Document:

EX4_1

__________

EXHIBIT 4.1

 

2006 STOCK INCENTIVE PLAN

 

 

For:

POWER AIR CORPORATION

Power Air Corporation

4777 Bennett Drive, Suite E, Livermore, California, U.S.A., 94551

__________

EXHIBIT 4.1

POWER AIR CORPORATION

2006 STOCK INCENTIVE PLAN

 

1.                    PURPOSE

1.1               The purpose of this Stock Incentive Plan of Power Air Corporation (the "Company") is to advance the interests of the Company by encouraging Eligible Participants (as herein defined) to acquire shares of the Company, thereby increasing their proprietary interest in the Company, encouraging them to remain associated with the Company and furnish them with additional incentive in their efforts on behalf of the Company in the conduct of their affairs. 

1.2               This Plan is specifically designed for Eligible Participants of the Company who are residents of the United States and/or subject to taxation in the United States, although Awards (as herein defined) under this Plan may be issued to other Eligible Participants.

2.                    DEFINITIONS

2.1                 As used herein, the following definitions shall apply:
(a)       "Administrator" means a Committee of the Board duly appointed by the Board, or otherwise the Board; 

(b)        "Affiliate" and "Associate" have the meanings ascribed to such terms in Rule 12b 2 promulgated under the Exchange Act;

(c)        "Applicable Laws" means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate laws, state or provincial securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein;

(d)        "Award" means the grant of an Option, SAR, Restricted Stock, unrestricted Shares, Restricted Stock Unit, Deferred Stock Unit or other right or benefit under this Plan; 

(e)        "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto;

(f)        "Award Right" means each right to acquire a Share pursuant to an Award;

(g)        "Board" means the Board of Directors of the Company;

(h)        "Cause" means, with respect to the termination by the Company or a Related Entity of the Grantee's Continuous Service, that such termination is for 'Cause' as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee's:

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	refusal or failure to act in accordance with any specific, lawful direction or order of the Company or a Related Entity;

	unfitness or unavailability for service or unsatisfactory performance (other than as a result of Disability);

	performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity;

	dishonesty, intentional misconduct or material breach of any agreement with the Company or a Related Entity; or

	commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person;

(i)        "Change in Control" means, except as provided below, a change in ownership or control of the Company effected through any of the following transactions:

	the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d 3 of the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such shareholders accept;

	a change in the composition of the Board over a period of 36 months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors; 

	the sale or exchange by the Company (in one or a series of transactions) of all or substantially all of its assets to any other person or entity; or

	approval by the shareholders of the Company of a plan to dissolve and liquidate the Company. 

Notwithstanding the foregoing, the following transactions shall not constitute a "Change of Control":

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(i)        the closing of any public offering of the Company's securities pursuant to an effective registration statement filed under the United States Securities Act of 1933, as amended, 

(ii)       the closing of a public offering of the Company's securities through the facilities of any stock exchange; or

(iii)      with respect to an Award that is subject to Section 409A of the Code, and payment or settlement of such Award is to be accelerated in connection with an event that would otherwise constitute a Change of Control, no event set forth previously in this definition shall constitute a Change of Control for purposes of this Plan or any Award Agreement unless such event also constitutes a "change in the ownership", "change in the effective control" or "change in the ownership of a substantial portion of the assets of the corporation" as defined under Section 409A of the Code and Treasury guidance formulated thereunder which guidance currently provides that: 

(A)        a "change in ownership" of a corporation shall be deemed to have occurred if any one person or more than one person acting as a group acquires stock of a corporation that constitutes more than 50% of the total Fair Market Value or total voting power of the stock of the corporation. Stock acquired by any person or group of people who already owns more than 50% of such total Fair Market Value or total voting power of stock shall not trigger a change in ownership;

(B)        a "change in the effective control" of a corporation generally shall be deemed to have occurred if within a 12-month period either: 

(I)        any one person or more than one person acting as a group acquires ownership of stock possessing 35% or more of the total voting power of the stock of the corporation; or 

(II)      a majority of the members of the corporation's board of directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election; and

(C)        a "change in the ownership of a substantial portion of the corporation's assets" generally is deemed to occur if within a 12-month period any person, or more than one person acting as a group, acquires assets from the corporation that have a total gross fair market value at least equal to 40% of the total gross fair market value of all the corporation's assets immediately prior to such acquisition.  The gross fair market value of assets is determined without regard to any liabilities;

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(j)        "Code" means the United States Internal Revenue Code of 1986, as amended;

(k)        "Committee" means the Compensation Committee or any other committee appointed by the Board to administer this Plan in accordance with the provisions of this Plan;

(l)        "Common Stock" means the common stock of the Company;

(m)      "Company" means Power Air Corporation, a Nevada corporation;

(n)        "Consultant" means any person (other than an Employee) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity;

(o)        "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a period of at least 36 months, or (ii) have been Board members for less than 36 months and were appointed or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such appointment or nomination was approved by the Board;

(p)        "Continuous Service" means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant that is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, maternity or paternity leave, military leave, or any other authorized personal leave. For purposes of incentive stock options, no such leave may exceed 90 calendar days, unless reemployment upon expiration of such leave is guaranteed by statute or contract;

(q)        "Corporate Transaction" means any of the following transactions:

	a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is organized;

	the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company's subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; or

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	any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger;

(r)        "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code;

(s)        "Deferred Stock Units" means Awards that are granted to Directors and are subject to the additional provisions set out in Subpart A which is attached hereto and which forms a material part hereof;

(t)        "Director" means a member of the Board or the board of directors of any Related Entity;

(u)        "Disability" or "Disabled" means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment.  A Grantee shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.  Notwithstanding the above, (i) with respect to an Incentive Stock Option, "Disability" or "Disabled" shall mean permanent and total disability as defined in Section 22(e)(3) of the Code and (ii) to the extent an Option is subject to Section 409A of the Code, and payment or settlement of the Option is to be accelerated solely as a result of the Eligible Participant's Disability, Disability shall have the meaning ascribed thereto under Section 409A of the Code and the Treasury guidance promulgated thereunder;

(v)        "Disinterested Shareholder Approval" means approval by a majority of the votes cast by all the Company's shareholders at a duly constituted shareholders' meeting, excluding votes attached to shares beneficially owned by Insiders;

(w)        "Eligible Participant" means any person who is an Officer, a Director, an Employee or a Consultant, including individuals who are foreign nationals or are employed or reside outside the United States;

(x)        "Employee" means any person who is a full-time or part-time employee of the Company or any Related Entity;

(y)        "Exchange Act" means the United States Securities Exchange Act of 1934, as amended;

(z)        "Fair Market Value" means, as of any date, the value of a Share determined in good faith by the Administrator.  By way of illustration, but not limitation, for the purpose of this definition, good faith shall be met if the Administrator employs the following methods:

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	Listed Stock. If the Common Stock is traded on any established stock exchange or quoted on a national market system, fair market value shall be (A) the closing sales price for the Common Stock as quoted on that stock exchange or system for the date the value is to be determined (the "Value Date") as reported in The Wall Street Journal or a similar publication, or (B) if the rules of the applicable stock exchange require, the volume-weighted average trading price for five days prior to the date the Board approves the grant of the Award.  If no sales are reported as having occurred on the Value Date, fair market value shall be that closing sales price for the last preceding trading day on which sales of Common Stock is reported as having occurred.  If no sales are reported as having occurred during the five trading days before the Value Date, fair market value shall be the closing bid for Common Stock on the Value Date.  If the Common Stock is listed on multiple exchanges or systems, fair market value shall be based on sales or bids on the primary exchange or system on which Common Stock is traded or quoted.  If the rules of any applicable stock exchange or system require a different method of calculating fair market value, then such method as is required by those rules;

	Stock Quoted by Securities Dealer. If Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported on any established stock exchange or quoted on a national market system, fair market value shall be the mean between the high bid and low asked prices on the Value Date.  If no prices are quoted for the Value Date, fair market value shall be the mean between the high bid and low asked prices on the last preceding trading day on which any bid and asked prices were quoted;

	No Established Market. If Common Stock is not traded on any established stock exchange or quoted on a national market system and is not quoted by a recognized securities dealer, the Administrator will determine fair market value in good faith.  The Administrator will consider the following factors, and any others it considers significant, in determining fair market value: (A) the price at which other securities of the Company have been issued to purchasers other than Employees, Directors, or Consultants; (B) the Company's net worth, prospective earning power, dividend-paying capacity, and non-operating assets, if any; and (C) any other relevant factors, including the economic outlook for the Company and the Company's industry, the Company's position in that industry, the Company's goodwill and other intellectual property, and the values of securities of other businesses in the same industry;

	Additional Valuation.  For publicly traded companies, any valuation method permitted under Section 20.2031-2 of the Estate Tax Regulations; or

	Non-Publicly Traded Stock.  For non-publicly traded stock, the fair market value of the Common Stock at the Grant Date based on an average of the fair market values as of such date set forth in the opinions of completely independent and well-qualified experts (the Participant's status as a majority or minority shareholder may be taken into consideration).

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Regardless of whether the Common Stock offered under the Award is publicly traded, a good faith attempt under this definition shall not be met unless the fair market value of the Common Stock on the Grant Date is determined with regard to nonlapse restrictions (as defined in Section 1.83-3(h) of the Treasury Regulations) and without regard to lapse restrictions (as defined in Section 1.83-3(i) of the Treasury Regulations);

(aa)   "Grantee" means an Eligible Participant who receives an Award pursuant to an Award Agreement;

(bb)   "Grant Date" means the date the Administrator approves that grant of an Award.  However, if the Administrator specifies that an Award's Grant Date is a future date or the date on which a condition is satisfied, the Grant Date for such Award is that future date or the date that the condition is satisfied;

(cc)   "Incentive Stock Option" means an Option within the meaning of Section 422 of the Code;

(dd)   "Insider" means:

	a Director or Senior Officer of the Company;

	a Director or Senior Officer of a person that is itself an Insider or Subsidiary of the Company;

	a person that has

	direct or indirect beneficial ownership of, 

	control or direction over, or

	a combination of direct or indirect beneficial ownership of and control or direction over,

securities of the Company carrying more than 10% of the voting rights attached to all the Company's outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution; or 

	the Company itself, if it has purchased, redeemed or otherwise acquired any securities of its own issue, for so long as it continues to hold those securities;

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(ee)   "Named Executive Officer" means, if applicable, an Eligible Participant who, as of the date of vesting and/or payout of an Award, is one of the group of "Covered Employees," as defined;

(ff)   "Non-Qualified Stock Option" means an Option which is not an Incentive Stock Option;

(gg)   "Officer" means a person who is an officer, including a Senior Officer, of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder;

(hh)   "Option" means an option to purchase Shares pursuant to an Award Agreement granted under the Plan;

(ii)   "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code;

(jj)   "Performance - Based Compensation" means compensation qualifying as "performance-based compensation" under Section 162(m) of the Code;

(kk)   "Plan" means this 2006 Stock Incentive Plan as amended from time to time;

(ll)   "Related Entity" means any Parent or Subsidiary, and includes any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or a Subsidiary holds a greater than 50% ownership interest, directly or indirectly;

(mm) "Related Entity Disposition" means the sale, distribution or other disposition by the Company of all or substantially all of the Company's interests in any Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity;

(nn)  "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as, established by the Administrator and specified in the related Award Agreement;

(oo)  "Restricted Stock Unit" means a notional account established pursuant to an Award granted to a Grantee, as described in this Plan, that is (i) valued solely by reference to Shares, (ii) subject to restrictions specified in the Award Agreement, and (iii) payable only in Shares; 

(pp)  "Restriction Period" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as determined by the Administrator, in its sole discretion) or the Restricted Stock is not vested; 

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(qq)  "SAR" means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock;

(rr)   "Senior Officer" means:

	the chair or vice chair of the Board, the president, a vice-president, the secretary, the treasurer or the general manager of the Company or a Related Entity;

	any individual who performs functions for a person similar to those normally performed by an individual occupying any office specified in Section 2.1(rr)(i) above; and

	the five highest paid employees of the Company or a Related Entity, including any individual referred to in Section 2.1(rr)(i) or 2.1(rr)(ii) and excluding a commissioned salesperson who does not act in a managerial capacity;

(ss)   "Share" means a share of the Common Stock; and

(tt)   "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.                    STOCK SUBJECT TO THE PLAN

                       Number of Shares Available

3.1      (a)        Subject to the provisions of Section 18, the maximum aggregate number of Shares which may be issued pursuant to all Awards under this Plan is Four Million (4,000,000) (the "Maximum Number").  The maximum aggregate number of Shares that may be granted in the form of Incentive Stock Options shall be 4,000,000.  See Section 29 for Reservation of Shares.

           (b)        Shares that have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan except that Shares (i) covered by an Award (or portion of an Award) which is forfeited or cancelled, expires or is settled in cash, or (ii) withheld to satisfy a Grantee's minimum tax withholding obligations, shall be deemed not to have been issued for purposes of determining the Maximum Number of Shares which may be issued under the Plan.  Also, only the net numbers of Shares that are issued pursuant to the exercise of an Award shall be counted against the Maximum Number.

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           (c)        However, in the event that prior to the Award's cancellation, termination, expiration, forfeiture or lapse, the holder of the Award at any time received one or more elements of "beneficial ownership" pursuant to such Award (as defined by the United States Securities Exchange Commission (the "SEC"), pursuant to any rule or interpretations promulgated under Section 16 of the Exchange Act), the Shares subject to such Award shall not again be made available for regrant under the Plan.  

                       Shares to Insiders

3.2                  Subject to Section 15.1(c) and 15.1(d), no Insider of the Company is eligible to receive an Award where:

	the Insider is not a Director or Senior Officer of the Company;

	any Award, together with all of the Company's other previously established or proposed Awards under the Plan could result at any time in:

	the number of Shares reserved for issuance pursuant to Options granted to Insiders exceeding 50% of the outstanding issue of Common Stock; or

	the issuance to Insiders pursuant to the exercise of Options, within a one year period of a number of Shares exceeding 50% of the outstanding issue of the Common Stock;

provided, however, that this restriction on the eligibility of Insiders to receive an Award shall cease to apply if it is no longer required under any Applicable Laws.

                       Limitations on Award

3.3                  Unless and until the Administrator determines that an Award to a Grantee is not designed to qualify as Performance-Based Compensation, the following limits ("Award Limits") shall apply to grants of Awards to Grantees subject to the Award Limits by Applicable Laws under this Plan: 

	Options and SARs.  Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 18), the maximum number of Shares with respect to one or more Options and/or Stock Appreciation Rights that may be granted during any one calendar year under the Plan to any one Grantee shall be 2,000,000 all of which may be granted as Incentive Stock Options); and

	Other Awards.  The maximum aggregate grant with respect to Awards of Restricted Stock, unrestricted Shares, Restricted Stock Units and Deferred Stock Units (or used to provide a basis of measurement for or to determine the value of Restricted Stock Units and Deferred Stock Units) in any one calendar year to any one Grantee (determined on the date of payment of settlement) shall be 2,000,000.

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4.                    ADMINISTRATION

                       Authority of Plan Administrator

4.1                  Authority to control and manage the operation and administration of this Plan shall be vested in a committee consisting of two or more members of the Board (the "Committee").  It is intended that the directors appointed to serve on the Committee shall be "non-employee directors" (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and "outside directors" (within the meaning of Section 162(m) of the Code) to the extent that Rule 16b-3 and, if necessary for relief from the limitation under Section 162(m) of the Code and such relief sought by the Company, Section 162(m) of the Code, respectively, are applicable.  However, the mere fact that a Committee member shall fail to qualify under either of the foregoing requirements shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.  Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board.  As used herein, the term "Administrator" means the Committee.

                       Powers of the Administrator

4.2                  Subject to Applicable Laws and the provisions of the Plan or subplans hereof (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the exclusive power and authority, in its discretion: 

	to construe and interpret this Plan and any agreements defining the rights and obligations of  the Company and Grantees under this Plan; 

	to select the Eligible Participants to whom Awards may be granted from time to time hereunder;

	to determine whether and to what extent Awards are granted hereunder;

	to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; 

	to approve forms of Award Agreements for use under the Plan, which need not be identical for each Grantee;

	to determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;

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	to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Grantee's rights under an existing Award shall not be made without the Grantee's consent unless as a result of a change in Applicable Law; 

	to suspend the right of a holder to exercise all or part of an Award for any reason that the Administrator considers in the best interest of the Company;

	subject to regulatory approval, amend or suspend the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan, shall, without the written consent of all Grantees, alter or impair any Award granted under the Plan unless as a result of a change in the Applicable Law;

	to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; 

	to further define the terms used in this Plan; 

	to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award Agreement; 

	to provide for rights of refusal and/or repurchase rights; 

	to amend outstanding Award Agreements to provide for, among other things, any change or modification which the Administrator could have provided for upon the grant of an Award or in furtherance of the powers provided for herein that does not disqualify an Incentive Stock Option under applicable regulations unless the Grantee so consents;

	to prescribe, amend and rescind rules and regulations relating to the administration of this Plan; and 

	to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

                       Effect of Administrator's Decision

4.3                  All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons.  The Administrator shall not be liable for any decision, action or omission respecting this Plan, or any Awards granted or Shares sold under this Plan.  In the event an Award is granted in a manner inconsistent with the provisions of this Section 4, such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

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                       Action by Committee

4.4                  Except as otherwise provided by committee charter or other similar corporate governance documents, for purposes of administering the Plan, the following rules of procedure shall govern the Committee.  A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved unanimously in writing by the members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Parent or Affiliate, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

                       Limitation on Liability

4.5                  To the extent permitted by applicable law in effect from time to time, no member of the Committee shall be liable for any action or omission of any other member of the Committee nor for any act or omission on the member's own part, excepting only the member's own wilful misconduct or gross negligence, arising out of or related to this Plan.  The Company shall pay expenses incurred by, and satisfy a judgment or fine rendered or levied against, a present or former member of the Committee in any action against such person (whether or not the Company is joined as a party defendant) to impose liability or a penalty on such person for an act alleged to have been committed by such person while a member of the Committee arising with respect to this Plan or administration thereof or out of membership on the Committee or by the Company, or all or any combination of the preceding, provided, the Committee member was acting in good faith, within what such Committee member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Company or its stockholders.  Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action.  The provisions of this Section 4.5 shall apply to the estate, executor, administrator, heirs, legatees or devisees of a Committee member, and the term "person" as used on this Section 4.5 shall include the estate, executor, administrator, heirs, legatees, or devisees of such person.

5.                    ELIGIBILITY

                       Except as otherwise provided, all types of Awards may be granted to Eligible Participants. An Eligible Participant who has been granted an Award may be, if he or she continues to be eligible, granted additional Awards.

6.                    AWARDS

                       Type of Awards

6.1                  The Administrator is authorized to award any type of arrangement to an Eligible Participant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of:

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	Shares, including unrestricted Shares; 

	Options;

	SARs or similar rights with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions;

	any other security with the value derived from the value of the Shares, such as Restricted Stock and Restricted Stock Units;

	Deferred Stock Units;

	Dividend Equivalent Rights, as defined in Section 13; or

	any combination of the foregoing.

                       Designation of Award

6.2                  Each type of Award shall be designated in the Award Agreement.  In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option.  But see Section 7.3(a) regarding exceeding the Incentive Stock Option threshold.

7.                    GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT

                       Grant of Options

7.1       (a)       One or more Options may be granted to any Eligible Participant.  Subject to the express provisions of this Plan, the Administrator shall determine from the Eligible Participants those individuals to whom Options under this Plan may be granted.  The Shares underlying a grant of an Option may be in the form of Restricted Stock or unrestricted Stock.

            (b)       Further, subject to the express provisions of this Plan, the Administrator shall specify the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Options.  As soon as practicable after the Grant Date, the Company shall provide the Grantee with a written Award Agreement in the form approved by the Administrator, which sets out the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Option.

            (c)       The Administrator may, in its absolute discretion, grant Options under this Plan at any time and from time to time before the expiration of this Plan.

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                       General Terms and Conditions

7.2                  Except as otherwise provided herein, the Options shall be subject to the following terms and conditions and such other terms and conditions not inconsistent with this Plan as the Administrator may impose:

	Exercise of Option. The Administrator may determine in its discretion whether any Option shall be subject to vesting and the terms and conditions of any such vesting.  The Award Agreement shall contain any such vesting schedule;

	Option Term.  Each Option and all rights or obligations thereunder shall expire on such date as shall be determined by the Administrator, but not later than ten years after the Grant Date (five years in the case of an Incentive Stock Option when the Optionee owns more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary ("Ten Percent Stockholder")), and shall be subject to earlier termination as hereinafter provided;

	Exercise Price.  The Exercise Price of any Option shall be determined by the Administrator when the Option is granted, at such Exercise Price as may be determined by the Administrator in the Administrator's sole and absolute discretion; provided, however, that the Exercise Price may not be less than 100% of the Fair Market Value of the Shares on the Grant Date with respect to any Incentive Stock Options which are granted and, provided further, that the Exercise Price of any Incentive Stock Option granted to a Ten Percent Stockholder shall not be less than 50% of the Fair Market Value of the Shares on the Grant Date.  Payment for the Shares purchased shall be made in accordance with Section 16 of this Plan.  The Administrator is authorized to issue Options, whether Incentive Stock Options or Non-qualified Stock Options, at an option price in excess of the Fair Market Value on the Grant Date, to determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;

	Method of Exercise.  Options may be exercised only by delivery to the Company of a stock option exercise agreement (the "Exercise Agreement") in a form approved by the Administrator (which need not be the same for each Grantee), 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 the Grantee'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;

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	Exercise After Certain Events.

	Termination of Continuous Services.

	Options.

	Termination of Continuous Services.  If for any reason other than Disability or death, a Grantee terminates Continuous Services with the Company or a Subsidiary, vested Options held at the date of such termination may be exercised, in whole or in part, at any time within three months after the date of such termination or such lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option)). 

	Continuation of Services as Consultant/Advisor.  If a Grantee granted an Incentive Stock Option terminates employment but continues as a Consultant (no termination of Continuous Services), Grantee need not exercise an Incentive Stock Option within three months of termination of employment but shall be entitled to exercise within three months of termination of Continuous Services to the Company or the Subsidiary (one year in the event of Disability or death) or such lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten years from the Grant Date).  However, if Grantee does not exercise within three months of termination of employment, pursuant to Section 422 of the Code the Option shall not qualify as an Incentive Stock Option. 

	Disability and Death.  If a Grantee becomes Disabled while rendering Continuous Services to the Company or a Subsidiary, or dies while employed by the Company or Subsidiary or within three months thereafter, vested Options then held may be exercised by the Grantee, the Grantee's personal representative, or by the person to whom the Option is transferred by the laws of descent and distribution, in whole or in part, at any time within one year after the termination because of the Disability or death or any lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option).

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                       Limitations on Grant of Incentive Stock Options

7.3       (a)       Threshold.  The aggregate Fair Market Value (determined as of the Grant Date) of the Shares for which Incentive Stock Options may first become exercisable by any Grantee during any calendar year under this Plan, together with that of Shares subject to Incentive Stock Options first exercisable by such Grantee under any other plan of the Company or any Parent or Subsidiary, shall not exceed $100,000.  For purposes of this Section 7.3(a), all Options in excess of the $100,000 threshold shall be treated as Non-Qualified Stock Options notwithstanding the designation as Incentive Stock Options.  For this purpose, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is granted.

           (b)       Compliance with Section 422 of the Code.  There shall be imposed in the Award Agreement relating to Incentive Stock Options such terms and conditions as are required in order that the Option be an "incentive stock option" as that term is defined in Section 422 of the Code.

           (c)       Requirement of Employment.  No Incentive Stock Option may be granted to any person who is not an Employee of the Company or a Parent or Subsidiary of the Company.

8.                    RESTRICTED STOCK AWARDS

                       Grant of Restricted Stock Awards

8.1                  Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  The restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (See Performance Goals, Section 14.4).  All awards of Restricted Stock shall be evidenced by Award Agreements.

                       Consideration

8.2                  Restricted Stock may be issued in connection with:

	Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or

	Purchase Price.  A purchase price, as specified in the Award Agreement related to such Restricted Stock. 

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                       Voting and Dividends

8.3                  Unless the Administrator in its sole and absolute discretion otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Restricted Stock and the right to receive any dividends declared or paid with respect to such Restricted Stock.  The Administrator may provide that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and restrictions applicable to such Restricted Stock.  All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.  

                       Forfeiture

8.4                  In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy the restriction period or a performance objective during the applicable restriction period, any Restricted Stock that has not vested prior to the event of forfeiture shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to vote and receive dividends with respect to the Restricted Stock.  Notwithstanding the foregoing, the Administrator may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock, provided such waiver is in accordance with the Applicable Laws. 

                       Certificates for Restricted Stock

8.4                  Restricted Stock granted under this Plan may be evidenced in such manner as the Administrator shall determine, including by way of certificates.  The Administrator may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee's benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, (see Escrow; Pledge of Shares, Section 23) or (ii) such certificates shall be delivered to the Grantee, provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed under this Plan and the Award Agreement.

9.                    UNRESTRICTED STOCK AWARDS

                       The Administrator may, in its sole discretion, grant (or sell at Fair Market Value or such other higher purchase price determined by the Administrator in the Award Agreement) an Award of unrestricted Shares to any Grantee pursuant to which such Grantee may receive Shares free of any restrictions under this Plan.

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10.                  RESTRICTED STOCK UNITS

                       Grant of Restricted Stock Units

10.1                 Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock Units to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  These restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (See Performance Goals, Section 14.4).  All awards of Restricted Stock Units shall be evidenced by Award Agreements. 

                       Number of Restricted Stock Units

10.2                The Award Agreement shall specify the number of Share equivalent units granted and such other provisions as the Administrator determines.

                       Consideration

10.3                Restricted Stock Units may be issued in connection with: 

	Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or

	Purchase Price.  A purchase price as specified in the Award Agreement related to such Restricted Stock Units. 

                       No Voting Rights

10.4                The holders of Restricted Stock Units shall have no rights as stockholders of the Company.

                       Dividend Equivalency

10.5                The Administrator, in its sole and absolute discretion, may provide in an Award Agreement evidencing a grant of Restricted Stock Units that the holder shall be entitled to receive, upon the Company's payment of a cash dividend on its outstanding Shares, a cash payment for each Restricted Stock Unit.  (See Section 13, Dividend Equivalent Right).  Such Award Agreement may also provide that such cash payment shall be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value of a Share on the date that such dividend is paid.

                       Creditor's Rights

10.6                A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company.  Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement.

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                       Settlement of Restricted Stock Units

10.7                Each Restricted Stock Unit shall be paid and settled by the issuance of Restricted Stock or unrestricted Shares in accordance with the Award Agreement and if such settlement is subject to Section 409A of the Code only upon any one or more of the following as provided for in the Award Agreement:

	a specific date or date determinable by a fixed schedule; 

	upon the Eligible Participant's termination of Continuous Services to the extent the same constitutes a separation from services for purposes of Section 409A of the Code except that if an Eligible Participant is a "key employee" as defined in Section 409A of the Code for such purposes, then payment or settlement shall occur 6 months following such separation of service;

	as a result of the Eligible Participant's death or Disability; or

	in connection with or as a result of a Change in Control in compliance with Section 409A of the Code.

                       Forfeiture

10.8                Upon failure to satisfy any requirement for settlement as set forth in the Award Agreement, including failure to satisfy any restriction period or performance objective, any Restricted Stock Units held by the Grantee shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to receive dividends with respect to the Restricted Stock Units.

11.                   DIRECTOR SHARES AND DIRECTOR DEFERRED STOCK UNITS

                       The grant of Awards of Shares to Directors and the election by Directors to defer the receipt of the Awards of Shares ("Deferred Stock Units") shall be governed by the provisions of Subpart A which is attached hereto.  The provisions of Subpart A are attached hereto as part of this Plan and are incorporated herein by reference.

12.                   STOCK APPRECIATION RIGHTS

                       Awards of SARs

12.1                An SAR is an award to receive a number of Shares (which may consist of Restricted Stock), or cash, or Shares and cash, as determined by the Administrator in accordance with Section 12.4 below, for services rendered to the Company.  A SAR may be awarded pursuant to an Award Agreement that shall be in such form (which need not be the same for each Grantee) as the Administrator shall from time to time approve, and shall comply with and be subject to the terms and conditions of this Plan.  A SAR may vary from Grantee to Grantee and between groups of Grantees, and may be based upon performance objectives (See Performance Goals in Section 14.4).

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                       Term

12.2                The term of a SAR shall be set forth in the Award Agreement as determined by the Administrator.

                       Exercise

12.3                A Grantee desiring to exercise a SAR shall give written notice of such exercise to the Company, which notice shall state the proportion of Shares and cash that the Grantee desires to receive pursuant to the SAR exercised, subject to the discretion of the Administrator.  Upon receipt of the notice from the Grantee, subject to the Administrator's election to pay cash as provided in Section 12.4 below, the Company shall deliver to the person entitled thereto (i) a certificate or certificates for Shares and/or (ii) a cash payment, in accordance with Section 12.4 below.  The date the Company receives written notice of such exercise hereunder is referred to in this Section 12 as the "exercise date". 

                       Number of Shares or Amount of Cash

12.4                Subject to the discretion of the Administrator to substitute cash for Shares, or some portion of the Shares for cash, the amount of Shares that may be issued pursuant to the exercise of a SAR shall be determined by dividing: (i) the total number of Shares as to which the SAR is exercised, multiplied by the amount by which the Fair Market Value of the Shares on the exercise date exceeds the Fair Market Value of a Share on the date of grant of the SAR; by (ii) the Fair Market Value of a Share on the exercise date; provided, however, that fractional Shares shall not be issued and in lieu thereof, a cash adjustment shall be paid.  In lieu of issuing Shares upon the exercise of a SAR, the Administrator in its sole discretion may elect to pay the cash equivalent of the Fair Market Value of the Shares on the exercise date for any or all of the Shares that would otherwise be issuable upon exercise of the SAR. 

                       Effect of Exercise

12.5                A partial exercise of a SAR shall not affect the right to exercise the remaining SAR from time to time in accordance with this Plan and the applicable Award Agreement with respect to the remaining shares subject to the SAR.

                       Forfeiture

12.6                In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy any restriction period or a performance objective, any SAR that has not vested prior to the date of termination shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety.

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13.                   DIVIDEND EQUIVALENT RIGHT

                       A dividend equivalent right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the dividend equivalent right (or other Award to which it relates) if such Shares had been issued to and held by the recipient (a "Dividend Equivalent Right").  A Dividend Equivalent Right may be granted hereunder to any Grantee as a component of another Award or as a freestanding Award.  The terms and conditions of Dividend Equivalent Right shall be specified in the grant.  Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional Shares, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single instalment or instalments, all determined in the sole discretion of the Administrator.  A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.  A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award. 

14.                   TERMS AND CONDITIONS OF AWARDS

                       In General

14.1                Subject to the terms of the Plan and Applicable Laws, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. 

                       Term of Award

14.2                The term of each Award shall be the term stated in the Award Agreement.

                       Transferability

14.3     (a)       Limits on Transfer.  No right or interest of a Grantee in any unexercised or restricted Award may be pledged, encumbered or hypothecated to or in favor of any party other than to the Company or a Related Entity or Affiliate.  No Award shall be sold, assigned, transferred or disposed of by a Grantee other than by the laws of descent and distribution or, in the case of an Incentive Stock Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Administrator may (but need not) permit other transfers where the Administrator concludes that such transferability (i) does not result in accelerated taxation or other adverse tax consequences, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including, without limitation, state or federal tax or securities laws applicable to transferable Awards.

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           (b)       Beneficiaries.  Notwithstanding Section 14.3(a), a Grantee may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Grantee and to receive any distribution with respect to any Award upon the Grantee's death.  A beneficiary, legal guardian, legal representative or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Grantee, except to the extent the Plan and such Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If no beneficiary has been designated or survives the Grantee, payment shall be made to the Grantee's estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Grantee at any time, provided the change or revocation is filed with the Administrator.

                       Performance Goals

14.4               In order to preserve the deductibility of an Award under Section 162(m) of the Code, the Administrator may determine that any Award granted pursuant to this Plan to a Grantee that is or is expected to become a Covered Employee shall be determined solely on the basis of (a) the achievement by the Company or Subsidiary of a specified target return, or target growth in return, on equity or assets, (b) the Company's stock price, (c) the Company's total shareholder return (stock price appreciation plus reinvested dividends) relative to a defined comparison group or target over a specific performance period, (d) the achievement by the Company or a Parent or Subsidiary, or a business unit of any such entity, of a specified target, or target growth in, net income, earnings per share, earnings before income and taxes, and earnings before income, taxes, depreciation and amortization, or (e) any combination of the goals set forth in (a) through (d) above.  If an Award is made on such basis, the Administrator shall establish goals prior to the beginning of the period for which such performance goal relates (or such later date as may be permitted under Section 162(m) of the Code or the regulations thereunder but not later than 90 days after commencement of the period of services to which the performance goal relates), and the Administrator has the right for any reason to reduce (but not increase) the Award, notwithstanding the achievement of a specified goal.  Any payment of an Award granted with performance goals shall be conditioned on the written certification of the Administrator in each case that the performance goals and any other material conditions were satisfied.

                       In addition, to the extent that Section 409A is applicable, (i) performance-based compensation shall also be contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months in which the Eligible Participant performs services and (ii) performance goals shall be established not later than 90 calendar days after the beginning of any performance period to which the performance goal relates, provided that the outcome is substantially uncertain at the time the criteria are established.

                       Acceleration

14.5                The Administrator may, in its sole discretion (but subject to the limitations of and compliance with Section 409A of the Code and Section 14.7 in connection therewith), at any time (including, without limitation, prior to, coincident with or subsequent to a Change of Control) determine that (a) all or a portion of a Grantee's Awards shall become fully or partially exercisable, and/or (b) all or a part of the restrictions on all or a portion of the outstanding Awards shall lapse, in each case, as of such date as the Administrator may, in its sole discretion, declare.  The Administrator may discriminate among Grantees and among Awards granted to a Grantee in exercising its discretion pursuant to this Section 14.5.

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                       Compliance with Section 162(m) of the Code

14.6                Notwithstanding any provision of this Plan to the contrary, if the Administrator determines that compliance with Section 162(m) of the Code is required or desired, all Awards granted under this Plan to Named Executive Officers shall comply with the requirements of Section 162(m) of the Code.  In addition, in the event that changes are made to Section 162(m) of the Code to permit greater flexibility with respect to any Award or Awards under this Plan, the Administrator may make any adjustments it deems appropriate.  

                       Compliance with Section 409A of the Code

14.7                Notwithstanding any provision of this Plan to the contrary, if any provision of this Plan or an Award Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the interest and penalties under Section 409A of the Code, such provision of this Plan or any Award Agreement shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code.  In addition, in the event that changes are made to Section 409A of the Code to permit greater flexibility with respect to any Award under this Plan, the Administrator may make any adjustments it deems appropriate. 

                       Section 280G of the Code

14.8                Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Grantee has a right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G of the Code), all such payments shall be reduced to the largest amount that shall result in no portion being subject to the excise tax imposed by Section 4999 of the Code.

                       Exercise of Award Following Termination of Continuous Service

14.9               An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee's Continuous Service only to the extent provided in the Award Agreement.  Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.

                       Cancellation of Awards

14.10             In the event a Grantee's Continuous Services has been terminated for "Cause", he or she shall immediately forfeit all rights to any and all Awards outstanding.  The determination that termination was for Cause shall be final and conclusive.  In making its determination, the Board shall give the Grantee an opportunity to appear and be heard at a hearing before the full Board and present evidence on the Grantee's behalf.  Should any provision to this Section 14.10. be held to be invalid or illegal, such illegality shall not invalidate the whole of this Section 14, but, rather, this Plan shall be construed as if it did not contain the illegal part or narrowed to permit its enforcement, and the rights and obligations of the parties shall be construed and enforced accordingly.

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15.                  ADDITIONAL TERMS IF THE COMPANY BECOMES LISTED ON A STOCK EXCHANGE

15.1                In the event the Shares become listed on a stock exchange, and to the extent required by the rules of such stock exchange, then the following terms and conditions shall apply to an Award in addition to those contained herein, as applicable:

	the exercise price of an Award must not be lower than the Fair Market Value (without discount) of the Shares on the stock exchange at the time the Award is granted;

	the exercise price of an Award granted to an Insider cannot be reduced, or the term of the Award cannot be extended to benefit an Insider, unless the Company obtains Disinterested Shareholder Approval;

	the number of securities issuable to Insiders, at any time, under all of the Company's security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the Company's total issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval; and

	the number of securities issued to Insiders, within any one year period, under all of the Company's security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval.

16.                    PAYMENT FOR SHARE PURCHASES

                       Payment

16.1                Payment for Shares purchased pursuant to this Plan may be made:

	Cash.  By cash, cashier's check or wire transfer or, at the discretion of the Administrator expressly for the Grantee and where permitted by law as follows:

	Surrender of Shares.  By surrender of shares of Common Stock of the Company that have been owned by the Grantee for more than six months, or lesser period if the surrender of shares is otherwise exempt from Section 16 of the Exchange Act, (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);

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	Deemed Net-Stock Exercise.  By forfeiture of Shares equal to the value of the exercise price pursuant to a "deemed net-stock exercise" by requiring the Grantee to accept that number of Shares determined in accordance with the following formula, rounded down to the nearest whole integer:

where:

a  =                 net Shares to be issued to Grantee;

b  =                 number of Awards being exercised;

c  =                 Fair Market Value of a Share; and

d  =                 Exercise price of the Awards; or

	Broker-Assisted.  By delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the exercise price and the amount of any required tax or other withholding obligations.

                       Combination of Methods

16.2                By any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law.

17.                    WITHHOLDING TAXES

                       Withholding Generally

17.1                Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or Shares are forfeited pursuant to a "deemed net-stock exercise," the Company may require the Grantee to remit to the Company an amount sufficient to satisfy the foreign, federal, state, provincial, or local income and employment tax withholding obligations, including, without limitation, on exercise of an Award.  When, under applicable tax laws, a Grantee incurs tax liability in connection with the exercise or vesting of any Award, the disposition by a Grantee or other person of an Award or an Option prior to satisfaction of the holding period requirements of Section 422 of the Code, or upon the exercise of a Non-Qualified Stock Option, the Company shall have the right to require such Grantee or such other person to pay by cash, or check payable to the Company, the amount of any such withholding with respect to such transactions.  Any such payment must be made promptly when the amount of such obligation becomes determinable.

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                       Stock for Withholding

17.2                To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Grantee to satisfy his or her obligation to pay any such withholding tax, in whole or in part, with Shares up to an amount not greater than the Company's minimum statutory withholding rate for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income.  The Administrator may exercise its discretion, by (i) directing the Company to apply Shares to which the Grantee is entitled as a result of the exercise of an Award, or (ii) delivering to the Company Shares that have been owned by the Grantee for more than six months, unless the delivery of Shares is otherwise exempt from Section 16 of the Exchange Act.  A Grantee who has made an election pursuant to this Section 17.2 may satisfy his or her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.  The Shares so applied or delivered for the withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

18.                    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

                       In General

18.1                Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. The Administrator shall make the appropriate adjustments to (i) the maximum number and/or class of securities issuable under this Plan; and (ii) the number and/or class of securities and the exercise price per Share in effect under each outstanding Award in order to prevent the dilution or enlargement of benefits thereunder; provided, however, that the number of Shares subject to any Award shall always be a whole number and the Administrator shall make such adjustments as are necessary to insure Awards of whole Shares. Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. 

                       Company's Right to Effect Changes in Capitalization

18.2                The existence of outstanding Awards shall not affect the Company's right to effect adjustments, recapitalizations, reorganizations or other changes in its or any other corporation's capital structure or business, any merger or consolidation, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares, the dissolution or liquidation of the Company's or any other corporation's assets or business or any other corporate act whether similar to the events described above or otherwise.  

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19.                    CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY DISPOSITIONS

                       Company is Not the Survivor

19.1                Subject to Section 19.3 and except as may otherwise be provided in an Award Agreement, the Administrator shall have the authority, in its absolute discretion, exercisable either in advance of any actual or anticipated Corporate Transaction, Change in Control or Related Entity Disposition in which the Company is not the surviving corporation, or at the time of an actual Corporate Transaction, Change in Control or Related Entity Disposition in which the Company is not the surviving corporation (a) to cancel each outstanding Award upon payment in cash to the Grantee of the amount by which any cash and the Fair Market Value of any other property which the Grantee would have received as consideration for the Shares covered by the Award if the Award had been exercised before such Corporate Transaction, Change in Control or Related Entity Disposition exceeds the exercise price of the Award, or (b) to negotiate to have such Award assumed by the surviving corporation.  The determination as to whether the Company is the surviving corporation is at the sole and absolute discretion of the Administrator.

                       In addition to the foregoing, in the event of a dissolution or liquidation of the Company, or a Corporate Transaction or Related Entity Disposition in which the Company is not the surviving corporation, the Administrator, in its absolute discretion, may accelerate the time within which each outstanding Award may be exercised.  Section 19.3 shall control with respect to any acceleration in vesting in the event of Change of Control.

                       The Administrator shall also have the authority:

	to release the Awards from restrictions on transfer and repurchase or forfeiture rights of such Awards on such terms and conditions as the Administrator may specify; and

	to condition any such Award's vesting and exercisability or release from such limitations upon the subsequent termination of the Continuous Service of the Grantee within a specified period following the effective date of the Corporate Transaction, Change in Control or Related Entity Disposition. 

                       Effective upon the consummation of a Corporate Transaction, Change in Control or Related Entity Disposition governed by this Section 19.1, all outstanding Awards under this Plan not exercised by the Grantee or assumed by the successor corporation shall terminate.

                       Company is the Survivor

19.2                he event of a Corporate Transaction, Change in Control or Related Entity Disposition in which the Company is the surviving corporation, the Administrator shall determine the appropriate adjustment of the number and kind of securities with respect to which outstanding Awards may be exercised, and the exercise price at which outstanding Awards may be exercised.  The Administrator shall determine, in its sole and absolute discretion, when the Company shall be deemed to survive for purposes of this Plan.  Subject to any contrary language in an Award Agreement evidencing an Award, any restrictions applicable to such Award shall apply as well to any replacement shares received by the Grantee as a result.

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                       Change in Control

19.3                There is a Change of Control, all outstanding Awards shall fully vest immediately upon the Company's public announcement of such a change.

20.                  PRIVILEGES OF STOCK OWNERSHIP

                       No Grantee shall have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Grantee.  After Shares are issued to the Grantee, the Grantee shall be a stockholder and 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 Grantee 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 shall be subject to the same restrictions as the Restricted Stock.  The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award.

21.                    RESTRICTION ON SHARES

                       At the discretion of the Administrator, the Company may reserve to itself and/or its assignee(s) in the Award Agreement that the Grantee not dispose of the Shares for a specified period of time, or that the Shares are subject to a right of first refusal or a right to repurchase by the Company at the Shares' Fair Market Value at the time of sale.  The terms and conditions of any such rights or other restrictions shall be set forth in the Award Agreement evidencing the Award.

22.                    CERTIFICATES

                       All certificates for Shares or other securities delivered under this Plan shall be subject to such stock transfer orders, legends and other restrictions as the Administrator 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.

23.                   ESCROW; PLEDGE OF SHARES

                       To enforce any restrictions on a Grantee's Shares, the Administrator may require the Grantee to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Administrator, 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 Administrator may cause a legend or legends referencing such restrictions to be placed on the certificates.  

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24.                   SECURITIES LAW AND OTHER REGULATORY COMPLIANCE

                       Compliance With Applicable Law

24.1                An Award shall 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 Grant Date and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company shall have no obligation to issue or deliver certificates for Shares under this Plan prior to (i) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (ii) completion of any registration or other qualification of such Shares under any state or federal laws or rulings of any governmental body that the Company determines to be necessary or advisable.  The Company shall be under no obligation to register the Shares with the Securities Exchange Commission 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 shall have no liability for any inability or failure to do so.  Evidences of ownership of Shares acquired pursuant to an Award shall bear any legend required by, or useful for purposes of compliance with, applicable securities laws, this Plan or the Award Agreement.

                       During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to this Plan and the exercise of Awards granted hereunder shall qualify for the exemption provided by Rule 16b-3 under the Exchange Act.  To the extent that any provision of this Plan or action by the Board or the Administrator does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board or the Administrator, and shall not affect the validity of this Plan.  In the event that Rule 16b-3 is revised or replaced, the Administrator may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement. 

                       Investment Representation

24.2                As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

25.                   NO OBLIGATION TO EMPLOY

                       Nothing in this Plan or any Award granted under this Plan shall confer or be deemed to confer on any Grantee any right to continue in the employ of, or to continue any other relationship with, the Company or to limit in any way the right of the Company to terminate such Grantee's employment or other relationship at any time, with or without Cause.

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26.                   EFFECTIVE DATE AND TERM OF PLAN

                       This Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall continue in effect for a term of ten years unless sooner terminated.

27.                   SHAREHOLDER APPROVAL

                       This Plan shall be subject to approval by the shareholders of the Company within 12 months from the date the Plan is adopted by the Company's Board. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.  The Administrator may grant Awards under this Plan prior to approval by the shareholders, but until such approval is obtained, no such Award shall be exercisable. In the event that shareholder approval is not obtained within the 12 month period provided above, all Awards previously granted under this Plan shall be cancelled and of no force or effect.

28.                   AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN OR AWARDS

                       The Board may amend, suspend or terminate this Plan at any time and for any reason.  To the extent necessary to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required.  Shareholder approval shall be required for the following types of amendments to this Plan: (i) any increase in Maximum Number of Shares issuable under the Plan except for a proportional increase in the Maximum Number as a result of stock split or stock dividend, or a change from a fixed Maximum Number of Shares to a fixed maximum percentage; (ii) any change to those persons who are entitled to become participants under the Plan which would have the potential of broadening or increasing Insider participation; or (iii) the addition of any form of financial assistance or amendment to a financial assistance provision which is more favourable to Grantees. 

                       Further, the Board may, in its discretion, determine that any amendment should be effective only if approved by the shareholders even if such approval is not expressly required by this Plan or by law.  No Award may be granted during any suspension of this Plan or after termination of this Plan. 

                       Any amendment, suspension or termination of this Plan shall not affect Awards already granted, and such Awards shall remain in full force and effect as if this Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company.  At any time and from time to time, the Administrator may amend, modify, or terminate any outstanding Award or Award Agreement without approval of the Grantee; provided however, that subject to the applicable Award Agreement, no such amendment, modification or termination shall, without the Grantee's consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination.  

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                       Notwithstanding any provision herein to the contrary, the Administrator shall have broad authority to amend this Plan or any outstanding Award under this Plan without approval of the Grantee to the extent necessary or desirable: (i) to comply with, or take into account changes in, applicable tax laws, securities laws, accounting rules and other applicable laws, rules and regulations; or (ii) to ensure that an Award is not subject to interest and penalties under Section 409A of the Code or the excise tax imposed by Section 4999 of the Code. 

                       Further, notwithstanding any provision herein to the contrary, and subject to Applicable Law, the Administrator may, in its absolute discretion, amend or modify this Plan: (i) to make amendments which are of a "housekeeping" or clerical nature; (ii) to change the vesting provisions of an Award granted hereunder, as applicable; (iii) to change the termination provision of an Award granted hereunder, as applicable, which does not entail an extension beyond the original expiry date of such Award; and (iv) the addition of a cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying securities from the Maximum Number.

29.                   RESERVATION OF SHARES

                       The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Plan.

                       The Shares to be issued hereunder upon exercise of an Award may be either authorized but unissued; supplied to the Plan through acquisitions of Shares on the open market; Shares forfeited back to the Plan; Shares surrendered in payment of the exercise price of an Award; or Shares withheld for payment of applicable employment taxes and/or withholding obligations resulting from the exercise of an Award.  

                       The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.  

30.                   EXCHANGE AND BUYOUT OF AWARDS

                       The Administrator may, at any time or from time to time, authorize the Company, with the consent of the respective Grantees, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards.  The Administrator may at any time buy from a Grantee an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Administrator and the Grantee may agree.  

31.                   APPLICABLE TRADING POLICY

                       The Administrator and each Eligible Participant will ensure that all actions taken and decisions made by the Administrator or an Eligible Participant, as the case may be, pursuant to this Plan comply with any Applicable Laws and policies of the Company relating to insider trading or "blackout" periods.

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32.                   GOVERNING LAW

                       The Plan shall be governed by the laws of the State of Nevada; provided, however, that any Award Agreement may provide by its terms that it shall be governed by the laws of any other jurisdiction as may be deemed appropriate by the parties thereto.

33.                   MISCELLANEOUS

                       Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

__________

EXHIBIT 4.1

SUBPART A

STOCK AND DEFERRED STOCK UNITS FOR ELIGIBLE DIRECTORS

A.                    Stock Award.  The Administrator shall pay Eligible Remuneration to each Director pursuant to an Award Agreement.

B.                    Election.  Further, the Administrator may, in its sole discretion, permit each Eligible Director to receive all or any portion of his Eligible Remuneration during the Remuneration Period in the form of Deferred Stock Units under this Plan (an "Election").  All deferrals pursuant to such an Election shall be evidenced by an Award Agreement. 

                       For purposes of this Subpart A, the following definitions shall apply:

"Annual Retainer" for a particular Director means the retainer (including any additional amounts payable for serving as lead Director or on any committee of the Board), payable to that Director for serving as a Director for the relevant Remuneration Period, as determined by the Board;

"Attendance Fee" means amounts payable annually to a Director as a Board meeting attendance fee or a committee meeting attendance fee, or any portion thereof;

"Canadian Director" means a Director who is a resident of Canada for the purposes of the Canadian Tax Act, and whose income from employment by the Company or Related Entity is subject to Canadian income tax, notwithstanding any provision of the Canada-United States Income Tax Convention (1980), as amended;

"Canadian Tax Act" and "Canadian Tax Regulations" means respectively the Income Tax Act (Canada), as amended and the Income Tax Regulation promulgated thereunder, as amended;

"Deferred Stock Unit" means a right granted by the Company to an Eligible Director to receive, on a deferred payment basis, Shares under this Plan; 

"Eligible Director" is any Director of this Company or Related Entity that the Administrator determines is eligible to elect to receive Deferred Stock Units under this Plan;

"Eligible Remuneration" means all amounts payable to an Eligible Director in Shares, including all or part of amounts payable in satisfaction of the Annual Retainer, Attendance Fees or any other fees relating to service on the Board which are payable to an Eligible Director or in satisfaction of rights or property surrendered by an Eligible Director to the Company; it being understood that the amount of Eligible Remuneration payable to any Eligible Director may be calculated by the Administrator in a different manner than Eligible Remuneration payable to another Eligible Director in its sole and absolute discretion;

"Prescribed Plan or Arrangement" means a prescribed plan or arrangement as defined in s.6801(d) of the Canadian Tax Regulation;

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"Remuneration Period" means, as applicable, (a) the period commencing on the Effective Date of this Plan and ending on the last day of the calendar year in which the Effective Date occurs; and (b) thereafter each subsequent calendar year, or where the context requires, any portion of such period; and

"Salary Deferral Arrangement" means a salary deferral arrangement as defined in the Canadian Tax Act.

1.                    Election.  An Eligible Director who desires to defer receipt of all or a portion of his or her Eligible Remuneration in any calendar year shall make such election in writing to the Company specifying:

	the dollar amount or percentage of Eligible Remuneration to be deferred; and

	the deferral period.

                       Otherwise, such election must be made before the first day of the calendar year in which the Eligible Remuneration shall be payable, however a newly appointed Eligible Director shall be eligible to defer payment of future Eligible Remuneration by providing written election to the Company within 30 calendar days of his or her appointment to the Board of Directors.  The elections made pursuant to this Section shall be irrevocable with respect to Eligible Remuneration to which such elections pertain and shall also apply to subsequent Eligible Remuneration payable in future calendar years unless such Eligible Director notifies the Company in writing, before the first day of the applicable calendar year, that he or she desires to change such election.

                       If the Eligible Director does not timely deliver an election in respect of a particular Remuneration Period, the Eligible Director will receive the Eligible Remuneration as provided for in the Award Agreement.  

2.                    Determination Of Deferred Stock Units.  The Company will maintain a separate account for each Eligible Director to which it will quarterly credit Deferred Stock Units at the end of March, June, September and December, or as otherwise determined by the Administrator, the Deferred Stock Units granted to the Eligible Director for the relevant Remuneration Period.  The number of Deferred Stock Units (including fractional Deferred Stock Units, computed to three digits) to be credited to an account for an Eligible Director will be determined on the date approved by the Administrator by dividing the appropriate amount of Eligible Remuneration to be deferred into Deferred Stock Units by the Fair Market Value on that date.

3.                       No Voting Rights.  The holders of Deferred Stock Units shall have no rights as stockholders of the Company.

4.                       Dividend Equivalency.  The Company will, on any date on which a cash or stock dividend is paid on its outstanding Shares, credit to each Eligible Director's account that number of additional Deferred Stock Units (including fractional Deferred Stock Units, computed to three digits) calculated by (i) multiplying the amount of the dividend per Share by the number of Deferred Stock Units in the account as of the record date for payment of the dividend, and (ii) dividing the amount obtained in (i) by the Fair Market Value on the date on which the dividend is paid.  (See Section 13 of the Plan, Dividend Equivalent Right).

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5.                    Eligible Director's Account.  A written confirmation of the balance in each Eligible Directors' Account will be sent by the Company to the Eligible Director upon request of the Eligible Director.

6.                    Creditor's Rights.  A holder of Deferred Stock Units shall have no rights other than those of a general creditor of the Company.  Deferred Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and condition of the applicable Award Agreement.

7.                    Settlement of Deferred Stock Units.  Subject to Section 8, each Deferred Stock Unit shall be paid and settled by the issuance of Restricted or unrestricted Shares in accordance with the Award Agreement and if such settlement is subject to Section 409A of the Code only upon any one or more of the following as provided for in the Award Agreement:

	a specific date or date determinable by a fixed schedule; 

	upon the Eligible Director's termination of Continuous Services to the extent the same constitutes a separation from services for the purposes of Section 409A of the Code except that if an Eligible Director is a "key employee" as defined in Section 409A of the Code for such purposes, then payment or settlement shall occur 6 months following such separation of service;

	as a result of the Eligible Director's death or Disability; or

	in connection with or as a result of a Change in Control in compliance with 409A of the Code.

                       The Company will issue one Share for each whole Deferred Stock Unit credited to the Eligible Director's account (net of any applicable withholding tax as provided for in this Plan).  Such payment shall be made by the Company as soon as reasonably possible following the settlement date.  Fractional Shares shall not be issued, and where the Eligible Director would be entitled to receive a fractional Shares in respect of any fractional Deferred Stock Unit, the Company shall pay to such Eligible Director, in lieu of such fractional Shares, cash equal to the Fair Market Value of such fractional Shares calculated as of the day before such payment is made, net of any applicable withholding tax.

8.                    Canadian Directors.  If a Deferred Stock Unit is granted to an Eligible Director who is a Canadian Director would otherwise constitute a Salary Deferred Arrangement, the Award Agreement pertaining to that Deferred Stock Unit shall contain such other or additional terms as will cause the Deferred Stock Unit to be a Prescribed Plan or Arrangement.

9.                    Issuance of Stock Certificates.  A stock certificate or certificates shall be registered and issued in the name of the holder of Deferred Stock Units and delivered to such holder as soon as practicable after such Deferred Stock Units have become payable or satisfied in accordance with the terms of the Plan

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10.                  Non-Exclusivity.  Nothing in this Subpart A shall prohibit the Administrator from making discretionary Awards to Eligible Directors pursuant to the other provisions of this Plan or outside this Plan, not otherwise inconsistent with these provisions.

11.                  Defined Terms.  Capitalized terms used in this Subpart A and not defined herein have the meaning give in the Plan.

__________EX10_19

__________

EXHIBIT 10.19

$1.00 UNIT PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

Between:

LEXINGTON RESOURCES, INC.

And:

{NAME OF SUBSCRIBER}

Lexington Resources, Inc.

7473 West Lake Mead Road, Las Vegas, Nevada, U.S.A., 89128

__________

$1.00 UNIT PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE LAWS OF ANY STATE, AND ARE BEING ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION PERTAINING TO SUCH SECURITIES AND PURSUANT TO A REPRESENTATION BY THE SECURITY HOLDER NAMED HEREON THAT SAID SECURITIES HAVE BEEN ACQUIRED FOR PURPOSES OF INVESTMENT AND NOT FOR PURPOSES OF DISTRIBUTION.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.  FURTHERMORE, NO OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS TO TAKE PLACE WITHOUT THE PRIOR WRITTEN APPROVAL OF COUNSEL TO THE COMPANY.  THE STOCK TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFERS ONLY IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS.

(OR)

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE LAWS OF ANY STATE, AND ARE BEING ISSUED IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE ACT.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION, THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION OR COMPLIANCE WITH REGULATION S.  FURTHERMORE, NO OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS TO TAKE PLACE WITHOUT THE PRIOR WRITTEN APPROVAL OF COUNSEL TO THE COMPANY.  THE STOCK TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFERS ONLY IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS.

(AND, IF APPLICABLE)

UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED HEREBY SHALL NOT TRADE THE SECURITIES BEFORE THE EARLIER OF (I) THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE DATE THE COMPANY FIRST BECAME A REPORTING ISSUER IN ANY OF ALBERTA, BRITISH COLUMBIA, MANITOBA, NOVA SCOTIA, ONTARIO, QUEBEC AND SASKATCHEWAN, IF THE COMPANY IS A SEDAR FILER, AND (II) THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (A) THE DISTRIBUTION DATE, AND (B) THE DATE THE COMPANY BECAME A REPORTING ISSUER IN THE LOCAL JURISDICTION OF THE SUBSCRIBER OF THE SECURITIES THAT ARE THE SUBJECT OF THE TRADE.

UNIT PRIVATE PLACEMENT OFFERING

	
To:
	
LEXINGTON RESOURCES, INC. (the "Company"), with an address for notice and delivery located at 7473 West Lake Mead Road, Las Vegas, Nevada, U.S.A., 89128.

                         The Company is offering (collectively, the "Offering"), on a private placement basis, units of the Company (each a "Unit") to eligible investors (each such an investor who subscribes to this Offering by this document is hereinafter referred to as the "Subscriber") at a subscription price of U.S. $1.00 per Unit, with each Unit consisting of one common share in the capital of the Company (each a "Share") and one non-transferable share purchase warrant in the capital of the Company (each a "Warrant").  The within private placement Offering of Units by the Company is not subject to any minimum subscription.  The Company offers, and the Subscriber accepts, the Units on the terms and conditions as set forth in this subscription agreement (the "Agreement").

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Article 1

SUBSCRIPTION FOR UNITS

1.1                   Subscription for Units.   Based upon the hereinafter terms, conditions, representations, warranties and covenants given by each party to the other, the Subscriber hereto hereby irrevocably subscribes for and agrees to purchase _______________ Units of the Company, at a subscription price of U.S. $1.00 per Unit, for aggregate consideration of U.S. $_______________ (the "Subscription Price").

1.2                   Acceptance of subscription.   The Company, upon acceptance by its Board of Directors (the "Board") of all or part of this subscription Agreement, agrees to issue the accepted number of Units, as fully paid and non-assessable, and as consideration for the Subscriber's subscription, and to refund any excess subscription monies of the Subscription Price of any non-accepted portion of this subscription Agreement by the Board.

1.3                   Warrants and exercise of Warrants.   The Warrants forming part of the Units will be registered in the name of the Subscriber and will be non-transferable, and each such Warrant will entitle the Subscriber to purchase one additional common share of the Company (each a "Warrant Share"), for the period commencing upon the date of issuance of the within Units by the Board and ending at 5:00 p.m. (Las Vegas, Nevada, time) on the day which is the earlier of (i) 18 months from the date of issuance of the within Units by the Board and (ii) twelve months from the effective date of the Company's proposed "Registration Statement" (as hereinafter determined), if any, pursuant to which the Warrant Shares underlying the Warrants are to be proposed for registration (the "Registration") under the United States Securities Act of 1933, as amended (the "U.S. Act") (the earlier such time period being the "Warrant Exercise Period" herein), at an exercise price of U.S. $1.25 per Warrant Share during the Warrant Exercise Period.

1.4                   Warrant certificates.   The terms and conditions which govern the Warrants will be referred to on the certificates representing the Warrants and will contain, among other things, anti-dilution provisions and provisions for the appropriate adjustment in the class, number and price of the Warrant Shares issuable on the exercise of the Warrants upon the occurrence of certain events including any subdivision, consolidation or reclassification of the common shares, the payment of stock dividends and the amalgamation of the Company.

1.5                   Other financings.   The issue and terms of the Warrants will not restrict or prevent the Company from obtaining any other financing nor from issuing additional securities or rights during the period within which the Warrants are exercisable.

1.6                   Replacement Warrant certificates.   If the Subscriber exercises any Warrants the Company will issue to the Subscriber the number of Warrant Shares equal to the number of Warrants exercised and deliver to the Subscriber a certificate representing the Warrant Shares.

1.7                   Subscriber's eligibility for subscription.   The Subscriber acknowledges and warrants (and has made diligent inquiries to so determine or has the sophistication and knowledge to know the Subscriber's status without concern of error), on which the Company relies, that the Subscriber is purchasing the Units on a private basis and without infraction of or impedance by his domicile laws due to one or more of the following:

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	the Subscriber is an eligible and exempt investor under the laws of the Subscriber's domicile by either being a person who complies with exemptions from prospectus requirements or is otherwise exempt by virtue of the Subscriber's wealth, income and investment knowledge or capacity; or

	the Subscriber is subscribing for a value in Units constituting an exempt investment under the laws of the Subscriber's domicile; or

	the Subscriber's domicile laws do not restrict investment; and

	where the Subscriber has completed the appropriate portions of this Agreement and its related Appendices and the completion of the same, whether signed or not, constitute a true and accurate statement by the Subscriber.

                       For the purposes of this Agreement it is hereby acknowledged and agreed that "Securities" is hereinafter collectively defined to mean the Units, the Shares, the Warrants and the Warrant Shares.

1.8                   Risks of subscription.   The Subscriber acknowledges that no party independent of the Company has made or will make any opinion or representations on the merits or risks of an investment in any of the Securities unless sought out by the Subscriber; which the Subscriber is encouraged to do.  The Subscriber is aware that this investment is a speculative and risky investment, the Subscriber warrants that it could tolerate the full loss of the investment without significant or material impact on the Subscriber's financial condition and the Subscriber waives all claim or liability of the Company for any loss in value of this investment.

Article 2

METHOD OF SUBSCRIPTION AND ACCEPTANCE BY THE COMPANY

2.1                   Method of subscription.   It is hereby acknowledged and agreed by the parties hereto that any subscription for Units shall be made by the Subscriber:

(a)       by faxing to the Company, at (702) 385-1202, or to the Company's counsel, Lang Michener LLP (the "Company's Counsel"), at (604) 893-2679 or (604) 685-7084, a completed and executed copy of this Agreement together with all applicable Appendices hereto; and

(b)       by delivering to the Company, at 7473 West Lake Mead Road, Las Vegas, Nevada, U.S.A., 89128, or to the Company's Counsel, at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, an originally executed and completed copy of this Agreement and all applicable Appendices hereto together with payment for the exact Subscription Price for such Units in the following manner:

(i)       by delivery:

(A)       to the Company, at its above address, of a bank draft, money order or cashier's cheque for the exact Subscription Price for the Units made payable to the Company; or

(B)       to the Company's Counsel, at its above address, of a bank draft, money order or cashier's cheque for the exact Subscription Price for the Units made payable to "Lang Michener LLP In Trust" for the account of the Company; or

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(ii)       by wire transfer to the Company's Counsel of the exact Subscription Price for the Units to the following wiring instructions:

	 	
Bank Name:
	
Bank of Montreal;

	 	
Bank Address:
	
595 Burrard Street, Vancouver, British Columbia, Canada;

	 	
Transit Number:
	
00040;

	 	
Bank Number:
	
001;

	 	
Account Name:
	
Lang Michener LLP Client's U.S. Trust Account

	 	
Reason:
	
Re: Lexington Resources, Inc.; File #57589-0002 - Subscriptions;

	 	
Account Number:
	
4692-529;

	 	
Swift Code:
	
BOFMCAM2; and

	 	
*
	
If coming from the U.S. or Overseas:

	 	
Intermediary Bank:
	
Wachovia Bank, N.A.;

	 	
Swift Code:
	
PNBPUS3NNYC; and

	 	
Fedwire ABA#:
	
026005092.

	 	
*Note:
	
Unless instructed otherwise by the Company, the Company's Counsel must deposit all trust funds (including the Subscription Price received) in an account that is insured by the Canadian Deposit Insurance Corporation or the Credit Union Deposit Insurance Corporation of British Columbia or guaranteed under the Community Financial Services Act (Canada).  All U.S. dollar accounts in Canada are not insured.

                         In this regard, and should the Subscriber's subscription and/or Subscription Price payment be submitted to the Company's Counsel, in trust or otherwise (as above in respect to the wire transfer), then the Subscriber agrees that the Company's Counsel shall have no accountability to the Subscriber whatsoever and acknowledges that the Company's Counsel is merely a recipient for the Company and has no obligation of any nature to the Subscriber.  Under no circumstances shall the Company's Counsel be considered to be giving legal or other advice or services to the Subscriber and no communication between the Subscriber and the Company's Counsel shall be considered advice (at the most only administrative subscription assistance on behalf of the Company) but the Subscriber shall rely solely and exclusively on the Subscriber's own judgment and the advice of the Subscriber's own counsel.

2.2                   Acceptance of subscription or return of Subscription Price by the Company.   The Subscriber acknowledges that the Company will be accepting subscriptions for Units on a first come, first serve, basis.  As a consequence the Company, upon acceptance by its Board of all or part of this subscription Agreement (the "Acceptance"), hereby agrees to issue the accepted number of Units, as fully paid and non-assessable, and as consideration for the Subscriber's subscription, and to refund any excess subscription monies of the Subscription Price of any non-accepted portion of this subscription Agreement by the Board.  In this regard the Subscriber acknowledges that, although Units may be issued to other subscribers concurrently with the Company's Acceptance of all or part of this subscription Agreement, there may be other sales of Units by the Company, some or all of which may close before or after the Acceptance herein.  The Subscriber further acknowledges that there is a risk that insufficient funds may be raised by the Company upon the Company's Acceptance of all or part of this subscription Agreement to fund the Company's objectives and that further closings may not take place after Acceptance herein.

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2.3                   Use of funds before and after Acceptance.   The Subscriber acknowledges and agrees that the Subscription Price monies shall be advanced immediately to the Company's general funds to reserve the Subscriber's subscription, shall not be held in trust, the Company may employ such funds for its business purposes immediately and prior to Acceptance and such funds shall not be considered a loan and shall not bear interest but shall constitute solely a reservation of subscription and advance of funds therefore.  The Subscriber shall not demand return of its Subscription Price monies unless the Units have not been issued for a period in excess of 90 calendar days from the date of this subscription and such demand may be fulfilled by Acceptance and delivery of subscribed Units or return of funds at the Company's sole and absolute discretion.  The Subscriber acknowledges that the funds to be raised from all Units are to be employed for the business of the Company in accordance with management's determination as to the best use of the same for the Company's business plans.  Notwithstanding any disclosure document or offering memorandum or prospectus provided concurrent with this subscription, the Company reserves the right at any time to alter its business plans in accordance with management's appreciation of the market for the goods and services of the Company and the best use of the Company's funds to advance its business, whether present or future.

2.4.                   Securities issued at different prices and characteristics.   The Subscriber acknowledges that the Company will issue its securities at different prices which may occur sequentially, from time-to-time, or at the same time and prices in the future may be lower than now.  The Company will also issue offerings which have warrants, or other benefits, attached and some offerings which do not.  Not all subscribers will receive common shares, or other share classes, of the Company at the same price and such may be issued at vastly different prices to that of the Subscriber.  For example, however, without limitation, the Company will or may issue securities at nominal prices as 'founders shares' (which may or will constitute millions of securities, as determined solely by the Board) or for developmental assets (which cannot be valued and so may be assigned a nominal value on the Company's books) or for services or to attract expertise or management talent or other circumstances considered advisable by the Board.  Such issuance at different prices are made by the Board in its judgment as to typical structuring for a company such as the Company, to incentivise, reward and to provide a measure of developmental control, to acquire assets or services which the Board considers necessary or advisable for the Company's development and success and other such considerations in the Board's judgment.  The Company may or will acquire debt and/or equity financings in the future required or advisable, as determined by the Board, in the course of the Company's business development.  The Subscriber acknowledges these matters, understands that the Subscriber's investment is not necessarily the most advantageous investment in the Company and authorizes the Board now and hereafter to use its judgment to make such issuances whether such issuances are at a lesser, equal or greater price than that of the Subscriber and whether such is prior to, concurrent with or subsequent to the Subscriber's investment herein.

2.5                   Delivery of Share and Warrant certificates.   The Company, within 90 calendar days of the Acceptance by its Board of all or part of this subscription Agreement, agrees to deliver to the Subscriber a Share certificate and a Warrant certificate for the accepted number of Units purchased by the Subscriber under this subscription Agreement and registered in the name of the Subscriber.

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Article 3

INVESTMENT SUBSCRIPTION TERMS, CORPORATE DISCLOSURE AND GENERAL SUBSCRIBER ACKNOWLEDGEMENTS AND WARRANTIES

3.1                   Description of the Units.   The Company is issuing Units at a price of U.S. $1.00 per Unit.  The Shares forming part of the Units, together with the Warrant Shares which are issuable upon the exercise of the Warrants, are a part of the common shares of the Company presently authorized.  Copies of the constating documents of the Company describing the common shares and the rights of shareholders are available upon request.

3.2                   Release of liability and indemnity.   The Subscriber acknowledges and agrees that, in consideration, in part, of the Company's within Acceptance of this subscription, the Subscriber hereby does hereby release, remise and forever discharge each of the Company and its respective subsidiaries, directors, officers, employees, attorneys, agents, executors, administrators, successors and assigns and the Company's Counsel, of and from all manner of action and actions, causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, claims, damages and demands, whether known or unknown, suspected or unsuspected and whether at law or in equity, which against either of the Company and/or any of its respective subsidiaries, directors, officers, employees, attorneys, agents, executors, administrators, successors and assigns and the Company's Counsel, the Subscriber ever had, now has, or which any of the Subscriber's respective successors or assigns, or any of them hereafter can, shall or may have by reason of any matter arising from the within subscription or the use of funds or the operation of the Company (collectively, the "Release") except only for gross negligence or fraud (and such shall constitute only objective willful act of objective material wrongdoing).  The Subscriber shall hold harmless and indemnify the Company from and against, and shall compensate and reimburse the same for, any loss, damage, claim, liability, fee (including reasonable attorneys' fees), demand, cost or expense (regardless of whether or not such loss, damage, claim, liability, fee, demand, cost or expense relates to a third-party claim) that is directly or indirectly suffered or incurred by the Company, or to which the Company becomes subject, and that arises directly or indirectly from, or relates directly or indirectly to, any inaccuracy in or breach of any representation, warranty, covenant or obligation of the Subscriber contained in this Agreement.  This Release is irrevocable and will not terminate in any circumstances.

3.3                   The Subscriber's understandings and acknowledgments.  The Subscriber hereby acknowledges and agrees that:

	Further financings:   the Company may issue further offerings similar to the within Offering which may be at higher or lower prices (as determined by the Company in accordance with its appreciation of market conditions).  The Company may, and will, acquire debt and/or equity financings in the future required or advisable in the course of the Company's business development;

	Withdrawal or revocation:   this Agreement is given for valuable consideration and shall not be withdrawn or revoked by the Subscriber once tendered to the Company with the Subscription Price;

	Agreement to be bound:   the Subscriber hereby specifically agrees to be bound by the terms of this Agreement as to all particulars hereof and hereby reaffirms the acknowledgments, representations and powers as set forth in this Agreement;

	Reliance on Subscriber's representations:   the Subscriber understands that the Company will rely on the acknowledgments, representations and covenants of the Subscriber contained herein in determining whether a sale of the Units to the Subscriber is in compliance with applicable securities laws.  The Subscriber warrants that all acknowledgments, representations and covenants are true and accurate; and

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	Waiver of pre-emptive rights:   the Subscriber hereby grants, conveys and vests unto the President of the Company, or unto such other nominee or nominees of the President of the Company as the President of the Company may determine, from time to time, in the President's sole and absolute discretion, as the Subscriber's power of attorney solely for the purpose of waiving any prior or pre-emptive rights which the Subscriber may have to further issues of equity by the Company under applicable corporate and securities laws.

3.4                   The Subscriber's representations and warranties.   The Subscriber hereby represents and warrants that:

 

(a)       Not a U.S. Person:   if the Subscriber is not a resident of the United States, the Subscriber: (i) is not a U.S. Person (as defined in Rule 902 of Regulation S ("Regulation S") under the U.S. Act, which definition includes, but is not limited to, any natural person resident in the United States, any corporation or partnership incorporated or organized under the laws of the United States or any estate or trust of which any executor, administrator or trustee is a U.S. Person; (ii) is not purchasing any of the Securities for the account or benefit of any U.S. Person or for offering, resale or delivery for the account or benefit of any U.S. Person or for the account of any person in any jurisdiction other than the jurisdiction set out in the name and address of the Subscriber set forth hereinbelow; and (iii) was not offered any Units in the United States and was outside the United States at the time of execution and delivery of this Agreement;

(b)       No registration and sales under Regulation S:   if the Subscriber is not a resident of the United States, the Subscriber acknowledges that the Securities have not been registered under the U.S. Act and the Company has no obligation or present intention of filing a registration statement under the U.S. Act in respect of any of the Securities.  The Subscriber agrees to resell the Securities only in accordance with the provisions of Regulation S, pursuant to a registration under the U.S. Act or pursuant to an available exemption from such registration, and that hedging transactions involving the Securities may not be conducted unless in compliance with the U.S. Act.  The Subscriber understands that any certificate representing the Securities may bear a legend setting forth the foregoing restrictions.  The Subscriber understands that the Securities are restricted within the meaning of "Rule 144" promulgated under the U.S. Act; that the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of purchase and payment of the Securities by the Subscriber, and even then will not be available unless (i) a public trading market then exists for the common stock of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Securities may be made by the Subscriber only in limited amounts in accordance with such terms and conditions;

(c)       No U.S. beneficial interest:   if the Subscriber is not a resident of the United States, no U.S. Person, either directly or indirectly, has any beneficial interest in any of the Securities acquired by the Subscriber hereunder, nor does the Subscriber have any agreement or understanding (written or oral) with any U.S. Person respecting:

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	the transfer or any assignment of any rights or interest in any of the Securities;

	the division of profits, losses, fees, commissions or any financial stake in connection with this subscription; or

	the voting of the Securities;

(d)       Experience:   the Subscriber has the requisite knowledge and experience in financial and business matters for properly evaluating the risks of an investment in the Company;

(e)       Information:   the Subscriber has received all information regarding the Company reasonably requested by the Subscriber;

(f)       Risk:   the Subscriber understands that an investment in the Company involves certain risks of which the Subscriber has taken full cognizance, and which risks the Subscriber fully understands;

(g)       Adequacy of information:   the Subscriber has been given the opportunity to ask questions of, and to receive answers from, the Company concerning the terms and conditions of the Offering and to obtain additional information necessary to verify the accuracy of the information contained in the information described in paragraph (e) above, or such other information as the Subscriber desired in order to evaluate an investment in the Company;

(h)       Residency:   the residence of the Subscriber as set forth hereinbelow is the true and correct residence of the Subscriber and the Subscriber has no present intention of becoming a resident or domiciliary of any other jurisdiction;

(i)       Independent investigation:   in making a decision to invest in the Company the Subscriber has relied solely upon independent investigations made by the Subscriber;

(j)       Principal:   the Subscriber is purchasing the Units as principal for the Subscriber's own account and not for the benefit of any other person, except as otherwise stated herein, and not with a view to the resale or distribution of all or any of the Units;

(k)       Decision to purchase:   the decision of the Subscriber to enter into this Agreement and to purchase Units pursuant hereto has been based only on the representations of this Agreement or based upon the Subscriber's relationship with a director and/or senior officer of the Company.  It is not made on other information relating to the Company and not upon any oral representation as to fact or otherwise made by or on behalf of the Company or any other person.  The Subscriber agrees that the Company assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of any business plan information which has been created based upon the Company's management experience.  In particular, and without limiting the generality of the foregoing, the decision to subscribe for Units has not been influenced by:

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	newspaper, magazine or other media articles or reports related to the Company or its business;

	promotional literature or other materials used by the Company for sales or marketing purposes; or

	any representations, oral or otherwise, that the Company will become a listed company, that any of the Securities will be repurchased or have any guaranteed future realizable value or that there is any certainty as to the success of the Company or the liquidity or value of any of the Securities;

(l)       Advertisements:   the Subscriber acknowledges that the Subscriber has not purchased Units as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

(m)       Information not received:   the Subscriber has not received, nor has the Subscriber requested, nor does the Subscriber have any need to receive, any offering memorandum or any other document (other than financial statements or any other document the content of which is prescribed by statute or regulation) describing the business and affairs of the Company which has been prepared for delivery to, and review by, prospective subscribers in order to assist them in making an investment decision in respect of the Units, and the Subscriber has not become aware of any advertisement in printed media of general and regular paid circulation, radio or television with respect to the distribution of the Units;

(n)       Information received:   the Subscriber has had access to such additional information, if any, concerning the Company as the Subscriber has considered necessary in connection with the Subscriber's investment decision to acquire the Units;

(o)       Satisfaction with information received:   the Subscriber acknowledges that, to the Subscriber's satisfaction:

	the Subscriber has either had access to or has been furnished with sufficient information regarding the Company and the terms of this investment transaction to the Subscriber's satisfaction;

	the Subscriber has been provided the opportunity to ask questions concerning this investment transaction and the terms and conditions thereof and all such questions have been answered to the Subscriber's satisfaction; and

	the Subscriber has been given ready access to and an opportunity to review any information, oral or written, that the Subscriber has requested concurrent with or as a part of this Agreement;

(p)       Economic risk:   the Subscriber has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the Subscriber's investment in and to the Securities, and the Subscriber is able to bear the economic risk of a total loss of the Subscriber's investment in and to any of the Securities;

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(q)       Speculative investment:   the Subscriber understands that an investment in the Securities is a speculative investment and that there is no guarantee of success of the Company's management's plans.  Management's plans are an effort to apply present knowledge and experience to project a future course of action which is hoped will result in financial success employing the Company's assets and with the present level of management's skills and of those whom the Company will need to attract (which cannot be assured).  Additionally, all plans are capable of being frustrated by new or unrecognized or unappreciated present or future circumstances which can typically not be accurately, or at all, predicted;

(r)       Address:   the Subscriber is resident as set out on the last page of this Agreement as the "Subscriber's Address", and the address as set forth on the last page of this Agreement is the true and correct address of the Subscriber;

(s)       Risk and resale restriction:   the Subscriber is aware of the risks and other characteristics of the Securities and of the fact that the Subscriber will not be able to resell the Securities except in accordance with the applicable securities legislation and regulatory policy;

(t)       Representations as to resale:   no person has made to the Subscriber any written or oral representations:

	that any person will resell or repurchase any of the Securities;

	that any person will refund the purchase of any of the Securities;

	as to the future price or value of any of the Securities; or

	that any of the Securities will be listed and posted for trading on any stock exchange, over-the-counter or bulletin board market, or that application has been made to list and post any of the Securities for trading on any stock exchange, over-the-counter or bulletin board market; and

the Subscriber will not resell any of the Securities except in accordance with the provisions of applicable securities legislation and stock exchange, over-the-counter and/or bulletin board market rules;

(u)       Reports and undertakings:   if required by applicable securities legislation, policy or order or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute and otherwise assist the Company in filing such reports, undertakings and other documents as may be reasonably required with respect to the issue of the Units;

(v)       Resale restrictions:   the Subscriber has been independently advised as to the applicable hold period imposed in respect of the Securities by securities legislation in the jurisdiction in which the Subscriber's resides and confirms that no representation has been made respecting the applicable hold periods for the Securities and is aware of the risks and other characteristics of the Securities and of the fact that the Subscriber may not be able to resell the Securities except in accordance with the applicable securities legislation and regulatory policy;

(w)     Age of majority:   the Subscriber, if an individual, has attained the age of majority and is legally competent to execute this Agreement and to take all actions required pursuant hereto;

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(x)      Authorization and formation of Subscriber:   the Subscriber, if a corporation, partnership, trust or other form of business entity, is authorized and otherwise duly qualified to purchase and hold the Securities, and such entity has not been formed for the specific purpose of acquiring Securities in this issue.  If the Subscriber is one of the aforementioned entities it hereby agrees that, upon request of the Company, it will supply the Company with any additional written information that may be requested by the Company.  In addition, the entering into of this Agreement and the transactions contemplated hereby will not result in the violation of any of the terms of and provisions of any law applicable to, or the constating documents, if a corporation, of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber may be bound;

(y)       Legal obligation:   this Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Subscriber;

(z)       Legal and tax consequences:   the Subscriber acknowledges that an investment in the Securities of the Company may have tax consequences to the Subscriber under applicable law, which the Subscriber is solely responsible for determining, and the Subscriber also acknowledges and agrees that the Subscriber is responsible for obtaining its own legal and tax advice;

(aa)     Compliance with applicable laws:   the Subscriber knows of no reason (and is sufficiently knowledgeable to determine the same or has sought legal advice) why the delivery of this Agreement, the acceptance of it by the Company and the issuance of the Units to the Subscriber will not comply with all applicable laws of the Subscriber's jurisdiction of residence or domicile, and all other applicable laws, and the Subscriber has no reason to believe that the Subscriber's subscription hereby will cause the Company to become subject to or required to comply with any disclosure, prospectus or reporting requirements or to be subject to any civil or regulatory review or proceeding.  In addition, the Subscriber will comply with all applicable securities laws and will assist the Company in all reasonable manner to comply with all applicable securities laws;

(ab)     Encumbrance or transfer of Securities:   while the Company is a non-reporting company, the Subscriber will not sell, assign, gift, pledge or encumber in any manner whatsoever any of the Securities herein subscribed for without the prior written consent of the Company and in accordance with applicable securities legislation;

(ac)     Regulation S:   if the Subscriber is not a resident of the United States, the Subscriber further represents and warrants that the Subscriber was not specifically formed to acquire any of the Securities subscribed for in this Agreement in violation of the provisions of Regulation S;

(ad)     Finders' fees:   the Subscriber has not retained, employed or introduced any broker, finder or other person who would be entitled to a brokerage commission or finder's fee arising out of the transactions contemplated hereby;

(ae)     Additional Subscriber acknowledgements:   the Subscriber also acknowledges (on its own behalf and, if applicable, on behalf of those for whom the Subscriber is contracting hereunder) as set forth below:

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	it has been furnished with all information, financial and otherwise, concerning the business, affairs and financial position of the Company necessary to make an informed decision to purchase the Units and the Subscriber agrees that such information has not been furnished pursuant to any form of written material which is, or may be construed as, an offering memorandum as that term is defined in the securities legislation of any Province of Canada or any State of the United States, the securities legislation in the jurisdictions in which the Company is incorporated and conducts business and the securities legislation in the jurisdiction in which the Subscriber is resident (collectively, the "Applicable Securities Legislation" herein) as such legislation is from time to time amended, and the regulations and rules prescribed thereto;

	the issue of the Units will be made pursuant to exemptions from the registration and prospectus requirements of the Applicable Securities Legislation and therefore:

	the Subscriber is restricted from using certain of the civil remedies available under such legislation and certain protections, rights and remedies provided in such legislation, including statutory rights of rescission or damages, will not be available to the Subscriber;

	the Subscriber may not receive information that might otherwise be required to be provided to the Subscriber under such legislation;

	the Company is relieved from certain obligations that would otherwise apply under such legislation;

	no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

	there is no government or other insurance covering the Securities; and

	there are risks associated with the purchase of the Securities;

	no prospectus has been filed by the Company with any regulatory authority in connection with the issuance of the Securities and the Company has already issued or may issue units or shares for significantly lesser consideration per unit or share than is being paid by the Subscriber for Units hereunder;

	any Subscription Price monies paid by the Subscriber for the Units are not subject to any restrictions pertaining to the use thereof by the Company and may be used immediately by the Company;

	this subscription forms part of a larger Offering and is subject only to the Company's Acceptance of this subscription Agreement and the Subscription Price therefore;

	the sale and delivery of the Units to the Subscriber or to any subscriber on whose behalf the Subscriber is contracting is conditional upon such sale being exempt from the requirement to file a prospectus or to prepare and deliver an offering memorandum under any applicable legislation relating to the sale of the Units or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or preparing and delivering an offering memorandum;

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	the Company may be required to provide applicable securities regulatory authorities with a list setting forth the identities of the beneficial purchasers of the Units and the Subscriber acknowledges and agrees that the Subscriber will provide, on request, particulars as to the identity of such beneficial purchasers as may be required by the Company in order to comply with the foregoing; and

	the Subscriber (or others for whom the Subscriber is contracting hereunder) has been advised to consult its own legal advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions and the Subscriber (or others for whom the Subscriber is contracting hereunder) is solely responsible, and the Company is not in any way responsible, for compliance with applicable resale restrictions;

(af)      Additional Subscriber representations and warranties under Applicable Securities Legislation:   if the Subscriber is not a resident of the United States, the Subscriber further represents and warrants to the Company and acknowledges and agrees that the Company will also rely upon the following representations and warranties in determining whether or not to accept this subscription under all Applicable Securities Legislation:

(i)       the Subscriber is purchasing the Units as principal for its own account, not for the benefit of any other person and not with a view to the resale or distribution of all or any of the Units and, by signing and returning the attached Appendix "I" - "Subscriber's Certificate", certifies that it {please circle at least one of the following categories and complete the missing information as appropriate}:

	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a spouse, parent, grandparent, brother, sister or child of                                {insert name}, a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a close personal friend of                                            {insert name}, a director, senior officer or control person of the Company, or of an affiliate of the Company; or

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	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a close business associate of                                    {insert name}, a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a founder of the Company; or

	is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is a parent, grandparent, brother, sister, child, spouse, close personal friend or close business associate of                                   {insert name}, a founder of the Company; or

	is a person or company that is wholly-owned by, or a majority of its board of directors is comprised of, any combination of persons or companies described in Section 3.4(af)(i)(A) to Section 3.4(af)(i)(F) hereinabove; or

	is a trust or estate of which all of the beneficiaries or a majority of the trustees are persons or companies described in Section 3.4(af)(i)(A) to Section 3.4(af)(i)(F) hereinabove; or

	is resident in the Province of Ontario and is a founder of the Company, or an affiliate of                                       {insert name}, a founder of the Company; or

	is resident in the Province of Ontario and is a spouse, parent, brother, sister, grandparent or child of                                      {insert name}, an executive officer, director or founder of the Company; or

	is resident in the Province of Ontario and is a control person of the Company; or

	is an "accredited investor" as defined in National Instrument 45-106 - Prospectus and Registration Exemptions ("NI 45-106"); or

	is an individual and will have an aggregate acquisition cost for the Units of not less than Cdn. $150,000; or

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	is not an individual but is a corporation, partnership, trust, fund, association or any other organized group of persons that was not created solely, nor used primarily, to permit a group of individuals to purchase securities without a prospectus which will have an aggregate acquisition cost of purchasing the Units of not less than Cdn. $150,000; or

	is an employee, executive officer, director or consultant as defined in NI 45-106 of the Company, of a related entity of the Company or of a permitted assign of one of those persons and the purchase of the Units is voluntary; or

	is resident in an "International Jurisdiction" (being a jurisdiction outside of Canada and the United States) and:

	the Subscriber is knowledgeable of, or has been independently advised as to, the Applicable Securities Legislation of such International Jurisdiction which would apply to this Agreement;

	the Subscriber is purchasing the Units pursuant to an applicable exemption from any prospectus, registration or similar requirements under the Applicable Securities Legislation of such International Jurisdiction, or, if such is not applicable, the Subscriber is permitted to purchase the Units under the Applicable Securities Legislation of the International Jurisdiction without the need to rely on exemptions; and

	the Applicable Securities Legislation of the International Jurisdiction do not require the Company to make any filings or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction;

(ii)      the Subscriber has not relied upon the Company or its directors and officers, or the Company's Counsel or advisors, for investment, legal or tax advice, including advice with respect to the hold period and resale restrictions imposed upon the Securities by the securities legislation in the jurisdiction in which the Subscriber resides, and has, if desired, in all cases sought the advice of the Subscriber's own personal investment advisor, legal counsel and tax advisors, and the Subscriber is either experienced in or knowledgeable with regard to the affairs of the Company or, either alone or with its professional advisors, is capable by reason of knowledge and experience in financial and business matters in general, and investments in particular, of evaluating the merits and risks of an investment in the Securities, and it is able to bear the economic risk of an investment in the Securities and can otherwise be reasonably assumed to have the capacity to protect its own interest in connection with the investment; and

(iii)     the Subscriber understands and acknowledges that the Company is not currently a reporting issuer or reporting company in every applicable jurisdiction and as a result the hold period to which the Securities are subject may be indefinite in certain jurisdictions in which the Securities are issued until the Company becomes a reporting issuer or reporting company in such jurisdiction.  The Subscriber further understands that the certificates representing the Securities will bear a legend describing the resale restrictions and the Subscriber agrees to comply with such resale restrictions; and

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(ag)       Additional Subscriber covenants and agreements:   the Subscriber further covenants and agrees that the Company will also rely upon the following covenants and agreements in determining whether or not to accept this subscription under all Applicable Securities Legislation:

 

	the Subscriber acknowledges and consents to the collection and retention by the Company of certain information, including personal information, regarding the Subscriber and the Subscriber's subscription, including the Subscriber's name, address, telephone number and e-mail address, the number of Securities purchased and any control persons of the Subscriber.  The Subscriber acknowledges and agrees that this information will be retained on the share register of the Company which may be available for inspection by the public.  The Subscriber further consents and agrees to the release of this information to the securities regulatory authorities as required by law and regulatory policies; and

	the Subscriber agrees that this Agreement will in no way restrict the Company from obtaining further funds through the sale of equity securities of the Company or otherwise.

3.5                   Company Confidential Information.   The Subscriber acknowledges that the Company is presently engaged in the business of acquiring, developing and/or drilling and bringing into production various resource-based oil and gas properties of merit.  The Subscriber recognizes the importance of protecting the Company's trade secrets, confidential information and other proprietary information and related rights acquired through the Company's expenditure of time, effort and money.  Therefore, in consideration of the Company permitting the Subscriber to submit this subscription and have access to Company information and/or Company confidential information otherwise coming to the Subscriber, the Subscriber agrees to be bound by the following terms and conditions:

 
(a)       Definitions:   for all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following words and phrases shall have the following meanings:
(i)       "Confidential Information" includes any of the following:

	any and all versions of the trade names, trade-mark, business plans, products, software, all Developments (as defined below) and all other matters owned or marketed by the Company;

	information regarding the Company's business operation, methods and practices, including marketing strategies, product pricing, margins and hourly rates for staff and information regarding the financial affairs of the Company;

	the names of the Company's clients and the names of the suppliers to the Company, and the nature of the Company's relationships with these clients and suppliers; and

	any other trade secret or confidential or proprietary information in the possession or control of the Company;

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however, Confidential Information does not include information which is or becomes generally available to the public without the Subscriber's fault; and

 

(ii)       "Developments" include all the following related to the products or business of the Company:

	copyright works, software, documentation, data, designs, scripts, photographs, music, reports, flowcharts, trade-marks, specifications, source codes, product designs or formula and any related works, including any enhancements, modifications or additions to the products owned, marketed or used by the Company; and

	inventions, devices, discoveries, concepts, ideas, algorithms, formulae, know-how, processes, techniques, systems and improvements, whether patentable or not;

developed, created, acquired, generated or reduced to practice by the Company or any person by or for the Company, including the Subscriber;

(b)       Maintaining confidentiality:   at all times the Subscriber shall keep in strictest confidence and trust the Confidential Information.  The Subscriber shall take all necessary precautions against unauthorized disclosure of the Confidential Information, and the Subscriber shall not, directly or indirectly disclose, allow access to, transmit or transfer the Confidential Information to a third party, nor shall the Subscriber use, copy or reproduce the Confidential Information except as may be reasonably required for the Subscriber with the permission of the Company;

(c)       Return of Confidential Information:   at the request of the Company the Subscriber shall immediately return to the Company all materials, including all copies in whatever form, containing the Confidential Information which are in the Subscriber's possession or under the Subscriber's control; and

(d)       No rights to Confidential Information:   the Subscriber acknowledges and agrees that the Subscriber shall not acquire any right, title or interest in or to the Confidential Information.  Should any interest in the Confidential Information come into the possession of the Subscriber by any means, other than specific written transfer by the Company, the Subscriber hereby assigns and transfers, now and in the future, to the Company, and agrees that the Company shall be the exclusive owner of, all of the Subscriber's right, title and interest to any such throughout the world, including all trade secrets, patent rights, copyrights and all other intellectual property rights therein.  The Subscriber further agrees to cooperate fully at all times with respect to signing further documents and doing such acts and other things required by the Company to confirm such transfer of ownership of rights.  The Subscriber agrees that the obligations in this section shall continue beyond the issue of any Securities hereunder, beyond the ownership of any Securities acquired hereunder and beyond the termination of the Subscriber's employment, engagement or association with the Company, for a period of five years from the date that the Subscriber delivers this Agreement to the Company.

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3.6                   Reliance on Subscriber's representations and warranties and indemnification.   The Subscriber understands that the Company will rely on the representations and warranties of the Subscriber herein in determining whether a sale of the Units to the Subscriber is in compliance with federal and applicable state and provincial securities laws.  The Subscriber hereby agrees to indemnify the Company and its affiliates and hold the Company and its affiliates harmless from and against any and all liability, damage, cost or expense (including reasonable attorney's fees) incurred on account of or arising out of: (i) any inaccuracy in the Subscriber's acknowledgements, representations or warranties set forth in this Agreement; (ii) the disposition of any of the Securities which the Subscriber will receive, contrary to the Subscriber's acknowledgements, representations or warranties in this Agreement or otherwise; (iii) any suit or proceeding based upon the claim that such acknowledgments, representations or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company or its affiliates; and (iv) the Subscriber's failure to fulfill any or all of the Subscriber's obligations herein.

3.7                   Change in Subscriber's representations and warranties.   All of the information set forth hereinabove with respect to the Subscriber and including, without limitation, the acknowledgements, representations and warranties set forth hereinabove, is correct and complete as of the date hereof and, if there should be any material change in such information prior to the acceptance of this subscription Agreement by the Company, the Subscriber will immediately furnish the revised or corrected information to the Company.

Article 4

UNITED STATES DECLARATIONS

4.1                   Subscriber's declarations as an "Accredited Investor" if resident in the United States.   If applicable and the Subscriber is a resident of the United States, the undersigned Subscriber also warrants and certifies that the Subscriber is an "Accredited Investor", as that term is defined in "Rule 501" of "Regulation D" promulgated under Section 4(2) of the U.S. Act, by virtue of the Subscriber's qualification under one or more of the following categories {please check the appropriate category or categories where applicable}:

	 	
c

	
The Subscriber is a natural person whose individual net worth, or joint net worth with that person's spouse, exceeds U.S. $1,000,000.

	 	
c

	
The Subscriber is a natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with the Subscriber's spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

	 	
c

	
The Subscriber is a corporation, organization described in section 501(c)(3) of the United States Internal Revenue Code, Massachusetts, or similar business trust or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of U.S. $5,000,000.

	 	
c

	
The Subscriber is a trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Units, whose purchase is directed by a sophisticated person.

	 	
c

	
The Subscriber is a director or executive officer of the Company.

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c

	
The Subscriber is a "private business development company" as that term is defined in section 202(a)(22) of the United States Investment Advisers Act of 1940.

	 	
c

	
The Subscriber is either: (a) a "bank" as defined in section 3(a)(2) of the U.S. Act, or a "savings and loan association or other institution" as defined in section 3(a)(5)(A) of the U.S. Act, whether acting in its individual or fiduciary capacity; or (b) a broker or dealer registered pursuant to section 15 of the United States Securities Exchange Act of 1934 (the "Exchange Act") or (c) an "insurance company" as defined in section 2(13) of the U.S. Act; or (d) an investment company registered under the United States Investment Company Act of 1940 or a "business development company" as defined in section 2(a)(48) of the United States Investment Company Act of 1940; or (e) a small business investment company licensed by the United States "Small Business Administration" under either of subsections 301(c) or (d) of the United States Small Business Investment Act of 1958; or (f) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of U.S. $5,000,000; or (g) an employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary as defined in section 3(21) of the United States Employee Retirement Income Security Act of 1974 which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of U.S. $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

	 	
c

	
The Subscriber is an entity in which all of the equity owners are accredited investors under one or more of the categories set forth hereinabove.

                        In this regard the Subscriber hereby acknowledges and agrees that one of the requirements of the above-referenced exemption is that the Company and the persons involved in the offering and sale of the relevant securities; and in this case the Units; must have reasonable grounds to believe and, in fact, believe that the Subscriber, whether alone or together with the Subscriber's representative, if any, has such knowledge and experience in financial and business matters that the Subscriber is capable of evaluating the merits and risks of the prospective investment.  As a result, and in order to be assured that the offer and sale of Units to the Subscriber as an Accredited Investor will not result in violation of that certain exemption from the registration and prospectus delivery requirement of the U.S. Act specified by the provisions of Rule 501 and "Rule 506" of Regulation D promulgated under Section 4(2) of the U.S. Act, the Subscriber is being requested to hereby provide the Company with a completed and executed copy of the Appendix "II" - "Subscriber's Suitability Questionnaire" which is attached hereto.

4.2                   Subscriber's declarations as a non-Accredited Investor.   If applicable and the Subscriber is a resident of the United States, the undersigned Subscriber also warrants and certifies that the Subscriber is not an Accredited Investor, as that term may be interpreted in accordance with Rule 501 of Regulation D promulgated under Section 4(2) of the of the U.S. Act, however, the Subscriber also warrants and certifies that the Subscriber satisfies one or more of the following categories {please check the appropriate category or categories where applicable}:

	 	
c

	
The Subscriber has an annual gross income of at least U.S. $50,000 and a net worth (exclusive of home, home furnishings and automobiles) of at least U.S. $100,000;

	 	
c

	
The Subscriber has, irrespective of annual gross income, a net worth of U.S. $200,000 (determined with the same exclusions specified immediately above); or

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c

	
The Subscriber represents and warrants, in the event of sales to fiduciary accounts, that such conditions are satisfied by the fiduciary, the fiduciary account or the contributor who directly or indirectly furnished the funds for the purchase of the Units.

                        In this regard the Subscriber hereby again acknowledges and agrees that one of the requirements of the above-referenced exemption is that the Company and the persons involved in the offering and sale of the relevant securities; and in this case the Units; must have reasonable grounds to believe and, in fact, believe that the Subscriber, whether alone or together with the Subscriber's representative, if any, has such knowledge and experience in financial and business matters that the Subscriber is capable of evaluating the merits and risks of the prospective investment.  As a result, and in order to be assured that the offer and sale of Units to the Subscriber as a non-Accredited Investor will not result in violation of that certain exemption from the registration and prospectus delivery requirement of the U.S. Act specified by the provisions of Rules 501 and 506 of Regulation D promulgated under Section 4(2) of the U.S. Act, the Subscriber is being requested to hereby provide the Company with a completed and executed copy of the Appendix "II" - "Subscriber's Suitability Questionnaire" which is attached hereto.

4.3                   Subscriber's reliance on a Representative.   If the Subscriber is relying upon the investment advice of a representative who has advised the undersigned in connection with this investment (the "Representative"), the undersigned believes the Representative to be sophisticated and competent in the area of investment advice and analysis and therefore capable of evaluating the risks and merits of an investment in the Units.  In this regard, if applicable, and in order to rely on Regulation D under the U.S. Act, the Subscriber is being requested to hereby provide the Company with a completed and executed copy from its Representative of the Appendix "III" - "Subscriber's Representative Questionnaire" which is attached hereto.

Article 5

RESTRICTED SECURITIES AND REGISTRATION

5.1                   No initial registration.   The Subscriber acknowledges and understands that neither the sale of the Units which the Subscriber is acquiring nor any of the Securities themselves have been registered under any Applicable Securities Legislation and, furthermore, that the Securities must be held indefinitely unless subsequently registered under Applicable Securities Legislation or an exemption from such registration is available.

5.2                   Legending of the Securities.   The Subscriber also acknowledges and understands that the certificates representing the Securities will be stamped with the following legend (or substantially equivalent language) restricting transfer in the following manner:

"These securities have not been registered under the United States Securities Act of 1933, as amended, or the laws of any state, and are being issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation by the security holder named hereon that said securities have been acquired for purposes of investment and not for purposes of distribution.  These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, or the availability of an exemption from such registration.  Furthermore, no offer, sale, transfer, pledge or hypothecation is to take place without the prior written approval of counsel to the company.  The stock transfer agent has been ordered to effectuate transfers only in accordance with the above instructions."

(or)

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"These securities have not been registered under the United States Securities Act of 1933, as amended (the "Act"), or the laws of any state, and are being issued in reliance upon Regulation S promulgated under the Act.  These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, the availability of an exemption from such registration or compliance with Regulation S.  Furthermore, no offer, sale, transfer, pledge or hypothecation is to take place without the prior written approval of counsel to the company.  The stock transfer agent has been ordered to effectuate transfers only in accordance with the above instructions.

(and, if applicable)
"Unless permitted under applicable securities legislation, the holder of the securities represented hereby shall not trade the securities before the earlier of (i) the date that is four months and a day after the date the company first became a reporting issuer in any of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the company is a sedar filer, and (ii) the date that is four months and a day after the later of (a) the distribution date, and (b) the date the company became a reporting issuer in the local jurisdiction of the subscriber of the securities that are the subject of the trade."

                       The Subscriber hereby consents to the Company making a notation on its records or giving instructions to any transfer agent of the Securities in order to implement the restrictions on transfer set forth and described hereinabove.

5.3                   Disposition under Rule 144.   The Subscriber also acknowledges and understands that:

	the Securities are restricted securities within the meaning of Rule 144 promulgated under the U.S. Act;

	the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of purchase and payment of the Securities by the Subscriber, and even then will not be available unless (i) a public trading market then exists for the common stock of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and

	any sale of the Securities may be made by the Subscriber only in limited amounts in accordance with such terms and conditions.

                   In this regard the Subscriber further acknowledges and understands that, without in anyway limiting the acknowledgements and understandings as set forth hereinabove, the Subscriber agrees that the Subscriber shall in no event make any disposition of all or any portion of the Securities which the Subscriber is acquiring hereunder unless and until:

	there is then in effect a "Registration Statement" under the U.S. Act covering such proposed disposition and such disposition is made in accordance with said Registration Statement; or

	(i) the Subscriber shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, (ii) the Subscriber shall have furnished the Company with an opinion of the Subscriber's own counsel to the effect that such disposition will not require registration of any such Securities under the U.S. Act and (iii) such opinion of the Subscriber's counsel shall have been concurred in by counsel for the Company and the Company shall have advised the Subscriber of such concurrence.

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5.4                   Registration of the Registrable Securities.   Subject to sections 5.1 to 5.3 hereinabove, the Company hereby covenants and agrees that:

 
(a)       Registration of Form S-1, Form S-3 or Form SB-2.  As promptly as reasonably practicable after the date of Acceptance hereof, and within 60 days following the Acceptance date, the Company shall file with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form S-1, or, if available, Form S-3 or Form SB-2 (herein a "Registration Statement"), relating to the resale by the Subscriber of each of the Shares and Warrant Shares issuable upon exercise of the Warrants and underlying the Units herein (collectively, the "Registrable Securities"); provided, however, that the Company shall not be obligated to effect any such registration, qualification, or compliance pursuant to this paragraph 5.4(a), or keep such registration effective pursuant to paragraph 5.4(b)(c) hereinbelow: (i) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or as a dealer in securities under the securities or blue sky laws of such jurisdiction or to execute a generate consent to services of process in effecting such registration, qualification or compliance, in each case where it has not already done so; or (ii) during any "Blackout Period".

(b)       Failure to File Registration Statement.  If a "Registration Event" (as hereinafter determined) occurs, then the Company will make payments to the Subscriber (then being a "Qualified Subscriber"), as partial liquidated damages, for the minimum amount of damages to the Qualified Subscriber by reason thereof and not as a penalty, at a rate equal to 1.5% of the Subscription Price per Unit held by the Qualified Subscriber per month of each calendar month of the "Registration Default Period" (as hereinafter determined; pro rated for any period less than 30 calendar days).  Each such payment shall be due and payable within five business days after the end of each calendar month of the Registration Default Period until the termination of the Registration Default Period and within five business days after such termination.  Such payments shall be in partial compensation to the Qualified Subscriber and shall not constitute the Qualified Subscriber's exclusive remedy for such events.  The amounts payable as partial liquidated damages pursuant to this paragraph shall be payable in lawful money of the United States.  Amounts payable as partial liquidated damages to each Qualified Subscriber hereunder with respect to each Share of Registrable Securities shall cease when the Qualified Subscriber no longer holds such Share of Registrable Securities.

(c)       Registration Procedures.   In the case of each registration, qualification, or compliance effected by the Company pursuant to paragraph 5.4(a), the Company will keep the Subscriber reasonably advised in writing (which may include email) as to the initiation of each registration, qualification and compliance and as to the completion thereof.  With respect to any registration state filed pursuant to paragraph 5.4(a), the Company will use its commercially reasonable efforts to:

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	prepare and file with the Commission with respect to such Registrable Securities, a Registration Statement on Form S-1, or, if available, Form S-3 or Form SB-2, or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as possible and remain effective at least for a period ending with the first to occur of (A) the sale of all Registrable Securities covered by the Registration Statement, (B) the availability under Rule 144 for the Subscriber to immediately, freely resell without restriction all Registrable Securities covered by the Registration Statement, (C) one year after the Warrant Exercise Period or (D) 90 days after a piggyback registration is declared effective by the Commission (in each case, the "Effectiveness Period"); provided, however, if at the end of the one-year period referred to in clause (A) or (B); and provided that no later than two business days before filing with the Commission a Registration Statement or prospectus or any amendments or supplements thereto, the Company shall (I) furnish to one special counsel (the "Subscriber's Counsel") selected by the Company for the benefit of the Subscriber, copies of all such documents proposed to be filed (excluding any exhibits other than applicable underwriting documents), in substantially the form proposed to be filed, which documents shall be subject to the review of such Subscriber's Counsel, and (II) notify the Subscriber of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

	if the Registration Statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction for the Commission;

	prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective during the Effectiveness Periods (but in any event at least until expiration of the 90-day period referred to in Section 1 of the U.S. Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the U.S. Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended method(s) of disposition by the sellers thereof as set forth in such Registration Statement;

	furnish, without charge to the Subscriber (A) a reasonable number of copies of such Registration Statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the U.S. Act) as such Subscriber may request, in conformity with the requirements of the U.S. Act, and (B) such other documents as the Subscriber may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Subscriber, but only during the Effectiveness Period;

	use its commercially reasonable best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdiction as the Subscriber reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable Registration Statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable the Subscriber to consummate the disposition in such jurisdictions of the Registrable Securities owned by the Subscriber; provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (v), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction;

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	comply, and continue to comply during the period that such Registration Statement is effective under the U.S. Act, in all material aspects with the U.S. Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such Registration Statement, and make available to its security holders, as soon as reasonable practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the Commission's effective date for the Registration Statement (the "Effective Date"), which earnings statement shall satisfy the provisions of Section 11(a) of the U.S. Act;

	as promptly as practicable after becoming aware of such event, notify the Subscriber of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time;

	permit the Subscriber and its legal counsel, at the Subscriber's sole cost and expense and prior written request to the Company, to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two business days prior to their filing with the Commission;

	make available for inspection by the Subscriber and any inspector retained by the Subscriber (the "Inspector"), at the Subscriber's expense and with prior written request to the Company, all records as shall be reasonably necessary to enable the Subscriber to exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which the Subscriber or any Inspector may reasonably request for purposes of such due diligence; provided, however, that the Subscriber shall hold in confidence and shall not make any disclosure of any record or other information which the Company determines in good faith to be confidential, and of which determination the Subscriber is so notified at the time the Subscriber receives such information, unless (A) the disclosure of such record is necessary to avoid or correct a misstatement or omission in the Registration Statement and a reasonable time prior to such disclosure the Subscriber shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (B) the release of such record is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (C) the information in such record has been made generally available to the public other than by disclosure in violation of this or any other agreement.  The Company shall not be required to disclose any confidential information in such records to any Inspector until and unless such Inspector shall have entered into a confidentiality agreement with the Company with respect thereto, substantially in the form of this subparagraph 5.4(c)(ix), which agreement shall permit such Inspector to disclose records to the Subscriber who has retained such Inspector.  The Subscriber agrees that it shall, upon learning that disclosure of such records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order, for the records deemed confidential.  The Company shall hold in confidence and shall not make any disclosure of information concerning the Subscriber provided to the Company pursuant to this Agreement unless, (I) disclosure of such information is necessary to comply with federal or state securities laws, (II) disclosure of such information to the Commission Staff of the Division of Corporation Finance is necessary to respond to comments raised by the Staff in its review of the Registration Statement, (III) disclosure of such information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (IV) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (V) such information has been made generally available to the public other than by disclosure in violation of this agreement.  The Company agrees that it shall, upon learning that disclosure of information concerning the Subscriber is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Subscriber and allow the Subscriber, at the Subscriber's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information;

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	use its best efforts to cause all the Registrable Securities covered by the Registration Statement to be listed or quoted on the principal securities market on which securities of the same class or series issued by the Company are then listed or traded;

	provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times;

	cooperate with the Subscriber to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts as the Subscriber may reasonable request and registered in such names as the Subscriber may request; and

	take all other reasonable actions necessary to expedite and facilitate disposition by the Subscriber of the Registrable Securities pursuant to the Registration Statement.

(d)       Definitions.  For all purposes of this section 5.4 and this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following words and phrases shall have the following meanings:

	"Blackout Period" means, with respect to the Registration Statement, a period in each case commencing on the day immediately after the Company notifies the Subscriber that it is required to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interests not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such Registration Statement, if any, would be seriously detrimental to the Company and its shareholders and ending on the earlier of (i) the date upon which the material non-public information commencing during the Blackout Period is disclosed to the public or ceases to be material and (ii) such time as the Company notifies the selling Subscriber that the Company will no longer delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective or allow sales pursuant to such Registration Statement to resume; provided, however, that (A) the Company shall limit its use of Blackout Periods, in the aggregate, to 60 trading days in any 12-month period and (B) no Blackout Period may commence sooner than 60 calendar days after the end of a prior Blackout Period;

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	"Registration Default Date" means 120 calendar days from the Acceptance by the Company of the within subscription for Units by the Subscriber herein; and

	"Registration Event" means the occurrence of any of the following events:

	the Registration Statement covering the Registrable Securities is not declared effective by the Commission on or before the Registration Default Date;

	after the Commission Effective Date sales cannot be made pursuant to the Registration Statement for any reason (including, without limitation, by reason of a stop order or the Company's failure to update the Registration Statement) except for the reasons specified in subparagraph 5.4(d)(iii)(C) hereinbelow; or

	the Company's common stock generally, or the Registrable Securities specifically, are not listed or included for quotation on a recognized stock exchange or over-the counter market in the United States (the "Approved Market"), or trading of the Company's common stock is suspended or halted on the Approved Market, which at the time constitutes the principle market for the Company's common stock, for more than two full, consecutive trading days; provided, however, that a Registration Event shall not be deemed to occur if all or substantially all trading in equity securities (including the Company's common stock) is suspended or halted on the Approved Market for any length of time.

Article 6

GENERAL PROVISIONS

6.1                   Address for delivery.   Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by delivery (electronic or otherwise) or prepaid registered mail deposited in a post office addressed to the Subscriber or the Company at the address specified in this Agreement.  The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the fifth calendar day after the same shall have been so mailed, except in the case of interruption of postal services for any reason whatsoever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.  Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

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6.2                   Severability and construction.  Each Article, section, sub-section, paragraph, sub-paragraph, term and provision of this Agreement, and any portion thereof, shall be considered severable, and if, for any reason, any portion of this Agreement is determined to be invalid, contrary to or in conflict with any applicable present or future law, rule or regulation, that ruling shall not impair the operation of, or have any other effect upon, such other portions of this Agreement as may remain otherwise intelligible (all of which shall remain binding on the parties and continue to be given full force and agreement as of the date upon which the ruling becomes final).

6.3                   Gender and number.   This Agreement is to be read with all changes in gender or number as required by the context.

6.4                   Governing law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, U.S.A., and the federal laws of the United States applicable therein.  Any dispute regarding matters as between the Subscriber and the Company, whether as a subscriber or shareholder and whether arising under this Agreement or pursuant to shareholder rights pursuant to the constating documents of the Company or applicable law, shall be adjudicated in the Courts of the State of Nevada, U.S.A., unless the Company shall permit otherwise.

6.5                   Representation and costs.   It is hereby acknowledged by each of the parties hereto that the Company's Counsel acts solely for the Company, and, correspondingly, that the Subscriber has been required by each of the Company's Counsel and the Company to obtain independent legal advice with respect to the Subscriber's review and execution of this Agreement.   In addition, it is hereby further acknowledged and agreed by the parties hereto that the Company's Counsel, and certain or all of its principal owners or associates, from time to time, may have both an economic or shareholding interest in and to the Company and/or a fiduciary duty to the same arising from either a directorship, officership or similar relationship arising out of the request of the Company for certain of such persons to act in a similar capacity while acting for the Company as counsel.  Correspondingly, and even where, as a result of this Agreement, the consent of each party hereto to the role and capacity of the Company's Counsel and its principal owners and associates, as the case may be, is deemed to have been received, where any conflict or perceived conflict may arise, or be seen to arise, as a result of any such capacity or representation, each party hereto acknowledges and agrees to, once more, obtain independent legal advice in respect of any such conflict or perceived conflict and, consequent thereon, the Company's Counsel, together with any such principal owners or associates, as the case may be, shall be at liberty at any time to resign any such position if it or any party hereto is in any way affected or uncomfortable with any such capacity or representation.  Each party to this Agreement will also bear and pay its own costs, legal and otherwise, in connection with its respective preparation, review and execution of this Agreement and, in particular, that the costs involved in the preparation of this Agreement, and all documentation necessarily incidental thereto, by the Company's Counsel, shall be at the cost of the Company.

6.6                   Survival of representations and warranties.   The covenants, representations and warranties contained herein shall survive the closing of the transactions contemplated hereby.

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6.7                   Counterparts.   This Agreement may be signed by the parties hereto in as many counterparts as may be necessary, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding the date of execution will be deemed to bear the execution date as set forth in this Agreement.  This Agreement may also be executed and exchanged by facsimile and such facsimile copies shall be valid and enforceable agreements.

6.8                   Entire Agreement and amendments.   This Agreement constitutes the only agreement between the parties with respect to the subject matter hereof and shall supersede any and all prior negotiations and understandings.  There are no collateral agreements or understandings hereto and this Agreement, and the documents contemplated herein, constitutes the totality of the parties' agreement.  This Agreement may be amended or modified in any respect by written instrument only.

6.9                   Corrections.   The Subscriber hereby authorizes the Company to correct any minor errors in, or complete any minor information missing from, any of this Agreement and each of Appendix "I" - "Subscriber's Certificate", Appendix "II" - "Subscriber's Suitability Questionnaire" and Appendix "III" - "Subscriber's Representative Questionnaire" to this Agreement, which may be required to be completed and executed by the Subscriber and delivered to the Company in accordance with the terms and conditions of this Agreement.

6.10                   Successors and assigns.   The terms and provisions of this Agreement shall be binding upon and enure to the benefit of the Subscriber, the Company and their respective successors and lawfully permitted assigns; provided that, except as herein provided, this Agreement shall not be assignable by any party without the written consent of the other.  The benefit and obligations of this Agreement, insofar as they extend to or affect the Subscriber, shall pass with any assignment or transfer of any of the Units in accordance with the terms of this Agreement.

                        IN WITNESS WHEREOF the parties hereto have hereunto set their respective hands and seals in the presence of their duly authorized signatories effective as at the dates below written.

                        Subscription by Subscriber:

                   SUBSCRIBER'S STATEMENT - the Subscriber is a sophisticated investor, the Subscriber has sought such independent counsel as the Subscriber considers necessary and the Subscriber has read this Agreement carefully and accepts, agrees and acknowledges the representations and terms thereof in full and without exception and agrees that this Agreement constitutes the entire agreement between the Company and the Subscriber and that there are no collateral representations or agreements between the same.

                        Dated at __________, __________, on this _____ day of __________, 2006.

 

	
______________________________

    Name of Subscriber - please print

	 	
______________________________

Subscriber's Address

	
By: ___________________________

Official Capacity or Title - please print
	 	
______________________________

- 29 -

	
______________________________

           Signature of Subscriber

	 	
______________________________

Subscriber's Telephone Number

	
______________________________

Please print name of individual whose

signature appears above if different than

the name of the Subscriber printed above
	 	
______________________________

Subscriber's Facsimile Number

______________________________

Subscriber's E-mail address

 

                        Acceptance by the Company:

                        LEXINGTON RESOURCES, INC. hereby accepts the above subscription by the Subscriber on this _____ day of __________, 2006.

 

	
The COMMON SEAL of

LEXINGTON RESOURCES, INC.,

the Company herein,

was hereunto affixed in the presence of:

_______________________________

Authorized Signatory
	
)

)

)

)

)

)

)
	

(C/S)

__________

Appendix "I"

 

TO THE $1.00 UNIT PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

OF LEXINGTON RESOURCES, INC.

 

SUBSCRIBER'S CERTIFICATE

                        In addition to the covenants, representations and warranties contained in the "$1.00 Unit Private Placement Subscription Agreement" of the Company, to which this Appendix "I" - "Subscriber's Certificate" is attached, the undersigned Subscriber covenants, represents and warrants to the Company that the Subscriber is purchasing the Units as principal, that the Subscriber is resident in the jurisdiction set out on the execution page thereof and that the Subscriber:

1.       is an "accredited investor", as defined in National Instrument 45-106 - Prospectus and Registration Exemptions by virtue of being {please check the appropriate category or categories where applicable}:

	
c

	
(a)
	
a Canadian financial institution, or an authorized foreign bank listed in Schedule III of the Bank Act (Canada);

	
c

	
(b)
	
the Business Development Bank incorporated under the Business Development Bank Act (Canada);

	
c

	
(c)
	
a subsidiary of a person referred to in paragraphs (a) or (b), if the person owns all of the voting shares of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;

	
c

	
(d)
	
a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);

	
c

	
(e)
	
an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);

	
c

	
(f)
	
the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada,;

	
c

	
(g)
	
a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

	
c

	
(h)
	
any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;

	
c

	
(i)
	
a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;

- 2 -

	
c

	
(j)
	
an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;

	
c

	
(k)
	
an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

	
c

	
(l)
	
an individual who, either alone or with a spouse, has net assets of at least $5,000,000;

	
c

	
(m)
	
a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;

	
c

	
(n)
	
an investment fund that distributes or has distributed its securities only to

	 	 	

	a person that is or was an accredited investor at the time of the distribution;

	a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] and 2.19 of National Instrument 45-106 - Prospectus and Registration Exemptions [Additional investment in investment funds]; or

	a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of National Instrument 45-106 - Prospectus and Registration Exemptions [Investment fund reinvestment];

	
c

	
(o)
	
an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

	
c

	
(p)
	
a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;

	
c

	
(q)
	
a person acting on behalf of a fully managed account managed by that person, if that person 

	 	 	

	is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

	in Ontario, is purchasing a security that is not a security of an investment fund;

	
c

	
(r)
	
a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;

- 3 -

	
c

	
(s)
	
an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;

	
c

	
(t)
	
a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;

	
c

	
(u)
	
an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; or

	
c

	
(v)
	
a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as

	 	 	

	an accredited investor, or

	an exempt purchaser in Alberta or British Columbia.

	
OR
	 	 
	
2.
	
is resident in one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Newfoundland and Labrador, the Northwest Territories or the Yukon and is {please check the appropriate category or categories where applicable and complete the missing information as appropriate}:

	
c

	
(a)
	
a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	
c

	
(b)
	
a spouse, parent, grandparent, brother, sister or child of                            (insert name), a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	
c

	
(c)
	
a close personal friend of                                      (insert name), a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	
c

	
(d)
	
a close business associate of                                    (insert name), a director, senior officer or control person of the Company, or of an affiliate of the Company; or

	
c

	
(e)
	
a founder of the Company; or

	
c

	
(f)
	
a parent, grandparent, brother, sister, child, spouse, close personal friend or close business associate of                                (insert name), a founder of the Company; or

	
c

	
(g)
	
a person or company that is wholly-owned by, or a majority of its board of directors is comprised of, any combination of persons or companies described in Section (a) to (f) above; or

	
c

	
(h)
	
a trust or estate of which all of the beneficiaries or a majority of the trustees are persons or companies described in Section (a) to (f) above.

- 4 -

	
OR
	 
	
3. 
	
is resident in the Province of Ontario and is {please check the appropriate category or categories where applicable and complete the missing information as appropriate}:

	
c

	
(a)
	
a founder of the Company, or an affiliate of                                        (insert name), a founder of the Company; or

	
c

	
(b)
	
a spouse, parent, brother, sister, grandparent or child of                                       (insert name), an executive officer, director or founder of the Company; or

	
c

	
(c)
	
a control person of the Company.

	
OR
	 	 
	
4.
	
as defined in National Instrument 45-106 - Prospectus and Registration Exemptions{please check the category where applicable}:

	
c

	
an employee, executive officer, director or consultant of the Company, of a related entity of the Company or of a permitted assign of one of those persons and the purchase of the Units is voluntary.

	
OR
	 
	
5.
	
{please check the appropriate category or categories where applicable}:

	
c

	
(a)
	
an individual and will have an aggregate acquisition cost for the Units of not less than $150,000; or

	
c

	
(b)
	
not an individual but is a corporation, partnership, trust, fund, association or any other organized group of persons that was not created solely, nor used primarily, to permit a group of individuals to purchase securities without a prospectus which will have an aggregate acquisition cost of purchasing the Units of not less than $150,000.

                        Dated at __________, __________, on this _____ day of __________, 2006.

 

	
______________________________

    Name of Subscriber - please print

	 	
______________________________

Subscriber's Address

	
By: ___________________________

Official Capacity or Title - please print
	 	
______________________________

	

______________________________

           Signature of Subscriber

	 	
______________________________

Subscriber's Telephone Number

- 5 -

	
______________________________

Please print name of individual whose

signature appears above if different than

the name of the Subscriber printed above
	 	
______________________________

Subscriber's Facsimile Number

______________________________

Subscriber's E-mail address

__________

Appendix "II"

 

TO THE $1.00 UNIT PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

OF LEXINGTON RESOURCES, INC.

 

SUBSCRIBER'S SUITABILITY QUESTIONNAIRE

                       In addition to the covenants, representations and warranties contained in the "$1.00 Unit Private Placement Subscription Agreement" of the Company, to which this Appendix "II" - "Subscriber's Suitability Questionnaire" is attached, the undersigned Subscriber covenants, represents and warrants to the Company as follows.

                       Name of Subscriber:                                                                                      .

                       Instructions:   This "Subscriber's Suitability Questionnaire" (the "Questionnaire") is being provided to each potential subscriber (each a "Subscriber") who has indicated an interest in purchasing "Units" in the capital stock of Lexington Resources, Inc., a Nevada corporation (the "Company").  The purpose of this Questionnaire is, in part, to allow the Company to have complete information about the Subscriber and, in addition, to assure the Company that it may rely on, if applicable, the exemption from the registration requirements under the United States Securities Act of 1933, as amended (the "U.S. Act"), afforded by Section 4(2) of the U.S. Act and "Rule 501" and "Rule 506" of "Regulation D" promulgated thereunder (the "Regulation").  The Regulation requires that, in order for an issuer, such as the Company, of securities, such as the Units, to rely on the exemption afforded thereby, the Company may only sell the Units to "Accredited Investors".  Eligibility is determined, among other things, by the ability of the Subscriber either alone or with his representative to evaluate the merits and risks of an investment in the Units, based on his knowledge and experience in financial and business matters, or by certain financial criteria.

                       If the answer to any question is "None" or "Not Applicable" please so state.  If you are acting as agent for a corporation, partnership, trust or other entity, any reference to the term "you" shall mean such corporation, partnership, trust or other entity.

                       Your answers will at all times be kept strictly confidential.  However, by signing this Questionnaire the Subscriber agrees that the Company may present this Questionnaire to such parties as may be appropriate if called upon to verify the information provided or to establish the availability of an exemption from registration of the private placement under the federal or state securities laws or if the contents are relevant to issue in any action, suit or proceeding to which the Company is a party or by which it is or may be bound.  A false statement by the Subscriber may constitute a violation of law, for which a claim for damages may be made against the Subscriber and, if applicable, its representative.  Otherwise, your answers to this Questionnaire will be kept strictly confidential.

                       This Questionnaire does not constitute an offer of Units by the Company, but is merely a request for information.

                       Please complete the following Questionnaire fully, attaching additional sheets if necessary.

- 2 -

1.                    Individuals

                       Please complete the following information if you are investing as an individual or jointly with another individual:

Name:                                                                                                                        .

Spouse's full name, if jointly held:                                                                          .

Date of birth:                                                                                                            .

Citizenship:                                                                                                              .

Permanent home address:                                                                                         

                                                                                                                                   .

Marital status:                                                                                                           .

Address for notices:                                                                                                  

                                                                                                                                  .

Home telephone number:                                                                                         .

Business telephone number:                                                                                     .

Social security or tax identification number:                                                            .

Occupation or profession:                                                                                         .

Are you purchasing Units for your own account?

Yes                               No                   

If you are not purchasing Units for your own account, please complete the following:

(a)     capacity in which you are purchasing Units (e.g.,: agent, representative, administrator, trustee, etc.)

                                                                                                                   .

(b)     name, address and home and business telephone numbers of person(s) you represent:

                                                                                                                   .

                                                                                                                   .

(c)     Please attach evidence of authority authorizing you to represent each person.

2.                    Corporations and other entities

- 3 -

                           Please complete the following information if you are investing as a corporation, partnership, trust or other entity:

Name and address of entity:                                                                                     

                                                                                                                                   .

State and year of organization:                                                                                  

                                                                                                                                   .

Employer identification number:                                                                             .
Business activities:                                                                                                  

                                                                                                                                   .

(a)       Has the corporation, partnership, trust or other entity been formed for the specific purpose of purchasing Units?
Yes                           No                   

(b)       Does the corporation, partnership, trust or other entity have total assets in excess of $5,000,000?
Yes                           No                   

(c)     Has the corporation, partnership, trust or other entity been in existence for less than 90 days prior to the date hereof?
Yes                           No                   

(d)      Indicate the number of shareholders, partners, beneficiaries or other holders of beneficial interest of the corporation, partnership, trust or other entity:            .

(e)       Does the Subscriber, any relative, spouse or relative of the Subscriber who has the same residence as the Subscriber and any trust or estate described in question "(f)" immediately hereinbelow collectively hold more than 50% of the equity securities (excluding directors' qualifying shares) or equity interests of the investing corporation, partnership or other entity?
Yes                           No                   

(f)       Do the Subscriber and the persons and entities specified in question "(e)" immediately hereinabove above collectively hold more than 50% of the beneficial interest (excluding contingent interests) of the investing trust or estate?
Yes                           No                   

3.                    All subscribers

                           Please answer each of the following questions:

                           For purposes of this Questionnaire the following definitions shall apply:

- 4 -

	"income" shall mean adjusted gross income as reported for federal tax purposes reduced by (a) any deduction for long term capital gain, (b) any deduction for depletion, (c) any exclusion for interest and (d) any losses allocated to purchaser as an individual; and

	"net worth" shall mean the total assets in excess of liabilities, as determined in accordance with generally accepted accounting principles, except that if any such assets have been depreciated, then the amount of the depreciation regarding any particular asset may be added to the depreciated cost of that asset to determine total assets; provided, however, that the amount of any such depreciation may be added only to the extent that the amount resulting after adding such depreciation does not exceed the fair market value of that asset.

(a)       Is your net worth, excluding the value of your principal residence, home furnishings and automobiles, more than $200,000?
Yes                           No                   

(b)       Is your net worth, jointly with your spouse and inclusive of the value of your principal residence, home furnishings and automobiles, at least $1,000,000?
Yes                           No                   

(c)       If you are purchasing Units as an individual, has your income from all sources exceeded $200,000 in each of the two years preceding the date you will sign this Questionnaire?
Yes                           No                   

(d)       If you are purchasing Units as an individual, did you and your spouse have joint income from all sources exceeding $300,000 in each of the two years preceding the date you will sign this Questionnaire?
Yes                           No                   

(e)       If you are purchasing Units as an individual and have had income from all sources of $200,000 for each of the two years preceding the date you will sign this Questionnaire, or you and your spouse have had joint income of $300,000 for each of the two years preceding the date you will sign this Questionnaire, do you reasonably expect your joint income from all sources to be equal to or exceed such amounts for the current year?
Yes                           No                   

(f)       As a non-accredited investor, you have an individual or joint income in the prior two years and a projected income for the current year as follows:

2003  $__________;     2004  $__________;     2005  $__________

(g)       Do you anticipate that your current amount of income will change in the foreseeable future?
Yes                           No                   

                       If so, when, why and to what amount will that income change?:

- 5 -

                                                                                                                   .

                                                                                                                   .

(h)       Does your proposed purchase of Units exceed:

____ 10% of your net worth (excluding home, furnishings and automobiles)?

____ 20% of your net worth (excluding home, furnishings and automobiles)?

(i)       Do you have a prior close business or personal relationship with the Company or any of its officers, directors or principal (10% or more) shareholders?

Yes                           No                   

If "Yes," please describe the nature of the relationship:

                                                                                                                   .

                                                                                                                   .

(j)       Are you aware that the proposed offering of Units is intended to be a long-term investment?
Yes                           No                   

(k)       Please indicate the general, business or professional education and degrees received by you (or, if the Subscriber is a corporation, partnership, trust or other entity, by the person completing this Questionnaire on its behalf).

      School                                       Degree                           Year Received

                                                                                                                             .

                                                                                                                             .

                                                                                                                             .

(l)       Investment experience:

(i)       Frequency of investment in market securities:

Often   _____    Occasionally   _____    Seldom   _____    Never   _____

(ii)       Frequency of investment in commodities futures:

Often   _____    Occasionally   _____    Seldom   _____    Never   _____

(iii)      Frequency of investment in options:

Often   _____    Occasionally   _____    Seldom   _____    Never   _____

(iv)      Frequency of investment in options:

Often   _____    Occasionally   _____    Seldom   _____    Never   _____

- 6 -

(v)       Frequency of investment in securities purchased on margin:

Often   _____    Occasionally   _____    Seldom   _____    Never   _____

(vi)      Have you purchased securities sold in reliance on the private offering exemptions from registration pursuant to the U.S. Act or any state laws during the past three years?

Yes                           No                   

If you answered "Yes," please provide the following information:

                                      Nature of           Business               Total amount              

      Year                          Security            of issuer                  invested

                                                                                                                             .

                                                                                                                             .

                                                                                                                             .

(m)       Please describe your principal business activities (or the business activities of the corporation, partnership, trust or entity) during the past five years:

                                                                                                                             .

                                                                                                                             .

(n)       Have you previously invested in a development stage company?
Yes                           No                   

(o)       Do you believe you have sufficient knowledge and experience in financial and business affairs that you can evaluate the merits and risks of a purchase of Units?
Yes                           No                   

(p)      Do you believe you have sufficient knowledge of investments in general, and investments similar to a purchase of Units in particular, to evaluate the risks associated with a purchase of Units?
Yes                           No                   

(q)
(1)       In evaluating the merits and risks of this investment, do you intend to rely upon the advice of a representative (the "Representative")?

Yes                           No                   

If you answered "Yes," please identify such person and indicate his or her business address and telephone number.  Any person offering such advice must complete and return one copy of the "Subscriber's Representative Questionnaire" which immediately follows this Questionnaire.

                                                                                                                      .

                                                                                                                      .

                                                                                                                      .

- 7 -

(2)       You hereby acknowledge that the Representative identified above, if any, may receive a sales commission or other compensation in connection with your purchase of Units  (if permitted by state and federal securities laws), and that you have been informed that you will receive written notification of such amounts to be paid before acceptance of this subscription.

(r)       Will any of the money you will use to purchase the Units be borrowed from lenders outside of the United States of America?
Yes                           No                   

(s)       Do you understand that there will be substantial restrictions on your ability to resell any Units you purchase and that, in any event, you will not be able to resell any Units purchased unless an exemption from registration or qualification is available pursuant to the U.S. Act and the securities laws of the various states and other appropriate jurisdictions.
Yes                           No                   

                           You hereby acknowledge that the foregoing statements are true and accurate to the best of your information and belief and that you will promptly notify the Company of any changes in the foregoing answers. You further acknowledge that you have requested and hereby authorize the individual named in question "(p)" hereinabove, if any, to act as your Representative in connection with the evaluation of the merits and risks of a prospective purchase of Units by you (or the purchasing corporation, partnership, trust or other entity) and you have read and understood the Subscriber's Representative Questionnaire delivered to you herewith.

                     Dated at __________, __________, on this _____ day of __________, 2006.

 

	
______________________________

    Name of Subscriber - please print

	 	
______________________________

Subscriber's Address

	
By: ___________________________

Official Capacity or Title - please print
	 	
______________________________

	

______________________________

           Signature of Subscriber

	 	
______________________________

Subscriber's Telephone Number

	
______________________________

Please print name of individual whose

signature appears above if different than

the name of the Subscriber printed above
	 	
______________________________

Subscriber's Facsimile Number

______________________________

Subscriber's E-mail address

__________

Appendix "III"

 

TO THE $1.00 UNIT PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

OF LEXINGTON RESOURCES, INC.

 

SUBSCRIBER'S REPRESENTATIVE QUESTIONNAIRE

                           In addition to the covenants, representations and warranties contained in the "$1.00 Unit Private Placement Subscription Agreement" of the Company, to which this Appendix "III" - "Subscriber's Representative Questionnaire" is attached, the undersigned Subscriber and its Representative covenants, represents and warrants to the Company as follows.

Name of Subscriber:                                                                                         .

                           Instructions:   This "Subscriber's Representative Questionnaire" (the "Questionnaire") is being sent to each potential subscriber who has indicated an interest in purchasing "Units" in the capital stock of Lexington Resources, Inc., a Nevada corporation (the "Company").  The purpose of this Questionnaire is, in part, to allow the Company to have complete information about the subscriber and, in addition, to assure the Company that it may rely on, if applicable, the exemption from the registration requirements under the United States Securities Act of 1933, as amended (the "U.S. Act") afforded by "Regulation D" promulgated thereunder (the "Regulation").  The Regulation requires that, in order for an issuer, such as the Company, of securities, such as the Units, to rely on the exemption afforded thereby, the Company may only sell the Units to "Accredited Investors".  Eligibility is determined, among other things, by the ability of the Subscriber either alone or with his representative (herein the "Representative") to evaluate the merits and risks of an investment in the Units, based on his knowledge and experience in financial and business matters, or by certain financial criteria.

                           If the answer to any question is "None" or "Not Applicable" please so state.

                           Your answers will at all times be kept strictly confidential.  However, by signing this Questionnaire, the Representative agrees that the Company may present this Questionnaire to such parties as may be appropriate if called upon to verify the information provided or to establish the availability of an exemption from registration of the private placement under the federal or state securities laws or if the contents are relevant to issue in any action, suit or proceeding to which the Company is a party or by which it is or may be bound.  A false statement by the Representative may constitute a violation of law, for which a claim for damages may be made against the Representative and, if applicable, the Subscriber.

                           This Questionnaire does not constitute an offer of Units by the Company, but is merely a request for information.

                           Please complete the following Questionnaire fully, attaching additional sheets if necessary.

1.                    Name:                                                                                                                        .
Age:                                                                                                                          .

Business Address:                                                                                                    

                                                                                                                                   .

Telephone Number:              .

- 2 -

2.                  Present occupation or position, indicating period of such practice or employment and field of professional specialization, if any:

                                                                                                                             .

                                                                                                                             .

3.                    List any business or professional education, including degrees received, if any.

                                                                                                                             .

                                                                                                                             .

4.                   Have you had prior experience in advising clients with respect to investments of this type?

Yes                           No                   

5.                    List any professional licenses or registrations, including bar admissions, accounting certifications, real estate brokerage licenses, and SEC or state broker-dealer registrations held by you.

                                                                                                                             .

                                                                                                                             .

6.                    Describe generally any business, financial or investment experience that would help you to evaluate the merits and risks of this investment.

                                                                                                                             .

                                                                                                                             .

7.                     State how long you have known the Subscriber and in what capacity.

                                                                                                                             .

                                                                                                                             .

8.                     Except as set forth in subparagraph (a) below, neither I nor any of my affiliates have any material relationship with the above-noted Company, its directors, officers, shareholders or attorneys; no such material relationship has existed at any time during the previous two years; and no such material relationship is mutually understood to be contemplated.

(a)                                                                                                                                     .
                                                                                                                             .

(b)       If a material relationship is disclosed in subparagraph (a) above, indicate the amount of compensation received as a result of such relationship.

                                                                                                                             .

                                                                                                                             .

9.                    In advising the Subscriber in connection with Subscriber's prospective investment in the Company, I will be relying in part on the Subscriber's own experience in certain areas.

Yes                           No                   

- 3 -

10.                  In advising the Subscriber in connection with the Subscriber's prospective investment in the Company, I will be relying in part on the expertise of an additional representative or representatives.

Yes                           No                   

                       If "Yes," give the name and address of such additional representative or representatives.

                                                                                                                             .

                                                                                                                             .

                       I understand that the Company will be relying on the accuracy and completeness of my responses to the foregoing questions, and I represent and warrant to the Company as follows:

	I am acting as Representative for the Subscriber in connection with the Subscriber's prospective investment in the Company;

	the answers to the above questions are complete and correct and may be relied upon by the Company in determining whether the offering in connection with which I have executed this Questionnaire is exempt from registration under the U.S. Act pursuant to the Regulation or otherwise;

	I will notify the Company immediately of any change in any statement made herein occurring prior to the closing of any purchase by the Subscriber of an interest in the proposed investment;

	I am not an affiliate, director, officer or other employee of the Company or any of its subsidiaries or affiliates or a beneficial owner of 10% or more of any class of the equity securities of the Company or any of its subsidiaries or affiliates;

	I have disclosed to the Subscriber in writing, prior to the Subscriber's acknowledgment of me as his/her Representative, any material relationship with the Company or its affiliates disclosed in answer to Question 8 above; and

	I personally (or together with the Subscriber or the additional representative or representatives indicated above) have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of the Subscriber's prospective investment in the Company.

                       Dated at __________, __________, on this _____ day of __________, 2006.

 
                                                                        

        Name of Representative - please print

 

                                                                        

               Signature of Representative

__________

End of $1.00 Unit Private Placement Subscription Agreement

__________

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