Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Farallon Resources Ltd. - Exhibit4.04

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES SHALL NOT TRADE THESE SECURITIES BEFORE APRIL 18, 2005. 

"THIS WARRANT AND THE SECURITIES DELIVERABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF
A "U.S. PERSON" OR A PERSON IN THE UNITED STATES UNLESS THE WARRANT AND THE
UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. 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 U.S. SECURITIES ACT." 

Issue Date: December 17, 2004 

COMMON SHARE PURCHASE WARRANT 
to
acquire Common Shares of 
FARALLON RESOURCES
LTD.
(incorporated under laws of the Province of British Columbia)

Suite 1020 – 800 West Pender Street 
Vancouver, BC V6C 2V6 
Telephone
(604) 684-6365 Fax: (604) 684-8092 

THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES
AT 5:00 P.M. (VANCOUVER TIME) ON DECEMBER 17, 2006 (THE “EXPIRY DATE”). 

	Warrant Certificate 	CERTIFICATE FOR 
	No. «Warrant_No»   	«Number_of_Shares__Warrants_Certificates» Warrants, each
      Warrant entitling the holder thereof to acquire one Common Share  of
      FARALLON RESOURCES LTD. 

THIS IS TO CERTIFY THAT, 

«Registration» 

(the “Holder”) is the registered holder of the number of common
share purchase warrants (the “Warrants”) of FARALLON RESOURCES LTD. (the
“Company”) set forth above, and is entitled, on exercise of these Warrants upon
and subject to the terms and conditions set forth herein, to purchase at any
time prior to 5:00 p.m. (Vancouver time) on December 17, 2005 at a price of
CDN$0.80 per share, and thereafter at any time prior to 5:00 p.m.
(Vancouver time) on the Expiry Date at a price of CDN$1.02 upon the terms
and conditions hereinafter set forth, the number of Common Shares set forth
above. 

          The
rights represented by this Warrant may be exercised by the Holder hereof, in
whole or in part and from time to time (but not for any fractional Common Share)
by surrendering this Warrant and the attached Warrant Exercise Form, duly
executed, to the offices of Farallon Resources Ltd., Suite 1020 – 800 West
Pender Street, Vancouver, B.C., V6C 2V6, together with 

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cash or a bank draft, certified cheque or money order payable
to “FARALLON RESOURCES LTD.” 

          Notwithstanding
the foregoing, the Warrants may not be transferred into or within the United
States or to or for the account or benefit of any person within the United
States or to any “U.S. Person” within the meaning of Regulation S under the U.S.
Securities Act without evidence satisfactory to the Company of compliance with
U.S. securities laws. 

          The
Company covenants and agrees that all Common Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free of all liens, charges and encumbrances. The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved, a sufficient number of Common Shares to
provide for the exercise of the rights represented by this Warrant. 

THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO IN
THIS WARRANT: 

1.      As used herein, the term
“Common Shares” shall mean and include the Company’s presently authorized common
shares and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the Holders thereof to participate in dividends and in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Company. 

2.      In case the Company shall at
any time subdivide its outstanding Common Shares into a greater number of
shares, the Warrant exercise price shall be proportionately decreased and the
number of subdivided Common Shares entitled to be purchased proportionately
increased, and conversely, in case the outstanding Common Shares of the Company
shall be consolidated into a smaller number of shares, the Warrant purchase
price shall be proportionately increased and the number of combined Common
Shares entitled to be purchased hereunder shall be adjusted accordingly. 

3.      If any capital
reorganization, reclassification or consolidation of the capital stock of the
Company, or the merger or amalgamation of the Company with another corporation
shall be effected, then as a condition of such reorganization, reclassification,
consolidation, merger or amalgamation, adequate provision shall be made whereby
the Holder hereof shall have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of the
Common Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, or other
securities as may be issued with respect to or in exchange for such number of
outstanding Common Shares equal to the number of Common Shares purchasable and
receivable upon the exercise of this Warrant had such reorganization,
reclassification, consolidation, merger or amalgamation taken place immediately
after such exercise. The Company shall not effect any merger or amalgamation
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such merger or
amalgamation shall assume by written instrument executed and mailed or delivered
to the Holder of this Warrant the 

- 3 - 

obligation to deliver to such Holder such Common Shares of
stock or securities in accordance with the foregoing provisions. 

4.      In case at any time: 

(a)      the
Company shall pay any dividend payable in stock upon its common shares or make
any distribution to the Holders of its Common Shares; 

(b)      the
Company shall offer for subscription pro rata to the Holders of its Common
Shares any additional shares of stock of any class or other rights; 

(c)      there
shall be any capital reorganization, or reclassification of the capital stock of
the Company, or consolidation or merger or amalgamation of the Company with, or
sale of all or substantially all of its assets to, another corporation; or 

(d)      there
shall be a voluntary or involuntary dissolution, liquidation or winding-up of
the Company; 

then, and in any one or more of such
cases, the Company shall give to the Holder of this Warrant, at least twenty
days’ prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or subscription
rights, or for determining rights to vote with respect to such reorganization,
reclassification, consolidation, merger or amalgamation, dissolution,
liquidation or winding-up and in the case of any such reorganization,
reclassification, consolidation, merger or amalgamation, dissolution,
liquidation or winding-up, at least twenty days’ prior written notice of the
date when the same shall take place. Such notice in accordance with the
foregoing clause, shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the Holders of Common
Shares shall be entitled thereto, and such notice in accordance with the
foregoing shall also specify the date on which the Holders of Common Shares
shall be entitled thereto, and such notice in accordance with the foregoing
shall also specify the date on which the Holders of Common Shares shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger or
amalgamation, dissolution, liquidation or winding-up as the case may be. Each
such written notice shall be given by first class mail, registered postage
prepaid, addressed to the Holder of this Warrant at the address of such Holder,
as shown on the books of the Company. 

5.      This Warrant shall not
entitle the Holder hereof to any rights as a shareholder of the Company,
including without limitation, voting rights. 

6.      This Warrant is transferable
with consent of the Company, which may require as a condition for it to consent
to any transfer that the transferee and transferor provide a legal opinion(s) as
to the compliance with applicable laws of any proposed transfer of rights under
this Warrant.

7.      This Warrant is exchangeable,
upon the surrender hereof by the Holder hereof at the offices of the Company,
for new Warrants of like tenor representing in aggregate the right to 

- 4 - 

subscribe for and purchase the number of Common Shares which
may be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of Common Shares
as shall be designated by such Holder hereof at the time of such surrender. 

8.      No transfer of this
Warrant shall be valid unless such transfer is made by the holder of the Warrant
or its executors, administrators or other legal representatives or its attorney
duly appointed by an instrument in writing in accordance with all such
reasonable requirements as the Company may prescribe in order to establish
compliance with all applicable securities legislation and stock exchange
requirements, which may include the delivery of a legal opinion delivered by
legal counsel of recognized standing in form and substance satisfactory to the
Company to the effect that the transfer does not require registration under the
U.S. Securities Act or any applicable state securities laws.

9.      These Warrants and the
common shares issued upon exercise of these Warrants (the "Warrant Shares") are
"restricted securities", as defined in Rule 144 of the United States Securities
Act of 1933 (the "U.S. Securities Act"), and may only be transferred pursuant to
an effective registration statement under the U.S. Securities Act, pursuant to a
transaction outside of the United States in accordance with Rule 904 of
Regulation S of the U.S. Securities Act or pursuant to a transaction that is
exempt from the registration requirements of the U.S. Securities Act. 

10.     If the holder of this Warrant is a
resident of the United States, a U.S. Person, as defined in Regulation S of the
U.S. Securities Act, or is otherwise subject to the securities laws of the
United States, any certificates representing Warrant Shares will bear the
following legend: 

"THE SECURITIES REPRESENTED HEREBY
  HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
  AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES,
  AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD
  OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) OUTSIDE THE UNITED STATES
  IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT OR
  (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
  ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY
  APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
  REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
  LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE
  COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY
  TO THE COMPANY TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
  GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. PROVIDED
  THAT THE COMPANY IS A "FOREIGN ISSUER" WITH NO "SUBSTANTIAL U.S. MARKET INTEREST",
  EACH WITHIN THE MEANING OF REGULATION S, AT THE TIME OF SALE AND THESE SECURITIES
  ARE BEING SOLD IN COMPLIANCE WITH RULE 904 OF REGULATIONS S, A NEW CERTIFICATE
  BEARING NO LEGEND MAY BE OBTAINED FROM THE TRANSFER AGENT FOR THE COMPNAY UPON
  DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY
  TO THE TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT SUCH SALE IS BEING
  MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT."

provided, that if the Warrant Shares are being sold outside the
United States in compliance with the requirements of Rule 904 of Regulation S at
a time when the Company is a "foreign issuer" with no "substantial U.S. market
interest", each as defined in Regulation S of the U.S. Securities 

- 5 - 

Act at the time of sale, the legends set forth above may be
removed by providing a declaration to the registrar and transfer agent of the
Company, as set forth in Appendix A to the Warrant Exercise Form attached hereto
(or in such other form as the Company may prescribe from time to time); and
provided, further, that, if the Warrant Shares are being sold otherwise than in
accordance with Regulation S and other than to the Company, the legend may be
removed by delivery to the registrar and transfer agent and the Company of an
opinion of counsel, of recognized standing reasonably satisfactory to the
Company, that such legend is no longer required under applicable requirements of
the U.S. Securities Act or state securities laws. 

Certificates for the Common Shares subscribed for will be
mailed to the persons specified in the exercise form at their respective
addresses specified therein or, if so specified in the exercise form, delivered
to such persons at the office where this Warrant Certificate is surrendered. If
fewer Common Shares are purchased than the number that can be purchased pursuant
to this Warrant Certificate, the Holder hereof will be entitled to receive
without charge a new Warrant Certificate in respect of the balance of the Common
Shares not so purchased. 

          IN
WITNESS WHEREOF FARALLON RESOURCES LTD. has caused this Warrant Certificate to
be duly signed and it shall bear the reference date being the Issue Date set
forth on page 1, notwithstanding its later date of actual issue or reissue of a
certificate for a lesser number of Warrants. 

FARALLON RESOURCES LTD. 

  

	By:	 	 
	 	Authorized Signatory 	 

WARRANT EXERCISE FORM 

	To: 	FARALLON RESOURCES LTD. (also the “Company”)
  
	  	Suite 1020 – 800 West Pender Street 
	  	Vancouver, B.C. V6C 2V6 
	 	Telephone: (604) 684-6365 Fax:
      (604) 684-8092 

1.      The undersigned Holder of the
within Warrant Certificate hereby subscribes for ___________ common shares
(“Common Shares”) of FARALLON RESOURCES LTD. (or such number of Common Shares or
other securities or property to which such subscription entitles him in lieu
thereof or in addition thereto under the provisions of the Warrant Certificate)
at the price determined under, and on the terms specified in, the Warrant
Certificate and encloses herewith cash or a bank draft, certified cheque or
money order payable at par to or to the order of FARALLON RESOURCES LTD. in
payment therefor. 

2.      The undersigned certifies,
represents and warrants that [Initial, as appropriate]: 

	_____	 	(a) 	 The undersigned : 

	 	 	  	  	
	     	 	      	(i)     	 is not a U.S. person or a person within the
        United States (as such terms are defined in Regulation S under the Securities
        Act of 1933 (the "U.S. Securities Act"); 

	 	 	  	  	
	   	 	    	(ii)   	 is not exercising the Warrants on behalf
        of a U.S. person or any person with the United States; 

	 	 	  	  	
	   	 	    	(iii)   	 was not in the United States at the time
        any offer to exercise the Warrants was received or at the time that the
        Warrants were exercised; OR 

	 	 	  	  	
	_____ 	 	(b) 	 The undersigned: 

	 	 	  	  	
	 	 	  	  	
	       	 	        	(i)       	 purchased the units of which the Warrants
        comprised a part (the "Units") directly from the Corporation for its own
        account or the account of another U.S. Accredited Investor pursuant to
        a written subscription agreement for the purchase of the Units; 

	   	 	    	(ii)   	 is exercising the Warrants solely for its
        own account or the account of such other U.S. Accredited Investor; 

	     	 	      	(iii)    	 is a U.S. Accredited Investor, as defined
        in Rule 501(a) of Regulation D of the Securities Act of 1933, both on
        the date the Units were purchased from the Corporation and on the date
        of the exercise of the Warrants; and 

	       	 	        	(iv)       	 if the Warrants are being exercised on behalf
        of another person, represents, warrants and certifies such person was
        a U.S. Accredited Investor, both on the date the Units were purchased
        from the Corporation and on the date of the exercise of the Warrants;
        OR 

	 	 	  	  	
	_____	 	(c)         	 The undersigned is tendering
        with this exercise form a written opinion of counsel or other evidence
        satisfactory to them to the effect that the common shares to be delivered
        upon exercise of this Warrant have been registered under the U.S. Securities
        Act and the Securities laws of all applicable States of the United States
        or are exempt from registration thereunder; 

- 2 - 

The terms “U.S. Person” and “United States” are as defined in
Regulation S under the U.S. Securities Act. 

3.      The undersigned is aware that
any shares acquired by exercise of the Warrant before April 18, 2005 will bear
the following legends: 

“Unless permitted under securities
legislation, the holder of the securities shall not trade the securities before
April 18, 2005.” 

4.      If the undersigned has
indicated that the undersigned is a U.S. Accredited Investor by marking
alternative (b) above, the undersigned represents and warrants to the Company
that: 

	(a) 	
      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 Warrant Shares and it is able to bear the economic risk
      of loss of its entire investment. 

	 	
       

	(b) 	
      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 Warrant Shares. 

	 	
       

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

	 	
       

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

	 	
       

	(d) 	
      If the undersigned is an individual (that is, a natural
      person and not a corporation, partnership, trust or other entity), then it
      satisfies one or more of the categories indicated below (please place an
      "X" on the appropriate lines): 

	   	__________	 
     	
      A natural person whose individual net worth, or joint net
      worth with that person’s spouse, at the date of this Certification exceeds
      US $1,000,000; 

	       	__________	 
           	
      A natural person who had an individual income in excess
      of US $200,000 in each of the two most recent years or joint income with
      that person’s spouse in excess of US $300,000 in each of those years and
      has a reasonable expectation of reaching the same income level in the
      current year; 

	(e) 	
      If the undersigned is a corporation, partnership, trust
      or other entity), then it satisfies one or more of the categories
      indicated below (please place an "X" on the appropriate lines):
  

	       	__________	 
           	
      An organization described in Section 501(c)(3) of the
      United States Internal Revenue Code, a corporation, a Massachusetts or
      similar business trust or partnership, not formed for the specific purpose
      of acquiring the Securities, with total assets in excess of US $5,000,000;
      

	   	__________	 
     	
      A trust that (a) has total assets in excess of US
      $5,000,000, (b) was not formed for the specific purpose of acquiring the
      Warrant Shares and (c) is 

- 3 - 

	     		 
         	
      directed in its purchases of securities by a person who
      has such knowledge and experience in financial and business matters that
      he/she is capable of evaluating the merits and risks of an investment in
      the Warrant Shares; 

	     	__________	 
         	
      An investment company registered under the Investment
      Company Act of 1940 or a business development company as defined in
      Section 2(a)(48) of that Act; 

	     	__________	 
         	
      A Small Business Investment Company licensed by the U.S.
      Small Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958; 

	   	__________	 
     	
      A private business development company as defined in
      Section 202(a)(22) of the Investment Advisors Act of 1940; or 

	   	
      __________
	 
     	
      An entity in which all of the equity owners satisfy the
      requirements of one or more of the foregoing categories. 

	(f) 	
      It has not exercised the Warrants 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. 

	 			
	(g) 	
      If it decides to offer, sell or otherwise transfer any of
      the Warrant Shares, it will not offer, sell or otherwise transfer any of
      such Warrant Shares directly or indirectly, unless: 

	 			
		
      (i) 
	
      the sale is to the Company; 

	 			
		
      (ii) 
	
      the sale is made outside the United States in a
      transaction meeting the requirements of Rule 904 of Regulation S under the
      U.S. Securities Act and in compliance with applicable local laws and
      regulations; 

	 			
		
      (iii) 
	
      the sale is made pursuant to the exemption from the
      registration requirements under the U.S. Securities Act provided by Rule
      144 thereunder and in accordance with any applicable state securities or
      "blue sky" laws; or 

	 			
		
      (iv) 
	
      the Warrant Shares are sold in a transaction that does
      not require registration under the U.S. Securities Act or any applicable
      state laws and regulations governing the offer and sale of securities, and
      it has prior to such sale furnished to the Company an opinion of counsel
      reasonably satisfactory to the Company. 

	 			
	(h) 	
      It understands that the Warrant Shares are "restricted
      securities" under applicable federal securities laws and that the U.S.
      Securities Act and the rules of the SEC provide in substance that the
      undersigned may dispose of the Warrant Shares only pursuant to an
      effective registration statement under the U.S. Securities Act or an
      exemption therefrom, and the undersigned understands that the Company has
      no obligation to register any of the Warrant Shares or to take action so
      as to permit sales pursuant to the U.S. Securities Act (including Rule 144
      thereunder). 

	 			
	(i) 	
      The certificates representing the Warrant Shares (and any
      certificates issued in exchange or substitution for the Securities) will
      bear a legend, in the form required by the certificate representing the
      Warrants, stating that such securities have not been registered under the
      U.S. Securities Act or the securities laws of any state of the United
      States and may not be offered for sale or sold unless registered under the
      U.S. Securities Act and the securities laws of all applicable states of
      the United States or an exemption from such registration requirements is
      

- 4 - 

		
      available. Delivery of certificates bearing such a legend
      may not constitute "good delivery" in settlement of transactions on
      Canadian stock exchanges or over-the-counter markets. If the Company is a
      "foreign Company" with no "substantial U.S. market interest" (all within
      the meaning of Regulation S under the U.S. Securities Act) at the time of
      sale, a new certificate will be made available to the undersigned upon
      provision by the undersigned of a declaration in the form attached as
      Appendix "A". 

	 	
       

	(j) 	
      It understands and agrees that the financial statements
      of the Company have been prepared in accordance with Canadian generally
      accepted accounting principles, which differ in some respects from United
      States generally accepted accounting principles, and thus may not be
      comparable to financial statements of United States companies. 

	 	
       

	(k) 	
      It consents to the Issuer making a notation on its
      records or giving instructions to any transfer agent of the Issuer in
      order to implement the restrictions on transfer set forth and described in
      this Warrant Exercise Form. 

5.      The undersigned hereby
irrevocably directs that the said Common Shares be issued and delivered as
follows: 

	  	  	Number(s) of 
	Names(s) in Full 	Address(es) (Include Postal
      Code) 	Common Shares 
	 	 	 
	_______________________	____________________________________________	____________________________
	 	 	 
	_______________________	____________________________________________	____________________________

(Please print full name in which share certificates are to be
issued. If any shares are to be issued to a person or persons other than the
Warrantholder, the Warrantholder must pay to the Trustee all exigible transfer
taxes or other government charges.) 

DATED this _____ day of ____________________, _____. 

	(If Common Shares are being registered to other 	 	  
	than the registered warrantholder a signature 	 	  
	guarantee is required.) 	 	  
	 	 	 
	 	 	 
	Signature Guaranteed By: 	 	Signature of Subscriber* 
	 	 	 
	 	 	 
	  	 	Name of Subscriber 
	 	 	 
	 	 	 
	 	 	 
	  	 	  
	  	 	Address of Subscriber (Include Postal Code)
  

* This signature must correspond exactly with the name
appearing on the first page. 

	
      Please check box if the share certificates are to be
      delivered (at subscriber’s expense) failing which the certificates will be
      mailed. 
	

THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES
AT 5:00 P.M. (VANCOUVER TIME) ON DECEMBER 17, 2006 (THE “EXPIRY DATE”). 

APPENDIX A TO WARRANT EXERCISE FORM 

	TO:   	
      ________________________________________ as registrar and
      transfer Agent for the common shares of Farallon Resources Ltd. (the
      "Company"). 

The undersigned (A) acknowledges that the sale of the
____________________ represented by certificate number _______________, to which
this declaration relates, is being made in reliance on Rule 904 of Regulation S
under the United States Securities Act of 1933, as amended (the "U.S. Securities
Act"), and (B) certifies that (1) the undersigned is not an "affiliate" (as
defined in Rule 405 under the U.S. Securities Act) of the Company or a
"distributor", as defined in Regulation S, or an affiliate of a "distributor";
(2) the offer of such securities was not made to a person in the United States
and either (a) at the time the buy order was originated, the buyer was outside
the United States, or the seller and any person acting on its behalf reasonably
believe that the buyer was outside the United States, or (b) the transaction was
executed on or through the facilities of a designated offshore securities market
within the meaning of Rule 902(b) under the U.S. Securities Act, and neither the
seller nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States; (3) neither the seller nor any
person acting on its behalf engaged in any directed selling efforts in
connection with the offer and sale of such securities; (4) the sale is bona fide
and not for the purpose of "washing off" the resale restrictions imposed because
the securities are "restricted securities" (as such term is defined in Rule
144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to
replace the securities sold in reliance on Rule 904 of the U.S. Securities Act
with fungible unrestricted securities; and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or a scheme to evade the
registration provisions of the U.S. Securities Act. Terms used herein have the
meanings given to them by Regulation S under the U.S. Securities Act. 

	By: 	 	 	Dated: 	 
	 	Signature 	 	 	  
	 	  	 	 	  
	Name (please print) 	 	 	 	  

Affirmation by Seller’s Broker-Dealer 

We have read the foregoing representations of our customer,
_________________________ (the "Seller") dated _______________________, with
regard to the sale, for such Seller’s account, of the _________________
represented by certificate number ______________ of the Company described
therein, and we hereby affirm that, to the best of our knowledge and belief, the
facts set forth therein are full, true and correct.

	 	 	 
	 	Name of Firm 	 
	 	 	 
	By: 	 	 
	 	Authorized officer 	 
	 		 
	Date:EXHIBIT 10.1
                                                                    ------------

                            ASSET PURCHASE AGREEMENT
                            ------------------------

BETWEEN:  Western Power & Equipment Corp.,
          an Oregon corporation                   ("Western")

AND:      Mid-Mountain Machinery Inc.
          a Washington corporation                 ("Buyer")

DATE:     February 28, 2006

                                    RECITALS
                                    --------

A. Western is the owner and operator of construction equipment sales, service,
and leasing operations in Spokane and Clarkston, Washington (the "Retail
Operations"); and

B. Buyer desires to purchase from Western certain of the assets relating to the
Retail Operations, and Western is willing to sell such assets to Buyer all under
the terms and conditions below.

                                    AGREEMENT
                                    ---------

ARTICLE 1. DEFINITIONS

     SECTION 1.01 "Affiliate" shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with the Person specified.

     SECTION 1.02 "Knowledge" with respect to Western shall mean the best
knowledge of Dean McLain, President and Bob Harbin, Vice President of Sales.

     SECTION 1.03 "Lien" shall mean any mortgage, pledge, security interest,
lease, lien or other encumbrance of any kind, including without limitation any
conditional sale contract, title retention contract or similar arrangement.

<PAGE>

ARTICLE 2. PURCHASE AND SALE

     SECTION 2.01 PURCHASE AND SALE OF ASSETS. Buyer purchases from Western, and
Western sells to Buyer, all of the right, title and interest of Western in the
following assets and rights associated with the Retail Operations (the
"Purchased Assets"), which Purchased Assets are more particularly described
below:

          (a)  Equipment. All items of equipment and attachments set forth on
               EXHIBIT A ("Equipment").

          (b)  Parts. All parts set forth on EXHIBIT B ("Parts").

          (c)  Furniture & Fixtures. All furniture and fixtures currently
               utilized in the Retail Operations, including all parts, shelving,
               ,all file cabinets, all office desks and chairs, office dividers,
               fax machine, copier, and current phone system.

          (d)  Shop Tools. Shop equipment, service tools, parts and service
               manuals and literature set forth on EXHIBIT C ("Shop Tools").

          (e)  Vehicles. The vehicles specified on attached EXHIBIT D
               ("Vehicles").

          (f)  Office and Shop Supplies. All office and shop supplies EXCEPT
               items imprinted with Western's logo (such as letterhead, order
               forms, and similar items) or bulk oils, fluids, fuel, and similar
               items in the shop.

          (g)  Computer Equipment. The computer and related equipment specified
               on attached EXHIBIT E ("Computers").

     SECTION 2.02 EXCLUDED ASSETS. The assets of Western being sold,
transferred, assigned, and delivered to Buyer shall include only those Purchased
Assets described in Section 2.01. Such Purchased Assets shall not, however,
include any of the following assets or properties of Western:

          (a)  Cash and cash equivalents on hand or in banks as of the closing
               date.

          (b)  Prepaid taxes, insurance, and other expenses and credits, refunds
               and receivables of such items.

          (c)  Any other assets not specifically described in Section 2.01.

For purposes of this Agreement, all of the property, assets, and rights retained
by Western under this Section 2.02 are collectively referred to as the "Excluded
Assets."

<PAGE>

     SECTION 2.03 PURCHASE PRICE.

          (a)  The purchase price for the Purchased Assets ("Purchase Price") is
               as follows:

               (1)  Equipment. The purchase price for the Equipment, as set
                    forth on Exhibit A attached hereto, is a total of
                    $2,184,962.00; consisting of $1,251,932.00 for new Case
                    equipment; $227,673.00 for new non-Case equipment;
                    $630,044.00 for rental equipment; and $75,313.00 for used
                    equipment. The new Case equipment shall be dealer
                    transferred from Western to Buyer as of the date above.
                    Buyer shall pay cash for the all other equipment at closing.

               (2)  Parts. The purchase price for the Parts, as set forth on
                    Schedule B attached hereto, is $261,114.00; consisting of
                    $198,609.00 for Case parts and $62,505.00 for non-Case
                    parts. Terms for Case parts are dealer transfer as of the
                    date of closing set forth above. Terms for non-Case parts
                    are cash at closing.

               (3)  Furniture & Fixtures. The purchase price for the Furniture &
                    Fixtures, as set forth above, shall be $35,837.00. Terms are
                    cash at closing.

               (4)  Shop Tools. The purchase price for the Shop Tools shall be
                    $52,923.00. Terms are cash at closing.

               (5)  Vehicles. The purchase price for the Vehicles shall be
                    $221,696.00. Terms are cash at closing.

               (6)  Office and Shop Supplies. The purchase price for the Office
                    and Shop Supplies, as set forth above, shall be $3,000.00
                    payable in cash at closing.

               (7)  Computers. The purchase price for the Computers, as set
                    forth above, shall be $9,474.00 payable in cash at closing.

          (b)  The Purchase Price is payable in full in cash at closing and/or
               dealer transfer at closing as set forth above. In the event that
               Case Corp. does not authorize any dealer transfer set forth
               above, in whole or in part, Buyer shall remit such amount to
               Western in cash within 5 days of Western's request to Buyer.

     SECTION 2.04 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated in the manner set forth in Sections 2.03 and 2.05.

<PAGE>

     SECTION 2.05 GOODWILL. In addition to the above Purchase Price, Buyer shall
pay for all of Western's goodwill and going concern value for the
assets/operations which Buyer is purchasing. The Goodwill value for Spokane and
Clarkston is agreed to be $75,000 payable in cash at closing. However, Buyer is
not purchasing and will not obtain any right to use Western's tradenames or
trademarks.

ARTICLE 3. DELIVERIES

     SECTION 3.01 DELIVERIES BY WESTERN.  Western has delivered to Buyer the
following:

          (a) An executed and acknowledged bill of sale form and substance as
          necessary to transfer to Buyer all of Western's right, title, and
          interest in and to the Purchased Assets.

          (b) Duly executed and effective assignments of lease for both the
          Spokane, WA facility and the Clarkston, WA facility;

          (c) The other documents, instruments, and writings required to be
          delivered by Western pursuant to this Agreement or otherwise required
          in connection herewith.

     SECTION 3.02 DELIVERIES BY BUYER. Buyer has delivered to Western the
following:

          (a) The amount of the Purchase Price and any other amounts due under
          this Agreement.

          (b) The other documents, instruments and writings required to be
          delivered by Buyer pursuant to this Agreement or otherwise required in
          connection herewith.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF WESTERN.  Western represents and
warrants to Buyer as set forth below:

     SECTION 4.01 ORGANIZATION AND QUALIFICATION. Western is a corporation
validly existing and in good standing under the laws of the State of Oregon and
is duly qualified to conduct business in the State of Washington.

     SECTION 4.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Western has the
requisite corporate power to execute and deliver this Agreement and the related
agreements contemplated hereby to which it is a party and to consummate the
transactions contemplated thereby. This Agreement and the related agreements
contemplated hereby to which Western is a party have been duly executed and
delivered by Western and constitute legal, valid, and binding obligations of

<PAGE>

Western and are enforceable against Western in accordance with their terms
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors' rights
and remedies generally and to the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).

     SECTION 4.03 OWNERSHIP OF PURCHASED ASSETS AND REAL PROPERTY. Western has
title to the tangible personal property included in the Purchased Assets
sufficient for the conduct of the Retail Operations as currently conducted by
Western.

     SECTION 4.04 ACCURACY OF INFORMATION. To the Knowledge of Western, all
information contained in this Agreement and all exhibit to this Agreement,
including descriptions of the Purchased Assets, price information, and
information on the schedules to such exhibits and to the Agreement, is true and
correct.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER.  Buyer represents and
warrants to Western as set forth below.

     SECTION 5.01 ORGANIZATION AND QUALIFICATION. Buyer is a corporation validly
existing and in good standing under the laws of the State of Washington.

     SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has the requisite
corporate power to execute and deliver this Agreement and the related agreements
contemplated hereby to which it is a party and to consummate the transactions
contemplated thereby. This Agreement and the related agreements contemplated
hereby to which Buyer is a party have been duly executed and delivered by Buyer
and constitute legal, valid, and binding obligations of Buyer and are
enforceable against Buyer in accordance with their terms subject to the effect
of any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, or similar laws affecting creditors' rights and remedies generally
and to the effect of general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).

     SECTION 5.03 FINANCING. Buyer has sufficient funds or committed lines of
credit to consummate the transactions contemplated by this Agreement.

     SECTION 5.04 INSPECTION OF PURCHASED ASSETS. Buyer has inspected to its
complete satisfaction the physical condition of the Purchased Assets.

     SECTION 5.05 BANKRUPTCY. Buyer is not, and has not within the past six
years been, the subject of a bankruptcy or insolvency proceeding, nor is Buyer
subject to any Lien that might adversely affect Buyer's ability to perform its
obligations as contemplated by this Agreement.

     SECTION 5.06 TAXES AND FEES. Buyer shall be responsible for and pay all
taxes and fees applicable to this transaction including, but not limited to,
sales taxes, use taxes, transfer taxes/fees, and registration fees.

<PAGE>

     SECTION 5.07 EMPLOYER IDENTIFICATION NUMBER. Buyer's federal employer
identification number is _________________.

ARTICLE 6. ADDITIONAL COVENANTS OF THE PARTIES

     SECTION 6.01 FURTHER ASSURANCES. Each party will use reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper, or advisable to carry out all of its respective
obligations under this Agreement and to consummate and make effective the
purchase and sale of the Purchased Assets and the Real Property pursuant to this
Agreement. Each party shall, and shall cause its Affiliates to, execute,
acknowledge, and deliver all such further conveyances, notices, assumptions,
releases, and acquittances and such other instruments, and shall take such
further actions, as may be necessary or appropriate more fully to assure to
Buyer and their successors or permitted assigns, all of the properties, rights,
titles, interests, estates, remedies, powers, and privileges intended to be
conveyed to Buyer pursuant to this Agreement and more fully to assure to Western
and its Affiliates and their successors and assigns the assumption of the
liabilities and obligations intended to be assumed by Buyer pursuant to this
Agreement, respectively.

     SECTION 6.02 NONASSIGNABLE CONTRACTS. To the extent any lease, contract,
right, or commitment included in the Purchased Assets is not capable of being
assigned, transferred, subleased, or sublicensed without the consent or waiver
of the issuer thereof, the other party thereto, or any third party (including a
government or governmental unit), or if such assignment, transfer, sublease, or
sublicense or attempted assignment, transfer, sublease or sublicense would
constitute a breach thereof or a violation of any law, decree, order,
regulation, or other governmental edict, this Agreement shall not constitute an
assignment, transfer, sublease, or sublicense thereof, or an attempted
assignment, transfer, sublease or sublicense of any such lease, contract, right,
or commitment. Anything in this Agreement to the contrary notwithstanding,
Western is not obligated to transfer to Buyer any of its rights and obligations
in and to any such contract, lease, right, or commitment without first having
obtained all necessary consents and waivers.

     SECTION 6.03 PRESERVATION OF RECORDS. Except for tax records, Buyer shall
preserve and keep (or cause to be preserved and kept) the books and records
conveyed pursuant to this Agreement, and Western shall preserve and keep (or
cause to be preserved and kept) such books and records as it or any of its
Affiliates shall retain with respect to the Purchased Assets, for a period of
three years after the date of this Agreement, and Buyer and Western shall each
grant to the other reasonable access to such books and records retained by them
during such period. In the event either Buyer or Western wishes to destroy such
records after such period, it shall first give written notice to the other party
and the other party shall have the right at its option, upon prior written
notice given to the party providing the initial notice, to take possession of
said records as promptly as practicable, but in any event within 180 days after
the date of its notice requesting the same.

<PAGE>

     SECTION 6.04 RISK OF LOSS. Buyer assumes all risk of loss from all causes
with respect to the Purchased Assets from and after the date of this Agreement.

     SECTION 6.05 CERTAIN PERSONNEL MATTERS.

          (a) Compensation of and any bonuses for all employees hired by Buyer
          for all periods of employment subsequent to the date of this Agreement
          shall be borne and paid for by Buyer. All vacation, sick day, and
          holiday pay of all employees of the Retail Operations that have
          accrued or were earned prior to the date of this Agreement shall be
          the sole responsibility of Western and shall be paid in full prior to
          the date of this Agreement or accrued on the books of Western and
          remitted to the employee at the time of his or her vacation or
          holiday.

          (b) Western shall be solely liable and responsible for obligations
          under any and all deferred compensation, pension, profit sharing,
          retirement, group insurance, or other employee benefit or welfare
          plans, written or oral, relating to employees of the Retail
          Operations, whether or not constituting an "employee benefit plan"
          under the Employee Retirement Income Security Act of 1974, as amended,
          that have accrued through and including the date of this Agreement.
          Buyer shall be solely liable and responsible for such obligations from
          the date of this Agreement.

     SECTION 6.06 BUSINESS CUTOFF. Commencing as of the day following the date
of this Agreement (i) all sales of new, used, and allied machinery and
attachments, parts and service shall be deemed to have been conducted for the
account of Buyer and (ii) all obligations for the following shall be deemed to
have been for the account of Buyer: sales commissions, travel, and entertainment
expenses, purchases of parts, machinery, and attachments and shop and office
supplies, shipping costs and costs of outside labor and materials incurred in
connection with the Retail Operations.

     SECTION 6.07. CONSENT OF CASE CREDIT CORPORATION AND CASE CORPORATION.
Buyer acknowledges that Western's agreements with Case Credit Corporation and
Case Corporation ("Case") require that Western obtain the consent of Case to the
sale transaction described in this agreement, and that such consent is the
responsibility of Buyer.

ARTICLE 7. INDEMNIFICATION AND LIMITATIONS ON LIABILITY

     SECTION 7.01 DEFINITIONS. As used in this Article, the following terms
shall have the meanings set forth below:

          (a) Losses. The term "Loss" or "Losses" shall mean any and all direct
          or

<PAGE>

          indirect payments, assessments, liabilities, costs and expenses paid
          or incurred (whether or not known or asserted prior to the date
          hereof, fixed or unfixed, conditional or unconditional, choate or
          inchoate, liquidated or unliquidated, secured or unsecured, accrued,
          absolute, contingent or otherwise), including without limitation
          penalties, interest on any amount payable to an unaffiliated party as
          a result of the foregoing and, subject to Section 7.05 hereof, any
          legal or other expenses reasonably incurred in connection with
          investigating or defending any Third-Party Claims, whether or not
          resulting in any liability, and all amounts paid in respect of claims
          or actions in accordance with Section 7.05 hereof; provided, however,
          that Losses shall not include any loss of profit or anticipated profit
          and shall be net of any insurance proceeds received by an Indemnitee
          from a nonaffiliated insurance company on account of such Losses
          (after deducting any direct costs incurred in obtaining such
          proceeds); provided, further, however, that nothing in this Article
          shall require an Indemnitee to proceed against its insurance carrier.

          (b) Third-Party Claims. The term "Third-Party Claims" shall mean any
          claims, actions or rights asserted against an Indemnitee by a party
          that is not the Indemnitor and is not an Affiliate of the Indemnitee,
          including without limitation, claims by governmental authorities.

          (c) Indemnitee. The term "Indemnitee" shall mean any Person that may
          be entitled to seek indemnification pursuant to the provisions of
          Section 7.02 or Section 7.03 hereof.

          (d) Indemnitor. The term "Indemnitor" shall mean any Person that may
          be obligated to provide indemnification pursuant to Section 7.02 or
          Section 7.03 hereof.

          (e) Specified Officer. With respect to any particular matter, the term
          "Specified Officer," as applied to any corporation, shall mean the
          chairman, president, general counsel, any vice president, or secretary
          of such corporation, or the manager of any plant or other facility of
          such corporation, or any other employee or agent of such corporation
          (who may report, directly or indirectly, to such person) having
          responsibility for an operational or staff function who in the normal
          course of such officer's, manager's or other person's responsibility
          would reasonably be expected to have knowledge of such matter.

          (f) Notice Period--Third-Party Claims. The term "Notice Period," as
          applied to any Third-Party Claim for which an Indemnitee seeks to be
          indemnified pursuant to this Article, shall mean the period ending the
          earlier of the following:

               (1) Three months after the time at which any Specified Officer of
               the Indemnitee (or the Indemnitee, if the Indemnitee is an
               individual) has received actual notice of such Third-Party Claim.

<PAGE>

               (2) With respect to any Third-Party Claim that has become the
               subject of proceedings before any court or tribunal, such time as
               would allow the Indemnitor sufficient time to contest, on the
               assumption that there is an arguable defense to such Third-Party
               Claim, such proceeding prior to any judgment or decision thereon.

               (3) With respect to any Third-Party Claim that the Indemnitee
               proposes to pay or settle, such time as would provide the
               Indemnitor sufficient time prior to such payment or settlement to
               determine whether to contest such claim and assume the defense
               pursuant to Section 7.05.

               (4) The time period under which a Claim Notice must be given as
               set forth in Section 7.06.

          (g) Claim Notice. The term "Claim Notice" shall have the meaning set
          forth in Section 7.04.

     SECTION 7.02 INDEMNITY BY WESTERN. Subject to Section 7.09, Western shall,
to the fullest extent permitted by law, defend and hold harmless Buyer and their
Affiliates, including the directors, officers, employees, agents and
representatives of each of them (each of whom may be an Indemnitee pursuant to
this section), from and against the following:

          (a) Breach. All Losses arising from the breach by Western in any
          material respect of any of its covenants or representations set forth
          in this Agreement.

          (b) Liabilities. Other than Losses pertaining to Environmental Loss
          (specifically sections 4.08, 6.04 and 7.09[a]) all Losses relating to
          the ownership or operation of the Retail Operations prior to the date
          of this Agreement.

     SECTION 7.03 INDEMNITY BY BUYER. Buyer shall, to the fullest extent
permitted by law, defend and hold harmless Western and its Affiliates, including
the current and former directors, officers, employees, agents, and
representatives of each of them (each of whom may be an Indemnitee pursuant to
this section), from and against the following:

          (a) Liabilities. All Losses (other than Losses for which Western is
          obligated to indemnify Buyer pursuant to Section 7.02) relating to or
          arising from the ownership, operation, occupancy, construction,
          condition (including without limitation environmental conditions) or
          use of the Purchased Assets or the Real Property or operation of a
          dealership, to the extent such Losses relate to, arise from or are
          associated with any period after the date of this Agreement and
          whether arising from the negligence or gross negligence of Western or
          any of its Affiliates or otherwise.

<PAGE>

          (b) Breach. All Losses arising from the breach by Buyer in any
          material respect of any of their covenants or representations set
          forth in this Agreement.

     SECTION 7.04 NOTIFICATION OF THIRD-PARTY CLAIMS. In no case shall any
Indemnitor under this Agreement be liable with respect to any Third-Party Claim
against any Indemnitee unless the Indemnitee shall have delivered to the
Indemnitor within the Notice Period a notice ("Claim Notice") describing in
reasonable detail the facts giving rise to such Third-Party Claim and stating
that the Indemnitee intends to seek indemnification for such Third-Party Claim
from the Indemnitor pursuant to this Article.

     SECTION 7.05 DEFENSE OF CLAIMS. Upon receipt of a Claim Notice from an
Indemnitee with respect to any Third-Party Claim, the Indemnitor may assume the
defense thereof with counsel reasonably satisfactory to such Indemnitee and the
Indemnitee shall cooperate in all reasonable respects in such defense. The
Indemnitee shall have the right to employ separate counsel in any action or
claim and to participate in the defense thereof, provided that the fees and
expenses of counsel employed by the Indemnitee shall be at the expense of the
Indemnitor only if such counsel is retained pursuant to the second succeeding
sentence or if the employment of such counsel has been specifically authorized
by the Indemnitor. The Indemnitor may conduct such defense in the name of or on
behalf of the Indemnitee or Indemnitor and shall have full authority and control
with respect thereto, including the settlement thereof. If the Indemnitor does
not notify the Indemnitee within 60 days after receipt of the Claim Notice that
it elects to undertake the defense thereof, the Indemnitee shall have the right
to defend at the expense of the Indemnitor the claim with counsel of its
choosing, subject to the right of the Indemnitor to assume the defense of any
claim at any time prior to settlement or final determination thereof. In such
event, the Indemnitee shall send a written notice to the Indemnitor of any
proposed settlement of any claim, which settlement the Indemnitor may reject, in
its reasonable judgment, within 30 days after receipt of such notice. Failure to
reject such settlement within such 30-day period shall be deemed an acceptance
of such settlement. In the event the Indemnitor rejects such settlement, the
Indemnitee shall have the right to settle the claim over the objection of the
Indemnitor, unless the Indemnitor assumes the defense from the Indemnitee upon
rejecting the settlement.

     SECTION 7.06 NOTICE OF OTHER CLAIMS. In the event any Indemnitee should
have a claim against any Indemnitor under or in connection with this Agreement
that does not involve a Third-Party Claim, the Indemnitee shall notify the
Indemnitor of such claim, specifying the nature of and specific basis for such
claim and the amount of such claim, with reasonable promptness, but in no event
later than when notice thereof is required to be made pursuant to this Article.
The Indemnitor shall remit payment for the amount of such claim upon receipt of
an invoice therefor, or in the event of a dispute, the Indemnitee and the
Indemnitor shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations, such dispute will be resolved
by litigation in an appropriate court of competent jurisdiction.

<PAGE>

     SECTION 7.07 ACCESS AND COOPERATION. Western and Buyer shall each cooperate
fully with the other as to all claims made under this Agreement, shall make
available to the other as reasonably requested all information, records and
documents relating to all such claims and shall preserve all such information,
records and documents until the termination of any such claim. Western and Buyer
also shall each make available to the other, as reasonably requested and subject
to availability, its personnel (including technical and scientific), agents and
other representatives who are responsible for preparing or maintaining
information, records or other documents, or who may have particular knowledge
with respect to any such claim.

     SECTION 7.08 NO INSURANCE. The indemnifications provided for in this
Article shall not be construed as a form of insurance and shall be binding upon
and inure to the benefit of Western and Buyer and their respective Affiliates,
successors and permitted assigns. Western and Buyer hereby waive for themselves,
their Affiliates, successors and permitted assigns, including without limitation
any insurers, any rights to subrogation for Losses arising from claims for which
each of them is respectively liable or against which each respectively
indemnifies the other, and, if necessary, Western and Buyer shall obtain waiver
of such subrogation from their respective insurers.

     SECTION 7.09 LIMITATIONS ON LIABILITIES.

          (a) Limitation on Liability.

               (1) Western's obligations for any claim relating to any
               Environmental Law, Hazardous Materials or other environmental
               matter shall arise only under Section 7.02(b) for breaches of the
               representations and warranties contained in Section 4.08.

               (2) Western shall have no liability for any Indemnifiable Loss,
               and Buyer shall have no liability for any claim for
               indemnification under Section 7.03, unless a Claim Notice or
               other notice has been delivered to the other as required by
               Section 7.04 or Section 7.06. In addition, and anything herein to
               the contrary notwithstanding, Western shall have no liability for
               any Indemnifiable Loss, and Buyer shall have no liability for any
               claim for indemnification under Section 7.03, for any breaches of
               covenants hereunder, unless a Claim Notice or other notice has
               been delivered to the other within one year after performance of
               the covenant giving rise to such Indemnifiable Loss or claim for
               indemnification, as the case may be, is required under this
               Agreement. In addition, and anything herein to the contrary
               notwithstanding, Western shall have no liability for any
               Indemnifiable Loss for any breaches of representations hereunder
               unless a Claim Notice or other notice has been delivered to it
               within the period that the representation giving rise to such
               Indemnifiable Loss survives as set forth in Article 8.

<PAGE>

               (b) No Incidental or Consequential Damages. Neither Buyer nor
               Western shall be entitled to recover from the other for any
               Losses any amount in excess of the actual damages suffered by
               such party. Buyer and Western each waive any right to recover
               punitive, special, exemplary, incidental and consequential
               damages.

               (c) Maximum Liability. Neither Western nor any of its Affiliates
               shall be liable for aggregate Losses (i) in excess of the
               Purchase Price, or (ii) for any Losses pertaining to the Real
               Property in excess of the purchase price thereof.

               (d) Exclusive Remedy. Western and Buyer each hereby acknowledges
               and agrees that its sole and exclusive remedy with respect to any
               and all claims relating to the representations, warranties,
               covenants and agreements contained in this Agreement or other
               claims pursuant to or in connection with this Agreement shall be
               pursuant to the indemnification provisions set forth in this
               Article.

               (e) No Rescission. Except as provided in Section 6.08, no breach
               of any representation, warranty, covenant or agreement contained
               herein shall give rise to any right on the part of Buyer or
               Western, as the case may be, after the consummation of the
               purchase and sale contemplated hereby, to rescind this Agreement
               or any of the transactions contemplated hereby.

               (f) Mitigation. Buyer and Western shall take all reasonable steps
               to mitigate all Losses upon and after becoming aware of any event
               that could reasonably be expected to give rise to any Losses that
               are indemnifiable hereunder.

ARTICLE 8. SURVIVAL. The representations and warranties of Western set forth in
this Agreement and in any certificate or instrument delivered in connection
herewith shall survive for a period of one year following the date of this
Agreement.

ARTICLE 9. BROKERS. Each of the Buyer and Western represent to the other that,
neither of the Buyer nor Western has, directly or indirectly, employed any
broker, finder or intermediary in connection with this Agreement or the
transactions contemplated hereby who might be entitled to a fee or commission
upon the execution of this Agreement or consummation of the transactions
contemplated hereby.

ARTICLE 10. EXPENSES. Except as otherwise specifically provided herein, each
party will bear all legal and other costs and expenses incurred by it.

<PAGE>

ARTICLE 11. NOTICES; MISCELLANEOUS

     SECTION 11.01 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice; provided,
that notices of a change of address shall be effective only upon receipt
thereof):

     To Western, as follows:                     To Buyer, as follows:

     Western Power & Equipment Corp.             Mid-Mountain Machinery Inc.
     6407-B N.E. 117th Avenue                    ___________________________
     Vancouver, WA  98662                        ___________________________
     Attn: President                             Attn:  President
     Facsimile: (360) 253-4830                   Facsimile: ___________________

     SECTION 11.02 MISCELLANEOUS.

          (a) Entire Agreement. This Agreement supersedes all prior agreements
          between the parties (written or oral) and, except as aforesaid, is
          intended as a complete and exclusive statement of the terms of the
          Agreement between the parties. This Agreement may be amended only by a
          written instrument duly executed by the parties.

          (b) Governing Law. This Agreement shall be governed by and construed
          in accordance with the laws of the State of Washington, without regard
          to the principles of conflicts of laws of such state.

          (c) Headings. The headings contained in this Agreement are for
          reference purposes only and shall not affect in any way the meaning or
          interpretation of this Agreement.

          (d) Assignability. Neither Buyer nor Western may transfer, assign, or
          encumber any of its rights, duties, or obligations under this
          Agreement or any part hereof without the prior written consent of the
          other party. Except as otherwise provided herein, this Agreement shall
          be binding upon and inure to the benefit of the parties hereto and
          their respective successors and permitted assigns.

          (e) No Third-Party Beneficiaries. Except as otherwise expressly
          provided herein, nothing in this Agreement shall entitle Western,
          Buyer, or their respective successors and assigns permitted hereby to
          any claim, cause of action, remedy, or right of any kind.

<PAGE>

          (f) Severability. Any term or provision of this Agreement that is
          invalid or unenforceable in any jurisdiction shall, as to such
          jurisdiction, be ineffective to the extent of such invalidity or
          unenforceability, but this shall not affect the validity or
          enforceability of any of the terms and provisions of this Agreement in
          any other jurisdiction. If any provision of this Agreement is so broad
          as to be unenforceable, such provision shall be interpreted to be only
          so broad as is enforceable.

          (g) Equitable Relief. The parties hereto agree that irreparable damage
          would occur in the event that any of the provisions of this Agreement
          were not performed in accordance with their specific terms or were
          otherwise breached. Accordingly, it is agreed that the parties shall
          be entitled to an injunction or injunctions to prevent breaches of
          this Agreement and to enforce specifically the terms and provisions
          hereof in any court of the United States or any state having
          jurisdiction, this being in addition to any other remedy at law or in
          equity.

          (h) Counterparts. This Agreement may be executed in any number of
          counterparts, no one of which needs to be executed by all the parties,
          and this Agreement shall be binding upon all the parties with the same
          force and effect as if all the parties had signed the same document,
          and each such signed counterpart shall constitute an original of this
          Agreement.

          Western Power & Equipment Corp.,        Mid-Mountain Machinery Inc.,
          an Oregon corporation                   a Washington corporation

          By: ____________________________        By: _________________________
              Dean McLain  President & CEO

                                                  Title: ______________________

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