Document:

DC3728.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

EMPLOYMENT AGREEMENT

	
BETWEEN

VARSITY GROUP INC.

	
AND

JOHN GRIFFIN

	
EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between VARSITY GROUP INC., a Delaware corporation (the
“Company”), and John Griffin (the “Executive”), effective as of the Purchase Date. Capitalized terms used but
not defined in this Agreement shall have the meaning ascribed to them in that certain Agreement and Plan of Merger dated February 22, 2008 (“Merger Agreement”) among the Company,
VGI Holdings Corp., a Delaware corporation (“Parent”), and VGI Acquisition Corp., a Delaware corporation and a wholly-owned direct subsidiary of Parent (“Merger Sub”).

	
WITNESSETH THAT:

     WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company, in accordance with the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the Company and the Executive hereby agree as follows:

1. Period of Employment.  The term “Period of Employment” means the period which commences on the Purchase Date and, unless
earlier terminated pursuant to Section 5, ends on December 31, 2008.  This Agreement is only effective upon occurrence of the Purchase Date under the Merger Agreement and has no force or effect unless the Purchase Date occurs.

2. Position.  During the Period of Employment, the Executive shall be employed as the Transitional Vice President – Finance of the Company, and shall perform such duties as the Executive shall
reasonably be directed to perform by the President of the Company. During the Period of Employment, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote substantially all of the
Executive’s business time and attention to the business and affairs of the Company.

	
3.      		
Compensation and Other Payments.	
	 
	 	
3.1 Base Salary. During the Period of Employment, the Company shall pay the	
	 

Executive a base salary equal to $12,083.00 per month (the “Base Salary”). The Base Salary shall be paid in accordance with the Company’s payroll
policy. 

     3.2 Cash Bonuses. If the Executive is employed by the Company on the Purchase Date and satisfies the bonus criteria set forth in Sections
3.2(a)(i)-(iii) below, then the Executive shall receive a cash bonus of $12,083, which will be paid within 5 business days of the Purchase Date.  In addition, if the Executive is employed by the Company at the end
of the Period of Employment and satisfies the bonus criteria set forth in Sections 3.2(a)(i)-(iii) below, then the Executive shall receive an additional cash bonus of $72,500 on January
1, 2009.

	
(a)      		
Bonus Criteria.	
	 
	 	
(i) The Executive complies with his obligations under this Agreement,	
	 

including without limitation the Executive’s obligations under Section 4 hereof.

     (ii) The Executive actively participates and contributes to the growth of the Company’s business and operations.

     (iii) The Executive receives a rating of 3.0 or better (rating scale of 1.0 to 5.0 with 5.0 being the highest rating) on the annual Company performance appraisal review process and related forms for
2008.

	
4.      		
Covenants.	
	 
	 	
4.1 Non-Competition. In consideration of the Executive’s agreement to enter into	
	 

this Agreement, and as a condition thereto, the Executive covenants and agrees that during the Executive’s employment with the Company or any of its affiliates (collectively referred to herein as the “Affiliated Companies”) and for one (1) year immediately following the termination of the Executive’s employment, (the “Noncompete and Non-Solicitation
Period”), the Executive shall not, directly or indirectly, in any manner engage in the Business (as defined below) or in any activity that directly or indirectly competes with the Business or own any interest in,
manage, control, participate in (whether as an owner, operator, manager, consultant, officer, director, employee, investor, agent, representative or otherwise), or consult with or render services for any person or entity that is engaged in the
Business or in any activity that competes directly or indirectly with the Business, in each case, anywhere (i) throughout the world, but if such area is determined by judicial action to be too broad, then (ii) within North America, but if such area
is determined by judicial action to be too broad, then (iii) within the continental United States, but if such area is determined by judicial action to be too broad, then (iv) within any state in which any of the Affiliated Companies are engaged in
Business, provided that (X) ownership of up to one percent (1%) of the outstanding capital stock of any entity that has securities registered pursuant to Section 13 or 15 of the Securities Exchange Act shall not be prohibited by this Section 4.1,
and (Y) it shall not be a breach of this Section 4.1 if Executive is employed by School One or one of its affiliates, but only so long as School One and each of its affiliates is in compliance with any non-compete or similar covenant or agreement
that they have entered into with the Company or any of its affiliates. For purposes of this Agreement, “Business” means the business of the Company (as conducted on or prior to the
date hereof), including, without limitation, providing outsourcing solutions to provide textbooks, uniforms, general merchandise and school supplies to K-12 (or equivalent) schools, colleges, other educational entities, students and students’
parents.

     4.2 Non-Solicit. During the Noncompete and Non-Solicitation Period, the Executive shall not directly or indirectly through another entity (whether as an owner,
operator, manager, consultant, officer, director, employee, investor, agent, representative or otherwise) (a) induce or attempt to induce any employee of the Affiliated Companies to leave the employ of the Affiliated Companies, or in any way
interfere with the relationship between the Affiliated Companies and any such employee, (b) hire any person who was an employee of the Affiliated Companies within twelve (12) months of the termination of their employment with the Affiliated
Companies, (c) call upon, solicit, or attempt to sell products or services similar to those offered by the Affiliated Companies to any of the Affiliated Companies’ customers, (d) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee, lessor or other business relation of the Affiliated Companies (or any prospective customer, supplier, licensee, licensor, franchisee, lessor or other business relation with which the Affiliated Companies has entertained
discussions regarding a prospective business relationship) to cease or refrain from doing business with the Affiliated Companies, or in any way interfere with the relationship (or prospective

	
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relationship) between any such customer, supplier, licensee, licensor, franchisee or other business relation and the Affiliated Companies (including, without limitation, making any negative statements or communications about the
Affiliated Companies) or (e) (i) acquire or attempt to acquire an interest in any business or (ii) enter into any agreement, relationship or other arrangement with any other party to create, establish, use or operate any entity, business,
partnership, joint venture or similar body, relating to any business of the Affiliated Companies or with which the Affiliated Companies has entertained discussions or has requested and received information relating to the acquisition of such
business by the Affiliated Companies as of the last day of the Period of Employment.  The preceding sentence does not, however, prohibit the Executive from soliciting any employee of the Affiliated Companies or any person who was an employee of the
Affiliated Companies within twelve (12) months of the termination of their employment with the Affiliated Companies for employment by placement of general advertisements for employees in newspapers or other media of general circulation and the
hiring therefrom.

     4.3 Nondisparagement.  The Executive will not, at any time on or after the date hereof, make any negative or disparaging statements or communications regarding the
Affiliated Companies, or any of their shareholders, directors, officers, employees, agents or affiliates.

	
4.4      		
General.	
	 
	 	
(a) The parties acknowledge and agree that the covenants set forth in this	
	 

Section 4 are reasonable with respect to period, geographical area and scope. Notwithstanding anything in this Section 4 to the contrary, if at any time, in any judicial proceeding, any of the restrictions stated in this Section 4
are found by a final order of a court of competent jurisdiction to be unreasonable or otherwise unenforceable under circumstances then existing, the Executive agrees that the period, scope or geographical area, as the case may be, shall be reduced
to the extent necessary to enable the court to enforce the restrictions to the extent such provisions are allowable under law, giving effect to the agreement and intent of the parties that the restrictions contained herein shall be effective to the
fullest extent permissible. In addition, the Executive acknowledges and agrees that money damages would not be an adequate remedy for any breach or threatened breach of the provisions of this Section 4 and that, in such event, the Company and/or its
respective successors or assigns shall, in addition to any other rights and remedies existing in their favor, be entitled to specific performance, injunctive and/or other relief from any court of competent jurisdiction in order to enforce or prevent
any violations of the provisions of this Section 4 (including the extension of the Noncompete and Non-Solicitation Period applicable to the Executive by a period equal to the length of court proceedings necessary to stop such violation). The
Executive hereby waives any and all defenses he may have on the ground of lack of jurisdiction or competence of the court to grant such specific performance, injunctive and/or other relief contemplated by the preceding sentence.  Any injunction
shall be available without the posting of any bond or other security. In the event of a breach or violation by the Executive of any of the provisions of this Section 4, the Noncompete and Non-Solicitation Period will be tolled for the Executive
until such alleged breach or violation is resolved; provided that if the Executive is found to have not violated the provisions of this Section 4, then the Noncompete and Nonsolicitation Period will not be deemed to have been tolled.  The Executive
agrees that the restrictions contained in this Section 4 are reasonable in all

	
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respects and are necessary to protect the goodwill of the businesses of the Affiliated Companies.  The prevailing party in any arbitration, mediation, court action, or other adjudicative proceeding arising out of this Section 4
shall be reimbursed by the party who does not prevail for its reasonable attorneys and experts fees and related expenses and for the costs of such proceeding.

     (b) The covenants set forth in this Section 4 shall survive termination of this Agreement and termination of the Period of Employment. The Parties acknowledge that the covenants set forth in Section 4
will apply during the Noncompete and Non-Solicitation Period as defined in Section 4.1 above.

     4.5 Intellectual Property Rights. The Executive acknowledges that all inventions, technology, processes, innovations, ideas, improvements, developments, methods,
designs, analyses, trademarks, service marks, and other indicia of origin, writings, audiovisual works, concepts, drawings, reports, all information and data processing systems, programs and software (including, without limitation, source code,
executable code, data, data-bases, and related material and documentation) and any and all licenses and copies thereof and rights thereto, and all similar, related, or derivative information or works (whether or not patentable or subject to
copyright), including but not limited to all patents, copyrights, copyright registrations, trademark registrations and software in and to any of the foregoing, along with the right to practice, employ, exploit, use, develop, reproduce, copy,
distribute copies, publish, license, or create works derivative of any of the foregoing, and the right to choose not to do or permit any of the aforementioned actions, which relate to any of the Affiliated Company’s actual or anticipated
business, research and development or existing or future products or services and which are conceived, developed or made by the Executive prior to or while employed by the Company (collectively, the “Work
Product”) belong to the Company and any and all intellectual property and moral rights related thereto are hereby conveyed, assigned and transferred to the Company. All other rights to any new Work Product and all
rights to any existing Work Product, including but not limited to all of the Executive’s rights to any copyrights or copyright registrations related thereto, are conveyed, assigned and transferred to the Company pursuant to this Agreement. The
Executive shall promptly disclose and deliver such Work Product to the Company and, at the Company’s expense, perform all actions reasonably requested by the Company (whether during or after the Period of Employment) to establish, confirm and
protect such ownership (including, without limitation, the execution of assignments, copyright registrations, consents, licenses, powers of attorney and other instruments). All Work Product made within six (6) months after expiration of the Period
of Employment shall be presumed to have been conceived during the Period of Employment, unless the Executive can prove conclusively that it was created after the Period of Employment.

	
5.      		
Termination of Employment.	
	 
	 	
5.1      		
By the Company. The Company may terminate the Executive’s employment: (a) immediately upon delivering written notice to the Executive if the	
	 

	 	
termination is for Cause, or

     (b) by giving at least thirty (30) days’ written notice to the Executive if the termination is not for Cause.

	
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5.2      		
Cause. For purposes of this Agreement, “Cause” means:	
	 
	 	
(a) the Executive’s commission of, or plea of guilty or nolo contendere to, a	
	 

	 	
felony;

     (b) an act of dishonesty by the Executive which results in the Executive’s substantial personal enrichment;

     (c) material failure by the Executive to abide by the Follett Code of Conduct and the terms of this Agreement;

     (d) the Executive’s engaging in willful misconduct or gross negligence with respect to employment duties; or

     (e) the Executive’s failure to abide by or carry out any policy, instruction or directive of the Company (so long as such policy, instruction or directive is legally permissible and not in
violation of the Follett Code of Conduct). If such failure is subject to correction, as determined by the Company in its discretion, Cause will not occur under this subsection 5.2(e) unless the Executive has been given a thirty (30) day cure period
subsequent to written notice to the Executive of such failure and appropriate correction has not occurred during such period in the reasonable determination of the Company.

     5.3 By the Executive. The Executive’s employment hereunder may be terminated by the Executive for any reason, by giving at least thirty (30) days’ written
notice to the Company. In the event of the Executive’s death or “Disability” (as defined under any long term disability plan then in effect in which the Executive participates), the Period of Employment shall automatically
terminate.

	
6.      		
Obligations of the Company Upon Termination.	
	 
	 	
(a)      		
Termination for Cause, Death or Disability. If the Company terminates	
	 
	 	
the Executive’s employment for Cause, if the Executive terminates the Period of Employment for any reason or if the Period of Employment is terminated due to the Executive’s death or Disability, then the Executive (or
his/her legal beneficiary) will be entitled to receive the Base Salary and accrued but untaken vacation through the date of termination.	
	 
	 	
(b)      		
Termination by the Company without Cause. If the Company	
	 
	 	
terminates the Executive’s employment without Cause prior to the end of the Period of Employment, the Executive will be entitled to receive:	
	 

     (i) payment of Base Salary and accrued but untaken vacation through the date of termination;

     (ii) salary continuation payments for the six-month period after the date of termination at the rate of Executive’s Base Salary as in effect immediately prior to the date of
termination;

     (iii) continuation of the Executive’s medical and dental benefits under similar terms for then-current employees of the Company, for a period equal to

	
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the lesser of (i) six (6) months after the date of termination or (ii) until the Executive obtains comparable coverage from a new employer, and thereafter as required by law, including COBRA; and

     (iv) all other benefits which have accrued to the Executive as of the date of termination.

7. General Release. The Executive acknowledges and agrees that the Executive’s right to receive severance pay and other benefits pursuant to subsections 6.4(b)(i) through 6.4(b)(iv) of this
Agreement is contingent upon the Executive’s compliance with the covenants set forth in Sections 4 and 9 of this Agreement and the Executive’s execution and acceptance of the terms and conditions of, and the effectiveness of, a general
release in a form substantially similar to that attached hereto as Exhibit A (the “Release”).  If the Executive fails to comply with the covenants set forth in Sections 4 and 9, or
if the Executive fails to execute the Release or revokes the Release during the seven-day period following the Executive’s execution of the Release, then the Executive shall not be entitled to any severance payments or other benefits to which
the Executive would otherwise be entitled under subsections 6.4(b)(ii) through 6.4(b)(iv).

8. Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, however, continuation of medical and dental benefits (as provided in subsection 6.4(b)(iii)) shall cease if comparable coverage is provided to Executive by a new employer.

9. Confidential Information.  The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Affiliated
Companies and their businesses, which shall have been obtained by the Executive pursuant to the Executive’s employment by the Company or any of the Affiliated Companies (the “Confidential
Information”). The immediately prior sentence shall not apply to Confidential Information which has become public knowledge, unless such Confidential Information became public knowledge due to acts by the Executive
or the Executive’s representatives in violation of this Agreement.  After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company, communicate or divulge any
Confidential Information to anyone other than the Company and those designated by it. The Executive agrees not to disclose the terms of this Agreement and any treatment the Executive may receive under this Agreement; provided, however, that the
Executive may make such disclosure to the Executive’s spouse, legal counsel, accountant and/or financial planner on an as-needed basis in order to manage the Executive’s personal affairs.  Upon termination of employment the Executive shall
promptly return to the Company all Confidential Information and all property of the Company, including without limitation all documents, paper files, computer or other media files, computer equipment, mobile telephones, company identification cards,
building keys and credit cards.

10. Remedy for Violation of Section 4 or 9.  The Executive acknowledges that the Company has no adequate remedy at law and will be irreparably harmed if the Executive breaches or threatens to
breach the provisions of Section 4 or 9 of this Agreement, and, therefore, agrees that the Company shall be entitled to:  (i) injunctive relief to prevent any breach or threatened breach of either such section, (ii) specific performance of the terms
of each of such sections in addition to any other legal or equitable remedy the Company may have and

	
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(iii) enforcement of either such section in any court of competent jurisdiction. If, at the time of enforcement of a covenant contained in either such section, a court shall hold that the duration, scope or area restrictions are
unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise
the appropriate section to cover the maximum duration, scope and area permitted by law.  Any injunction shall be available without the posting of any bond or other security.

11. Withholding.  All payments required to be made by the Company hereunder to the Executive shall be subject to withholding of such amounts relating to taxes as the Company may reasonably
determine. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provision for payment of taxes as required by law.

12. Arbitration.  Any dispute or controversy between the Company and the Executive arising out of or relating to this Agreement shall be settled by arbitration administered by the American
Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect and judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Any arbitration shall be held before a single arbitrator who shall be selected by the mutual agreement of the Company and the Executive, unless the parties are unable to agree to an arbitrator, in which case, the
arbitrator will be selected under the procedures of the AAA.  The arbitrator shall have the authority to award any actual or compensatory damages (excluding exemplary or punitive damages) that a court of competent jurisdiction could order or grant.
Notwithstanding the foregoing, either party may, without inconsistency with this arbitration provision, apply to any court having jurisdiction over such dispute or controversy and seek injunctive or other equitable relief until the arbitration award
is rendered or the controversy is otherwise resolved. Notwithstanding any choice of law provision included in this Agreement, the United States Federal Arbitration Act shall govern the interpretation and enforcement of this arbitration provision.
The arbitration proceeding shall be conducted in Chicago, Illinois or such other location to which the parties may agree.  The Company shall pay the costs of any arbitrator appointed hereunder but each side will be responsible for their own filing
fees, attorney fees, witness fees, etc. associated with their claim or their defense to any claim.

	
13.      		
Successors.	
	 
	 	
13.1 This Agreement is personal to the Executive and without the prior written consent	
	 

of the Company shall not be assignable by the Executive.

     13.2 This Agreement and the rights thereunder shall inure to the benefit of and be enforceable by the Executive’s heirs and legal representatives.

     13.3 This Agreement and the rights thereunder shall inure to the benefit of and be binding upon the Company and its successors and assigns.

	
14.      		
Miscellaneous.	
	 
	 	
14.1 This Agreement shall be governed by and construed in accordance with the laws	
	 

of the State of Virginia, without reference to principles of conflicts of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This

	
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Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or the respective successors and legal representatives.

     14.2 All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, by overnight courier, or by registered
or certified mail, return receipt requested, postage prepaid, addressed as follows:

	
If to the Executive:

John Griffin

6411 Winnepeg Road

Bethesda, MD 20817

If to the Company:

Varsity Group Inc.

2677 Prosperity Ave., Suite 250

Fairfax, VA 22031

Facsimile: (703) 205-6230

Attention: President

or to such other address as any of the parties shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective upon the earlier of actual receipt by the addressee or the fifth day
following placement with the United States postal service or overnight courier.

     14.3 The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this
Agreement.

     14.4 Any party’s failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision
hereof.

     14.5 This Agreement supersedes any prior employment agreement or understandings, written or verbal, between any of the Affiliated Companies and the Executive and
contains the entire understanding of each of the Affiliated Companies and the Executive with respect to the subject matter hereof.

     14.6 This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

	
* *

	
* *

IN WITNESS HEREOF, the parties have executed this Agreement as of the dates written

	
below.

	 	
VARSITY GROUP INC.

	
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By: /s/ James Craig

Its: CEO

Dated: February 22, 2008

/s/ John Griffin John Griffin

Dated: February 22, 2008

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Exhibit A

	
General Release of all Claims

     1. For valuable consideration, the adequacy of which is hereby acknowledged, the undersigned (“Executive”), for himself or herself,
the Executive’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through Executive, if any (collectively, “Releasers”), does hereby release, waive, and forever discharge Follett Corporation (the “Company”), its agents, subsidiaries, affiliates, related organizations, employees,
officers, directors, attorneys, successors, and assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to Releasers for, any and all
liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or
absolute, which heretofore has been or which hereafter may be suffered or sustained, directly or indirectly, by Releasers in consequence of, arising out of, or in any way relating to Executive’s employment with the Company or any of its
affiliates and the termination of Executive’s employment. The foregoing release and discharge, waiver and covenant not to sue includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under
common law including wrongful or retaliatory discharge, breach of contract and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute
including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. 1981), the National Labor Relations Act, the Age Discrimination in Employment Act (ADEA), the Fair Labor Standards Act, the Employee Retirement
Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Maryland Human Rights Act, the Illinois Human Rights Act, or the discrimination or employment laws of any state or municipality, and/or any claims
under any express or implied contract which Releasers may claim existed with Releasees. This also includes a release by Executive of any claims for breach of contract, wrongful discharge and all claims for alleged physical or personal injury,
emotional distress relating to or arising out of Executive’s employment with the Company or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be
given of certain work force reductions. This release and waiver does not apply to any claims or rights that may arise after the date Executive signs this General Release.  The foregoing release does not cover:  (1) any right to indemnification now
existing under the Articles of Incorporation or By-laws of the Company regardless of when any claim is filed, (2) any right to sue or take other action to enforce the Employment Agreement between the Company and Executive, dated February ___, 2008
(the “Employment Agreement”), or (3) any right to sue or to take other action to enforce the Agreement and Plan of Merger between Varsity Group Inc., VGI Holdings Corp. and VGI
Acquisition Corp., dated February ___, 2008 (the “Merger Agreement”).

     2. Excluded from this release and waiver are any claims which cannot be waived by law, including but not limited to the right to participate in an investigation conducted by certain government
agencies.  Executive does, however, waive Executive’s right to any monetary recovery should any agency (such as the Equal Employment Opportunity Commission) pursue any claims on Executive’s behalf. Executive represents and warrants that
Executive has not filed any complaint, charge, or lawsuit against the Releasees with any government agency or any court.

	
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     3. Executive agrees never to sue Releasees in any forum for any claim covered by the above waiver and release language, except that Executive may bring a claim under the ADEA to challenge this General
Release. If Executive violates this General Release by suing Releasees, other than under the ADEA or as otherwise set forth in Section 1 hereof, Executive shall be liable to the Company for its reasonable attorneys’ fees and other litigation
costs incurred in defending against such a suit. Nothing in this General Release is intended to reflect any party’s belief that Executive’s waiver of claims under ADEA is invalid or unenforceable, it being the interest of the parties that
such claims are waived.

	
4.      		
Executive acknowledges and recites that:	
	 
	 	
(a)      		
Executive has executed this General Release knowingly and voluntarily;	
	 
	 	
(b)      		
Executive has read and understands this General Release in its entirety;	
	 
	 	
(c)      		
Executive has been advised and directed orally and in writing (and this	
	 

subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice the Executive wishes with respect to the terms of this General Release before executing it;

     (d) Executive’s execution of this General Release has not been forced by any employee or agent of the Company, and Executive has had an opportunity to negotiate about the terms of this General
Release; and

     (e) Executive has been offered 21 calendar days after receipt of this General Release to consider its terms before executing it.

     5. This General Release shall be governed by the internal laws (and not the choice of laws) of the State of Illinois, except for the application of pre-emptive Federal law.

     6. Executive shall have 7 days from the date hereof to revoke this General Release by providing written notice of the revocation to the Company’s General Counsel, as provided in Section 14.2 of
the Employment Agreement, in which event this General Release shall be unenforceable and null and void.

     PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

	
Date: 
		
 		
                                                                      
                                     John Griffin 
	
	
[Exhibit only. 
		
 		
To be signed only at termination of employment in connection with severance benefits] 
	
	
 
	
	
 
		
 		
                                                                      
                                     Executive 
	

- 11 -THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE NOT BEEN REG

THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").

THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

Aurelio Resource Corp.

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT 

UNITS

NON-UNITED STATES RESIDENT SUBSCRIBERS

INSTRUCTIONS TO PURCHASER

	
1.
	
The purchaser is to complete all the information in the boxes on page * and sign where indicated with an "X".

	
2.
	
IF THE PURCHASER IS A CANADIAN RESIDENT AND AN ACCREDITED INVESTOR, then complete the "Accredited Investor Questionnaire" that starts on page 5.

	
3.
	
IF THE PURCHASER IS A CANADIAN RESIDENT AND IS NOT AN ACCREDITED INVESTOR, and not purchasing a minimum of $150,000 in value of securities, complete the "Friends and Family" Questionnaire that starts on page 8.

	
4. 
	
RESIDENTS OF COUNTRIES OUTSIDE THE UNITED STATES AND CANADA AND CANADIAN RESIDENTS PURCHASING A MINIMUM OF $150,000 IN VALUE OF SECURITIES may subscribe without filling in an Accredited Investor or Friends and Family Questionnaire. 

	
5.
	
All other information must be filled in where appropriate. 

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

	
TO:
	
AURELIO RESOURCE CORP. (the "Issuer"), of 5554 South Prince Street, Suite 200, Littleton CO 80120 

Subject and pursuant to the terms set out in the Terms on pages 3 to 4, the General Provisions on pages 9 to 14 and the other schedules and appendices attached which are hereby incorporated by reference, the Purchaser hereby irrevocably subscribes for, and on Closing will purchase from the Issuer, the following securities at the following price:

	
Units

	
US$0.90 per Unit for a total purchase price of US$

	
The Purchaser owns, directly or indirectly, the following securities of the Issuer:

	

	
[Check if applicable]  The Purchaser is  an insider of the Issuer or  a member of the professional group 

The Purchaser directs the Issuer to issue, register and deliver the certificates representing the Purchased Securities as follows:

	
REGISTRATION INSTRUCTIONS
	 	
DELIVERY INSTRUCTIONS

	 	 	 
	
Name to appear on certificate
	 	
Name and account reference, if applicable

	 	 	 
	
Account reference if applicable
	 	
Contact name

	 	 	 
	
Address
	 	
Address

	 	 	 
	 	 	
Telephone Number

EXECUTED by the Purchaser this _______ day of May, 2007.  By executing this Subscription Agreement, the Purchaser certifies that the Purchaser and any beneficial purchaser for whom the Purchaser is acting is resident in the jurisdiction shown as the "Address of Purchaser". 

	
WITNESS:
	 	
EXECUTION BY PURCHASER:

	 	 	
X

	
Signature of Witness
	 	
Signature of individual (if Purchaser is an individual)

	 	 	
X

	
Name of Witness
	 	
Authorized signatory (if Purchaser is not an individual)

	 	 	 
	
Address of Witness
	 	
Name of Purchaser (please print)

	 	 	 
	 	 	
Name of authorized signatory (please print)

	
Accepted this _____ day of May, 2007
	 	 
	
AURELIO RESOURCE CORP..
	 	
Address of Purchaser (residence)

	
Per:
	 	 
	 	 	
Telephone Number 

	
Authorized Signatory
	 	 
	 	 	
E-mail address

	 	 	 
	 	 	
Social Security/Insurance No.:

By signing this acceptance, the Issuer agrees to be bound by the Terms on pages 3 to 4, the General Provisions on pages 9 to 14 and the other schedules and appendices incorporated by reference. If funds are delivered to the Company's lawyers, they are authorized to release the funds to the Issuer. 

TERMS

	
Reference date of this Subscription Agreement 
	
____ _____, 2007 (the "Agreement Date")

The Offering

	
The Issuer
	
Aurelio Resource Corp.  (the "Issuer")

	
Offering
	
The offering consists of units (the "Units") of the Issuer, each Unit consists of one common share (a "Share") and one-half of one non-transferable share purchase warrant (a "Warrant").

One whole Warrant will entitle the Purchaser to purchase one additional common share of the Company (a "Warrant Share") at a price of $1.60 per Warrant Share for a period of two years from Closing.

	
Purchased Securities
	
The "Purchased Securities" under this Subscription Agreement are Units.  

	
Finder's Fee
	
The Issuer shall pay a finders fee to finders who introduce qualified investors who participate in the offering in amounts negotiated with the finders.

	
No Minimum or Maximum
	
There is no minimum or maximum offering.  The Issuer may close on any subscription amounts it receives and it may close the offering in tranches.

	
Issue Price
	
US$0.90 per Unit

	
Warrants
	
The Warrants will be non-transferable and be issued and registered in the name of the purchasers or their nominees.

The certificates representing the Warrants will, among other things, include provisions for the appropriate adjustment in the class, number and price of the Warrant Shares issued upon exercise of the Warrants upon the occurrence of certain events, including any subdivision, consolidation or reclassification of the Issuer's common shares, the payment of stock dividends and the amalgamation of the Issuer.

The issue of the Warrants will not restrict or prevent the Issuer from obtaining any other financing, or from issuing additional securities or rights, during the period within which the Warrants may be exercised.

	
Selling Jurisdictions
	
The Units may be sold in jurisdictions where they may be lawfully sold (the "Selling Jurisdictions").

	
Exemptions
	
The offering will be made in accordance with the following exemptions: 

	 	 	
(a)
	
the "accredited investor" exemption in Canada (section 2.3 of National Instrument 45-106);

	 	 	
(b)
	
the "friends and family" exemption in Canada (section 2.5 of National Instrument 45-106);

	 	 	
(c)
	
the "$150,000 purchaser" exemption in Canada (section 2.10 of National Instrument 45-106); and

	 	 	
(d)
	
such other exemptions as may be available the securities laws of the Selling Jurisdictions.

	
No Registration of Securities
	
The Securities acquired by the Purchasers are restricted under Rule 144.

	
Resale restrictions and legends
	
The Purchaser acknowledges that the certificates representing the Purchased Securities will bear the following legends:

	 	 	
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS."

	 	
Purchasers are advised to consult with their own legal counsel or advisors to determine the resale restrictions that may be applicable to them.

Purchaser has requested the Issuer not to include a restrictive legend under Canadian Securities laws.

	
Closing Date
	
The completion of the sale and purchase of the Units will take place in one or more closings, on a date or dates as agreed to by the Issuer and the Purchaser. Payment for, and delivery of the Units, is scheduled to occur on or about May 30, 2007 or such later date as may be agreed upon by the Issuer and the Purchaser (the "Closing Date").

	
Additional definitions
	
In the Subscription Agreement, the following words have the following meanings unless otherwise indicated:

	 	 	
(a)
	
"Purchased Securities" means the Units purchased under this Subscription Agreement; and

	 	 	
(b)
	
"Securities" means the Shares, the Warrants and the Warrant Shares.

The Issuer

	
Jurisdiction of organization
	
The Issuer is incorporated under the laws of the State of Nevada.

	
Stock exchange listings
	
Certain market makers make market in the Issuer's stock on the US over the counter bulletin board

	
"Securities Legislation Applicable to the Issuer"
	
The "Securities Legislation Applicable to the Issuer" are the US Securities Exchange Act of 1934, and the Securities Commission having jurisdiction over the Issuer are the United States Securities and Exchange Commission.

	
Wire Instructions to Aurelio Resource Corporation
	
Chase Bank  5734 S. Prince Street

Littleton, CO USA 80120

Account Name:  Aurelio Resource Corporation

Account Number:  634940876

Routing Number or ABA number:  102001017

Swift Code:  CHASUS33

End of Terms

NATIONAL INSTRUMENT 45-106

ACCREDITED INVESTOR QUESTIONNAIRE

The purpose of this Questionnaire is to assure Aurelio Resource Corp." (the "Company") that the undersigned (the "Subscriber") will meet certain requirements for the registration and prospectus exemptions provided for under National Instrument 45-106 ("NI 45-106"), as adopted by the Securities Commissions in Canada, in respect of a proposed private placement of securities by the Company (the "Transaction").  The Company will rely on the information contained in this Questionnaire for the purposes of such determination.

The undersigned Subscriber covenants, represents and warrants to the Company that:

	 	
1.
	
the Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Transaction and the Subscriber is able to bear the economic risk of loss arising from such Transaction;

	 	
2.
	
the Subscriber satisfies one or more of the categories of "accredited investor" (as that term is defined in NI 45-106) indicated below (please check the appropriate box):

	 	 	

 ̈

	
(a) a Canadian financial institution as defined in National Instrument 14-101, or an authorized foreign bank listed in Schedule III of the Bank Act (Canada); 

	 	 	

 ̈

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

	 	 	

 ̈

	
(c) a subsidiary of any person referred to in any of the foregoing categories, if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;

	 	 	

 ̈

	
(d) an individual registered or formerly registered under securities legislation in a jurisdiction of Canada, as a representative of a person or company registered under securities legislation in a jurisdiction of Canada, as an adviser or dealer, other than a limited market dealer registered under the Securities Act (Ontario) or the Securities Act (Newfoundland);

	 	 	

 ̈

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

	 	 	

 ̈

	
(f) the government of Canada or a province, or any crown corporation or agency of the government of Canada or a province;

	 	 	

 ̈

	
(g) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comite de gestion de la taxe scholaire de l'ile de Montreal or an intermunicipal management board in Québec;

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

	
(j) an individual who either alone or with a spouse beneficially owns, directly or indirectly, financial assets (as defined in NI 45-106) having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds CDNUS$1,000,000;

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

	
(n) an investment fund that distributes it securities only to persons that are accredited investors at the time of distribution, a person that acquires or acquired a minimum of CDN$150,000 of value in securities, or a person that acquires or acquired securities under Sections 2.18 or 2.19 of NI 45-106;

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

	
(q) a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

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

	 	 	

 ̈

	
(v) a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or British Columbia after this instrument comes into force;

The Subscriber acknowledges and agrees that the Subscriber may be required by the Company to provide such additional documentation as may be reasonably required by the Company and its legal counsel in determining the Subscriber's eligibility to acquire the Purchased Securities under relevant Legislation.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _____ day of  May, 2007.

	
If a Corporation, Partnership or Other Entity:
	 	
If an Individual:

	 	 	
X

	
Print or Type Name of Entity
	 	
Signature

	
X
	 	 
	
Signature of Authorized Signatory
	 	
Print or Type Name

	 	 	 
	
Type of Entity
	 	 

 

 

Family, Friends and Business Associates Questionnaire 

If the Subscriber is resident in a Canadian province or territory other than Ontario IS NOT PURCHASING MORE THAN $150,000 IN VALUE OF SECURITIES and is not an Accredited Investor, he or she is to check one or more of the following boxes, as appropriate:

	
(A)
	
a director, officer, employee or control person of the Issuer
	
          

	
(B)
	
a spouse, parent, grandparent, brother, sister or child of a director, senior officer or control person of the Issuer
	
          

	
(C)
	
a close personal friend of a director, senior officer or control person of the Issuer
	
          

	
(D)
	
a close business associate of a director, senior officer or control person of the Issuer
	
          

 

If the Subscriber is resident in Ontario, the Subscriber is (tick one or more of the following boxes only if the Subscriber is resident in Ontario):

	
(A)
	
a founder of the Issuer
	

	
(B)
	
an affiliate of a founder of the Issuer
	

	
(C)
	
a spouse, parent, brother, sister, grandparent or child of a director, executive officer or founder of the Issuer
	

	
(D)
	
a person that is a control person of the Issuer
	

	
(E)
	
an accredited investor
	

	
(F)
	
purchasing as principal Securities with an aggregate acquisition cost of not less than CDN$150,000
	

If the Subscriber ticked boxes A-D above, name of director, officer or employee of the Issuer with whom the Subscriber has a relationship:

_____________________________________________________________________________________

	
___________________________________________

Signature

	 
	
Print or Type Name of Entity or Individual

Date: _______________________, 2007

 

 

GENERAL PROVISIONS

	DEFINITIONS

1.1In the Subscription Agreement (including the first (cover) page, the Terms on pages * to *, the General Provisions on pages * to *  and the other schedules and appendices incorporated by reference), the following words have the following meanings unless otherwise indicated:

	"1933 Act" means the United States Securities Act of 1933, as amended;

	"Applicable Legislation" means the Securities Legislation Applicable to the Issuer (as defined on page *) and all legislation incorporated in the definition of this term in other parts of the Subscription Agreement, together with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by the Commissions; 

	"Closing" means the completion of the sale and purchase of the Purchased Securities; 

	"Closing Date" has the meaning assigned in the Terms; 

	"Closing Year" means the calendar year in which the Closing takes place; 

	"Commissions" means the Commissions with Jurisdiction over the Issuer (as defined on page *) and the securities commissions incorporated in the definition of this term in other parts of the Subscription Agreement;

	"Final Closing" means the last closing under the Private Placement;

	"General Provisions" means those portions of the Subscription Agreement headed "General Provisions" and contained on pages * to *;

	"Private Placement" means the offering of the Purchased Securities on the terms and conditions of this Subscription Agreement;

	"Purchased Securities" has the meaning assigned in the Terms;

	"Regulatory Authorities" means the Commissions;

	"Securities" has the meaning assigned in the Terms;

	"Subscription Agreement" means the first (cover) page, the Terms on pages * to *, the General Provisions on pages 9 to 14 and the other schedules and appendices incorporated by reference; and

	"Terms" means those portions of the Subscription Agreement headed "Terms" and contained on pages * to *.

1.2In the Subscription Agreement, the following terms have the meanings defined in Regulation S: "Directed Selling Efforts", "Foreign Issuer", "Substantial U.S. Market Interest", "U.S. Person" and "United States".

1.3In the Subscription Agreement, unless otherwise specified, currencies are indicated in US dollars.

1.4In the Subscription Agreement, other words and phrases that are capitalized have the meanings assigned to them in the body hereof.

	Acknowledgements, REPRESENTATIONS AND WARRANTIES OF PURCHASER

2.1Acknowledgements concerning offering

The Purchaser acknowledges that:

	none of the Securities have been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act ("Regulation S"), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case in accordance with applicable state and provincial securities laws; 

	the Purchaser acknowledges that the Company has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

	the decision to execute this Agreement and acquire the Purchased Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the receipt of which is hereby acknowledged) which has been filed by the Company with the Securities and Exchange Commission (the "SEC");

	neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

	there is no government or other insurance covering any of the Purchased Securities;

	there are risks associated with an investment in the Purchased Securities;

	the Purchaser has not acquired the Purchased Securities as a result of, and will not itself engage in, any "directed selling efforts" (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Purchaser may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements;

	the Purchaser and the Purchaser's advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the distribution of the Purchased Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;

	the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Purchaser during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Purchased Securities hereunder have been made available for inspection by the Purchaser, the Purchaser's lawyer and/or advisor(s);

	the Purchaser will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Purchaser contained herein or in any document furnished by the Purchaser to the Company in connection herewith being untrue in any material respect or any breach or failure by the Purchaser to comply with any covenant or agreement made by the Purchaser to the Company in connection therewith;

	the Purchased Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Purchaser that any of the Purchased Securities will become listed on any stock exchange or automated dealer quotation system, except that currently market makers make a market for the Company's common shares on the NASD's OTC Bulletin Board;

	the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in accordance with applicable state and provincial securities laws;

	the statutory and regulatory basis for the exemption claimed for the offer of the Securities, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state and provincial securities laws; 

	the Purchaser has been advised to consult the Purchaser's own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Company is not in any way responsible) for compliance with:

(i)any applicable laws of the jurisdiction in which the Purchaser is resident in connection with the distribution of the Purchased Securities hereunder, and

(ii) applicable resale restrictions; 

	this Agreement is not enforceable by the Purchaser unless it has been accepted by the Company, and the Purchaser acknowledges and agrees that the Company reserves the right to reject any subscription for any reason; and

	By executing and delivering this Agreement, each Subscriber will have directed the Company not to include a Canadian Legend on any certificates representing the Securities to be issued to such Subscriber.  As a consequence, the Subscriber will not be able to rely on the resale provisions of Multilateral Instrument 45-102, and any subsequent trade in the Securities during or after the Canadian hold period described therein will be a distribution subject to the prospectus and registration requirements of Canadian securities legislation, to the extent that the trade is at that time subject to any such Canadian securities legislation.

2.2Representations by the purchaser

The Purchaser represents and warrants to the Issuer that, as at the Agreement Date and at the Closing:

	the Purchaser has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if the Purchaser is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of the Purchaser;

	the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to the Purchaser or of any agreement, written or oral, to which the Purchaser may be a party or by which the Purchaser is or may be bound;

	the Purchaser has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms;

	the Purchaser is not acquiring the Purchased Securities for the account or benefit of, directly or indirectly, any U.S. Person;

	the Purchaser is not a U.S. Person;

	the Purchaser is resident in the jurisdiction set out under the heading "Name and Address of Purchaser" on the signature page of this Agreement;

	the sale of the Purchased Securities to the Purchaser as contemplated in this Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Purchaser;

	the Purchaser is acquiring the Purchased Securities for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons; 

	the Purchaser is outside the United States when receiving and executing this Agreement and is acquiring the Purchased Securities as principal for the Purchaser's own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in such Securities;

	the Purchaser is not an underwriter of, or dealer in, the common shares of the Company, nor is the Purchaser participating, pursuant to a contractual agreement or otherwise, in the distribution of the Purchased Securities;

	the Purchaser (i) is able to fend for him/her/itself in the Subscription; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Securities; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;

	the Purchaser acknowledges that the Purchaser has not acquired the Purchased Securities as a result of, and will not itself engage in, any "directed selling efforts" (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Purchaser may sell or otherwise dispose of the Securities pursuant to registration of the Securities pursuant to the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements and as otherwise provided herein;

	the Purchaser understands and agrees that none of the Securities have been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

	the Purchaser understands and agrees that offers and sales of any of the Securities prior to the expiration of a period of one year after the date of original issuance of the Securities (the one year period hereinafter referred to as the "Distribution Compliance Period") shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom and in each case only in accordance with applicable state and provincial securities laws;

	the Purchaser understands and agrees not to engage in any hedging transactions involving any of the Securities unless such transactions are in compliance with the provisions of the 1933 Act and in each case only in accordance with applicable state and provincial securities laws;

	the Purchaser understands and agrees that the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act;

	the Purchaser is not aware of any advertisement of any of the Securities and is not acquiring 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 or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

	no person has made to the Purchaser any written or oral representations:

(i)that any person will resell or repurchase any of the Securities;

(ii)that any person will refund the purchase price of any of the Securities;

(iii)as to the future price or value of any of the Securities; or

(iv)that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Company on any stock exchange or automated dealer quotation system.

2.3Reliance, indemnity and notification of changes

The representations and warranties in the Subscription Agreement (including the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 9 to 14 and the other schedules and appendices incorporated by reference) are made by the Purchaser with the intent that they be relied upon by the Issuer in determining its suitability as a purchaser of Purchased Securities, and the Purchaser hereby agrees to indemnify the Issuer against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur as a result of reliance thereon. The Purchaser undertakes to notify the Issuer immediately of any change in any representation, warranty or other information relating to the Purchaser set forth in the Subscription Agreement (including the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 9 to 14 and the other schedules and appendices incorporated by reference) which takes place prior to the Closing.

2.4Survival of representations and warranties

The representations and warranties contained in this Section will survive the Closing.

	ISSUER'S ACCEPTANCE

The Subscription Agreement, when executed by the Purchaser, and delivered to the Issuer, will constitute a subscription for Securities which will not be binding on the Issuer until accepted by the Issuer by executing the Subscription Agreement in the space provided on the face page(s) of the Agreement and, notwithstanding the Agreement Date, if the Issuer accepts the subscription by the Purchaser, the Subscription Agreement will be entered into on the date of such execution by the Issuer.

	CLOSING

4.1On or before the end of the fifth business day before the Closing Date, the Purchaser will deliver to the Issuer the Subscription Agreement and all applicable schedules and required forms, duly executed, and payment in full for the total price of the Purchased Securities to be purchased by the Purchaser.

4.2At Closing, the Issuer will deliver to the Purchaser the certificates representing the Purchased Securities purchased by the Purchaser registered in the name of the Purchaser or its nominee, or as directed by the Purchaser.  

	MISCELLANEOUS

5.1The Purchaser agrees to sell, assign or transfer the Securities only in accordance with the requirements of applicable securities laws and any legends placed on the Securities as contemplated by the Subscription Agreement.

5.2The Purchaser hereby authorizes the Issuer to correct any minor errors in, or complete any minor information missing from any part of the Subscription Agreement and any other schedules, forms, certificates or documents executed by the Purchaser and delivered to the Issuer in connection with the Private Placement.

5.3The Issuer may rely on delivery by fax machine of an executed copy of this subscription, and acceptance by the Issuer of such faxed copy will be equally effective to create a valid and binding agreement between the Purchaser and the Issuer in accordance with the terms of the Subscription Agreement.

5.4Without limitation, this subscription and the transactions contemplated by this Subscription Agreement are conditional upon and subject to the Issuer's having obtained such regulatory approval of this subscription and the transactions contemplated by this Subscription Agreement as the Issuer considers necessary.

5.5This Subscription Agreement is not assignable or transferable by the parties hereto without the express written consent of the other party to this Subscription Agreement.

5.6Time is of the essence of this Subscription Agreement and will be calculated in accordance with the provisions of the Interpretation Act (British Columbia).

5.7Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for in this Subscription Agreement, this Subscription Agreement contains the entire agreement between the parties with respect to the Securities and there are no other terms, conditions, representations or warranties whether expressed, implied, oral or written, by statute, by common law, by the Issuer, or by anyone else.

5.8The parties to this Subscription Agreement may amend this Subscription Agreement only in writing.

5.9This Subscription Agreement enures to the benefit of and is binding upon the parties to this Subscription Agreement and their successors and permitted assigns.

5.10A party to this Subscription Agreement will give all notices to or other written communications with the other party to this Subscription Agreement concerning this Subscription Agreement by hand or by registered mail addressed to the address given on page 1.

5.11This Subscription Agreement is to be read with all changes in gender or number as required by the context.

5.12This Subscription Agreement will be governed by and construed in accordance with the internal laws of Colorado (without reference to its rules governing the choice or conflict of laws), and the parties hereto irrevocably attorn and submit to the exclusive jurisdiction of the courts of Colorado with respect to any dispute related to this Subscription Agreement.

End of General Provisions

End of Subscription Agreement

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