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                                                                    EXHIBIT 4.1

                              U.S. MICROBICS, INC.

                      2005-II EMPLOYEE STOCK INCENTIVE PLAN

                           AS ADOPTED AUGUST 25, 2005

1.       PURPOSE.

         The purpose of this Plan is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options, Restricted Stock and Stock Bonuses. Capitalized terms
not defined in the text are defined in Section 2.

2.       DEFINITIONS.

         As used in this Plan, the following terms will have the following
meanings:

         "AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.

         "AWARD AGREEMENT" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

         "BOARD" means the Board of Directors of the Company.

         "CAUSE" means any cause, as defined by applicable law, for the
termination of a Participant's employment with the Company or a Parent or
Subsidiary of the Company.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COMPANY" means U.S. Microbics, Inc., a Colorado corporation, or any
successor corporation.

         "DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Board.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

         "FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

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                  (a)      if such Common Stock is publicly traded and is then
                           listed on a national securities exchange, its closing
                           price on the date of determination on the principal
                           national securities exchange on which the Common
                           Stock is listed or admitted to trading as reported in
                           The Wall Street Journal;

                  (b)      if such Common Stock is quoted on the NASDAQ National
                           Market, its closing price on the NASDAQ National
                           Market on the date of determination as reported in
                           The Wall Street Journal;

                  (c)      if such Common Stock is publicly traded but is not
                           listed or admitted to trading on a national
                           securities exchange, the average of the closing bid
                           and asked prices on the date of determination as
                           reported by Bloomberg, L.P.;

                  (d)      in the case of an Award made on the Effective Date,
                           the price per share at which shares of the Company's
                           Common Stock are initially offered for sale to the
                           public by the Company's underwriters in the initial
                           public offering of the Company's Common Stock
                           pursuant to a registration statement filed with the
                           SEC under the Securities Act; or

                  (e)      if none of the foregoing is applicable, by the Board
                           in good faith.

         "INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.

         "OPTION" means an award of an option to purchase Shares pursuant to
Section 6.

         "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

         "PARTICIPANT" means a person who receives an Award under this Plan.

         "PERFORMANCE FACTORS" means the factors selected by the Board, in its
sole and absolute discretion, from among the following measures to determine
whether the performance goals applicable to Awards have been satisfied:

                  (a)      Net revenue and/or net revenue growth;

                  (b)      Earnings before income taxes and amortization and/or
                           earnings before income taxes and amortization growth;

                  (c)      Operating income and/or operating income growth;

                  (d)      Net income and/or net income growth;

                  (e)      Earnings per share and/or earnings per share growth;

                  (f)      Total stockholder return and/or total stockholder
                           return growth;

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                  (g)      Return on equity;

                  (h)      Operating cash flow return on income;

                  (i)      Adjusted operating cash flow return on income;

                  (j)      Economic value added; and

                  (k)      Individual confidential business objectives.

         "PERFORMANCE PERIOD" means the period of service determined by the
Board, not to exceed five years, during which years of service or performance is
to be measured for Restricted Stock Awards or Stock Bonuses.

         "PLAN" means this U.S. Microbics, Inc. 2005-II Employee Stock Incentive
Plan, as amended from time to time.

         "RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section
7.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 3 and 19, and any
successor security.

         "STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 8.

         "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

         "TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Company, provided that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to a
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Board may make such provisions respecting suspension of
vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Board will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").

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         "UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.

         "VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.

3.       SHARES SUBJECT TO THE PLAN.

         3.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 3.2 and 19, the
total aggregate number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 50,000,000 plus Shares that are subject to: (a)
issuance upon exercise of an Option but cease to be subject to such Option for
any reason other than exercise of such Option; (b) an Award granted hereunder
but forfeited or repurchased by the Company at the original issue price; and (c)
an Award that otherwise terminates without Shares being issued. At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Options granted under
this Plan and all other outstanding but unvested Awards granted under this Plan.

         3.2 ADJUSTMENT OF SHARES. In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Board.

4.       ELIGIBILITY.

          ISOs (as defined in Section 6 below) may be granted only to employees
(including officers and directors who are also employees) of the Company or of a
Parent or Subsidiary of the Company. All other Awards may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction.

5.       ADMINISTRATION.

         5.1 BOARD AUTHORITY. This Plan will be administered by the Board.
Subject to the general purposes, terms and conditions of this Plan, the Board
will have full power to implement and carry out this Plan. Without limitation,
the Board will have the authority to:

                  (a)      construe and interpret this Plan, any Award Agreement
                           and any other agreement or document executed pursuant
                           to this Plan;

                  (b)      prescribe, amend and rescind rules and regulations
                           relating to this Plan or any Award;

                  (c)      select persons to receive Awards;

                  (d)      determine the form and terms of Awards;

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                  (e)      determine the number of Shares or other consideration
                           subject to Awards;

                  (f)      determine whether Awards will be granted singly, in
                           combination with, in tandem with, in replacement of,
                           or as alternatives to, other Awards under this Plan
                           or any other incentive or compensation plan of the
                           Company or any Parent or Subsidiary of the Company;

                  (g)      grant waivers of Plan or Award conditions;

                  (h)      determine the vesting, ability to exercise and
                           payment of Awards;

                  (i)      correct any defect, supply any omission or reconcile
                           any inconsistency in this Plan, any Award or any
                           Award Agreement;

                  (j)      determine whether an Award has been earned; and

                  (k)      make all other determinations necessary or advisable
                           for the administration of this Plan.

         5.2 BOARD DISCRETION. Any determination made by the Board with respect
to any Award will be made at the time of grant of the Award or, unless in
contravention of any express term of this Plan or Award, at any later time, and
such determination will be final and binding on the Company and on all persons
having an interest in any Award under this Plan. The Board may delegate to one
or more officers of the Company the authority to grant an Award under this Plan
to Participants who are not Insiders of the Company.

6.       OPTIONS.

          The Board may grant Options to eligible persons and will determine
whether such Options will be Incentive Stock Options within the meaning of the
Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number of Shares
subject to the Option, the Exercise Price of the Option, the period during which
the Option may be exercised, and all other terms and conditions of the Option,
subject to the following:

         6.1 FORM OF OPTION GRANT. Each Option granted under this Plan will be
evidenced by an Award Agreement that will expressly identify the Option as an
ISO or an NQSO (hereinafter referred to as the "STOCK OPTION AGREEMENT"), and
will be in such form and contain such provisions (which need not be the same for
each Participant) as the Board may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.

         6.2 DATE OF GRANT. The date of grant of an Option will be the date on
which the Board makes the determination to grant such Option, unless otherwise
specified by the Board. The Stock Option Agreement and a copy of this Plan will
be delivered to the Participant within a reasonable time after the granting of
the Option.

         6.3 EXERCISE PERIOD. Options may be exercisable within the times or
upon the events determined by the Board as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by

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attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Board also may provide for
Options to become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Board
determines.

         6.4 EXERCISE PRICE. The Exercise Price of an Option will be determined
by the Board when the Option is granted and may be not less than 85% of the Fair
Market Value of the Shares on the date of grant; provided that: (a) the Exercise
Price of an ISO will be not less than 100% of the Fair Market Value of the
Shares on the date of grant; and (b) the Exercise Price of any ISO granted to a
Ten Percent Stockholder will not be less than 110% of the Fair Market Value of
the Shares on the date of grant. Payment for the Shares purchased may be made in
accordance with Section 9 of this Plan.

         6.5 METHOD OF EXERCISE. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Board, (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.

         6.6 TERMINATION. Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:

                 (a) If the Participant's service is Terminated for any reason
except death or Disability, then the Participant may exercise such Participant's
Options only to the extent that such Options would have been exercisable upon
the Termination Date no later than three (3) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Board, with any exercise beyond three (3) months after the
Termination Date deemed to be an NQSO), but in any event, no later than the
expiration date of the Options.

                 (b) If the Participant's service is Terminated because of
Participant's death or Disability (or the Participant dies within three (3)
months after a Termination other than for Cause or because of Participant's
Disability), then Participant's Options may be exercised only to the extent that
such Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant's legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Board, with any such exercise beyond (i) three (3) months
after the Termination Date when the Termination is for any reason other than the
Participant's death or Disability, or (ii) twelve (12) months after the
Termination Date when the Termination is for Participant's death or Disability,
deemed to be an NQSO), but in any event no later than the expiration date of the
Options.

                  (c) Notwithstanding the provisions in paragraph 6.6(a) above,
if a Participant's service is Terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the Option shall be
entitled to exercise any Option with respect to any Shares whatsoever, after
Termination, whether or not after Termination the Participant may receive

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payment from the Company or Subsidiary for vacation pay, for services rendered
prior to Termination, for services rendered for the day on which Termination
occurs, for salary in lieu of notice, or for any other benefits. For the purpose
of this paragraph, Termination shall be deemed to occur on the date when the
Company dispatches notice or advice to the Participant that his service is
Terminated.

         6.7 LIMITATIONS ON EXERCISE. The Board may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option, provided
that such minimum number will not prevent Participant from exercising the Option
for the full number of Shares for which it is then exercisable.

         6.8 LIMITATIONS ON ISO. The aggregate Fair Market Value (determined as
of the date of grant) of Shares with respect to which ISO are exercisable for
the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISO are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISO and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.

         6.9 MODIFICATION, EXTENSION OR RENEWAL. The Board may modify, extend or
renew outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of
a Participant, impair any of such Participant's rights under any Option
previously granted. Any outstanding ISO that is modified, extended, renewed or
otherwise altered will be treated in accordance with Section 424(h) of the Code.
The Board may reduce the Exercise Price of outstanding Options without the
consent of Participants affected by a written notice to them; provided, however,
that the Exercise Price may not be reduced below the minimum Exercise Price that
would be permitted under Section 6.4 of this Plan for Options granted on the
date the action is taken to reduce the Exercise Price.

         6.10 NO DISQUALIFICATION. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

7.       RESTRICTED STOCK.

                  A Restricted Stock Award is an offer by the Company to sell to
an eligible person Shares that are subject to restrictions. The Board will
determine to whom an offer will be made, the number of Shares the person may
purchase, the price to be paid (the "PURCHASE PRICE"), the restrictions to which
the Shares will be subject, and all other terms and conditions of the Restricted
Stock Award, subject to the following:

         7.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
(the "RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which
need not be the same for each Participant) as the Board will from time to time

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approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise extended by the Board.

         7.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Board on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price must be made in accordance with Section 9
of this Plan.

         7.3 TERMS OF RESTRICTED STOCK AWARDS. Restricted Stock Awards shall be
subject to such restrictions as the Board may impose. These restrictions may be
based upon completion of a specified number of years of service with the Company
or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Board shall:
(a) determine the nature, length and starting date of any Performance Period for
the Restricted Stock Award; (b) select from among the Performance Factors to be
used to measure performance goals, if any; and (c) determine the number of
Shares that may be awarded to the Participant. Prior to the payment of any
Restricted Stock Award, the Board shall determine the extent to which such
Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and have different
performance goals and other criteria.

         7.4 TERMINATION DURING PERFORMANCE PERIOD. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Board determines otherwise.

8.       STOCK BONUSES.

         8.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares (which
may consist of Restricted Stock) for extraordinary services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus will be
awarded pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the Board
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of
such performance goals as are set out in advance in the Participant's individual
Award Agreement (the "PERFORMANCE STOCK BONUS AGREEMENT") that will be in such
form (which need not be the same for each Participant) as the Board will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent or Subsidiary and/or individual performance factors or upon such
other criteria as the Board may determine.

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         8.2 TERMS OF STOCK BONUSES. The Board will determine the number of
Shares to be awarded to the Participant. If the Stock Bonus is being earned upon
the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Board will: (a) determine the nature, length and starting
date of any Performance Period for each Stock Bonus; (b) select from among the
Performance Factors to be used to measure the performance, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Stock Bonus, the Board shall determine the extent to which
such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Board. The Board
may adjust the performance goals applicable to the Stock Bonuses to take into
account changes in law and accounting or tax rules and to make such adjustments
as the Board deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or
hardships.

         8.3 FORM OF PAYMENT. The earned portion of a Stock Bonus may be paid to
the Participant by the Company either currently or on a deferred basis, with
such interest or dividend equivalent, if any, as the Board may determine.
Payment may be made in the form of cash or whole Shares or a combination
thereof, either in a lump sum payment or in installments, all as the Board will
determine.

9.       PAYMENT FOR SHARE PURCHASES.

         9.1 PAYMENT. Payment for Shares purchased pursuant to this Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Board and where permitted by law:

                  (a)      by cancellation of indebtedness of the Company to the
                           Participant;

                  (b)      by surrender of shares that either: (1) have been
                           owned by Participant for more than one year and have
                           been paid for within the meaning of Rule 144 of the
                           Securities Act of 1933 (and, if such shares were
                           purchased from the Company by use of a promissory
                           note, such note has been fully paid with respect to
                           such shares); or (2) were obtained by Participant in
                           the public market;

                  (c)      by waiver of compensation due or accrued to the
                           Participant for services rendered;

                  (d)      with respect only to purchases upon exercise of an
                           Option, and provided that a public market for the
                           Company's stock exists:

                           (1)      through a "same day sale" commitment from
                                    the Participant and a broker-dealer that is
                                    a member of the National Association of
                                    Securities Dealers (an "NASD DEALER")
                                    whereby the Participant irrevocably elects
                                    to exercise the Option and to sell a portion
                                    of the Shares so purchased to pay for the
                                    Exercise Price, and whereby the NASD Dealer
                                    irrevocably commits upon receipt of such
                                    Shares to forward the Exercise Price
                                    directly to the Company; or

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                           (2)      through a "margin" commitment from the
                                    Participant and a NASD Dealer whereby the
                                    Participant irrevocably elects to exercise
                                    the Option and to pledge the Shares so
                                    purchased to the NASD Dealer in a margin
                                    account as security for a loan from the NASD
                                    Dealer in the amount of the Exercise Price,
                                    and whereby the NASD Dealer irrevocably
                                    commits upon receipt of such Shares to
                                    forward the Exercise Price directly to the
                                    Company; or

                  (e)      by any combination of the foregoing.

10.      WITHHOLDING TAXES.

         10.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

         10.2 STOCK WITHHOLDING. When, under applicable tax laws, a participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Board may allow the Participant
to satisfy the minimum withholding tax obligation by electing to have the
Company withhold from the Shares to be issued that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Board and be in writing in a form acceptable to the Board.

11.      PRIVILEGES OF STOCK OWNERSHIP.

         11.1 VOTING AND DIVIDENDS. No Participant will have any of the rights
of a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a stockholder and will have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.

         11.2 FINANCIAL STATEMENTS. Pursuant to regulation 260.140.46 of the
Rules of the California Corporations Commissioner, the Company will provide
financial statements to each Participant prior to such Participant's purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

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12.      TRANSFERABILITY.

         Awards granted under this Plan, and any interest therein, will not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, other than by will or by the laws of
descent and distribution. During the lifetime of the Participant an Award will
be exercisable only by the Participant. During the lifetime of the Participant,
any elections with respect to an Award may be made only by the Participant
unless otherwise determined by the Board and set forth in the Award Agreement
with respect to Awards that are not ISOs.

13.      RESTRICTIONS ON SHARES.

         At the discretion of the Board, the Company may reserve to itself
and/or its assignee(s) in the Award Agreement a right to repurchase a portion of
or all Unvested Shares held by a Participant following such Participant's
Termination at any time within ninety (90) days after the later of (a)
Participant's Termination Date, or (b) the date Participant purchases Shares
under this Plan. Such repurchase by the Company shall be for cash and/or
cancellation of purchase money indebtedness, and the price per share shall be
the Participant's Exercise Price or the Purchase Price, as applicable.

14.      CERTIFICATES.

         All certificates for Shares or other securities delivered under this
Plan will be subject to such stock transfer orders, legends and other
restrictions as the Board may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange
or automated quotation system upon which the Shares may be listed or quoted.

15.      ESCROW; PLEDGE OF SHARES.

         To enforce any restrictions on a Participant's Shares, the Board may
require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by the
Board appropriately endorsed in blank, with the Company or an agent designated
by the Company to hold in escrow until such restrictions have lapsed or
terminated, and the Board may cause a legend or legends referencing such
restrictions to be placed on the certificates. Any Participant who is permitted
to execute a promissory note as partial or full consideration for the purchase
of Shares under this Plan will be required to pledge and deposit with the
Company all or part of the Shares so purchased as collateral to secure the
payment of Participant's obligation to the Company under the promissory note;
provided, however, that the Board may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Board will
from time to time approve. The Shares purchased with the promissory note may be
released from the pledge on a pro rata basis as the promissory note is paid.

16.      EXCHANGE AND BUYOUT OF AWARDS.

         The Board may, at any time or from time to time, authorize the Company,
with the consent of the respective Participants, to issue new Awards in exchange
for the surrender and cancellation of any or all outstanding Awards. The Board

                                      -12-
<PAGE>

may at any time buy from a Participant an Award previously granted with payment
in cash, Shares (including Restricted Stock) or other consideration, based on
such terms and conditions as the Board and the Participant may agree.

17.      SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.

         An Award will not be effective unless such Award is in compliance with
all applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are
in effect on the date of grant of the Award and also on the date of exercise or
other issuance. Notwithstanding any other provision in this Plan, the Company
will have no obligation to issue or deliver certificates for Shares under this
Plan prior to: (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and/or (b) completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the registration, qualification
or listing requirements of any state securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any
inability or failure to do so.

18.      NO OBLIGATION TO EMPLOY.

         Nothing in this Plan or any Award granted under this Plan will confer
or be deemed to confer on any Participant any right to continue in the employ
of, or to continue any other relationship with, the Company or any Parent or
Subsidiary of the Company or limit in any way the right of the Company or any
Parent or Subsidiary of the Company to terminate Participant's employment or
other relationship at any time, with or without cause.

19.      CORPORATE TRANSACTIONS.

         19.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event of
(a) a dissolution or liquidation of the Company, (b) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 19.1,

                                      -13-
<PAGE>

such Awards will expire on such transaction at such time and on such conditions
as the Board will determine. Notwithstanding anything in this Plan to the
contrary, the Board may provide that the vesting of any or all Awards granted
pursuant to this Plan will accelerate upon a transaction described in this
Section 19. If the Board exercises such discretion with respect to Options, such
Options will become exercisable in full prior to the consummation of such event
at such time and on such conditions as the Board determines, and if such Options
are not exercised prior to the consummation of the corporate transaction, they
shall terminate at such time as determined by the Board.

         19.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 19, in the event
of the occurrence of any transaction described in Section 19.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, or sale of assets.

         19.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either: (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

20.      ADOPTION AND STOCKHOLDER APPROVAL.

         This Plan will become effective on the date on which it is adopted by
the Board (the "EFFECTIVE DATE"). This Plan shall be approved by the
stockholders of the Company within twelve (12) months before or after the date
this Plan is adopted by the Board. Upon the Effective Date, the Board may grant
Awards pursuant to this Plan. In the event that stockholder approval of this
Plan is not obtained within the time period provided herein, all Awards granted
hereunder shall be cancelled, any Shares issued pursuant to any Awards shall be
cancelled and any purchase of Shares issued hereunder shall be rescinded.

21.      TERM OF PLAN/GOVERNING LAW.

         Unless earlier terminated as provided herein, this Plan will terminate
ten (10) years from the date this Plan is adopted by the Board or, if earlier,
the date of stockholder approval. This Plan and all agreements there under shall
be governed by and construed in accordance with the laws of the State of
California.

22.      AMENDMENT OR TERMINATION OF PLAN.

         The Board may at any time terminate or amend this Plan in any respect,
including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to this Plan; provided, however, that the
Board will not, without the approval of the stockholders of the Company, amend
this Plan in any manner that requires such stockholder approval.

                                      -14-
<PAGE>

23.      NONEXCLUSIVITY OF THE PLAN.

         Neither the adoption of this Plan by the Board, the submission of this
Plan to the stockholders of the Company for approval, nor any provision of this
Plan will be construed as creating any limitations on the power of the Board to
adopt such additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options and bonuses
otherwise than under this Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.

24.      ACTION BY BOARD.

         Any action permitted or required to be taken by the Board or any
decision or determination permitted or required to be made by the Board pursuant
to this Plan shall be taken or made in the Board's sole and absolute discretion.

                                      -15-Agreement of Purchase and Sale

THIS AGREEMENT made as of the 12 day of August, 2005, between Duna Resources
Ltd. (the "Vendor") and Lions Petroleum Inc. (the "Purchaser").

WHEREAS the Vendor has agreed to sell, and the Purchaser has agreed to
purchase, on the terms and conditions set forth, all of the Vendor's right,
title, estate and interest in and to the Assets as they are defined;

IN CONSIDERATION of the premises and the respective agreements of the parties
set forth, the parties agree as follows:

1.   Interpretation

     1.1   Definitions.  In this agreement, including the premises and any
schedules to it:

           (1)  "Adjusted Closing Payment" has the meaning ascribed to it in
                paragraph 4.1(2);

           (2)  "Assets" means the Hydrocarbon Interest and the Miscellaneous
                Interests;

           (3)  "Business Day" means any day of the week except Saturday,
                Sunday or any statutory holiday;

           (4)  "Closing" has the meaning ascribed to it in paragraph 4.1(1);

           (5)  "Closing Date" has the meaning ascribed to it in paragraph
                4.1(1);

           (6)  "Effective Time" has the meaning ascribed to it in paragraph
                2.3;

           (7)  "Hydrocarbon Interests" means the interests of Vendor, as set
                forth in Schedule "A", in respect of the Leases and the Lands;

           (8)  "Hydrocarbon Substances" means petroleum, natural gas and
                related hydrocarbons and any other substances, whether
                gaseous, liquid or solid, and whether hydrocarbons or not
                (including sulphur), which might be produced in association
                with them or any of them;

           (9)  "Lands" means the land described in Schedule "A" and, except
                as otherwise expressly noted in the Schedule, includes all
                Hydrocarbon Substances within, on or under the lands;

           (10) "Land Records" means all of the Vendor's files, records,
                agreements, documents, reports and other material of whatever
                nature pertaining to the Assets;

           (11) "Leases" means collectively the various leases, reservations,
                permits, licences and other documents of title by virtue of
                which the holder is entitled to explore for, drill for,
                recover, remove or dispose of Hydrocarbon Substances forming
                part of the Lands, including, without limitation, the leases,
                reservations, permits, licences and other documents of title
                described in Schedule "A";

           (12) "Miscellaneous Interests" means the interests of the Vendor
                (other than Hydrocarbon Interests) in all property, assets and
                rights ancillary to its Hydrocarbon Interests, including,
                without limitation, the entire interests of the Vendor in:

               (a)   all contracts, agreements and documents (including any
                     pooling agreements, unit agreements, unit operating
                     agreements and agreements for the construction, ownership
                     or operation of facilities) relating to its Hydrocarbon
                     Interests, Leases, Lands (or any lands with which they
                     have been pooled or unitized), or any rights in relation
                     to them;

               (b)   all subsisting rights to enter on, use and occupy the
                     surface of any of the Lands (or any lands with which they
                     have been pooled or unitized), of any lands to be
                     traversed in order to gain access to any of its Lands;

               (c)   all well, pipeline and other permits, licences and
                     authorizations relating to its Hydrocarbon Interests,
                     Leases, Lands (or any lands with which they have been
                     pooled or unitized);

               (d)   all Hydrocarbon Substances in the course of production
                     from its Lands (or any lands with which they have been
                     pooled or unitized) but not at the Effective Time beyond
                     the wellhead; and

               (e)   all books, records and documents, and all geological,
                     geophysical, engineering and other reports and data,
                     relating to its Hydrocarbon Interests, Leases, Lands (or
                     any lands with which they have been pooled or unitized);
                     and

          (13) "Purchase Price" has the meaning ascribed to it in paragraph
               2.2.

     1.2   Schedules.  The following schedules are annexed to this agreement
and form a part of it;

          Schedule "A"    Schedule of Lands, Leases, Hydrocarbon Interests and
          Wells;

          Schedule "B"  List of encumbrances, liens, royalties and other
          claims to the Assets.

          Schedule "C"   Non-convertible Overriding Royalty Agreement.

     1.3   Headings.  The insertion of headings in this agreement is for
convenience of reference only and shall not affect the construction or
interpretation of it.

     1.4   Entire agreement.  This agreement expresses and constitutes the
entire agreement between the parties with respect to the purchase and sale of
the Assets, and maybe amended only by written instrument executed by the
Vendor and the Purchaser.

2.   Purchase and sale

     2.1   Purchase and sale.  The Vendor agrees to sell the Assets to the
Purchaser, and the Purchaser agrees to purchase the Assets from the Vendor,
all on the terms and conditions set forth in this agreement.

     2.2   Purchase price.

           The consideration for the sale of the Assets shall be ten thousand
dollars ($10,000) in Canadian funds (the "Cash Consideration") and 10,000
fully paid and non-assessable shares in the common stock of the Purchaser (the
"Share Consideration") payable in accordance with the provisions of paragraph
4.1 (collectively the "Purchase Price").

           The Purchaser reserves to the Vendor a 3% non-convertible
overriding royalty without deductions (the "Overriding Royalty") and the
Purchaser and the Vendor shall enter into an agreement for the Overriding
Royalty in the same form as Schedule "C" (the "Non-convertible Overriding
Royalty Agreement").  Fully xecuted copy of the Non-convertible Overriding
Royalty Agreement shall be exchanged by the Purchaser and the Vendor at
Closing.

     2.3   Adjustments.  The effective time for adjustments in respect of the
conveyance and assignment of the Assets (the "Effective Time") shall be 12
noon on the 31st day of May, 2005, and all benefits and obligations of every
kind and nature accruing, payable or paid in respect of the Assets, including,
without limitation, prepaid land rentals, operating costs, capital costs,
governmental incentives and proceeds from the sale of production shall be
adjusted between the Vendor and the Purchaser as of the Effective Time.  In
clarification, the Vendor and the Purchaser acknowledge that:

           (1)   all costs of whatever nature incurred in connection with work
performed or goods or services provided in respect of the Assets prior to the
Effective Time shall be borne by the Vendor, regardless of the time at which
they became payable;

           (2)   Hydrocarbon Substances produced for marketing, and beyond the
wellhead at the Effective Time, shall not form part of the Assets, and
adjustments between the parties shall account for the same on the basis of
proceeds realized on a "first-in, first-out" basis; and

           (3)   any royalty tax credits accruing to the Vendor in respect of
Hydrocarbon Substances attributable to the Assets produced subsequent to the
Effective Time shall be for the credit of the Purchaser.

3.   Interim matters

     3.1   Title examination and evaluation.   From and after the date of this
agreement the Vendor shall, if and as requested by the Purchaser, make or
cause to be made available for the review of the Purchaser and the Purchaser's
Solicitors all Leases, agreements, correspondence, reports, records and other
documents and materials which in any manner relate to or affect Vendor's
Hydrocarbon Interests, and to which the Vendor has or can obtain access.  The
Purchaser may, if it so chooses, at the Purchaser's sole expense, cause its
solicitors to undertake an investigation of any Vendor's title to its
Hydrocarbon Interests.

     3.2   Interim Provisions.  During the period from the date of this
agreement to the Closing Date the Vendor shall, to the full extent that the
nature of its interest permits, continue to ensure that the Assets are
operated and maintained in a proper and prudent manner in accordance with good
industry practices, and the Vendor shall not, without the prior written
approval of the Purchaser:

           (1)   authorize or make any expenditure in respect of the Assets,
other than:

                 (a)   usual operating expenditures incurred and allocatable
to its Assets pursuant to existing operating agreements with arm's length
third parties;

                 (b)   capital expenditures required in accordance with good
industry practice, to a maximum of $5,000 gross expenditure for any single
operation; and

                 (c)   expenditures required by reason of an emergency even
endangering life or property;

           (2)   propose or initiate any operations in respect of the Assets;

           (3)   surrender or abandon any of the Assets; or

           (4)   amend any agreement or instrument relating to the Assets.

4.   Completion

     4.1   Closing and adjustments.

           (1)   The closing of the purchase and sale contemplated in this
agreement ("Closing") shall take place at the offices of Leschert and Company,
Suite 2760, 200 Granville Street, Vancouver, British Columbia, Canada V6C 1S4,
at noon on August 19th, 2005 (the "Closing Date"), or at any other place and
time, or on any other Closing Date, as may be mutually agreed on in writing.

           (2)   At Closing the Vendor and the Purchaser shall, to the extent
practicable, adjust and settle accounts pertaining to the Assets in the manner
contemplated by paragraph 2.3.  The adjustments and settlements shall be
evidenced by interim statements of adjustments signed by the Vendor and the
Purchaser at Closing, and the Purchase Price amount shall for Closing
settlement purposes be adjusted either upward or downward, as applicable, to
reflect the adjustments and settlements.  All accountings and adjustments not
readily ascertainable at the Closing Date shall be settled between the parties
on an item-by-item basis as soon after the Closing Date as they become
ascertainable, and the Vendor and the Purchaser shall attempt in good faith to
have signed within 30 days after the Closing Date a statement of adjustments
which is expressly stated to be a final statement of all adjustments.

     4.2   Purchaser's conditions precedent.  The following shall be
conditions precedent to the Purchaser's obligation to complete the purchases
contemplated by this agreement;

           (1)   the Purchaser shall on or before the Closing Date have
received legal opinions or title reports in form and substance satisfactory to
the Purchaser, which shall address title and confirm that the Vendor's
Hydrocarbon Interests correspond to the interests described in Schedule "A";

           (2)   the Purchaser shall on or before the Closing Date have become
satisfied that there are no substantive material defects in the physical
condition of the Assets, and that there are no substantive flaws in or terms
of agreements and arrangements relating to the operation of the Assets and to
the production, transportation, processing and sale of production from or
allocatable to the Assets which would materially adversely affect the
aggregate value of the Vendor's Hydrocarbon Interests;

           (3)   except as shall have been approved in writing by the
Purchaser, there shall not between the date of the agreement and the Closing
Date have occurred any damage to or alteration of the Assets (including any
amendment to any agreement or instrument forming a part) which, in the
Purchaser's opinion, would materially adversely affect the aggregate value of
the Assets;

           (4)   the Vendor's representations and warranties contained in
paragraph 5.1 shall be true and correct as at the date of Closing, the
Purchaser shall not at the Closing Date be aware of any facts indicating to
the contrary, and the Vendor shall on the Closing Date have delivered to the
Purchaser a certificate of the Vendor, dated as of the Closing Date, stating
that the representations and warranties contained in paragraph 5.1 are true
and correct as at the Closing Date;

           (5)   the Purchaser shall on the Closing Date have received the
following:

                 (a)    all other transfers, conveyances, assignments,
novation agreements, notices and other documents and instruments as the
Purchaser may reasonably request for the purpose of effecting the purchase and
sale of all of the Assets in accordance with the terms of this agreement,
executed by the respective Vendor in all cases in which the Vendor is the
appropriate signatory (but execution by third parties shall not be required);

                 (b)   the land records; and

                 (c)   an absolute assignment from the Vendor in respect of
the right to receive revenues derived from or attributable to the Assets;

           (6)   the Purchaser shall on or before the Closing Date receive
regulatory authorities acceptance for the filing of this Agreement and their
consent to the completion of the transactions contemplated herein, including,
without limiting the generality of the foregoing, the allotment and issuance
of the Share Consideration and the payment of the Cash Consideration; and

           (7)   the Vendor shall have complied fully with the provisions of
paragraph 3.2.

The foregoing conditions shall be for the sole benefit of the Purchaser and
may be waived in whole or in part by the Purchaser in writing.  In the event
that any of the foregoing conditions is not satisfied or waived on or before
the date specified for its satisfaction, the Purchaser shall be entitled to
terminate this agreement by notice in writing given to the Vendor on or before
the earlier of the Closing Date and the five Business Days following the date
specified for the satisfaction of the unsatisfied condition precedent.

     4.3   Vendor's conditions precedent.

           (1)   The following shall be conditions precedent to the Vendor's
obligation to complete the sale by this agreement;

                 (a)   the Purchaser shall on the Closing Date have delivered
to the Vendor certified or solicitor's trust cheques in an aggregate amount
equal to the Adjusted Closing Payment, payable to the Vendor;

                 (b)   the Purchaser not having received a notice pursuant to
s.23(3)(b) of the Investment Canada Act (Canada) in respect of the sale and
purchase of the Assets; and

                 (c)   the Purchaser's representations and warranties
contained in paragraph 5.2 shall be true and correct as at the date of this
agreement and as at the Closing Date, the Vendor shall not at the Closing Date
be aware of any facts indicating to the contrary, and the Purchaser shall on
or before the Closing Date have delivered to the Vendor a certificate of the
Purchaser, dated as of the Closing Date, stating that the representations and
warranties contained in paragraph 5.2 are true and correct as at the Closing
Date.

           (2)   The foregoing conditions shall be for the sole benefit of the
Vendor and may be waived in whole or in part by the Vendor in writing.  In the
event that any of the foregoing conditions is not satisfied or waived on or
before the Closing Date, the Vendor shall be entitled to terminate this
agreement by notice in writing given to the Purchaser on the Closing Date.

     4.4   Possession and risk.  If the purchase and sale contemplated is
completed, possession and risk of the Assets shall be deemed to have passed to
the Purchaser at the Effective Time.

     4.5   Post-completion administration.  If the purchase and sale
contemplated is completed, then until that time as the Purchaser becomes the
recognized holder of the Assets in the place and stead of the Vendor, the
provisions of paragraph 3.2 shall apply, mutatis mutandis, in respect of the
Assets, and the Vendor shall;

           (1)   hold and stand possessed of the Assets fully on behalf of the
Purchaser, and receive and hold all proceeds, benefits and advantages accruing
in respect of the Assets fully for the benefit, use and ownership of the
Purchaser, without entitlement at any time to commingle any of them with its
own or any other assets;

           (2)   within five Business Days of the date of receipt, deliver to
the Purchaser all revenues, proceeds and other benefits of any nature received
by it in respect of the Assets;

           (3)   in a timely manner deliver to the Purchaser all third party
notices and communications received by it in respect of the Assets;

           (4)   in a timely manner deliver to third parties all the notices
and communications as the Purchaser may reasonably request, and all the moneys
and other items as the Purchaser may reasonably provide in respect of the
Assets; and

           (5)   as agent of the Purchaser, do and perform all acts and
things, and execute and deliver all agreements, notices and other documents
and instruments, as the Purchaser may reasonably request for purposes of
facilitating the exercise of rights incidental to the ownership of the Assets;
provided, however, that the Vendor shall not be liable to the Purchaser for
any loss or damage suffered by the Purchaser in connection with the
arrangement established by this paragraph, except to the extent that the loss
or damage is caused by the Vendor's negligence, its willful misconduct or its
breach of its contractual obligations under this paragraph, and the Purchaser
shall indemnify the Vendor from and against any liability, loss, costs, claims
or damages arising out of the good faith performance by the Vendor of its
obligations under this paragraph.  Nothing in this paragraph contained shall
be construed as restricting or limiting in any manner any of the other
covenants, warranties, representations and other obligations of the parties.

5.   Representations and warranties

     5.1   Vendor's representations.  The Vendor covenants with, and
represents and warrants to, the Purchaser that;

           (1)   it is a corporation duly incorporated and validly subsisting
with full capacity to sell its Assets, and to otherwise transact the affairs
contemplated by this agreement, in accordance with the provisions of it;

           (2)   it has good right and full power and authority to sell its
Assets in accordance with the provisions of this agreement, it has taken all
corporate actions necessary to authorize the execution and delivery of this
agreement and will at the Closing Date have taken all corporate actions
necessary to authorize and complete the sale of its Assets in accordance with
the provisions of this Agreement, and this Agreement has been validly executed
and delivered, and it and all other documents executed and delivered by or on
behalf of it pursuant to it shall constitute legal, valid and binding
obligations of it enforceable in accordance with their respective terms and
conditions;

           (3)   completion of the sale of its portion of the Assets in
accordance with the terms of this agreement will not be in conflict with,
constitute a default under, or be in violation or breach of;

                 (a)   any agreement or instrument to which it is a party or
by which it is bound, or

                 (b)   any judgment, decree, order, law, statute, rule or
regulation applicable to it;

           (4)   although the Vendor does not warrant its title to the
Hydrocarbon Interests, it does represent and warrant that:

                 (a)   it is aware of no act or thing having been done whereby
any of its interest in the Assets or any of them might be canceled or
determined, nor has it encumbered or alienated or become aware of any
encumbrance or alienation of, or caused or suffered to exist any third panty
right, demand or claim in respect of, the Assets or any interest in them, and
the Assets are now, and will be conveyed to the Purchaser, free and clear of
all liens, encumbrances, royalties and other third party claims and interests
of any nature created by, through, or under it (excepting only any of the
third party claims and interests expressly identified in Schedule "B" which
may have been so created);

                 (b)   it has received no notice of default, and is aware of
no default or notice of default, relating to the Assets or any of them, and it
has, to the extent of its interest, and in accordance with the nature of its
interest, paid or has caused to be paid within applicable time-limits all
production royalties, and performed and observed or caused to be performed and
observed all obligations and covenants, required on its part to keep the
Leases and any of them in full force and effect;

                 (c)   it is not a party to, and is not aware of, any action,
suit or other legal, administrative or arbitration proceeding or governmental
investigation, actual or threatened, which might reasonably be expected to
result in impairment or loss of any of its interests in the Assets or any
part, and there is no particular circumstance, matter or thing known to it
which could reasonably be anticipated to give rise to any action, suit or
other legal, administrative or arbitration proceeding or governmental
investigation;

                (d)   subject to the terms and conditions of the Leases, the
Purchaser may, on the completion of the purchase and sale contemplated, enter
into and on and hold and enjoy the Lands for the residue of the respective
terms of the Leases and all renewals of it, without any lawful interruption
from or by the Vendor or any person claiming by, through or under the Vendor;
and

                (e)   to the best of its knowledge, except as noted in
Schedule "B", none of its Hydrocarbon Interests are subject to reduction by
virtue of the conversion or other alteration of any third party interest
relating to it;

           (5)   there are at the date of this agreement no authorizations for
expenditure or other financial commitments which are outstanding or due, or
which may become due, in respect of its portion of the Assets or operations
relating to it;

           (6)   it is not a non-resident within the meaning of s. 116 of the
Income Tax Act (Canada);

           (7)   (a)   there are no production sales agreements or
arrangements under which Vendor, or any party acting on its behalf, is
obligated to sell or deliver Hydrocarbon Substances allocatable to its
Hydrocarbon Interests to any party; and

                 (b)   neither the Vendor nor any party acting on its behalf
is obligated to deliver Hydrocarbon Substances allocatable to its Hydrocarbon
Interests to any party without in due course receiving and being entitled to
retain full payment at current contract prices;

           (8)   all ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of property or the
production of its Hydrocarbon Substances, or the receipt of proceeds from it,
payable in respect of the Assets prior to the date of this agreement have been
properly and fully paid and discharged, and there are no unpaid taxes or
assessments which could result in a lien or charge on the Assets;

           (9)   to the best of its knowledge after due inquiry, except as
will be disclosed in writing to the Purchaser, none of its Assets are subject
to any preferential right of purchase or other preemptive right whereby any
party would have the right to acquire any of its Assets as a consequence of it
having agreed to sell its Assets to the Purchaser in accordance with it, and
none of its Assets are subject to any provision requiring consent of a third
party to the sale of its Assets to the Purchaser in accordance with it; and

           (10)  the Workers' Compensation Board of Alberta does not possess,
and is not entitled to, a charge on or lien against any of the Assets.

     5.2   Purchaser's representations.  The Purchaser covenants with, and
represents and warrants to each Vendor that:

           (1)   the Purchaser is a corporation duly incorporated and validly
subsisting under the laws of the State of Delaware and the Purchaser has full
capacity and authority to purchase the Assets, and to otherwise transact the
affairs contemplated by this agreement, in accordance with the provisions of
it;

           (2)   the Purchaser has taken all corporate actions necessary to
authorize the execution and delivery of this agreement and will at the Closing
Date have taken all corporate actions necessary to authorize and complete the
purchase of the Assets in accordance with the provisions of this agreement,
and this agreement has been validly executed and delivered, and it and all
other documents executed and delivered by or on behalf of the Purchaser
pursuant to it shall constitute legal, valid and binding obligations of the
Purchaser enforceable in accordance with their respective terms and
conditions;

           (3)   completion, of the purchase of the Assets in accordance with
the terms of this agreement will not be in conflict with, constitute a default
under, or be in violation or breach of:

                 (a)   any agreement or instrument to which the Purchaser is a
party or by which it is bound; or

                 (b)   any judgment, decree, order, statute, rule or
regulation applicable to the Purchaser; and

      5.3   Enforcement limitation.  Absent fraud on the part of the
respective Vendor, the Purchaser shall not be entitled to enforce any claim
for any breach or failure of any representation and warranty contained in
paragraph 5.1 unless it shall within one year of the Closing Date have given
the Vendor written notice of the claim, including particulars of the
representation and warranty alleged to have failed or been breached and of the
alleged facts giving rise to the breach or failure.  Similarly, absent fraud
on the part of the Purchaser, neither the Vendor shall be entitled to enforce
any claim for any breach or failure of any representation and warranty
contained in paragraph 5.2 unless it shall within one year of the Closing Date
have given the Purchaser written notice of the claim, including particulars of
the representation and warranty alleged to have failed or been breached and of
the alleged facts giving rise to the breach or failure.

6.   Recourse

     6.1   Indemnification.

           (1)   The Vendor shall continue to remain liable for and shall
indemnify the Purchaser from and against any liability, loss, costs, claims or
damages (including legal costs on a solicitor/client basis) arising out of any
matter or thing pertaining to the Assets and arising or occurring prior to the
Effective Time, provided that this indemnity is not in any way a title
warranty, and does not provide an extension of any warranty contained
elsewhere in this agreement.  Provided that possession and risk pass in
accordance with the provisions of paragraph 4.4, the Purchaser shall indemnify
the Vendor from and against any liability, loss, costs, claims or damages
(including legal costs on a solicitor/client basis) arising out of any matter
or thing pertaining to the Assets and arising or occurring subsequent to the
Effective Time.  Each of the foregoing indemnifications applies only to the
extent that the liability, loss, costs, claims or damages suffered or incurred
by the injured party have not arisen as a result of its negligence or willful
misconduct, or as a result of the breach of any of its covenants, warranties,
representations or other obligations under this agreement.

           (2)   The Vendor assigns to the Purchaser all insurance proceeds
which may be received or receivable by or on behalf of the Vendor in
connection with any liability, loss, costs, claims or damages for which the
Vendor may be liable to the Purchaser pursuant to the provisions of paragraph
6.1(1), and agrees to take all the actions as may reasonably be required to
ensure that the proceeds are paid to the Purchaser as soon as is reasonably
practicable after they become payable.  The proceeds shall if received by the
Vendor be held in trust by the Vendor for the Purchaser and paid over to it,
and the Purchaser shall be fully subrogated into and shall have full rights of
substitution into all applicable policies of insurance held by or on behalf of
the Vendor.

     6.2   Substitution and subrogation.  To the extent that it is possible,
the Vendor shall convey its portion of the Assets to the Purchaser with full
right of substitution and subrogation of the Purchaser in and to the position
of the Vendor with respect to the benefit of all covenants and warranties by
others given or made in respect of the Assets or any part of it.

7.   General

     7.1   Consequences of termination.  Notwithstanding anything to the
contrary contained in this agreement, if this agreement is terminated in
accordance with its terms prior to the completion of the purchase and sale
contemplated by it, then except as concerns covenants, warranties,
representations or other obligations breached prior to the time at which
termination occurs, and except as concerns any cost payment obligations
incurred under the provisions of this agreement, the parties shall be released
from all of their obligations under this agreement.

     7.2   Purchase Price allocation.  The respective Purchase Prices shall be
paid, allocated and attributed by the Vendor and the Purchaser as follows:

           (1)   to the Miscellaneous Interests - $1.00

           (2)   to the Hydrocarbon Interests - balance of the Purchase Price

     7.3   Brokers' Fee.  Neither party shall be liable for the payment of any
commissions or compensation in the nature of finders' fees to any broker or
agent acting on behalf of the other party, and each of the parties agrees to
indemnify the other from any payment or claim and from any liability, loss,
costs (including legal costs on a solicitor/client basis) or damages suffered
or incurred in connection with them.

     7.4   Communications.  All notices and other communications given in
connection with this agreement shall be in writing, and the respective
addresses of the parties for the service of any notices or other
communications shall be as follows:

           To the Purchaser:   Lions Petroleum Inc
                               600 17th Street
                               Suite 2800 South
                               Denver, CO 80202
                               Attention: Dale M. Paulson

           With a copy to:     Leschert and Company
                               Suite 2760, 200 Granville Street
                               Vancouver, British Columbia V6C 1S4
                               Attention: Allen D. Leschert

           To the Vendor:      Duna Resources Ltd.
                               622, 206 7th Ave. S.W.
                               Calgary, Alberta

Any notices or other communications shall be sufficiently given if delivered
by hand or by reputable courier service, or, absent postal disruption, if sent
by registered mail, postage prepaid, posted within Canada, to the parties at
their respective addresses for service as set forth.  Any notice or other
communication given shall be deemed to have been given and received on the
second Business Day on which it is presented during normal business hours at
the address for service of the addressee of this agreement.  Either party may
change its address for service by notice in writing to the other party.

     7.5   Assignment.  No party shall be entitled to assign any interest in
this agreement without the consent of the other party.

     7.6   Enurement.  This agreement shall enure to the benefit of and be
binding on the parties and their respective successors and permitted assigns.

     7.7   Time of essence.  Time shall be of the essence.

     7.8   Governing law.  This agreement shall be governed by and construed
in accordance with the laws of the Province of British Columbia, and each of
the parties submits to the jurisdiction of the courts of the Province of
British Columbia for the interpretation and enforcement of it.

     7.9   Further assurances.  Each of the parties shall on and after the
Closing Date, without further consideration, do and perform all further acts
and things, and execute and deliver all further agreements, assurances, deeds,
assignments, conveyances, notices, releases and other documents and
instruments, as may reasonably be required to more fully assure the conveyance
of the Assets to the Purchaser in accordance with the provisions of this
agreement and otherwise to assure the carrying out of the intent and purpose
of this agreement.

     7.10   Waiver.  No waiver by either party shall be effective unless in
writing, and a waiver shall affect only the matter, and the occurrence of it,
specifically identified in the writing granting the waiver and shall not
extend to any other matter or occurrence.

     7.11   Non-merger.  The provisions contained in this agreement shall
survive the Closing and shall not merge in any conveyance, transfer,
assignment, novation agreement or other document or instrument issuing
pursuant hereto or in connection with it.

IN WITNESS WHEREOF the parties have executed and delivered this agreement as
of the date first written above.

LIONS PETROLEUM INC.

Per:

/s/ Dale Paulson
--------------------------------
Name: DALE M. PAULSON
Title: PRESIDENT & CEO

DUNA RESOURCES LTD.

Per:

/s/ Gary Earl
--------------------------------
Name: GARY EARL
Title: PRESIDENT

<PAGE>

                        List of Schedules

Schedule "A" - Lands, Leases, Hydrocarbon Interests and Wells
Schedule "B" - List of encumbrances, liens, royalties and other claims to
               the assets
Schedule "C" - Non-convertible Overriding Royalty Agreement

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