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EXHIBIT 10.16    
    

 
 

SEPARATION AGREEMENT    
    

        This Separation Agreement (hereinafter the "Agreement") is made and entered into by and between State Street Corporation ("State Street"), and on behalf of State
Street Bank and Trust Company (together with State Street, the "Company"), and William W. Hunt (the "Executive"), dated as of January 2, 2008, and effective on the Effective Date (as defined in
Section 20(i) hereof). The parties seek through this Agreement to recite the mutually agreed upon terms and conditions of the Executive's separation from the Company. 

        1.    Termination of Employment.    The Executive hereby resigns, as of January 2, 2008 (the "Separation
Date"), from his position of employment as Vice Chairman of State Street and Chief Executive Officer of the State Street Global Advisors business unit of the Company, as well as from all officerships
and directorships of the Company and any of its affiliates and subsidiaries (the "Company Group"), including from the boards and committees of any related trusts or foundations and from any other
entities controlled by the Company Group. The Company hereby accepts the Executive's voluntary resignation from the Company Group, as herein described, effective as of the Separation Date. 

        2.    Base Salary; Additional Payments.    The Executive shall be entitled to receive base salary at the annualized
rate of $750,000 currently in effect (the "Base Pay") for any unpaid periods of employment through and including the Separation Date, such amount to be paid in accordance with the Company's standard
payroll practices. The Executive shall receive reimbursement for all properly documented and reimbursable business expenses that are submitted to the Company within 30 days of the Effective
Date. The Executive shall additionally receive payment for any accrued but unused vacation, as reflected in the books and records of the Company, within two weeks of the Effective Date. 

        3.    Severance Compensation.    Subject to Section 20(i) hereof, upon the Separation Date and continuing until
the second anniversary of the Separation Date (the "Severance Compensation Period"), the Company will provide the Executive with severance compensation in an amount equal to the Base Pay for such
two-year period in accordance with the terms of the State Street Corporation Severance Plan (the "Severance Plan") (except as otherwise modified herein);  provided that so much of
such severance compensation as would be payable on such basis within the first six months following the Separation Date shall instead be paid in a single lump sum on that day that falls six months and
one day after such Separation Date (the "Delayed Payment Date"), and the balance shall be paid thereafter in accordance with the Company's standard payroll practices as in effect on the Separation
Date. 

        4.    Benefits Continuation.    

        (a)   Provided
he makes a timely election to participate and in accordance with the terms of the Severance Plan (except as modified herein), the Executive shall be eligible
for continuation of coverage, at his expense, under the Company's group medical, dental and vision plans, but only to the extent required by and subject to the terms of Part 6 of Subtitle B of
Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). If, at the conclusion of the first 18 months of the Severance Compensation Period, the Executive
immediately prior thereto is still receiving continuation coverage pursuant to the immediately preceding sentence, has not accepted new employment and has not secured alternate health, dental and
vision insurance coverages, either through new employment or otherwise, the Company will arrange for comparable coverage (through self-insurance or otherwise) at comparable cost to the
Executive through the balance of the Severance Compensation Period or, if earlier, until the Executive accepts new employment. The Executive agrees to notify the Company immediately if he accepts new
employment during the Severance Compensation Period. 

        (b)   Eligibility
to participate in the Company's short-term disability plan will end as of the Separation Date, and eligibility to participate in the Company's
long-term disability plan will end as of the last day of the calendar month in which the Executive's Separation Date occurs. 

 

        (c)   The
Executive may continue his life insurance (i.e., Basic Life Insurance, Optional Employee Life Insurance,
Spouse/Domestic Partner Life Insurance and Dependent Child Life Insurance, as applicable) during the Severance Compensation Period by making the premium payments therefor. Such coverage will terminate
at the conclusion of the Severance Compensation Period, unless the Executive directly elects to convert his coverage pursuant to the terms of these policies by private arrangement with the life
insurance carrier. 

        (d)   The
Executive shall continue to receive repatriation tax equalization and tax preparation benefits related to his service with the Company Group as an expatriate in
accordance with Company policy in effect as of the date hereof. 

        (e)   The
Executive's participation in all other Company benefit plans and programs, including, but not limited to, the Qualified Plan and the Savings Plan (each as defined
below), will end as of the Separation Date, in accordance with the terms of the respective plans. 

        5.    Stock-Based Compensation, Retirement and Other Benefits.    

        (a)    Stock Options/SARs.    State Street has previously awarded stock options and stock appreciation rights to the
Executive under its 1997 Equity Incentive Plan (the "1997 Plan") and its 2006 Equity Incentive Plan (the "2006 Plan" and collectively with the 1997 Plan, the "Equity Plans"). The Company has furnished
the Executive a schedule (including vesting schedules and expiration dates), appended hereto as Exhibit A, reflecting those outstanding
(i.e., not earlier expired or been exercised) stock options and stock appreciation rights held by the Executive as of the Separation Date (each, a
"Stock Option"). The Stock Options shall continue to vest and be exercisable, subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, and/or become
forfeitable in accordance with the terms of the applicable Equity Plan and/or the applicable option agreement or other award documentation. The Company and the Executive agree that the restraints and
obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or
undertakings of the Executive on the same subject under the Equity Plans and any related award documentation. For the avoidance of doubt, those 8,271 Stock Options granted to the Executive under the
1997 Plan that were scheduled to vest on March 2, 2010 shall be immediately and automatically forfeited as of the Separation Date in accordance with their terms. 

        (b)    Performance Awards.    The Executive holds performance share awards granted under the Equity Plans. The
following provisions shall govern the treatment of certain of these awards: 

        (i)    Cycle O Performance Award.    State Street has previously awarded to the Executive a Cycle O performance award
under the 1997 Plan as set forth on Exhibit A hereto (the "Cycle O Award"), that vested on December 31, 2007. Notwithstanding anything to
the contrary under the terms of the 1997 Plan and/or the applicable performance share award agreement or other award documentation, but subject to the Executive's compliance with Section 6,
Section 7 and Section 8 hereof, the Company shall deliver to the Executive, on or about February 15, 2008, but not later than March 15, 2008, that number of shares of
common stock of State Street, par value $1 ("Common Stock"), equal to the number of such shares the Executive would have received under the Cycle O Award had the Executive remained employed by the
Company Group. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for
all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the Cycle O Award. 

        (ii)    2006 PEP Performance Award.    State Street has previously awarded to the Executive performance-based equity
awards under the 2006 State Street Global Advisors Performance Equity Program pursuant to the 1997 Plan as set forth on Exhibit A hereto (the
"2006 PEP Award"). In 

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accordance
with the terms of the 2006 PEP Award (as modified herein) and subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, the Company shall
deliver to the Executive in full satisfaction of the 2006 PEP Award, on February 15, 2009 (the "Settlement Date"), but not later than March 15, 2009, that number of shares of Common
Stock (the "2006 PEP Shares") equal to the product of (I) the number of the shares of Common Stock the Executive would have received under his 2006 PEP Award had the Executive remained employed
by the Company Group through the Settlement Date and (II) 24/36 (66.66%); provided that if the aggregate value of the 2006 PEP Shares (determined
using the closing price of a share of Common Stock on the New York Stock Exchange on the Settlement Date) is greater than $5 million, the Executive shall only be entitled to the delivery, in
full satisfaction of the 2006 PEP Award, of such number of 2006 PEP Shares with an aggregate value equal to $5 million, and the remainder of the 2006 PEP Shares shall be forfeited. The Company
and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling,
in lieu of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the 2006 PEP Award. 

        (c)    Payments in Respect of Other Stock-Based Awards.    The Executive holds certain deferred stock awards and
performance share awards (in addition to those discussed under Section 5(b) hereof) granted under the Equity Plans. The following provisions shall govern the treatment of these awards: 

        (i)    Deferred Stock Awards.    State Street has previously awarded to the Executive an award of shares of deferred
stock under the 1997 Plan as set forth on Exhibit A hereto (the "DSAs"), which are scheduled to vest on February 15, 2008. In full
satisfaction of the DSAs and subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, the Company shall pay the Executive on the Delayed Payment Date
a single lump sum cash payment of $900,000, provided that in no event shall such payment occur prior to February 15, 2008. The Company and the
Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu
of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the DSAs. 

        (ii)    Other Stock-Based Awards.    In full satisfaction of all other equity-based awards held by the Executive under
the Equity Plans, including, without limitation, all performance-based equity awards under the 2005 State Street Global Advisors Performance Equity Program pursuant to the 1997 Plan, all
performance-based equity awards under the 2007 State Street Global Advisors Performance Equity Program pursuant to the 2006 Plan, and the "Cycle P" and "Vice Chairman" performance awards under the
1997 Plan, but specifically excluding only the Stock Options, the Cycle O Award, the 2006 PEP Award and the DSAs (which shall be subject to Section 5(a), Section 5(b)(i),
Section 5(b)(ii) and Section 5(c)(i) hereof, respectively), the Company shall pay the Executive on the Delayed Payment Date a lump sum cash payment of $4.6 million;  provided that in the
event that the aggregate value of the 2006 PEP Shares (determined in accordance with Section 5(b)(ii) hereof) is less than
$5 million as of the Settlement Date, the Company shall pay the Executive on the Settlement Date, but not later than
March 15, 2009, an additional lump sum cash payment equal to (i) $5 million less (ii) the aggregate value of the 2006 PEP Shares (determined in accordance with
Section 5(b)(ii) hereof). Any amounts payable by the Company pursuant to this Section 5(c)(ii) are subject to the Executive's compliance with Section 6, Section 7 and
Section 8 hereof. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be
deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the Equity Plans and any related award documentation. 

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        (d)    Pension Benefits.    The Executive is vested in his currently accrued benefit as of the Separation Date under
the Company's tax-qualified defined benefit pension plan, the State Street Retirement Plan (the "Qualified Plan"), and State Street's Management Supplemental Retirement Plan, as amended
and restated effective as of January 1, 2008 (the "SERP" and together with the Qualified Plan, the "Retirement Plans"). The Company has furnished to the Executive a schedule showing his vested
benefits under the Retirement Plans (the "Retirement Benefits"). The Executive shall be entitled following the Separation Date to receive the Retirement Benefits in accordance with and subject to the
terms of the applicable Retirement Plans. In addition to the foregoing benefits, the Executive will be entitled to receive, following the Separation Date, all of his accrued benefits as of the
Separation Date under State Street's Salary Savings Program (the "Savings Plan") and its Management Supplemental Savings Plan as amended and restated effective as of January 1, 2008 (formerly,
the 401(k) Voluntary Deferral Plan) (the "MSSP"), in each case in accordance with and subject to the terms of the applicable plan. The Company has furnished the Executive a schedule, appended hereto
as Exhibit B, reflecting, as of December 31, 2006, the Executive's vested accrued benefits under the Qualified Plan, the SERP, the Savings
Plan, the MSSP and the Supplemental Pension Plan, as amended and restated effective as of January 1, 2008 (formerly, the Supplemental Defined Benefit Pension Plan) (the "ESRP"). For the
avoidance of doubt, for purposes of determining the Executive's benefits under the foregoing programs, compensation or remuneration paid or payable pursuant to Section 2 hereof or otherwise
paid or payable pursuant to this Agreement shall be disregarded. 

        6.    Non-Competition/Non-Solicitation.    The Executive agrees that he will not, during the
18-month period commencing on the Separation Date (the "Restricted Period"), (a) accept employment with, work for or otherwise provide services to, whether directly or indirectly or
whether with or without compensation, any Institution (as defined below); (b) directly or indirectly solicit or encourage any customer or prospective customer (the latter defined to mean any
person or entity with which any member of the Company Group has made a business-seeking contact other than by mass mailing or general advertising within 12 months preceding the Separation Date)
of, or investor in, any member of the Company Group as of the Separation Date to conduct with anyone else any business activity which such customer, prospective customer or investor could conduct with
the Company Group; (c) directly or indirectly hire or solicit any officer or principal of the Company Group to discontinue or curtail his/her employment with the Company Group (other than
through generalized solicitations or advertising); (d) directly or indirectly solicit or encourage any independent contractor providing services to any member of the Company Group to terminate
or curtail his/her/its relationship with the Company Group; (e) directly or indirectly attempt to induce a client or customer of the Company Group with whom the Executive has had or with whom
persons supervised by the Executive have had significant personal contact while employed by the Company Group to (i) transfer its business
from the Company Group to any other person or entity; (ii) cease or curtail its business with the Company Group; or (iii) divert a business opportunity from the Company Group to any
other person or entity. Notwithstanding the foregoing, (A)(i) on and after the six-month anniversary of the Separation Date, the Executive may provide services to any hedge fund
established after the Separation Date of which the Executive is a founding principal and (ii) on or after the first anniversary of the Separation Date, the Executive may accept employment with,
work for or provide services to any hedge fund which is not controlled by or under common control with an Institution, and (B) nothing herein shall prevent the Executive from owning not in
excess of 1% of any security issued and outstanding of an entity listed on a national securities exchange or the Nasdaq National Market. For purposes of this Agreement, an "officer", "principal" or
"independent contractor" of the Company Group is any person who acquired such status on or within 12 months preceding the date of the asserted breach. For purposes of this Agreement, "control"
(including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an
entity or person, whether through the ownership of voting securities, by contract, or otherwise. 

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        For
purposes of this Agreement, each of the following entities (together with its affiliates and subsidiaries) is an "Institution": Fidelity Investments, Barclays Global Investors, N.A.,
Wellington Management Co., LLP, The Bank of New York Mellon, Putnam Investments, Goldman Sachs Asset Management LP, BlackRock, Inc. and any institution in addition to the
foregoing that is among the five institutions with the highest value of total assets under management as listed in Institutional Investor's annual ranking of America's Top Money Managers, Total Assets
Under Management (historically published in the month of July) or Pensions & Investments' annual ranking of Top Firms Ranked By Worldwide Assets (historically published in the month of May)
(the "Top Five(5)") published most recently prior to the Separation Date (the "Publication Date"); provided that, if one or both of these publications
change the title of their rankings, the ranking(s) utilized will be ranking(s) of total assets under management; and provided further that, if one or
both of these publications change their names, or cease to carry out the described annual rankings, the ranking(s) utilized will be by the publication(s) that are recognized in the worldwide
investment community as the most trustworthy rankings, as determined by the Executive Compensation Committee of the Board (as defined in Section 10 hereof) in its sole discretion. If for any
reason the publications used to determine the Top Five (5) institutions have different rankings, then any Institution listed in the Top Five (5) list of any such publication will be
considered an Institution. For purposes of this Agreement, Institutions shall be determined without regard to, and shall not include, the Company Group. Furthermore, any successor entity to an
Institution, by way of merger, acquisition (either of stock or substantially all of the assets), reorganization, change of name or other similar event occurring subsequent to the Publication Date,
shall be deemed to be an Institution. 

        7.    Confidential Information.    The Executive agrees that, except as authorized in writing by the Company's Chief
Executive Officer, as required by applicable law, rule, regulation or legal process, or as may be reasonably required in connection with obtaining legal advice, he will not, directly or indirectly,
use or disclose any Confidential Information belonging to the Company Group. For purposes of this Agreement, "Confidential Information" means any and all information of the Company Group that is not
generally known by others with whom it competes or does business, or with whom, during the 12 months preceding the Separation Date, it planned to compete or do business, including but not
limited to (a) all proprietary information of the Company Group, including but not limited to the products and services, technical data, methods, processes, trade secrets, know-how,
developments, inventions, and formulae of the Company Group, (b) the development, research, testing, marketing, financial activities and strategic plans of the Company Group, (c) the
manner in which the Company Group operates, (d) the Company Group's actual and projected financial performance, (e) the identity and special needs of the customers, clients, prospective
customers, prospective clients and investors of the Company Group, and (f) the people and organizations with whom any member of the Company Group has business relationships and the substance of
those relationships. Confidential Information also includes any information that any member of the Company Group may receive or has received from customers, investors, business partners or others with
any understanding, express or implied, that the information would not be publicly disclosed. Anything in this paragraph to the contrary notwithstanding, the Executive shall be bound by his obligations
to maintain attorney/client confidences, and the Company does not hereby waive any attorney/client privilege. Notwithstanding the foregoing, "Confidential Information" shall not include any
information (i) that is currently or becomes publicly available or a matter of public knowledge or domain through no wrongful act or omission by the Executive, or (ii) that is received
by the Executive from a third party who is not known by the Executive to be bound by an obligation of confidentiality to the Company Group not to disclose such information. The Executive further
agrees that, on or before five days subsequent to the Separation Date, he will return to the Company all documents, materials and information (whether in hard copy, on electronic media or otherwise)
related to Company business, and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of the Company Group in his
possession or control, and hereby certifies that he has not and will not 

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knowingly
retain copies of any such Company Group documents, materials or information; provided that the Executive shall be entitled to retain copies of
all compensation and benefit plans and agreements, including, without limitation, the Equity Plans and related documentation, referenced in Section 3, Section 4 and Section 5
hereof. 

        8.    Non-Disparagement.    The Executive agrees that he shall not make any intentionally false, or any
disparaging or derogatory statements, to any media outlet (including, but not limited to, any Internet-based chat rooms, message boards and/or web pages), industry groups, financial institutions,
current or former employees, consultants, clients or customers of the Company Group regarding the Company Group or any of its directors, officers, employees, agents or representatives, or about the
Company Group's business affairs and/or financial condition. The Company, in turn, agrees that it will not, in any authorized corporate communications to third parties, and will endeavor to direct
those individuals set forth on Exhibit C hereto not to, make any intentionally false, or any disparaging or derogatory statements about the
Executive; provided, however, that nothing herein shall prevent either party from giving truthful
testimony and/or from otherwise making good faith statements in connection with legal investigations and/or other proceedings. In addition, the Company shall, prior to its public release, provide the
Executive with a copy of the press release regarding the Executive's separation from the Company. 

        9.    Certain Remedies.    

        (a)    Remedies.    The Company and the Executive agree without reservation that the restraints set forth in
Section 6, Section 7 and Section 8 hereof are necessary for the reasonable and proper protection of the Company, or the Executive, as the case may be; that each and every one of
the restraints is reasonable with respect to subject matter, length of time and geographic area; and that these restraints will not prevent the Executive from obtaining other suitable employment, if
he wishes to do so, during the Restricted Period. The Company and the Executive further agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and
Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject contained in any agreement previously
entered into or binding between the Executive and any member of the Company Group, including, without limitation, under the Equity Plans and any related award documentation. The Executive further
agrees that, were he to breach any of the covenants contained in Section 6, Section 7 or Section 8 hereof, the damage to the Company would be irreparable. The Executive therefore
agrees that the Company, in addition to any other remedies available to it, including, without limitation, under Section 9(b) hereof, shall be entitled to preliminary and permanent injunctive
relief against any breach or threatened breach by the Executive of any of those covenants, together with an award of attorney's fees incurred in connection with securing the same. It is expressly
agreed that the Company will not have to post bond in connection with any such injunction, and that the Executive will not take, and will not permit anyone else to take on his behalf, any position in
a court or any other forum inconsistent with any of his covenants and agreements herein. The Company and the Executive further agree that, in the event that any provision of Section 6 or
Section 7 hereof is determined by a court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area, or too great a range
of activities, the relevant provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. Further, the Company and the Executive agree that the period of
restriction described in Section 6 hereof shall be tolled, and shall not run, during any period of time in which the Executive is judicially determined by a court of competent jurisdiction to
have been in breach of the terms of Section 6 hereof. 

        (b)    Forfeiture.    In the event that the Executive (i) fails to comply with Section 6,
Section 7 or Section 8 hereof, other than any isolated, insubstantial and inadvertent failure that is not in bad faith, or (ii) files any charge, claim, demand, action or
arbitration with regard to the Executive's employment, compensation or termination of employment under any federal, state or local law, or an arbitration 

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under
any industry regulatory entity, except in either case for a claim for breach of this Agreement or failure to honor the obligations set forth herein, the Company shall be entitled to cease making
any payments due hereunder, subject to written notice to the Executive specifying in reasonable detail the nature of the breach, and the Executive agrees that he shall forfeit, in each of the
following clauses (i) and (ii) as of the date of the breach by the Executive: (i) any amounts not already paid pursuant to Section 3 and Section 5(c) hereof; and
(ii) all Stock Options, the Cycle O Award and the 2006 PEP Award (including any right to a cash payment pursuant to Section 5(c)(ii) hereof) to the extent not vested, settled, paid
and/or exercised, as applicable, as of the date of the breach by the Executive. Any disputes with respect to the application of this Section 9(b) shall be subject to Section 19 hereof;  provided that during the pendency of any such dispute the Company shall be entitled to withhold any payments and/or settlement of any awards to the
Executive pursuant to this Section 9(b). 

        10.    Post-Employment Cooperation.    The Executive agrees he will reasonably cooperate with the Company
with respect to any matters arising during or related to his employment, including but not limited to reasonable cooperation in connection with any litigation, governmental investigation, or
regulatory or other proceeding which may have arisen or which may arise following the execution of this Agreement; provided this obligation shall not
extend to any litigation or other proceeding commenced by the Company against the Executive or to any litigation or other proceeding commenced by the Executive against the Company to enforce the
Executive's rights under this Agreement or with respect to any right, claim or cause of action which the Executive has not released pursuant to Section 12 hereof. As part of such reasonable
cooperation, the Executive shall provide reasonably requested information to the Company and its attorneys with respect to any matter arising during or related to his employment, shall make himself
reasonably available to meet with Company Group personnel, the Company's attorneys, the attorneys of the Board of Directors of State Street (the "Board") and/or the attorneys of any committee of the
Board, and shall, at the Company's request and upon reasonable notice, travel to such places as the Company may specify (for which the Company will reimburse the Executive for his travel and lodging
expenses in accordance with the Company's expense practices applicable to the Executive immediately prior to the Separation Date). Finally, as part of such reasonable cooperation agreed to herein, to
the extent allowed by law, the Executive shall promptly notify the Company's Chief Legal Officer, by the third business day following his actual, personal receipt, or actual, personal notice of
receipt, from any third party or governmental entity of a request for testimony and/or documents, whether by legal process or otherwise, relating to any matter arising during or relating to his
employment or other relationship with the Company Group. In the event that the Executive's required cooperation pursuant to this Section 10 exceeds an aggregate of 24 working hours, and to the
extent not connected to the deposition or testimony of the Executive, the Company shall compensate the Executive at an hourly rate of $250 per hour for such cooperation, not to exceed $2,000 for any
single day's work. The Company shall promptly notify the Executive, within three business days, of its actual receipt from any third party or governmental entity of a request for testimony of and/or
documents from the Executive, whether by legal process or otherwise, relating to any matter arising during or relating to the Executive's employment or other relationship with the Company Group. The
Company agrees to provide the Executive reasonable access to information regarding his employment benefits and to Company personnel who have knowledge of such matters. 

        11.    Reciprocity of Obligations.    The performance by State Street of its commitment to pay moneys to the Executive
hereunder, and the Executive's right to receive and retain the same, shall be expressly conditioned on the Executive's material fulfillment of all of his obligations in this Agreement, including,
without limitation, those set forth in Sections 6, 7, 8 and 10 hereof. Similarly, the Executive's performance of his commitments hereunder shall be expressly conditioned upon the Company's
material fulfillment of all of its obligations set forth herein. Either party may suspend or terminate its performance hereunder in the event the other commits a material breach of this Agreement. 

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        12.    Executive's Release of Claims.    

        (a)    Generally.    In consideration of the benefits to be provided the Executive hereunder, and after consultation
with counsel, the Executive, and each of the Executive's respective heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the "Releasors"), hereby releases,
waives and forever discharges the Company Group and all those persons, employees, directors, agents and entities affiliated with it ("Releasees") from and against any and all claims, rights and causes
of action arising on or prior to the date hereof, both known and unknown, including but not limited to all claims of breach of contract or misrepresentation, wrongful discharge, and claims of alleged
violations of Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, ERISA, the Americans With Disabilities Act, Massachusetts G.L. c. 151B, Massachusetts G.L. c. 149,
§ 148, and any other local, state, or federal law, regulation or other requirement and any other claim relating to or arising out of the Executive's employment and/or other
relationship with the Company Group and/or his ownership of Common Stock. The Executive hereby covenants that he will not institute any charge, complaint or lawsuit to challenge the validity of this
release or to otherwise assert claims against the Releasees that have been waived hereunder. It is agreed and understood that the foregoing general release does not waive any of the following rights:
(a) to the pay or benefits to be provided to the Executive as set forth herein; (b) to enforce the terms of this Agreement; (c) to exercise the Stock Options in accordance with
Section 5(a) hereof; (d) to access any benefit to which the Executive is entitled under the Qualified Plan, the SERP or the Savings Plan; (e) to pursue counterclaims and defenses
directly related to claims that the Company has not waived pursuant to this Agreement and claims which the Executive may not release pursuant to applicable laws and regulations; (f) to
file a charge with the Equal Employment Opportunity Commission ("EEOC") or similar state agency or otherwise participate in an investigation or proceeding conducted by the EEOC or similar state
agency; (g) to avail himself of any rights to insurance or indemnification that the Executive may have (including with respect to matters that are the subject of this release) under State
Street's articles, by-laws or applicable insurance policies, under applicable law, and under any agreement between the Executive and the Company; and (h) to pursue claims arising
after the date hereof. 

        (b)    Specific Release of ADEA Claims.    In further consideration of the payments and benefits provided to the
Executive under this Agreement, the Releasors hereby unconditionally release and forever discharge the Company Group, and the officers, employees, directors and agents of each member of the Company
Group from any and all claims that the Releasors may have as of the date the Executive signs this Agreement arising under the Federal Age Discrimination in Employment Act of 1967, as amended, and the
applicable rules and regulations promulgated thereunder ("ADEA"). In signing this Agreement, the Executive acknowledges that he understands its provisions; that his agreement is knowing and voluntary;
that he has been afforded a full and reasonable opportunity of at least 21 days to consider its terms and consult with or seek advice from an attorney of his choosing; that he is providing this
release and discharge set forth in this Section 12(b) only in exchange for consideration in addition to anything of value to which he is already entitled; and that he has been advised to seek
counsel from an attorney and has in fact done so. 

        13.    Company's Release of Claims.    In exchange for the commitments of the Executive set forth herein, the Company,
for itself and on behalf of the Company Group, hereby voluntarily and forever releases, waives and discharges the Executive from and against any and all causes of action, rights or claims arising on
or prior to the date hereof, both known and unknown, to the Company, including but not limited to all claims of breach of contract or misrepresentation, breach of fiduciary duty, and claims of
violation of any local, state or federal law, regulation or other requirement and any other claim relating to or arising out of the Executive's employment and/or other relationship with the Company
Group. The Company hereby covenants that it will not institute any charge, complaint, or lawsuit to challenge the validity of this release or to otherwise assert claims against the Executive that have
been waived hereunder. It is agreed and understood that the foregoing general release does not waive any of 

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the
following rights: (a) to enforce the terms of this Agreement; (b) to pursue claims arising from criminal, fraudulent or otherwise intentionally wrongful misconduct on the Executive's
part or claims arising from a knowing violation of federal or state laws or regulations; (c) to pursue claims arising from the Executive's obtaining an impermissible or illegal benefit from the
Company; (d) to pursue claims arising from actions taken after the date hereof; (e) to pursue counterclaims and defenses directly related to claims that the Executive has not waived
pursuant to this Agreement; and (f) to pursue claims which the Company may not release pursuant to applicable laws and regulations. 

        14.    Indemnification.    The Executive shall be entitled (a) to such rights to indemnification as shall exist
in the Company's articles and by-laws, as amended from time to time, under applicable law, and under any agreement between the Executive and the Company, and (b) to coverage under
the Company's directors' and officers' insurance policy and other applicable liability policies, as in effect from time to time, for causes relating to acts or omissions occurring on or prior to the
Separation Date, to the extent set forth in such documents. The Executive agrees to promptly notify the Company of any claims made against the Executive in his capacity as a former officer/employee of
the Company or any other member of the Company Group. 

        15.    Entire Agreement.    This Agreement, together with all of the plans, agreements and documents referred to
herein and as modified hereby, constitutes the entire agreement between the Company and the Executive, and supersedes any other contracts or commitments with respect to the Executive's employment with
the Company and/or other service to the Company, and/or his separation therefrom (including any contracts or commitments to the extent they relate to the Executive's activities following the
Separation Date), except to the extent expressly provided for herein. It is agreed and understood that, except as expressly set forth in this Agreement, the Executive shall receive no other
compensation or benefits of any kind from the Company, including, without limitation, under the ESRP or the Change of Control Agreement (defined below). 

        16.    Modification of Agreement.    This Agreement may only be amended, modified or waived by a writing signed by
parties duly authorized to do so. 

        17.    Successors and Assigns; Death Benefits.    It is agreed and understood that this Agreement shall inure to the
benefit of and be binding upon the parties' respective heirs, executors, beneficiaries, successors and
assigns. In the case of benefits under an employee benefit plan or program of the Company (including, but without limitation, the Qualified Plan, the SERP, the Savings Plan, the MSSP, the Equity
Plans, and any life insurance policy or program under which the Executive is covered), the heirs or beneficiaries of the Executive shall be entitled only to such death benefits and other rights and
benefits, if any, as are provided under the terms of the applicable plan or program. In addition, in the event of the Executive's death prior to his receipt of all the payments, compensation and
benefits provided for herein, the unpaid portions of any such payments, compensation and/or benefits shall, subject to the proviso in Section 20(b) hereof, be paid to the Executive's
beneficiary or beneficiaries or to the Executive's estate, as the case may be, at the same time or times, and in the same form and amounts, as they would have been paid had the Executive survived. 

        18.    Notices.    All notices and other communications hereunder shall he in writing and shall be deemed to have been
given three days after having been mailed by first-class mail or registered or certified mail, two days after having been mailed by private overnight courier service or 12 hours after having
been delivered or sent by facsimile or email (provided in each case that the day on which notice is deemed to have been given is a business day), to the following addresses or to such other addresses 

9

 

as
the parties shall have furnished to each other in writing; provided that notice provided to copy parties shall not be deemed to be notice to the
parties to this Agreement. 

        If
to the Executive: 

William
W. Hunt

304 Marsh Street

Belmont, MA 02478

Email: wwhunt304marsh@hotmail.com

        With
a copy to: 

Michael
F. O'Connell, Esq.

Rackemann, Sawyer & Brewster

160 Federal Street

Boston, MA 02110-1700

Facsimile: 1-617-542-7437

Email: moconnell@rackemann.com

        If
to the Company: 

State
Street Corporation

Attn: Chief Legal Officer

1 Lincoln Street

Boston, MA 02111

Facsimile: (617) 664-8209

Email: jcarp@StateStreet.com

        With
a copy to: 

Linda
E. Rappaport, Esq.

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY 10022

Facsimile: 1-212-848-7179

Email: lrappaport@shearman.com

        19.    Disputes.    Any dispute or controversy arising under this Agreement that cannot be mutually resolved by the
Executive and the Company shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association or JAMS (an "Arbitration Association"), as selected by the
Company in its sole discretion, in Boston, Massachusetts before one arbitrator of exemplary qualifications and stature, who shall be selected jointly by the Executive and the Company, or, if agreement
on the selection of the arbitrator cannot be reached, shall be selected by the Arbitration Association (provided that any arbitrator selected by the
Arbitration Association shall not, without the consent of both the Executive and the Company, be affiliated with the Executive or the Executive's affiliates or the Company Group). Judgment may be
entered on the arbitrator's award in a Massachusetts State Court. The arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. Each
party shall bear his or its own expenses incurred in any arbitration arising out of a dispute or controversy under this Agreement. 

        20.    Miscellaneous.    

        (a)   All
payments to the Executive and all benefits, entitlements and accruals of the Executive under this Agreement or under any other Company Group plan or program (whether
or not expressly mentioned in this Agreement) are conditioned upon the payment by the Executive of the employee's portion of applicable required tax withholdings, including, without limitation, FICA
(including 

10

 

Medicare)
tax withholdings. The Company may reduce any cash payments by the amount of any such applicable tax withholdings, including, without limitation, any such applicable tax withholdings with
respect to any taxable non-cash benefits or payments. The Executive agrees that the Company may, upon written notice by the Company to the Executive specifying in reasonable detail the
nature of the following deductions, deduct from the severance compensation all outstanding financial obligations that he may have to the Company, including, without limitation, such items as expense
account balances, credit card balances, employee advances (including advanced vacation days) and reimbursement for any property of the Company Group retained by him. 

        (b)   The
Executive acknowledges that he is a "specified employee" under Treas. Reg. § 1.409A-1(i). Any amounts payable under this Agreement
that constitute deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended, as determined by the Company in its reasonable discretion, that would (but for
this sentence) be payable within six months following the Separation Date shall instead be paid on the Delayed Payment Date; provided that in the event
the Executive dies prior to the Delayed Payment Date, any payments that would be payable on the Delayed Payment Date pursuant to this Agreement shall instead be paid, subject to Section 20(i)
hereof, on the earlier of (i) the 30th day following the date of the Executive's death or (ii) the Delayed Payment Date. 

        (c)   Effective
as of the Separation Date, the Executive shall cease to be covered by that certain change of control employment agreement between the Company and the Executive
(the "Change of Control Agreement"), and the Change of Control Agreement shall have no further force or effect; provided,  however, that nothing herein
shall eliminate or otherwise adversely affect any protections that the Executive may have upon a change of control of State
Street under other plans, awards or agreements of the Company Group, including, without limitation, accelerated vesting of outstanding Stock Options. 

        (d)   In
order to be certain that this Agreement will resolve any and all concerns that the Executive might have, the Company requests that he carefully consider its terms,
including the general release of claims set forth above. For a period of seven days following his execution of this Agreement (the "Revocation Period"), the Executive may revoke his acceptance hereof
as to the release of claims under ADEA, and this Agreement shall not become effective or enforceable as to the release of such claims until after the Revocation Period has expired. In the event of any
such revocation by the Executive all obligations of the parties under this Agreement shall terminate and be of no further force and effect as of the date of the Executive's revocation;  provided that no
such revocation by the Executive shall be effective unless it is in writing and signed by the Executive and received by the Company
prior to the expiration of the Revocation Period. 

        (e)   The
parties' substantive and procedural rights with respect to this Agreement shall be governed by the laws of the Commonwealth of Massachusetts, without resort to
choice of law or conflict of law principles. 

        (f)    The
headings of this Agreement are for convenience of reference only, and will not affect the construction of any provision hereof. 

        (g)   This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and which together shall be deemed to be one and the same
instrument. 

        (h)   The
failure of any party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such
party to enforce the same. Waiver by any party hereto of any breach or default by another party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default. 

        (i)    This
Agreement shall take effect on the eighth day following the Executive's execution hereof (the "Effective Date"),  provided that the Executive has not earlier revoked his acceptance of the 

11

 

Agreement
in accordance with the provisions of Section 20(d) hereof. The Company represents and warrants that it has due authority to enter into this Agreement and that upon the Effective Date,
this Agreement shall be a valid and binding obligation of the Company. 

12

THE
EXECUTIVE HEREBY ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS AGREEMENT, THAT THE EXECUTIVE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT THE EXECUTIVE HEREBY ENTERS INTO THIS
AGREEMENT VOLUNTARILY AND OF HIS OWN FREE WILL. 

	

ACCEPTED AND AGREED TO:	
 	

ACCEPTED AND AGREED TO:
	

    
	
 	

 	
 	

 
	William W. Hunt	 	STATE STREET CORPORATION
	

 	
 	

By:	
 	

    

 

 
 

EXHIBIT A    
    

EQUITY GRANT TREATMENT  

	 
	 	 
	 	Vesting Schedule

	Award
 
	 	Grant

Date

	 	2008
	 	 
	 	2009
	 	 
	 	2010
	 	 
	 	2011
	 	 

	Vested Stock Options—1,600 options, 3 months from 1/2/08 to exercise	 	06/17/99	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Vested Stock Options—12,500 options, 3 months from 1/2/08 to exercise	
 	

06/15/00	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—2,100 options, 3 months from 1/2/08 to exercise	
 	

09/20/01	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—20,000 options, 3 months from 1/2/08 to exercise	
 	

02/21/02	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—3,569 options, 3 months from 1/2/08 to exercise	
 	

03/21/02	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—15,247 options, 3 months from 1/2/08 to exercise	
 	

12/19/02	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—37,000 options, 3 months from 1/2/08 to exercise	
 	

12/17/03	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—20,000 options, 3 months from 1/2/08 to exercise	
 	

03/03/04	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Options—18,500 options; expire 3 months after 12/09	
 	

03/02/05	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Unvested Stock Options—18,500 unvested options vesting through 12/09, then 3 months to exercise	
 	

03/02/05	
 	

9,250	
 	

3/2/08	
 	

9,250	
 	

3/2/08	
 	

 	
 	

 	
 	

 	
 	

 
	

Vested Stock Appreciation Rights—8,271 SARs; expire 3 months after 12/09	
 	

03/01/06	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

Unvested Stock Appreciation Rights—16,542 unvested SARs vesting through 12/09, then 3 months to exercise	
 	

03/01/06	
 	

8,271	
 	

3/2/08	
 	

8,271	
 	

3/2/09	
 	

 	
 	

 	
 	

 	
 	

 
	

Unvested Stock Appreciation Right Grant—51,050 unvested SARs vesting through 2/11; expire 2/12]	
 	

02/15/07	
 	

12,762	
 	

3/2/08	
 	

12,762	
 	

2/15/09	
 	

12,763	
 	

2/15/10	
 	

12,763	
 	

2/15/11
	

Deferred Stock Award Grant—11,576 shares vesting 2/08—cashed out ($900,000)	
 	

03/01/06	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

	

2005 SSgA Performance Equity Plan Award—44,405 units canceled	
 	

03/02/05	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

2006 SSgA Performance Equity Plan Award Grant—31,934 units granted; 21,289 units (2/3 of original grant) paid in accordance to plan	
 	

03/01/06	
 	

 	
 	

 	
 	

21,289	
 	

02/15/09	
 	

 	
 	

 	
 	

 	
 	

 
	

2007 SSgA Performance Equity Plan Award—56,666 units cashed out at grant value ($4.0 million)	
 	

02/14/07	
 	

—	
 	

—	
 	

—	
 	

—	
 	

 	
 	

 	
 	

—	
 	

—
	

2006 Performance Award Grant—Cycle O—9,793 units paid as scheduled in 2/08	
 	

03/01/06	
 	

9,793	
 	

12/31/07	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

2007 Performance Award Grant—Cycle P—15,111 units granted; 7,556 units (1/2 of original grant) cashed out ($600,000)	
 	

02/14/07	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

2006 Vice Chairman Award Grant—29,443 units canceled	
 	

12/20/06	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

 

 
 

EXHIBIT B    
    

Accrued Vested Benefits under Pension Plans as of December 31, 2006

	Qualified Plan	 	$	146,718.72
	SERP	 	$	517,297.39
	ESRP	 	$	0
	Savings Plan	 	$	230,362.27
	MSSP	 	$	0

 

 
 

EXHIBIT C

Non-Disparagement

Mr. Joseph
C. Antonellis

Mr. Jeffrey N. Carp

Mr. Joseph W. Chow

Mr. Joseph L. Hooley

Mr. Ronald E. Logue

Mr. David C. O'Leary

Mr. James S. Phalen

Mr. Edward J. Resch

Mr. Stanley W. Shelton 

QuickLinks

EXHIBIT 10.16

SEPARATION AGREEMENT

EXHIBIT A

EXHIBIT B

EXHIBIT CFiled by Automated Filing Services Inc. (604) 609-0244 - Coloured (US) Inc. - Exhibit 10.1

EXHIBIT 10.1 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”), AND ARE PROPOSED TO BE ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. UPON ANY SALE, SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. 

REGULATION S SUBSCRIPTION AGREEMENT 

(FOR NON-U.S. SUBSCRIBERS) 

THIS AGREEMENT is made effective as of the date of
acceptance set forth on the execution page to this Agreement. 

BETWEEN: 

COLOURED (US) INC., a Nevada
corporation 

(hereinafter called the “Company”) 

OF THE FIRST PART 

AND: 

THE SUBSCRIBER LISTED ON THE
EXECUTION PAGE TO THIS AGREEMENT 

(hereinafter called the “Subscriber”)

OF THE SECOND PART 

NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

ARTICLE 1 
DEFINITIONS 

1.1           
Definitions. The following terms will have the following meanings for all
purposes of this Agreement:

(a)      
“Agreement” shall mean this Agreement, and all schedules and amendments to the
Agreement; 

(b)      
“Closing” shall mean the closing of the purchase and sale of the Units in
accordance with the terms and conditions of this Agreement; 

- 2 - 

(c)      
“Common Stock” means the Common Stock of the Company with a par value of $0.001
per share; 

(d)      
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as
amended; 

(e)      
“Subscriber” shall mean the Subscriber executing the signature page to this
Agreement; 

(f)      
“Offering” shall mean the offering of up to 8,000,000 Units by the
Company at the Subscription Price;

(g)      
“SEC” shall mean the United States Securities and Exchange Commission; (h)
“Securities” shall mean the Units, the Shares, the Warrants and the Warrant
Shares; (i) “Securities Act” shall mean the United States Securities Act of
1933, as amended; 

(j)      
"Shares" means those shares of Common Stock to be purchased by the Subscriber
and comprising a portion of the Units;

(k)      
“Subscription Price” means the subscription price of $0.025 per Unit payable by
the Subscriber to the Company in consideration for the purchase and sale of the
Units, in the aggregate amount of $200,000 and in accordance with Section 2.1 of
this Agreement; 

(l)      
“Warrant” means one share purchase warrant, in the form attached as Schedule B
to this Agreement, entitling the Subscriber to purchase one share of Common
Stock of the Company at a price of $0.025 per share for a two year term
following the purchase and sale of the Units; 

(m)      
"Warrants" means those Warrants to be purchased by the Subscriber and comprising
a portion of the Units;

(n)      
“Warrant Shares” means the shares of common stock issuable upon exercise of the
Warrants;

(o)      
“Unit” means a unit consisting of one (1) Share and one (1) whole Warrant; and

(p)      
“Units” means the aggregate of 8,000,000 Units to be purchased by the Subscriber
from the Company in accordance with the terms and conditions of this Agreement.

1.2            
  Schedules. The following schedules are attached to and form part of this
  Agreement: 

	 	Schedule A 	Definition of U.S. Person 
	 	Schedule B 	Form of Warrant 

1.3            
Currency. All dollar amounts referred to in this agreement are in United
States funds, unless expressly stated otherwise. 

ARTICLE 2 
PURCHASE AND SALE OF SHARES 

2.1            
Agreement to Subscribe. Subject to the terms and conditions of this
Agreement, the Subscriber hereby subscribes for and agrees to purchase from the
Company an aggregate of 8,000,000 

- 3 - 

Units at the Subscription Price. Upon execution of this
Agreement, the subscription by the Subscriber will be irrevocable. 

2.2            
Acceptance by Company. Upon execution of this Agreement by the Company,
the Company agrees to sell the Units to the Subscriber for the Subscription
Price. 

2.3            
Payment of Subscription Price. The Subscription Price is payable by the
Subscriber to the Company prior to or contemporaneously with the execution of
this Agreement by the Subscriber and will be advanced to the Company or its
solicitors. The Subscriber acknowledges that if the funds are advanced to the
Company’s solicitors, the solicitors shall release such funds to the Company on
confirmation by the Company that it will accept the subscription. 

2.4            
Loan Pending Closing. Pending acceptance by the Company of the
subscription for the Units, all funds paid by the Subscriber on account of the
Subscription Price shall be deposited by the Company and immediately available
to the Company for its corporate purposes. In the event the Closing is not
completed, the subscription funds will constitute a non-interest bearing demand
loan of the Subscriber to the Company. 

2.5            
Delivery of Certificates. The Subscriber hereby authorizes and directs
the Company to deliver the securities to be issued to such Subscriber pursuant
to this Agreement to the Subscriber’s address indicated on the signature page of
this Agreement. 

2.6            
No Minimum Subscription. The Subscriber acknowledges and agrees that the
subscription for the Shares and the Company’s acceptance of the subscription is
not subject to any minimum subscription for the Offering. 

2.7            
Compliance with Securities Laws. Any acceptance by the Company of the
Subscription is conditional upon compliance with all securities laws and other
applicable laws of the jurisdiction in which the Subscriber is resident. Each
Subscriber will deliver to the Company all other documentation, agreements,
representations and requisite government forms required by the lawyers for the
Company as required to comply with all securities laws and other applicable laws
of the jurisdiction of the Subscriber. 

ARTICLE 3 
AGREEMENTS, REPRESENTATIONS AND
WARRANTIES OF THE SUBSCRIBER 

3.1            
Exemption from Registration. The Subscriber acknowledges and agrees that
the Securities will be offered and sold to the Subscriber without such offers
and sales being registered under the Securities Act and will be issued to the
Subscriber in an offshore transaction outside of the United States in accordance
with a safe harbour from the registration requirements of the Securities Act
provided by Rule 903 of Regulation S of the Securities Act based on the
representations and warranties of the Subscriber in this Agreement. As such, the
Subscriber further acknowledges and agrees that all Securities will, upon
issuance, be “restricted securities” within the meaning of the Securities Act.

3.2            
Resales of Securities. The Subscriber acknowledges that that the
Securities may not be offered, resold, pledged or otherwise transferred except
through an exemption from registration under the Securities Act or pursuant to
an effective registration statement under the Securities Act and in accordance
with all applicable state securities laws and the laws of any other
jurisdiction. The Subscriber agrees to resell the Securities only in accordance
with the provisions of Regulation S of the Securities Act, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration pursuant to the Securities Act. The Subscriber agrees that the
Company will refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S of the Securities Act, pursuant
to registration under the Securities Act, pursuant to an available exemption
from 

- 4 - 

registration. The Subscriber agrees that the Company may
require the opinion of legal counsel reasonably acceptable to the Company in the
event of any offer, sale, pledge or transfer of any of the Securities by the
Subscriber pursuant to an exemption from registration under the Securities
Act.

3.3            
Registration Rights. The Company agrees to (i) file a registration
statement with the SEC under the Securities Act in order to register the resale
by the Subscriber of the Shares and the Warrant Shares within thirty (30) days
of the date of Closing, and (ii) use its best efforts to pursue the
effectiveness of the registration statement as early as possible. 

3.4            
Hedging Transactions. The Subscriber agrees not to engage in hedging
transactions with regard to the Securities unless in compliance with the
Securities Act. 

3.5            
Share Certificates. The Subscriber acknowledges and agrees that all
certificates representing the Shares and Warrant Shares will be endorsed with
the following legend, or such similar legend as deemed advisable by legal
counsel for the Company, to ensure compliance with Regulation S of the
Securities Act and to reflect the status of the Shares and Warrant Shares as
restricted securities: 

	 	
      “THE SECURITIES REPRESENTED BY THIS
      CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN
      EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED
      BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT
      BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE
      TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
      PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION
      UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
      REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE
      SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
      ACT.” 
	 

3.6            
Warrant Exercises. The Subscriber acknowledge and agree that the Warrants
may only be exercised (i) outside the United States in an offshore transaction
in accordance with Rule 903 of Regulation S, or (ii) within the United States
pursuant to exemption from the registration requirements of the Securities Act.
In order to establish the availability of Rule 903, the Subscriber acknowledges
and agrees that it will not be entitled to exercise the Warrants unless at the
time of such exercise the Subscriber is able to make the representations and
warranties with respect its purchase of the Warrant Shares set forth in the
exercise form attached to the certificate representing the Warrants. If the
Warrants are to be exercised pursuant to an exemption from the registration
requirements of the Securities Act, the Subscriber will be required to deliver a
legal opinion in form and substance satisfactory to the Company to the effect
that the Warrant Shares may be issued pursuant to an exemption from the
registration requirements of the Securities Act. 

3.7            
Warrant Certificates. The Subscriber acknowledges and agrees that
certificates representing the Warrants will be in the form attached hereto as
Schedule B. The Subscriber further acknowledges and agrees that all certificates
representing the Warrants will be endorsed with the following legend, or such
similar legend as deemed advisable by legal counsel for the Corporation, to
ensure compliance with Rule 903 of Regulation S of the Securities Act and to
reflect the status of the Warrants as restricted securities: 

	 	
      “THIS WARRANT AND THE SHARES TO BE ISSUED UPON ITS
      EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN
      EXEMPTION FROM THE REGISTRATION 
	 

- 5 - 

	 	
      REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S
      PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED
      FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
      WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
      REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY
      NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A
      PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE WARRANT AND
      THE UNDERLYING SHARES AND WARRANTS HAVE BEEN REGISTERED UNDER THE
      SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY
      SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS
      IS AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY
      REGULATION S UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS
      INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
      COMPLIANCE WITH THE ACT.” 
	 

3.8            
Representations and Warranties of the Subscriber. The Subscriber,
represents and warrants to the Company as follows, and acknowledges that the
Company is relying upon such covenants, representations and warranties in
connection with the sale of the Securities to the Subscriber: 

(a)      
The Subscriber is not a “U.S. Person” as defined by Regulation S of the
Securities Act, as set forth in Schedule A of this Agreement.

(b)      
The Subscriber is not acquiring the Securities for the account or benefit of a
U.S. Person. 

(c)      
The Subscriber was not in the United States at the time the offer to purchase
the Securities was received or at the time this Agreement was executed. 

(d)      
The Subscriber has such knowledge, sophistication and experience in business and
financial matters such that it is capable of evaluating the merits and risks of
the investment in the Securities. The Subscriber has evaluated the merits and
risks of an investment in the Securities. The Subscriber can bear the economic
risk of this investment, and is able to afford a complete loss of this
investment.

(e)      
The Subscriber acknowledges that the Company is in the early stages of
development of its business and the Company’s success is subject to a number of
significant risks, including the risk that the Company will not be able to
finance its plan of operations and that the Company’s business plan will not
succeed. The Subscriber acknowledges that any forward-looking information
provided by the Company to the Subscriber are subject to risks and uncertainties
and that the Company’s actual results may differ materially from the results
anticipated. 

(f)      
The Securities will be acquired by the Subscriber for investment for the
Subscriber's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Subscriber has no
present intention of selling, granting any participation in, or otherwise
distributing the same. The Subscriber does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. 

(g)      
The Subscriber has received or has had full opportunity to review the Company’s
filing with the SEC under the Exchange Act (the “Company’s SEC Filings”). The
Subscriber has had full opportunity to ask questions and receive answers from
representatives of the Company 

- 6 - 

regarding the Company’s SEC Filings,
the terms and conditions of the Offering and the business, properties, prospects
and financial condition of the Company, each as is necessary to evaluate the
merits and risks of investing in the Securities. The Subscriber believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities.

The Subscriber has had full opportunity
to discuss this information with the Subscriber’s legal and financial advisers
prior to execution of this Agreement. 

(h)      
The Subscriber represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. 

(i)      
The Subscriber has satisfied himself or herself as to the full observance of the
laws of his or her jurisdiction in connection with any invitation to subscribe
for the Securities or any use of this Agreement, including (i) the legal
requirements within his jurisdiction for the purchase of the Securities; (ii)
any foreign exchange restrictions applicable to such purchase; (iii) any
governmental or other consents that may need to be obtained; (iv) the income tax
and other tax consequences, if any, that may be relevant to an investment in the
Securities; and (v) any restrictions on transfer applicable to any disposition
of the Securities imposed by the jurisdiction in which the Subscriber is
resident. 

(j)      
The Subscriber has not purchased the Securities as a result of any form of
general solicitation or general advertising, including advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
media or broadcast over radio, television or other form of telecommunications,
or any seminar or meeting whose attendees have been invited by general
solicitation or general advertising. 

(k)      
This Agreement has been duly authorized, validly executed and delivered by the
Subscriber. 

ARTICLE 4 
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY 

4.1       Representations and
Warranties of the Company. The Company represents and warrants to the
Subscriber and acknowledges that the Subscriber is relying upon such
representations and warranties in connection with the execution, delivery and
performance of this Agreement: 

(a)      
The Company is a corporation duly incorporated and in good standing under the
laws of the State of Nevada, and has the requisite corporate power and authority
to conduct its business as it is currently being conducted, to enter into this
Agreement and to sell the Securities to the Subscriber. 

(b)      
The execution and delivery by the Company of this Agreement has been duly
authorized by all necessary action on the part of the Company, and no further
consent or action is required by the Company, its board of directors or its
stockholders.

(c)      
The issuance of the Securities has been duly authorized by all necessary
corporate action of the Company.

(d)      
The issuance of the Shares and the Warrants has been duly authorized and, when
issued upon payment thereof in accordance with this Agreement, will have been
validly issued, fully paid and non-assessable. The Warrant Shares have been
authorized and validly reserved for issuance, and when issued upon exercise of
the Warrant in accordance with the terms thereof (and 

- 7 - 

upon payment of the exercise price
therefor), will be validly issued, fully paid and non-assessable.

(e)      
The existing stockholders of the Company have no pre-emptive or similar rights
to purchase shares of Common Stock from the Company. 

(f)      
The issue and sale of the Securities by the Company does not and will not
conflict with, and does not and will not result in a breach of, any of the terms
of its Articles of Incorporation or Bylaws or any agreement or instrument to
which the Company is a party. 

ARTICLE 5 
MISCELLANEOUS PROVISIONS 

5.1       Effectiveness of
Representations; Survival. Each party is entitled to rely on the
representations, warranties and agreements of each of the other parties and all
such representation, warranties and agreement will be effective regardless of
any investigation that any party has undertaken or failed to undertake. The
representation, warranties and agreements will survive the purchase and sale of
the Securities. 

5.2       Further
Assurances. Each of the parties hereto will cooperate with the others and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence, and
confirm the intended purposes of this Agreement. 

5.3       Amendment. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties. 

5.4       Expenses. Each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel, and accountants.

5.5       Entire
Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
arrangements and understandings, both written and oral, expressed or implied,
with respect thereto. Any preceding correspondence or offers are expressly
superseded and terminated by this Agreement. 

5.6       Severability. If
one or more provisions of this Agreement is held to be unenforceable under
applicable law, such provision will be excluded from this Agreement and the
balance of this Agreement will be enforceable in accordance with its terms. 

Notices. All notices and other communications required
or permitted under to this Agreement must be in writing and will be deemed given
if sent by personal delivery, faxed with electronic confirmation of delivery,
internationally-recognized express courier or registered or certified mail
(return receipt requested), postage prepaid. All such notices and other
communications will be deemed to have been received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of a fax, when the party
sending such fax has received electronic confirmation of its delivery, (c) in
the case of delivery by internationally-recognized express courier, on the
business day following dispatch and (d) in the case of mailing, on the fifth
business day following mailing. 

5.7       Headings. The
headings contained in this Agreement are for convenience purposes only and will
not affect in any way the meaning or interpretation of this Agreement. 

- 8 - 

5.8         Benefits.
This Agreement is and will only be construed as for the benefit of or
enforceable by those persons party to this Agreement. 

5.9        
Assignment. This Agreement may not be assigned (except by operation of
law) by any party without the consent of the other parties. 

5.10       Governing Law.
This Agreement will be governed by and construed in accordance with the laws of
the State of Nevada applicable to contracts made and to be performed
therein.

5.11       Construction.
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
will be applied against any party.

5.12       Electronic
Means. Delivery of an executed copy of this Agreement by electronic
facsimile transmission or other means of electronic communication capable of
producing a printed copy will be deemed to be execution and delivery of this
Agreement as of the date of its acceptance by the Company. 

5.13       Schedules and
Exhibits. The schedules and exhibits are attached to this Agreement and
incorporated herein. 

5.14       Counterparts.
This Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement and will become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart. 

IN WITNESS WHEREOF, this Subscription Agreement is
executed as of the day and year first written above. 

	Number of Units Subscribed for: 	 	X 
	 	 	 
	Subscription Price (per Unit): 	 	 
                         
                 $0.025 per Unit 
	 	 	 
	Total Subscription Price (US$): 	 	X 
	 	 	 
	Signature of Subscriber or Authorized Signatory 	 	X 
	of Subscriber: 	 	  
	 	 	 
	Name of Authorized Signatory of 	 	  
	Subscriber (if applicable): 	 	  
	 	 	 
	Title of Authorized Signatory of 	 	  
	Subscriber (if applicable): 	 	  
	 	 	 
	Name of Subscriber: 	 	X 
	 	 	 
	Address of Subscriber: 	 	X 
	 	 	 
	 	 	 

ACCEPTED BY: 

COLOURED (US) INC. 

- 9 - 

	Signature of Authorized Signatory: 	 	 
	 	 	 
	Name of Authorized Signatory: 	 	 
	 	 	 
	Position of Authorized Signatory: 	 	 
	 	 	 
	Date of Acceptance: 	 	 

- 10 - 

SCHEDULE A 

DEFINITION OF U.S. PERSON 

A “U.S. Person” is defined by Regulation S of the Act to be any
person who is: 

	 	(a) 	
      any natural person resident in the United
  States;

	 	 	 	 
	 	(b) 	
      any partnership or corporation organized or incorporated
      under the laws of the United States;

	 	 	 	 
	 	(c) 	
      any estate of which any executor or administrator is a
      U.S. person;

	 	 	 	 
	 	(d) 	
      any trust of which any trustee is a U.S.
person;

	 	 	 	 
	 	(e) 	
      any agency or branch of a foreign entity located in the
      United States;

	 	 	 	 
	 	(f) 	
      any non-discretionary account or similar account (other
      than an estate or trust) held by a dealer or other fiduciary organized,
      incorporate, or (if an individual) resident in the United States;
    and

	 	 	 	 
	 	(g) 	
      any partnership or corporation if:

	 	 	 	 
	 		(i) 	
      organized or incorporated under the laws of any foreign
      jurisdiction; and

	 	 	 	 
	 		(ii) 	
      formed by a U.S. person principally for the purpose of
      investing in securities not registered under the Act, unless it is
      organized or incorporated, and owned, by accredited Subscribers [as
      defined in Section 230.501(a) of the Act] who are not natural persons,
      estates or trusts.

- 11 - 

SCHEDULE B 

FORM OF WARRANT 

- 12 - 

THIS WARRANT AND THE SHARES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY
NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED
STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON
UNLESS THE WARRANT AND THE UNDERLYING SHARES AND WARRANTS HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH
STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED
STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE SECURITIES
ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE ACT. 

COLOURED (US) INC. 
A NEVADA CORPORATION (the
“Company”) 

COMMON STOCK PURCHASE WARRANT CERTIFICATE 

[DATE OF ISSUANCE] 

Warrant Certificate No. S-<> 

	Name of Holder: 	«NAME» 
	Address of Holder: 	«ADDRESS» 
	Number of Shares: 	800,000 Shares 
	Exercise Price:
       	US$0.025 per Share for a
      period of two years from the
      date of issuance until the Expiry
      Date 
	Expiry Date: 	November <> , 2009

THIS WARRANT CERTIFIES THAT, for value received, the
above named holder or its registered assigns (the “Holder”), shall have the
right to purchase from the Company the above referenced number of fully paid and
non-assessable shares (the “Shares”) of the Company’s common stock (the “Common
Stock”) at an exercise price equal to the exercise price set forth above (the
"Exercise Price"), subject to further adjustment as set forth in this
Certificate, at any time from the date hereof until 5:00 P.M., Pacific time, on
the expiry date set forth above (the “Expiry Date”). This Warrant is issued
pursuant to the Subscription Agreement between the Company and Holder (the
“Subscription Agreement”) pursuant to which the Holder purchased units
consisting of one share of Common Stock and one warrant to purchase one
additional share of Common Stock. The exercise of this Warrant shall be subject
to the provisions, limitations and restrictions contained herein.

- 13 - 

1.            
Exercise. 

     
1.1       Procedure for Exercise of
Warrant. The Holder may exercise this Warrant by delivering the following to
the principal office of the Company in accordance with Section 5.1 hereof: 

	 	(a) 	
      a duly executed Notice of Exercise in substantially the
      form attached as Schedule A,

	 	 	 
	 	(b) 	
      either (i) a written certification that the Holder is not
      a U.S. person, as defined under Regulation S of the Securities Act, and
      that the Warrant is not being exercised on behalf of a U.S. person, which
      written certificate may be contained in the Notice of Exercise delivered
      pursuant to sub-paragraph (a) above; or (ii) a written opinion of counsel
      to the effect that the Warrant and the Shares have been registered under
      the Securities Act or are exempt from registration thereunder;

	 	 	 
	 	(c) 	
      payment of the Exercise Price then in effect for each of
      the Shares being purchased, as designated in the Notice of Exercise,
      and

	 	 	 
	 	(d) 	
      this Warrant.

Payment of the Exercise Price may be in cash, certified or
official bank check payable to the order of the Company, or wire transfer of
funds to the Company’s account (or any combination of any of the foregoing) in
the amount of the Exercise Price for each share being purchased.

     
1.2       Delivery of Certificate and New
Warrant. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the Holder, together with any other
securities or other property which the Holder is entitled to receive upon
exercise of this Warrant, shall be delivered to the Holder hereof, at the
Company’s expense, within a reasonable time, not exceeding fifteen (15) calendar
days, after the rights represented by this Warrant shall have been so exercised;
and, unless this Warrant has expired, a new Warrant representing the number of
Shares (except a remaining fractional share), if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder
hereof within such time. The person in whose name any certificate for shares of
Common Stock is issued upon exercise of this Warrant shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Exercise Price was received by
the Company, irrespective of the date of delivery of such certificate.

     
1.3       Restrictive Legend. This Warrant
and the Shares have not been registered under the Securities Act of 1933, as
amended, (the "Securities Act") and the Warrants have been and the Shares, upon
exercise of the Warrants, will be issued pursuant to exemptions from the
registration requirements of the Securities Act. Neither this Warrant nor any of
the Shares or any other security issued or issuable upon exercise of this
Warrant may be sold, transferred, pledged or hypothecated in the absence of an
effective registration statement under the Act relating to such security or an
exemption from the registration requirements of the Securities Act. Each
certificate for the Warrant, the Shares and any other security issued or
issuable upon exercise of this Warrant shall contain a legend on the face
thereof, in form and substance satisfactory to counsel for the Company, setting
forth the restrictions on transfer contained in this Section. The Holder
understands that this Warrant constitutes and the Shares upon issuance will
constitute “restricted securities” under the Securities Act. The holder
acknowledges and agrees that all certificates representing the Shares will be
endorsed with the following legend: 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR 

- 14 - 

RESOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.” 

     
1.4       Fractional Shares. No fractional
Shares shall be issuable upon exercise or conversion of the Warrant and the
number of Shares to be issued shall be rounded down to the nearest whole Share.
If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying to
Holder an amount computed by multiplying the fractional interest by the current
market price of a full Share.

2.            
Covenants of the Company. 

     
2.1       Authorized Shares. The
Company covenants and agrees that the Company will at all times have authorized
and reserved, free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise in full of the rights represented by
this Warrant.

     
2.2       Issuance of Shares. The
Company covenants and agrees that all shares of Common Stock that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable, and free from all transfer
taxes, liens and charges with respect to the issue thereof.

3.            
Transfer and Replacement.

     
(a)       Subject to compliance with any
applicable securities laws and the conditions set forth herein, this Warrant and
all rights hereunder are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Shares
without having a new Warrant issued.

     (b)      
The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants. 

     (c)      
If, at the time of the surrender of this Warrant in connection with any transfer
of this Warrant, the transfer of this Warrant shall not be registered pursuant
to an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer that (i) the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, and (ii) that the holder or transferee execute and
deliver to the Company such documentation as is necessary to establish that the
shares are being transferred pursuant to an exemption from the registration
requirements of the Securities Act and applicable state securities laws or in an
offshore transaction pursuant to and in accordance with Rule 904 of Regulation S
of the Securities Act. 

     
(d)       The Company covenants that upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating 

- 15 - 

to the Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate. 

4.            
Adjustments of Exercise Price and/or Number of
Shares.

     
4.1       Subdivision or Combination of
Shares. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of the following. In case the Company shall (i)
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Shares purchasable upon
exercise of this Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Shares or other securities of the Company
which are purchasable hereunder, the Holder shall thereafter be entitled to
purchase the number of Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Shares or other securities of the Company resulting
from such adjustment. An adjustment made pursuant to this paragraph shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event. 

     
4.2       Reorganization, Reclassification,
Consolidation, Merger or Sale. If any recapitalization,
reclassification or reorganization of the share capital of the Company, or any
consolidation or merger of the Company with another Company, or the sale of all
or substantially all of its shares and/or assets or other transaction
(including, without limitation, a sale of substantially all of its assets
followed by a liquidation) shall be effected in such a way that holders of
Common Stock shall be entitled to receive shares, securities or other assets or
property, then, as a condition of such recapitalizations, reclassifications,
reorganizations, consolidations, mergers or sales, lawful and adequate
provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares, securities or other
assets or property as may be issued or payable with respect to or in exchange
for the number of outstanding Common Stock which such Holder would have been
entitled to receive had such Holder exercised this Warrant immediately prior to
the consummation of such recapitalizations, reclassifications, reorganizations,
consolidations, mergers or sales. The Company or its successor shall promptly
issue to Holder a new Warrant for such new securities or other property. The new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to give effect to the adjustments provided for in this Section 4
including, without limitation, adjustments to the Exercise Price and to the
number of securities or property issuable upon exercise of the new Warrant. The
provisions of this Section 4.2 shall similarly apply to successive
recapitalizations, reclassifications, reorganizations, consolidations, mergers
or sales.

     
4.3       Notice of Adjustment.
Whenever the number of Shares or number or kind of securities or other property
purchasable upon the exercise of this Warrant or the Exercise Price is adjusted,
as herein provided, the Company shall give notice thereof to the Holder, which
notice shall state the number of Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Shares (and other securities or property) after such adjustment, setting forth a
brief 

- 16 - 

statement of the facts requiring such adjustment and setting
forth the computation by which such adjustment was made. 

5.            
Miscellaneous Provisions. 

     
5.1       Notices. Any notice or other
document required or permitted to be given or delivered to the Holder shall be
delivered or forwarded to the Holder at the address for Holder provide on the
first page of this Warrant or to such other address or number as shall have been
furnished to the Company in writing by the Holder. Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
or forwarded to the Company at the address or number as shall have been
furnished to Holder in writing by the Company. All notices, requests and
approvals required by this Warrant shall be in writing and shall be conclusively
deemed to be given (a) when hand-delivered to the other party, (b) when received
if sent by facsimile at the address and number set forth above; provided that
notices given by facsimile shall not be effective, unless either (i) a duplicate
copy of such facsimile notice is promptly given by depositing the same in the
mail, postage prepaid and addressed to the party as set forth below or (ii) the
receiving party delivers a written confirmation of receipt for such notice by
any other method permitted under this paragraph; and further provided that any
notice given by facsimile received after 5:00 p.m. (recipient’s time) or on a
non-business day shall be deemed received on the next business day; (c) five (5)
business days after deposit in the United States mail, certified, return receipt
requested, postage prepaid, and addressed to the party as set forth below; or
(d) the next business day after deposit with an international overnight delivery
service, postage prepaid, addressed to the party as set forth below with next
business day delivery guaranteed; provided that the sending party receives
confirmation of delivery from the delivery service provider.

     
5.2       Limitation of Liability. No
provision hereof, in the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
Exercise Price hereunder or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

     
5.3       No Rights as Stockholder. This
Warrant shall not entitle the Holder to any of the rights of a stockholder of
the Company except upon exercise in accordance with the terms hereof.

     
5.4       Governing Law. This Warrant shall
be governed by and construed in accordance with the laws of the State of Nevada
as applied to agreements among Nevada residents made and to be performed
entirely within the State of Nevada, without giving effect to the conflict of
law principles thereof.

     
5.5       Waiver, Amendments and Headings.
This Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by both parties (either
generally or in a particular instance and either retroactively or
prospectively). The headings in this Warrant are for purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.

- 17 - 

IN WITNESS WHEREOF, the Company has caused this Warrant
to be signed by its duly authorized officer effective as of the _____ day
of  _____________ , 200___.

	                           	COLOURED (US)
      INC. 
	 	 
	                                                                                                                       
    	Per: 
	 	 
	Signature of Authorized Signatory: 	 
	 	 
	Name of Authorized Signatory: 	 
	 	 
	Position of Authorized Signatory: 	 

SCHEDULE A 

FORM OF NOTICE OF EXERCISE

	TO: 	COLOURED (US) INC. 

The undersigned hereby exercises the right to purchase the
number of shares of common stock of Coloured (US) Inc. (the "Company") set forth
below (the "Shares") pursuant to the Warrant to Purchase Common Stock issued by
the Company and dated [DATE OF ISSUANCE]. In accordance with the
provisions of the Warrant, the undersigned hereby tenders the following
concurrently with the delivery of this Notice of Exercise (i) payment of the
Exercise Price payable by the undersigned for the Shares (the “Purchase Price”)
in effect for each of the Shares being purchased, and (ii) the original Warrant.

	Number of Shares Purchased: 	 
                         
                         
                   Shares 
	 	 
	Aggregate Purchase Price: 	US$ 

The undersigned represents and warrants to and agrees with the
Company that: 

	1. 	
      It has such knowledge and experience in financial and
      business matters as to be capable of evaluating the merits and risks of an
      investment in the Shares and it is able to bear the economic risk of loss
      of its entire investment.

	 	 
	2. 	
      The Company has provided to it the opportunity to ask
      questions and receive answers concerning the terms and conditions of the
      offering and it has had access to such information concerning the Company
      as it has considered necessary or appropriate in connection with its
      investment decision to acquire the Shares.

	 	 
	3. 	
      It is acquiring the Shares for its own account, for
      investment purposes only and not with a view to any resale, distribution
      or other disposition of the Shares in violation of the United States
      securities laws.

	 	 
	4. 	
      It understands the Shares have not been and will not be
      registered under the United States Securities Act of 1933, as amended (the
      "1933 Act") or the securities laws of any state of the United States and
      that the sale contemplated hereby is being made in reliance on a
      safe-harbour from such registration requirements.

	 	 
	5. 	
      The undersigned is not a “U.S. Person” as defined by
      Regulation S of the Securities Act and is not acquiring the Shares for the
      account or benefit of a U.S. Person.

	 	 	 
	 		A “U.S. Person” is defined by Regulation S of the Act to
      be any person who is:
	 	 	 
	 		
      (h) 
	any natural person resident in the United
      States;
	 	 	 
	 		
      (i) 
	 any partnership or corporation organized or
      incorporated under the laws of the United States;
	 	 	 
	 		
      (j) 
	 any estate of which any executor or
      administrator is a U.S. person;

- 2 - 

	 	(k) 	
      any trust of which any trustee is a U.S.
      person;

	 	 	 	 
	 	(l) 	
      any agency or branch of a foreign entity located in
      the United States;

	 	 	 	 
	 	(m) 	
      any non-discretionary account or similar account
      (other than an estate or trust) held by a dealer or other fiduciary
      organized, incorporate, or (if an individual) resident in the United
      States; and

	 	 	 	 
	 	(n) 	
      any partnership or corporation if:

	 	 	 	 
	 		(i) 	
      organized or incorporated under the laws of any
      foreign jurisdiction; and

	 	 	 	 
	 		(ii) 	
      formed by a U.S. person principally for the purpose of
      investing in securities not registered under the Act, unless it is
      organized or incorporated, and owned, by accredited Subscribers [as
      defined in Section 230.501(a) of the Act] who are not natural persons,
      estates or trusts.

	6. 	
      The undersigned was not in the United States at the time
      the offer to purchase the Shares was received and the Subscriber was not
      in the United States at the time these Warrants were exercised.

	 	 
	7. 	
      The undersigned acknowledges that the Shares are
      “restricted securities” within the meaning of the Securities Act and will
      be issued to the Subscriber in accordance with Regulation S of the
      Securities Act without registration under the Securities Act.

	 	 
	8. 	
      The undersigned agrees to resell the Shares only in
      accordance with the provisions of Regulation S of the Securities Act,
      pursuant to registration under the Securities Act, or pursuant to an
      available exemption from registration pursuant to the Securities
    Act.

	 	 
	9. 	
      The undersigned agrees not to engage in hedging
      transactions with regard to the Shares unless in compliance with the
      Securities Act.

	 	 
	10. 	
      The Subscriber acknowledges and agrees that all
      certificates representing the Shares will be endorsed with the following
      legend in accordance with Regulation S of the Securities
  Act:

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.” 

- 3 - 

	11. 	
      The Subscriber and the Company agree that the Company
      will refuse to register any transfer of the Shares not made in accordance
      with the provisions of Regulation S of the Securities Act, pursuant to
      registration under the Securities Act, pursuant to an available exemption
      from registration, or pursuant to this
Agreement.

	Date of Execution: 	 
	 	 
	Signature of Purchaser or Authorized Signatory 	 
	of Purchaser (if the Purchaser is not an 	 
	individual): 	 
	 	 
	Name of Authorized Signatory of 	 
	Purchaser(if the Purchaser is not an individual): 	 
	 	 
	Title of Authorized Signatory of 	 
	Purchaser(if the Purchaser is not an individual): 	 
	 	 
	Name of Purchaser: 	 
	 	 
	Address of Purchaser:

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