares therein. The piggyback registration rights granted to the Holder
pursuant to this Section shall continue until all of the Holder's Warrant Shares
have been sold in accordance with an effective registration statement or upon
the Expiration Date. The Company will pay all registration expenses in
connection therewith.

          5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.

          6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution

                                       3
<PAGE>

for and upon cancellation hereof, or in lieu of and substitution for this
Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

          7. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 8). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.
In the event the Company fails to have sufficient authorized but unissued Common
Stock to allow for the issuance of Warrant Shares upon the exercise of the
Warrant the Company shall be liable for liquidated damages in the amount of 2%
interest per thirty calendar day period on the value of the Warrant Shares based
on the closing bid price of the Company's Common Stock on the business day prior
to the Company's receipt of its Election to Purchase. The damages shall accrue
until the Common Stock is issued.

     The Company acknowledges that its failure to reserve a sufficient number of
Warrant Shares as required in this Section 7, will cause the Holder to suffer
damages in an amount that will be difficult to ascertain. Accordingly, the
parties agree that it is appropriate to include in this Warrant a provision for
liquidated damages. The parties acknowledge and agree that the liquidated
damages provision set forth in this section represents the parties' good faith
effort to quantify such damages and, as such, agree that the form and amount of
such liquidated damages are reasonable and will not constitute a penalty. The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Warrant.

     It is the intention of the parties that interest payable under any of the
terms of this Warrant shall not exceed the maximum amount permitted under any
applicable law. If a law, which applies to this Warrant which sets the maximum
interest amount, is finally interpreted so that the interest in connection with
this Warrant exceeds the permitted limits, then: (1) any such interest shall be
reduced by the amount necessary to reduce the interest to the permitted limit;
and (2) any sums already collected (if any) from the Company which exceed the
permitted limits will be refunded to the Company. The Holder may choose to make
this refund by reducing the amount that the Company owes under this Warrant or
by making a direct payment to the Company. If a refund reduces the amount that
the Company owes the Holder, the reduction will be treated as a partial payment.
In case any provision of this Warrant is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Warrant will not in any way be affected or
impaired thereby.

          8. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 8; provided, that there shall be no
adjustment in the number of Warrant Shares issuable upon exercise of this
Warrant upon any adjustment of the

                                       4
<PAGE>

Exercise Price pursuant to paragraph (d) of this Section 8. Upon each such
adjustment of the Exercise Price pursuant to this Section 8, the Holder shall
thereafter prior to the Expiration Date be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.

               (a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock and not the Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock into a larger number of shares, or (iii) combine outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.

               (b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the Holder the right to receive the securities or property set forth in this
Section 9(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.

               (c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").

                                       5
<PAGE>

               (d) If, at any time while this Warrant is outstanding, the
Company shall issue or cause to be issued rights or warrants to acquire or
otherwise sell or distribute shares of Common Stock for a consideration per
share less than the Exercise Price then in effect, except for (i) the granting
of options or warrants to employees, officers, directors and the issuance of
shares upon exercise of options granted, under any stock option plan heretofore
or hereinafter duly adopted by the Company; (ii) shares issued upon exercise of
any currently outstanding warrants or options and upon conversion of any
currently outstanding convertible debenture or (iii) shares issued pursuant to
the Investment Agreement then, forthwith upon such issue or sale, the Exercise
Price shall be reduced to the price (calculated to the nearest cent) determined
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of (i) the number of shares of
Common Stock outstanding immediately prior to such issuance, and (ii) the number
of shares of Common Stock which the aggregate consideration received (or to be
received, assuming exercise or conversion in full of such rights, warrants and
convertible securities) for the issuance of such additional shares of Common
Stock would purchase at the Exercise Price, and the denominator of which shall
be the sum of the number of shares of Common Stock outstanding immediately after
the issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.

               (e) For the purposes of this Section 8, the following clauses
shall also be applicable:

                   (i) Record Date. In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.

                   (ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

               (f) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.

               (g) Whenever the Exercise Price is adjusted pursuant to Section
8(c) above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser and
such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.

                                       6
<PAGE>

               (h)    If:

                      (i)  the Company shall declare a dividend (or any other
                           distribution) on its Common Stock; or

                      (ii) the Company shall declare a special nonrecurring cash
                           dividend on or a redemption of its Common Stock; or

                      (iii) the Company shall authorize the granting to all
                           holders of the Common Stock rights or warrants to
                           subscribe for or purchase any shares of capital stock
                           of any class or of any rights; or

                      (iv) the approval of any stockholders of the Company shall
                           be required in connection with any reclassification
                           of the Common Stock of the Company, any consolidation
                           or merger to which the Company is a party, any sale
                           or transfer of all or substantially all of the assets
                           of the Company, or any compulsory share exchange
                           whereby the Common Stock is converted into other
                           securities, cash or property; or

                      (v)  the Company shall authorize the voluntary
                           dissolution, liquidation or winding up of the affairs
                           of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

          9. Payment of Exercise Price. Payment of Exercise Price. The Holder
may pay the Exercise Price in one of the following manners:

               (a) Cash Exercise. The Holder shall deliver immediately available
funds; or

                                       7
<PAGE>

               (b) Cashless Exercise. The Holder shall surrender this Warrant to
the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:

                   X = Y (A-B)/A
     where:
                   X = the number of Warrant Shares to be issued
                   to the Holder.

                   Y = the number of Warrant Shares with
                   respect to which this Warrant is being
                   exercised.
                   A = the closing bid price of the
                   Common Stock for the trading day immediately
                   prior to the Date of Exercise.

                   B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.

               (c) The Holder is limited in the amount of this Warrant it may
exercise. In no event shall the Holder be entitled to exercise any amount of
this Warrant in excess of that amount upon exercise of which the sum of (1) the
number of shares of Common Stock beneficially owned (as such term is defined
under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of 1934 (the
1934 Act")) by the Holder, and (2) the number of Warrant Shares issuable upon
the exercise of any Warrants then owned by Holder, would result in beneficial
ownership by the Holder of more than 4.99% of the outstanding shares of Common
Stock of the Company, as determined in accordance with Rule13d-1(j).
Furthermore, the Company shall not process any exercise that would result in
beneficial ownership by the Holder of more than 4.99% of the outstanding shares
of Common Stock of the Company.

          10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.

          11. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided a
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

                                       8
<PAGE>

If to the Company:

         Can-Cal Resources, Inc.
         8221 Cretan Blue Lane
         La Vegas, NV 89128
         Attention:  Ronald Sloan CEO
         Telephone:  702-243-1849
         Facsimile:  702-243-1869

         With a copy to:
         The Law Office of Stephen E. Rounds
         4635 East Eighteenth Avenue
         Denver, Colorado USA 80220
         Attention:  Stephen E. Rounds, Esq.
         Telephone:  303-377-6997
         Facsimile:  303-377-0231

If to the Investor:

         At the address listed in the Questionnaire.

With a copy to:

         Joseph B. LaRocco, Esq.
         49 Locust Avenue, Suite 107
         New Canaan, CT 06840
         Telephone:  203-966-0566
         Facsimile:  203-966-0363

     Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.

          12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

          13.  Miscellaneous.

               (a) This Warrant shall not be assignable. This Warrant may be
amended only in writing signed by the Company and the Holder.

               (b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.

                                       9
<PAGE>

               (c) This Warrant shall be governed by and construed and enforced
in accordance with the laws of the State of Nevada without regard to the
principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the State of Nevada, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

               (d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

               (e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.

                                            CAN-CAL RESOURCES, INC.

                                            By:    /s/  Ronald Sloan
                                                 -------------------------------
                                                    Ronald Sloan, CEO

                                       10

<PAGE>

                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To: Can-Cal Resources, Inc.

     In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), $.001 par value per share, of Can-Cal
Resources, Inc., and encloses herewith $________ in cash, certified or official
bank check or checks, which sum represents the aggregate Exercise Price (as
defined in the Warrant) for the number of shares of Common Stock to which this
Form of Election to Purchase relates, together with any applicable taxes payable
by the undersigned pursuant to the Warrant.

     The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

                            PLEASE INSERT SOCIAL SECURITY OR
                            TAX IDENTIFICATION NUMBER

--------------------------------------------------------------------------------
                         (Please print name and address)

If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:

--------------------------------------------------------------------------------
                         (Please print name and address)

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

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

Dated: _____________, _____                 Name of Holder:

                                            (Print)
                                                   -----------------------------

                                            (By:)
                                                 -------------------------------
                                            (Name:)
                                            (Title:)
                                            (Signature must conform in all
                                            respects to name of holder as
                                            specified on the face of the
                                            Warrant)

                                       11

<PAGE>

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