Document:

EXHIBIT 4.2

                       PREFERRED SHARE PURCHASE AGREEMENT

     This Preferred  Share Purchase  Agreement  (this  "Agreement") is dated for
reference March 28, 2005 by and between Clearly Canadian Beverage Corporation, a
British  Columbia  company  (the  "Corporation")  and BG Capital  Group Ltd.,  a
Bahamas  corporation  ("Holder").  The Corporation  and Holder are  collectively
referred to herein as the "parties" and each a "party."

     NOW,  THEREFORE,  in  consideration  of the above and the  mutual  promises
hereinafter set forth, the parties hereto agree as follows:

1.   DEFINITIONS

In this Agreement:

          (a)  "2005  Budgeted  Targets"  means  the  budgeted  targets  of  the
Corporation's  performance  as set out in  Schedule  A  attached  hereto,  which
budgeted  targets  are  based  in part  on the  2005  Pro  Forma  Budget  of the
Corporation set out in Schedule B attached hereto;

          (b)  "Affiliate"  has the  meaning  set forth in Rule 12b-2  under the
Exchange Act of 1934, as amended (the "Exchange Act");

          (c) "BG Facility"  means the One Million Dollar  ($1,000,000.00)  loan
from Holder to the Corporation pursuant to the terms of a loan agreement between
Holder and the Corporation dated February 9, 2005 (the "BG Loan Agreement");

          (d) "Blue  Mountain"  means Blue  Mountain  Springs  Ltd.,  an Ontario
corporation, wholly-owned by the Corporation;

          (e) "Business Day" means a day which is not a Saturday,  Sunday or any
statutory holiday in the Province of British Columbia;

          (f) "CAPCO  Facility"  means the One  Million  Dollar  ($1,000,000.00)
operating line of credit  established by CAPCO Financial  Company, a division of
Greater Bay Bank N.A  ("CAPCO")  in favour of CCB (US),  as amended from time to
time, together with all security granted thereunder;

          (g)  "CCB(US)"  means CC Beverage  (U.S.)  Corporation,  a  Washington
corporation wholly-owned by the Corporation;

          (h)  "Collingwood  Property" means the land located in the Township of
Osprey,  in the County of Grey,  owned by Blue  Mountain,  as more  particularly
described in Schedule C hereto;

          (i) "Collingwood  Property  Mortgages" means the first charge security
mortgage in the principal  amount of Eight  Hundred  Thousand  Canadian  Dollars
($800,000.00  CDN) registered  against the Collingwood  Property in the names of
Jeanette  McGrath and Shari-Anne  Dudart-McGrath  and the second charge security
mortgage in the principal amount of One Million Canadian Dollars ($1,000,000.00

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CDN)  registered  against  the  Collingwood  Property  in the name of  Global as
security for the Global Facility;

          (j) "Common Shares" means the  Corporation's  common shares after such
shares have been  consolidated on a ten (10) for one (1) share basis pursuant to
the Shareholder Approval;

          (k)  "Convertible  Debentures"  means  the  Six  Hundred  and  Seventy
Thousand  Canadian  Dollars   ($670,000.00  CDN)  principal  amount  of  secured
convertible  debentures  issued by the  Corporation  pursuant to the Convertible
Debenture Trust Indenture;

          (l) "Convertible  Debenture Trust Indenture" means the trust indenture
dated  December  2, 2002 as  amended by a  supplemental  trust  indenture  dated
December 1, 2003 between the  Corporation  and Pacific  Corporate Trust Company,
under which the Corporation has issued the Convertible  Debentures and granted a
security interest in all of its present and after-acquired personal property;

          (m)  "Criterion   Contract"  means  the  consulting  contract  between
Criterion  Capital  Corporation  ("Criterion"),  a British Columbia  corporation
wholly-owned  by Douglas  Mason and the  Corporation  dated  March 1,  2002,  as
amended by letter agreement dated February 28, 2003;

          (n)  "Environmental  Law" means any and all applicable  international,
federal,  provincial,  state,  municipal or local laws,  statutes,  regulations,
treaties,  orders,  judgements,  decrees and/or ordinances whether or not having
the force of law and all applicable  official  directives and  authorizations of
any Governmental Authority relating to any contaminant, the environment,  public
health,  occupational health and safety,  product liability or any environmental
activity;

          (o) "Financial  Statements" means the audited  consolidated  financial
statements of the Corporation for the period ending December 31, 2004 consisting
of the  audited  balance  sheets;  the  consolidated  statements  of  change  in
shareholders'  equity,  the  consolidated   statements  of  operations  and  the
consolidated statements of cash flows;

          (p)  "Formosa  Property"  means the land  located  in the  Village  of
Formosa,  Ontario,  owned by the Corporation,  as more particularly described in
Schedule C hereto;

          (q)  "Formosa  Property  Mortgages"  means the first  charge  security
mortgage in the principal amount of One Million Canadian Dollars  ($1,000,000.00
CDN) registered  against the Formosa  Property in the name of Global as security
for the Global Facility;

          (r)  "Global   Facility"  means  the  One  Million   Canadian  Dollars
($1,000,000.00  CDN)  principal  amount of loan from Global (GMP)  Holdings Inc.
("Global") to the Corporation  pursuant to the terms of a loan Agreement between
Global and the Corporation dated November 23, 2004, as amended;

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          (s)  "Governmental  Authority" means any nation,  federal  government,
province,  state,  municipality  or other  political  subdivision  of any of the
foregoing,   and  any  entity  exercising  executive,   legislative,   judicial,
regulatory or administrative functions;

          (t) "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances,  materials and wastes, including,  without limitation,  hydrocarbons
(including   naturally   occurring  or  man-made  petroleum  and  hydrocarbons),
flammable  explosives,  asbestos,  urea  formaldehyde  insulation,   radioactive
materials,   biological  substances,   polychlorinated  biphenyls,   pesticides,
herbicides  and any  other  kind  and/or  type  of  pollutants  or  contaminants
(including, without limitation, materials which include hazardous constituents),
sewage,  sludge,  industrial slag, solvents and/or any other similar substances,
materials,  or wastes and  including any other  substances,  materials or wastes
that are or become regulated under any Laws (including,  without limitation, any
that are or become classified as hazardous or toxic under any Laws);

          (u)  "Information  Circular"  means the  information  circular  of the
Corporation dated March 28, 2005;

          (v)  "Koltai  Contract"  means the  employment  agreement  between Tom
Koltai and the Corporation dated January 1, 1997, as amended;

          (w) "Laws" shall mean all statutes, codes, ordinances, decrees, rules,
regulations,  customs,  treaties,  municipal  by-laws,  judicial  or arbitral or
administrative or ministerial or departmental or regulatory  judgments,  orders,
decisions,  rulings or  awards,  directives,  customs,  policies  or  guidelines
whether or not having the force of law, or any provisions of the foregoing;

          (x) "Lien" means any mortgage, charge, pledge, right of set-off, title
retention,  hypothec,  security  interest,  lien,  assignment,  claim  or  other
encumbrance  of any  nature  or kind  whatsoever,  whether  fixed  or  floating,
statutory or consensual, and howsoever created;

          (y) "Loan  Documents" has the meaning  ascribed thereto in the BG Loan
Agreement;

          (z) "Management  Credit Facility" means the amended credit facility in
the  aggregate  amount of Three  Hundred  and  Ninety-Four  Thousand  and Thirty
Canadian  Dollars  ($394,030.00  CDN) among the  Corporation,  as borrower,  and
Criterion and Philip Langridge, as lenders;

          (aa) "Material  Subsidiaries" means,  collectively,  Blue Mountain and
CCB (US);

          (bb) "Morley Contract" means the consulting  contract between Bruce E.
Morley Law Corporation ("Law Corp"), a British Columbia corporation wholly-owned
by Bruce Morley and the  Corporation  dated March 1, 2002,  as amended by letter
agreement dated February 28, 2003;

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          (cc) "Permitted  Encumbrance"  means in respect of any person, any one
or more of the following:

               (i) inchoate or statutory  priorities,  liens or trust claims for
taxes,  assessments  and other  governmental  charges  or  levies  which are not
delinquent or the validity of which are currently  being contested in good faith
by  appropriate  proceedings  provided  that  there  shall have been set aside a
reserve to the extent required by GAAP in an amount which is reasonably adequate
with respect thereto;

               (ii) the right  reserved  to, or vested in, any  municipality  or
governmental authority by the terms of any lease, license,  franchise, grant, or
permit,  or by any statutory  provision,  to terminate any such lease,  license,
franchise,  grant or  permit,  or to  require  annual or  periodic  payment as a
condition of the continuance thereof;

               (iii) inchoate or statutory liens of contractors, subcontractors,
mechanics,  suppliers,  material  men and  others in  respect  of  construction,
maintenance, repair or operation of assets or properties of the person, or other
like  possessory  liens  and  public  utility  liens  provided  the same are not
registered as encumbrances against the title to any real or personal property of
the person;

               (iv)  security  given to a public  utility or other  governmental
authority  or  other  public   authority   when  required  by  such  utility  or
governmental  authority in connection  with the  operations of the person in the
ordinary course of business;

               (v)  title  defects  which  are  of a  minor  nature  and  in the
aggregate will not  materially  impair the value or use of this property for the
purposes for which it is held or  applicable  municipal  and other  governmental
restrictions,  including municipal by-laws and regulations  affecting the use of
land or the nature of any structures which may be erected thereon, provided such
restrictions have been complied with;

               (vi) reservations,  limitations, provisos and conditions, if any,
expressed  in any  original  grants  from the Crown of any real  property or any
interest therein and the easements, rights-of-way, servitudes and similar rights
in real  property  comprised  in the assets of the person or  interests  therein
granted or reserved to other persons;

               (vii) personal  property  security  interests  securing  purchase
money security  obligations,  provided that such security  interests charge only
the assets which are subject of the purchase money security obligations (and the
proceeds thereof to the extent permitted by applicable law) and no other assets,
and security  interests arising under capitalized lease  obligations,  including
security interests registered in favour of Telecom Leasing Canada (TLC) Limited;

               (viii) liens and charges on accounts  receivable and  inventories
of CCB(US) in favour of CAPCO, as security for the CAPCO Facility;

               (ix) the Collingwood Property Mortgages;

               (x) the Formosa Property Mortgage;

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               (xi) the  security  on all present  and  after-acquired  personal
property  of the  Corporation,  CCB(US) and Blue  Mountain  granted in favour of
Global, as security for the Global Facility;

               (xii) the security  interest  granted pursuant to the Convertible
Debenture Trust Indenture, securing the Convertible Debentures;

               (xiii)  the  security  interest  granted by CCB (US) in favour of
Advanced H2O Inc.  pursuant to a bottling  agreement dated February 26, 2002, as
amended February 6, 2004;

               (xiv)  Instrument  No.  358815  being a charge  in  favour of the
Laurentian  Bank  of  Canada  against  the  Collingwood  Property  described  in
paragraph 2(b) of Schedule C;

               (xv) Instrument No. 365181 being a lease in favour of Christopher
E. Teeter  against the  Collingwood  Property  described  in  paragraph  2(b) of
Schedule C;

               (xvi)  Instrument No. 365710 being a charge in favour of Realcare
Services Ltd.  against the Collingwood  Property  described in paragraph 2(b) of
Schedule C;

               (xvii) Instrument No. 365711 being a charge in favour of National
Trust Co.,  in trust for  R.R.S.P.  #097565  against  the  Collingwood  Property
described in paragraph 2(b) of Schedule C; and

               (xviii)  Instrument No. 380910 being a certificate  registered by
Ralph  Moyal,  as  Plaintiff  against  the  Collingwood  Property  described  in
paragraph 2(b) of Schedule C;

          (dd) "Person" means an individual, partnership,  corporation, trustee,
trust,  unincorporated  organisation,  non-share  capital  corporation,  or  any
federal,  provincial or municipal  governmental body,  corporation,  commission,
board, agency, foundation,  association, counsel or other governmental authority
of any kind  whatsoever,  or any other entity  whatsoever;

          (ee) "SEC" means the United States Securities and Exchange Commission;

          (ff) "Stock  Options" means the stock options as set forth in Schedule
D to be issued under the Corporation's  stock option plan to be presented to the
shareholders of the Corporation for approval;

          (gg) "Shareholder Approval" means the approval, in accordance with the
Articles of the  Corporation,  by the  shareholders  of the  Corporation  of the
particular  matters to be acted upon as set forth in the  Information  Circular;
and

          (hh) "Transaction Documents" shall mean this Agreement and any and all
other  agreements,  instruments  and documents  contemplated  to be executed and
delivered pursuant to this Agreement.

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2.   AGREEMENT TO SELL AND PURCHASE

     2.1 Sale and Purchase.  Subject to the terms and conditions  hereof, at the
Closing (as defined in section 6.1), the Corporation  hereby agrees to issue and
sell to Holder,  and Holder agrees to purchase from the Corporation an aggregate
of Two Million  (2,000,000) of the  Corporation's  Class A Preferred shares (the
"Class A Shares").

     2.2 Purchase Price.  The purchase price for the Class A Shares shall be Two
Million  Dollars  ($2,000,000.00)  or One Dollar ($1.00) for each of the Class A
Shares (the "Purchase Price").

     2.3 Rights of Class A Shares.  The Corporation's  Class A Shares shall have
the respective  rights,  preferences and privileges as set forth in the Schedule
of the Special Rights and  Restrictions of the Class A Shares attached hereto as
Schedule E (the  "Class A Special  Rights and  Restrictions").  It is agreed and
acknowledged  by the  parties  hereto  that the  terms  set forth in the Class A
Special Rights and Restrictions form binding  obligations of the Corporation and
Holder and for greater certainty, shall, by reference, be incorporated into, and
form a part of, this Agreement.

3.   EXCHANGE OF CLASS A SHARES

     3.1 Exchange.  Upon the Corporation's  receipt of gross proceeds of no less
than Three Million Dollars  ($3,000,000.00)  (the "Private Placement  Proceeds")
from a bought deal private  placement of Common  Shares (the  "Standard  Private
Placement") pursuant to an engagement letter between Standard Securities Capital
Corporation ("Standard") and the Corporation dated for reference March 28, 2005,
the Holder will exchange all of its Class A Shares into Two Million  (2,000,000)
of the Corporation's Class B Preferred shares (the "Class B Shares").

     3.2 Rights of Class B Shares.  The Corporation's  Class B Shares shall have
the respective  rights,  preferences and privileges as set forth in the Schedule
of the Special Rights and  Restrictions of the Class B Shares attached hereto as
Schedule F (the  "Class B Special  Rights and  Restrictions").  It is agreed and
acknowledged  by the  parties  hereto  that the  terms  set forth in the Class B
Special Rights and Restrictions form binding  obligations of the Corporation and
Holder and for greater certainty, shall, by reference, be incorporated into, and
form a part of, this Agreement.

     3.3  Exchange  Effective.  The  Exchange  of the Class A Shares  under this
Article  3 shall be  deemed  to have  been  effected  on the  date  the  Private
Placement Proceeds are received by the Corporation.

     3.4 Certificates. On the fifth Business Day after the effective date of the
exchange  of the Class A Shares  into  Class B  Shares,  the  Corporation  shall
deliver  to the  Holder's  solicitor,  Brent  Lokash  Law  Corporation,  a share
certificate or share  certificates of the Corporation  representing  the Class B
Shares  (the  "Class B Share  Certificate")  in  exchange  for the return to the
Corporation of the Class A Share Certificate (as defined in subsection  6.2(e)).
Any Class A Share  Certificate not returned to the Corporation will be deemed to

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be cancelled as of the effective date of the exchange of the Class A Shares into
Class B Shares without any further act by the Holder or the Corporation.

     3.5  Taxes.  The  Corporation  shall  pay all  documentary,  stamp or other
transactional taxes and charges  attributable to the issuance or delivery of the
Class B Share Certificate.

4.   PRIVATE PLACEMENT FINDER'S FEE

     4.1 Finder's Fee. In consideration of Holder introducing the Corporation to
Standard, the Corporation, shall, upon issuance of the Class B Share Certificate
pursuant  to  Section  3.4,  issue to Holder  Four  Hundred  and Fifty  Thousand
(450,000) Common Shares (the "Finder's Fee Shares").

     4.2 Certificate.  Along with the delivery of the Class B Share Certificate,
the  Corporation  shall  issue and  deliver  by hand  against  a signed  receipt
therefor or by registered  mail,  return receipt  requested,  to the address set
forth  in  section  15.9,  a share  certificate  or  share  certificates  of the
Corporation  representing  the  Finder's  Fee Shares  (the  "Finder's  Fee Share
Certificate").

     4.3  Taxes.  The  Corporation  shall  pay all  documentary,  stamp or other
transactional taxes and charges  attributable to the issuance or delivery of the
Finder's Fee Share Certificate.

5.   PAYMENT OF PURCHASE PRICE

     The Purchase Price will be payable by Holder to the Corporation as follows:

          (a) the sum of One Million Dollars ($1,000,000.00) by way of a deposit
(the  "Deposit")  to be paid within five (5) Business  Days of the  execution of
this  Agreement by both  parties,  into an interest  bearing  trust account with
Holder's  solicitor,  Brent  Lokash Law  Corporation,  and to be released to the
Corporation,  along with all  interest  accrued,  upon the  Closing,  or paid to
Holder,  along with all interest accrued thereon,  in the event the Closing does
not occur on the Closing Date; and

          (b)  the  sum  of  One  Million  Dollars  ($1,000,000.00)  by  way  of
conversion,  upon the Closing,  of the BG Facility into One Million  (1,000,000)
Class A Shares,  which  conversion  shall be deemed  to be  repayment  of the BG
Facility and  extinguish and satisfy,  in full,  any and all  obligations of the
Corporation under the BG Facility.

6.   CLOSING; CONDITIONS TO CLOSING

     6.1 The closing of the transactions  contemplated under this Agreement (the
"Closing")  shall  take place at such  place as the  Corporation  and Holder may
mutually agree on the first Business Day following the  Shareholder  Approval or
on such  other  date as the  Corporation  and  Holder  may  mutually  agree (the
"Closing Date").

     6.2 The Closing is subject to the  satisfaction  or waiver,  in whole or in
part, of each of the following conditions at, or prior to the Closing:

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          (a) the Corporation shall have obtained the Shareholder Approval;

          (b)  the  Corporation   shall  have  furnished  to  Holder,   in  form
satisfactory to Holder, executed authorizations by the Board of Directors of the
Corporation   (the  "Board")   approving  and   authorizing   the   transactions
contemplated by this Agreement and appointing  Brent Lokash,  Marco Markin and a
third  nominee of the Holder's  choosing to the Board for a term of no less than
one year;

          (c) the Corporation shall have furnished to Holder a certified copy of
a resolution of the shareholders of the Corporation  creating the  Corporation's
Class A Shares and the  Corporation's  Class B Shares,  along with copies of all
corporate  registry  filings  required by the  Province  of British  Columbia in
connection therewith;

          (d)  the  Corporation   shall  have  furnished  to  Holder,   in  form
satisfactory to Holder,  executed officer's  certificates of the Corporation and
the Material  Subsidiaries in connection with the  transactions  contemplated by
this Agreement;

          (e) the Corporation shall have furnished to Holder a share certificate
or share  certificates of the Corporation  representing  the Class A Shares (the
"Class A Share Certificate");

          (f) the  Corporation  shall have  furnished  to Holder a consent  from
Global  confirming  as of the Closing  Date,  the  outstanding  balance and good
standing of the Global  Facility  and  agreeing  to the  issuance of the Class A
Shares and the Class B Shares;

          (g) the  Corporation  shall have  furnished  to Holder a consent  from
CAPCO  Financial  Company  confirming  as of the Closing Date,  the  outstanding
balance and good standing of the CAPCO Facility;

          (h) the  Corporation  shall have furnished to Holder an agreement from
each  beneficial  owner of units of the  Convertible  Debenture  Trust Indenture
other than  Technology  Flavors & Fragrances,  Inc.  (such owners the "Remaining
Debentureholders")  providing  that upon the  closing  of the  Standard  Private
Placement,  the Six Hundred and Seventy Thousand  Canadian Dollars  ($670,000.00
CDN) outstanding  amount of the Convertible  Debentures shall be repaid, and the
Remaining  Debentureholders  shall  subscribe  Five Hundred and Twenty  Thousand
Canadian  Dollars  ($520,000.00  CDN) of Common  Shares at a price of One Dollar
($1.00) per share;

          (i) the  Corporation  shall have furnished to Holder an agreement from
Criterion,  one of the lenders of the Management Credit Facility  providing that
upon the closing of the  Standard  Private  Placement  the entire  amount of the
Management Credit Facility shall be repaid, and Criterion shall subscribe for an
aggregate  $262,230CDN  of Common  Shares at a price of One Dollar  ($1.00)  per
share;

          (j) the Corporation shall have furnished to Holder a written amendment
to the Criterion Contract providing as follows:

               (i)  Criterion  shall  receive  25% of its  Consulting  Fees,  as
defined in the Criterion Contract,  for the balance of 2005 (the "2005 Criterion
Reduced Fee Amount");

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               (ii) the Criterion Contract shall not be terminated without cause
until after December 31, 2005 and, subject to paragraph 6.2(j)(iii),  thereafter
if for any reason the  Criterion  Contract  is  terminated  by the  Corporation,
Criterion shall receive severance of Two Hundred Thousand Dollars  ($200,000.00)
and Stock Options to purchase One Hundred and Fifty  Thousand  (150,000)  Common
Shares (collectively, the "Criterion Termination Compensation");

               (iii) in the event the 2005 Budgeted  Targets are achieved by the
Corporation,  the Criterion  Contract shall continue for 2006 in accordance with
the terms of the Criterion  Contract,  and Criterion  shall be paid by March 31,
2006 a bonus equal to 20% of its annual  pre-amended  Consulting  Fees,  plus an
amount equal to the balance of Criterion's  2005 Consulting Fees not included in
the 2005 Criterion Reduced Fee Amount,  and if, for any reason  whatsoever,  the
Corporation  terminates  the Criterion  Contract prior to December 31, 2006, the
Corporation  shall  immediately  pay  Criterion an amount equal to the Criterion
Termination  Compensation,  plus the balance of any Consulting  Fees due for any
remaining portion of 2006;

          (k) the Corporation shall have furnished to Holder a written amendment
to the Morley Contract providing as follows:

               (i) Law Corp shall  receive 80% of its Retainer  Fees, as defined
in the Morley Contract,  for the balance of 2005 (the "2005 Law Corp Reduced Fee
Amount");

               (ii) the Morley  Contract  shall not be terminated  without cause
until after December 31, 2005 and, subject to paragraph 6.2(k)(iii),  thereafter
if for any reason the Morley Contract is terminated by the Corporation, Law Corp
shall receive severance of One Hundred and Fifty Thousand Dollars  ($150,000.00)
and Stock  Options to purchase  One Hundred  Thousand  (100,000)  Common  Shares
(collectively, the "Law Corp Termination Compensation");

               (iii) in the event the 2005 Budgeted  Targets are achieved by the
Corporation,  the Morley Contract shall continue for 2006 in accordance with the
terms of the Morley  Contract,  and Law Corp  shall be paid by March 31,  2006 a
bonus equal to 20% of its annual pre-amended Retainer Fees, plus an amount equal
to the balance of Law Corp's  2005  Retainer  Fees not  included in the 2005 Law
Corp  Reduced  Fee Amount and if, for any  reason  whatsoever,  the  Corporation
terminates the Morley Contract prior to December 31, 2006, the Corporation shall
immediately  pay  Law  Corp  an  amount  equal  to  the  Law  Corp   Termination
Compensation,  plus the  balance  of any  Retainer  Fees  due for any  remaining
portion of 2006;

          (l) the Corporation shall have furnished to Holder a written amendment
to the Koltai Contract providing as follows:

               (i) Koltai shall  receive 80% of his Base  Salary,  as defined in
the Koltai  Contract,  for the  balance of 2005 (the "2005  Koltai  Reduced  Fee
Amount");

               (ii) the Koltai  Contract  shall not be terminated  without cause
until after December 31, 2005 and, subject to paragraph 6.2(l)(iii),  thereafter
if for any reason the Koltai Contract is terminated by the  Corporation,  Koltai
shall receive severance of One Hundred and Fifty Thousand Dollars  ($150,000.00)
and Stock  Options to purchase  One Hundred  Thousand  (100,000)  Common  Shares
("collectively, the Koltai Termination Compensation");

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               (iii) in the event the 2005 Budgeted  Targets are achieved by the
Corporation,  the Koltai Contract shall continue for 2006 in accordance with the
terms of the Koltai Contract, and Koltai shall be paid by March 31, 2006 a bonus
equal to 20% of his annual pre-amended Base Salary,  plus an amount equal to the
balance of Koltai's 2005 Base Salary not included in the 2005 Koltai Reduced Fee
Amount and if, for any reason whatsoever,  the Corporation terminates the Koltai
Contract  prior to December 31, 2006,  the  Corporation  shall  immediately  pay
Koltai an amount equal to the Koltai Termination Compensation,  plus the balance
of any Base Salary due for any remaining portion of 2006;

          (m) the Corporation shall have furnished to Holder a written amendment
to the  employment  agreement (the  "Hamzagic  Contract")  between Sead Hamzagic
("Hamzagic")  and the  Corporation  dated  October  1, 2003  providing  that the
Hamzagic  Contract  shall not be  terminated  until after  December 31, 2005 and
thereafter  if for  any  reason  the  Hamzagic  Contract  is  terminated  by the
Corporation,  Hamzagic  shall  receive  a  payment  of  Sixty  Thousand  Dollars
($60,000.00);

          (n) the  Corporation  shall  have  furnished  to  Holder  an  executed
consulting agreement, with Matt Hoogendoorn (the "Consultant"),  effective April
1, 2005, providing as follows:

               (i) the Consultant  shall assist the Corporation with accounting,
financing and cash-flow management;

               (ii) the  Consultant  shall have signing  authority on all of the
Corporation's or the Material Subsidiary's bank accounts;

               (iii) the Consultant  shall be retained by the Corporation for no
less than one (1) year and shall be paid Five Thousand  Dollars  ($5,000.00) per
month and  thereafter,  subject to  renewal  with the  mutual  agreement  of the
Corporation and the Consultant;

          (o) the Corporation  shall have complied with all of its covenants and
agreements contained in this Agreement and all representations and warranties of
the Corporation contained in this Agreement shall be true;

          (p) the  Corporation  shall  have  furnished  to Holder an  opinion of
counsel for the  Corporation  and each Material  Subsidiary,  in form reasonably
satisfactory to Holder, in connection with the transactions contemplated by this
Agreement;

          (q) the Corporation and Holder shall have executed and issued to Brent
Lokash Law  Corporation  a joint  direction to pay the  Deposit,  along with all
interest  accrued thereon and less the  Corporation's  reimbursement of Holder's
legal fees in accordance with the provisions of Article 14, to the Corporation;

          (r) the  Corporation  shall have taken all action  required  to make a
representative  designated by Holder a signatory on all bank accounts  owned and
operated by the Corporation and the Material Subsidiaries; and

                                       10

<PAGE>

          (s) Holder shall have furnished to the  Corporation all such documents
or  undertakings  as are  required to effect the  discharge  of the Security (as
defined in the BG Loan Agreement).

7.   REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

     The Corporation hereby represents and warrants to Holder, as of the Closing
Date, as follows:

     7.1 Organization, Good Standing, Qualification and Power and Authority. The
Corporation  is a company  incorporated  and  amalgamated  under the Company Act
(British Columbia) and is now governed by the Business Corporations Act (British
Columbia) and has not  discontinued  or been dissolved  under such act and is in
good standing with respect to the filing of annual reports with the Registrar of
Companies office;  CCB(US) is a company incorporated under the laws of the State
of Washington and has not discontinued or been dissolved and is in good standing
with respect to the filing of annual reports therein. Blue Mountain is a company
incorporated  under the Business  Corporations Act (Ontario) is in good standing
and has not been  discontinued  or dissolved.  The Corporation has all requisite
corporate  power and  authority  to (a)  execute  and  deliver  the  Transaction
Documents;  (b)  issue the  Class A  Shares,  the  Class B  Shares,  the Class A
Dividend Shares (as defined in the Class A Special Rights and Restrictions), the
Class  B  Dividend  Shares  (as  defined  in the  Class  B  Special  Rights  and
Restrictions),  the Class A Conversion Shares (as defined in the Class A Special
Rights and Restrictions), the Class B Conversion Shares (as defined in the Class
B Special Rights and Restrictions)  and the Finder's Fees Shares  (collectively,
the "Securities") as contemplated in the Transaction Documents; and (d) to carry
out the other provisions of the Transaction Documents.

     7.2 Material Subsidiaries.  The Material Subsidiaries are the only material
subsidiaries of the Corporation.

     7.3 Authorization; Binding Obligations. All corporate action on the part of
the  Corporation,  its officers,  directors and  shareholders  necessary for the
authorization  of the  Transaction  Documents and the  performance of all of its
obligations thereunder and for the authorization, sale, issuance and delivery of
the  Transaction  Documents and the Securities  have been taken or will be taken
prior to the Closing.  The Corporation has taken or will take all such action as
may be necessary to assure that an adequate number of the Corporation's  Class A
Shares, the Corporation's  Class B Shares and Common Shares, as the case may be,
are authorized and reserved for issuance as provided under this  Agreement.  The
Transaction Documents will, once executed,  constitute, valid, legal and binding
obligations  of the  Corporation  enforceable  in  accordance  with their terms,
except  to such  limitations  as may  result  from  any  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or other  similar laws  relating to or
affecting the enforcement of creditors' rights generally.

     7.4 Capitalization.  The authorized,  issued and outstanding capital shares
of the  Corporation  and the Material  Subsidiaries  is set forth on Schedule G.
Other  than as set out in this  Agreement,  no Class A Shares  or Class B Shares
have been created or issued as of the date hereof. No Common Shares are entitled
to preemptive or similar rights,  nor is any holder of Common Shares entitled to
preemptive or similar rights arising out of any agreement or understanding  with

                                       11
<PAGE>

the Corporation by virtue of this Agreement.  Except as disclosed in Schedule G,
there are no authorized or  outstanding  options,  warrants,  script,  rights to
subscribe  to,  registration  rights,  calls  or  commitments  of any  character
whatsoever  relating to, or,  except as a result of the purchase and sale of the
Securities  hereunder,  securities,  rights or obligations  convertible  into or
exchangeable  for, or giving any person any right to  subscribe  for or acquire,
any  capital  shares  of  the  Corporation  or  the  Material  Subsidiaries,  or
contracts, commitments, understandings, or arrangements by which the Corporation
or any Material  Subsidiary is or may become bound to issue  additional  capital
shares, or securities or rights convertible or exchangeable into capital shares.
The fully  diluted  Common  Shares of the  Corporation  upon  completion  of the
transactions  contemplated by the Agreement is expected to be  substantially  as
set out in Schedule I.

     7.5 Consents and Approvals.  The execution and delivery of the  Transaction
Documents  by  the  Corporation  and  the  performance  by  it or  any  Material
Subsidiary  of their  respective  obligations  hereunder  or  thereunder  do not
require any  consent,  approval,  order,  authorization,  licence,  exemption or
designation of or by any Governmental  Authority  except for corporate  registry
filings in respect of the creation of the  Corporation's  Class A Shares and the
Corporation's  Class B Shares, and exemptions for the issuance of the Securities
pursuant  to  applicable  securities  laws  and  filing  reports  in  connection
therewith.

     7.6 No  Violations.  The execution and delivery by the  Corporation  of the
Transaction  Documents and the  performance by it or any Material  Subsidiary of
their  respective  obligations  hereunder or thereunder in compliance  with such
provisions  do not and will not: (i) conflict  with or result in a breach of any
of the terms,  conditions or provisions of: (A) its constating or organizational
documents;  (B) any Law  applicable  to it or its property  and assets;  (C) any
contractual  provision,  including,  without  limitation any material  contract,
binding on or affecting them or any of their respective property and assets, the
breach of which could  reasonably be expected to have a material  adverse effect
upon  the  business,   assets,  condition,   financial  or  otherwise  of  them,
respectively; or (D) any writ, judgment, injunction,  termination or award which
is binding on any of them or any of their  respective  property  and assets;  or
(ii)  result  in or  permit:  (A) the  imposition  of any  Lien on any of  their
respective  property and assets;  or (B) the acceleration of the maturity of any
indebtedness  of the  Corporation  or any  Material  Subsidiary,  except for the
Global Facility;

     7.7 Compliance  with Laws. The business of the Corporation and the Material
Subsidiaries  has been  conducted in compliance  with all Laws,  except for such
violations that have been cured or that,  individually or in the aggregate,  may
not  reasonably be expected to have a material  adverse  effect on the business,
operations,  financial condition or prospects of the Corporation or the Material
Subsidiaries. Neither the real or personal properties owned, leased, operated or
occupied by the Corporation or the Material Subsidiaries, nor the use, operation
or maintenance  thereof (i) violates any Laws, or (ii) violates any  restrictive
or similar covenant, agreement, commitment, understanding or arrangement, except
where such violation may not  reasonably be expected to have a material  adverse
effect on the  business,  operations,  financial  condition  or prospects of the
Corporation or the Material Subsidiaries.

     7.8 Licenses;  Permits; Related Approvals. The Corporation and the Material
Subsidiaries possess all licenses, permits, consents, approvals, authorizations,
qualifications,  and orders (hereinafter  collectively referred to as "Permits")

                                       12
<PAGE>

of all Government Authorities legally required to enable the Corporation and the
Material  Subsidiaries to conduct their business in all  jurisdictions  in which
such business is conducted. All of the Permits are in full force and effect, and
no suspension,  modification or cancellation of any of the Permits is pending or
threatened,  which may reasonably be expected to have a material  adverse effect
on the business, operations, financial condition or prospects of the Corporation
and the Material  Subsidiaries.  The execution  and delivery of the  Transaction
Documents  by  the  Corporation  and  the  performance  by  it or  any  Material
Subsidiary of their  obligations  hereunder  and  thereunder do not and will not
conflict with or violate any of the Permits.

     7.9 Real Property.  The Formosa  Property,  the Collingwood  Property and a
property  in  Piney,  Manitoba  (the  "Lands")  are the only  interests  in real
property owned or held by the  Corporation  and the Material  Subsidiaries.  All
agreements  with respect to such interests in the Lands are in force and effect,
without amendment thereto, and such interests in the Lands are free and clear of
all Liens other than the Permitted Encumbrances.

     7.10  Rents and Taxes:  All rents,  royalties,  operating  costs,  property
taxes, business taxes, development cost charges, or other Governmental Authority
charges,  taxes,  costs and levies which are  chargeable  against the Lands have
been paid in full unless the same are not due and payable.

     7.11 Intellectual  Property.  Schedule H is a complete and accurate list of
all copyrights,  patents, trademarks and any and all other intellectual property
of any  kind  whatsoever  owned,  licensed  or held by the  Corporation  and the
Material  Subsidiaries  (the  "Intellectual  Property").  Such  interests in the
Intellectual  Property is without any conflict known to the Corporation with the
rights of others,  and is free and clear of all Liens  other than the  Permitted
Encumbrances.

     7.12  Title  to  Assets.  Other  than  the  Permitted   Encumbrances,   the
Corporation and the Material  Subsidiaries will, upon the Closing, have good and
marketable  title to their  property and assets (the "Assets") free and clear of
all Liens other than the Permitted Encumbrances. With respect to the Assets they
lease, the Corporation and the Material  Subsidiaries are in material compliance
with such leases and, to the  Corporation's  knowledge,  hold a valid  leasehold
interest free and clear of all Liens.

     7.13  Material  Contracts.  All  material  contracts,  agreements,  leases,
commitments,  instruments  or other  dealings  to which the  Corporation  or any
Material Subsidiary is a party, including but not limited to all oral or written
consulting contracts,  management contracts, labor services contracts or similar
agreements for the services of a particular  individual of the  Corporation  and
the Material  Subsidiaries (the "Material Contracts") have been disclosed in the
Corporation's  annual report on Form 20-F (the  "Disclosure  Document")  for the
year ending  December 31, 2003  prepared in  compliance  with the United  States
Securities   Exchange  Act  of  1934,  as  amended  (the  "Exchange   Act"),  or
subsequently  publicly  disclosed by the  Corporation.  For the purposes of this
Agreement  a  contract  shall be  included  as a  Material  Contract  if (i) the
performance of any right or obligation by any party to such contract  involves a
payment by either party of One Hundred  Thousand  Dollars  ($100,000.00) or more
and  having a term of more  than  one  year;  (ii) an  expenditure,  receipt  or
transfer  or other  disposition  of  property  with a value of greater  than One
Hundred Thousand Dollars $100,000.00 may arise under such contract (other than a

                                       13

<PAGE>

contract with a customer or supplier in the ordinary course of business);  (iii)
such contract has been entered into out of the ordinary course of business.

     7.14 Defaults.  Neither the Corporation  nor any Material  Subsidiary is in
default  in the  performance,  observance  or  fulfillment  of  any  obligation,
agreement,   covenant,  or  condition  contained  in  any  contract,  indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a party
or by which it or any of its properties may be bound (not including the Material
Contracts) other than such violations or defaults that would not individually or
in the aggregate  have a material  adverse  effect on the  Corporation's  or any
Material Subsidiary's business, prospects,  properties,  condition (financial or
other),  results of operations  or net worth.  Neither the  Corporation  nor any
Material  Subsidiary is in breach or default of any of the terms of the Material
Contracts,  and the  Corporation is not aware of any breach or default of any of
the terms of the Material  Contracts by any other party  thereto,  and each such
contract  is in good  standing  and in full force and effect  without  amendment
thereto.

     7.15  Financial   Statements;   Undisclosed   Liabilities.   The  Financial
Statements are in accordance with the books and records of the Corporation,  are
true,  correct and complete and accurately  present the Corporation's  financial
position as of the dates set forth therein and the results of the  Corporation's
operations and changes in the Corporation's  financial  position for the periods
then ended,  all in conformity  with generally  accepted  accounting  principles
applied in the  United  States or  Canada,  as the case may be, on a  consistent
basis during each period and on a basis  consistent  with that of prior periods.
Except (i) as disclosed in the Financial  Statements;  (ii) as disclosed in this
Agreement; and (iii) as are incurred in the ordinary course of the routine daily
affairs of the Corporation's and the Material  Subsidiaries'  business since the
date of the  Financial  Statements,  neither the  Corporation  nor any  Material
Subsidiary has any  liabilities  or obligations of any nature or kind,  known or
unknown, whether accrued,  absolute,  contingent, or otherwise. To the knowledge
of the Corporation,  there is no basis for assertion  against the Corporation or
any Material Subsidiary of any material claim, liability or obligation not fully
disclosed in the Financial Statements or in this Agreement.

     7.16  Solvent.  To the  best  of its  knowledge,  the  Corporation  and the
Material  Subsidiaries  is solvent and is  generally  able to pay their debts as
they come due and will be able to do so after giving effect to the  transactions
contemplated in this Agreement.

     7.17  Shareholder  Loans. As of the date of this  Agreement,  no monies are
owed to any  shareholders  of the  Corporation,  or any  Affiliates  of any such
shareholders,  other  than  the  Management  Credit  Facility,  the  Convertible
Debentures,  short term,  unsecured  facilities  owing to Criterion  and Douglas
Mason in the amount of  approximately  Four Hundred and Fifty Thousand  Canadian
Dollars  ($450,000.00 CDN), and to suppliers of the Corporation and the Material
Subsidiaries in the ordinary course of business.

     7.18 Guarantees.  Other than Permitted  Encumbrances or as disclosed in the
Financial Statements or previously disclosed to Holder,  neither the Corporation
nor any of the Material  Subsidiaries  have  guaranteed  the  obligations of any
Person.

     7.19  Proprietary   Rights.   Neither  the  Corporation  nor  any  Material
Subsidiary has received any communications  alleging that it has violated or, by

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<PAGE>

conducting its business as proposed would violate, any proprietary rights of any
other person, nor is the Corporation aware of any basis for the foregoing.

     7.20 No  Litigation.  Other  than  has  been  disclosed  in the  Disclosure
Document, the Financial Statements or otherwise disclosed to Holder, there is no
action,  suit or  proceeding  pending or, to the  knowledge of the  Corporation,
threatened against or affecting the Corporation,  any Material Subsidiary or any
of their  properties or rights before any court or by or before any Governmental
Authority,  and the Corporation and the Material  Subsidiaries is not in default
with respect to any final judgment, writ, injunction, decree, rule or regulation
of any court or Governmental Authority.

     7.21 Tax Matters.  The Corporation and the Material  Subsidiaries have duly
and timely filed,  or obtained  extensions of time for filing,  all material tax
returns required by federal,  provincial and local  authorities (the "Returns").
All information reported on the Returns is true, accurate, and complete. Neither
the  Corporation  nor the Material  Subsidiaries is a party to, and is not aware
of, any pending or threatened action, suit, proceeding, or assessment against it
for the collection of taxes by any Governmental  Authority.  The Corporation and
the  Material  Subsidiaries  have paid in full all taxes,  interest,  penalties,
assessments  and  deficiencies  owed  by  it  to  all  taxing  authorities.  The
Corporation and the Material Subsidiaries have withheld and remitted all amounts
required to be withheld by it including without  limitation,  income tax, social
security plan contributions and employment  insurance premiums and has paid such
amounts including any penalties or interest due to the appropriate  authority on
a timely basis and in the form required under the appropriate legislation.

     7.22 Pension Plans.  The Corporation  and the Material  Subsidiaries do not
currently  have a  pension  plan or  deferred  compensation  plan for any of its
employees.  To the best of the  Corporation's  knowledge  as at the date of this
Agreement, there are no strikes or other labour disputes against the Corporation
or any of its Material Subsidiaries that are pending or threatened. All payments
due from the  Corporation  or any of its  Material  Subsidiaries  on  account of
employee  health plans and vacation pay have been paid.  None of the Corporation
or  any  of  its  Material   Subsidiaries   have  any   obligations   under  any
collective-bargaining  agreement nor, to the best of their  knowledge,  is there
any  organizing  activity  involving  the  Corporation  or any  of its  Material
Subsidiaries by any labour union or group of employees.

     7.23 Manner of Offering.  The Securities  are being issued  pursuant to (i)
Regulation  S of the United  States  Securities  Act of 1933,  as  amended  (the
"Securities  Act");  and (ii)  Multilateral  Instrument 45 - 103 Capital Raising
Exemptions ("MI 45 - 103") of Canadian Securities  Administrators (the "Canadian
Rules").

     7.24 Reporting  Company.  The  Corporation is (i) a foreign  private issuer
under the  Securities  Act;  (ii) a reporting  issuer under the  Securities  Act
(British  Columbia) and the Securities Act (Ontario)  (such  Securities Acts and
the  rules  and  regulations  thereunder  are  collectively  referred  to as the
"Provincial Securities Acts"); (iii) in compliance with its material obligations
under the Provincial Securities Acts, the Canadian Rules, the Securities Act and
the Exchange Act (the "Security Rules");  and (iv) the information  contained in
all materials,  reports,  financial statements,  disclosures and other documents
filed by the  Corporation  under the  Security  Rules are  true,  accurate,  and
complete.  The  Corporation is listed on the National  Association of Securities

                                       15

<PAGE>

Dealers,  Inc.  ("NASD"),  Over-the-Counter  Bulletin Board ("OTCBB") and Canada
Trading & Quotation System ("CNQ").

     7.25 Full  Disclosure.  All  factual  information  heretofore  or  herewith
furnished  by or on behalf of the  Corporation  to Holder for  purposes of or in
connection  with this Agreement or any transaction  contemplated  hereby is true
and accurate and all statements  made by  representatives  of the Corporation in
connection  with the  negotiation  of this  Agreement  do not contain any untrue
statement  of a material  fact or omit to state any material  fact  necessary to
make the statements  contained herein not misleading.  There is no fact known to
the  Corporation  which  materially   adversely  affects  the  accuracy  of  the
representations  and  warranties  contained in this  Agreement or the  financial
condition,  operations,  business,  earnings,  assets,  or  liabilities  of  the
Corporation  or the Material  Subsidiaries.  The  Disclosure  Document fully and
accurately discloses the business, assets and undertaking of the Corporation and
the Material  Subsidiaries as of the date of its filing and no material  changes
have  occurred  in  respect  of the  information  described  therein,  except as
publicly disclosed by the Corporation.

8.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER

     Holder hereby  represents,  warrants and covenants to the Corporation as of
the Closing Date:

     8.1  Requisite  Power and  Authority.  Holder has all  necessary  power and
authority  to execute  and deliver the  Transaction  Documents  and to carry out
their provisions. All actions on Holder's part required for the lawful execution
and  delivery  of the  Transaction  Documents  for  which  it has  executed  and
delivered have been or will be effectively taken prior to the Closing.

     8.2  Investment  Representations.  Holder  understands  that  none  of  the
Securities  to be  acquired  by  Holder  have  yet  been  registered  under  the
Securities Act or the Provincial  Securities Acts.  Holder also understands that
the  Securities  to be acquired by Holder are being offered and sold pursuant to
an exemption from  registration,  and in the case of the  Provincial  Securities
Acts, the prospectus requirements, contained in regulations under the Securities
Act  and  the  Provincial   Securities   Acts,   based  in  part  upon  Holder's
representations contained in this Agreement.

          (a)  Acquisition  for Own Account.  Holder is acquiring the Securities
for its own account, or the account of its designated  assignee,  for investment
only,  and not with a view  towards  distribution  in  violation  of  applicable
securities laws.

          (b) Accredited  Investor.  Holder represents that it is an "accredited
investor"  within the meaning of (i) Rule 501(a) of Regulation D as  promulgated
under the  Securities  Act;  and (ii) MI 45-103.  Forthwith  upon request of the
Corporation,  Holder  will,  upon  request  of  the  Corporation,   furnish  the
Corporation  with a certificate or  certificates  in respect of its status as an
"accredited investor" hereunder.

          (c)  Non-Foreign  Status.  Holder is a non resident of both the United
States and Canada for purposes of income taxation as such term is defined in the
Internal Revenue Code of 1986, as amended, and the Income Tax Act (Canada).

                                       16

<PAGE>

          (d) Financial Experience.  Holder 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  Securities  and it is able to bear the economic
risk of loss of its entire investment.

          (e)   Information.   The   Corporation  has  provided  to  Holder  the
opportunity  to ask  questions  and  receive  answers  concerning  the terms and
conditions of the  transactions  contemplated  in this  Agreement and it has had
access to such  information  concerning  the  Corporation  as it has  considered
necessary or appropriate in connection  with its investment  decision to acquire
the Securities.

          (f) No Registration.  Holder acknowledges that the Securities have not
been registered  under the Securities Act or the securities laws of any state of
the United States,  that the Securities may not be offered or sold,  directly or
indirectly,  in the United  States  except  pursuant to  registration  under the
Securities  Act and the securities  laws of all  applicable  states or available
exemptions  therefrom,  and  that,  except  as set  forth  in  Article  12,  the
Corporation  has no  obligation  or present  intention of filing a  registration
statement under the Securities Act in respect of any of the Securities.  "United
States" means the United States of America, its territories and possessions, any
state of the United States and the District of Columbia;

          (g) No Offer in the  United  States.  Holder  acknowledges  and agrees
that:

               (i) Holder is not in the United  States and the offer to purchase
the Securities was not made to a person in the United States;

               (ii) this  Agreement was delivered to,  executed and delivered by
the Holder outside the United States;

               (iii) Holder is not, and will not be  purchasing  the  Securities
for the account or benefit of, any U.S. Person or person in the United States;

               (iv)  the  current   structure  of  this   transaction   and  all
transactions and activities  contemplated hereunder is not a scheme to avoid the
registration requirements of the Securities Act;

               (v) Holder has no  intention  to  distribute  either  directly or
indirectly any of the Securities in the United States, except in compliance with
the Securities Act;

               (vi) Holder's affairs are controlled and directed from outside of
the United  States,  its  purchase of the  Securities  was not  solicited in the
United States, no part of the transaction which is the subject of this Agreement
occurred in the United States,  and the Corporation has informed the Holder that
no market for the Securities currently exists in the United States; and

               (vii) Holder understands that the Securities may not be converted
or  exchanged  in the  United  States or by or on  behalf of a U.S.  Person or a
person  in  the  United  States  unless   exemptions   are  available  from  the
registration  requirements  of the  Securities  Act  and  any  applicable  state

                                       17

<PAGE>

securities  laws and the  holder  thereof  has  provided  an  opinion of counsel
reasonably satisfactory to the Corporation to such effect.

In this  subsection  8.2(g),  "U.S.  Person" has the  meaning  ascribed to it in
Regulation  S  promulgated  under  the  Securities  Act.  Without  limiting  the
foregoing,  but for greater clarity in this Agreement,  a U.S. Person  includes,
subject to the  exclusions  set forth in  Regulation  S, (i) any natural  person
resident in the United States, (ii) any partnership or corporation  organized or
incorporated  under the laws of the United States,  (iii) any estate or trust of
which  any  executor,  administrator  or  trustee  is a U.S.  Person,  (iv)  any
discretionary account or similar account (other than an estate or trust) held by
a dealer  or other  fiduciary  organized,  incorporated,  or (if an  individual)
resident in the United States, and (v) any partnership or corporation  organized
or incorporated under the laws of any non-U.S. jurisdiction which is formed by a
U.S.  Person  principally  for  the  purpose  of  investing  in  securities  not
registered under the Securities Act, unless it is organized or incorporated, and
owned,  by U.S.  Accredited  Investors who are not natural  persons,  estates or
trusts;

          (h)  Distribution  Compliance  Period.  Holder  has  no  intention  to
distribute  either  directly or indirectly  any of the  Securities in the United
States,  except in compliance with the Securities Act and the securities laws of
all  applicable   states  of  the  United  States  or  an  exemption  from  such
requirements  is available and further that it will not offer or sell any of the
Securities  to or for the account or benefit of any person in the United  States
(other than a  distributor)  or engage in any  "directed  selling  efforts"  (as
defined  in  Regulation  S  under  the   Securities   Act)  prior  to  a  40-day
"distribution  compliance  period" (as defined in  Regulation S) that applies to
the  distribution  of the  Securities  under Rule 903(b)(2) of Regulation S, and
further that it will not resell the  Securities  except in  accordance  with the
provisions of applicable securities  legislation,  regulations,  rules, policies
and orders and stock exchange rules.

          (i) Reporting  Obligations under the Exchange Act. Holder acknowledges
that the Common Shares of the Corporation are registered  under the Exchange Act
and agrees that it will comply with the applicable reporting requirements of the
Exchange Act in connection with its ownership of the Securities.

          (j) Transfer Restrictions.  Holder agrees that if it decides to offer,
sell or otherwise  transfer any of the  Securities,  it will not offer,  sell or
otherwise transfer any of such Securities directly or indirectly, unless:

               (i)  the  sale  is  made  pursuant  to  registration   under  the
Securities Act, the Canadian Rules and the Provincial Securities Acts; or

               (ii)  the  sale  is  made  pursuant  to  an  exemption  from  the
registration  requirements  under the Securities Act, the Canadian Rules and the
Provincial Securities Acts.

          (k) Sale in Canada.  Holder  further  represents  and warrants that it
will not offer,  sell or otherwise  transfer any of the Securities within Canada
or to a  Canadian  resident  (as such  term is  defined  in the  Income  Tax Act
(Canada))  within the period  that is four  months and one day from the  Closing
Date,  except  pursuant to an exemption  from the  prospectus  and  registration
requirements of the Provincial Securities Acts and the Canadian Rules.

                                       18

<PAGE>

          (l)  Legends.  Holder  understands  and agrees  that the  certificates
representing the Securities will bear a legend stating that such shares have not
been  registered  under  the  Securities  Act,  and are  subject  to the  resale
restrictions  under the Canadian Rules,  and may not be offered for sale or sold
unless  registered  under  the  Securities  Act an no longer  subject  to resale
restrictions  under the Canadian  Rules or an exemption  from such  registration
requirements is available.

          (m) Notations. Holder consents to the Corporation making a notation on
its records or giving  instructions  to any transfer agent of the Corporation in
order to implement the restrictions on transfer set forth and described  herein.
Unless the Corporation has received an opinion of counsel, reasonably acceptable
to the  Corporation,  that  a  legend  is  not  required  upon  issuance  of the
Securities,  the Securities may be imprinted with a legend in substantially  the
following form:

                    UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
                    THIS  SECURITY  MUST NOT TRADE  THE  SECURITY  BEFORE  [FOUR
                    MONTHS  PLUS  ONE DAY  FROM  THE  DATE OF  ISSUANCE  OF THIS
                    SECURITY].

          (n) Due Diligence. Holder has been solely responsible for its own "due
diligence"  investigation  of the  Corporation,  and its respective  management,
business and financial  condition,  for its own analysis of the merits and risks
of this investment, and for its own analysis of the fairness and desirability of
the terms of the  investment;  (ii) in taking any action or performing  any role
relative to the arranging of the proposed investment, Holder has acted solely in
its own interest;  and (iii)  neither  Holder nor any of its agents or employees
has acted as an agent of the Corporation, or as an issuer, underwriter,  broker,
dealer  or  investment  adviser  relative  to  any  security  involved  in  this
investment.

          (o) Tax Consequences.  Holder understands and agrees that there may be
material tax  consequences  to Holder of an  acquisition  or  disposition of the
Securities.  The Corporation gives no opinion and makes no  representation  with
respect  to the tax  consequences  to  Holder  under any tax law in  respect  of
Holder's acquisition or disposition of Securities.

     8.3  Indemnification.  Holder  shall  notwithstanding  termination  of this
Agreement  and without  limitation  as to time,  indemnify and hold harmless the
Corporation and its officers,  directors,  agents, employees and affiliates,  to
the fullest  extent  permitted by  applicable  law, from and against any and all
losses, claims, damages, liabilities,  costs, expenses (including legal fees and
disbursements on a solicitor and his own client basis), as incurred, arising out
of,  or  relating  to, a breach or  breaches  of any  representation,  warranty,
covenant or agreement by Holder under this Agreement.

9.   ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS

     9.1 Environmental  Representations and Warranties. The Corporation and each
Material Subsidiary represent and warrant that:

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<PAGE>

          (a) the  Corporation  and each Material  Subsidiary  operates and will
continue to operate in conformity  with all  Environmental  Laws and Permits and
will ensure its staff is trained as required for such purposes;

          (b) the businesses of the Corporation and the Material Subsidiaries do
not require it to maintain an environmental emergency response plan;

          (c)  neither  the  Corporation  nor any  Material  Subsidiary  stores,
generates,  uses,  treats,  manufactures,  handles or disposes of any  Hazardous
Materials  on  any  of  its  properties   other  than  in  compliance  with  all
Environmental  Laws and Permits  thereunder,  or has  disposed of any  Hazardous
Materials in a manner contrary to Environmental Law or any Permit;

          (d) the  Corporation and each Material  Subsidiary  possesses and will
maintain all necessary environmental Permits and other approvals required by any
Governmental Authority as may be necessary for the conduct of its business;

          (e) its assets are and will  remain  free of  environmental  damage or
contamination; and

          (f) the Corporation and each Material  Subsidiary has no knowledge of,
and has not received any notice of, any pending or threatened claim,  complaint,
proceeding, prosecution,  investigation or otherwise against or affecting any of
the Corporation or any Material Subsidiary, or any of its properties,  assets or
operations relating to Environmental Laws.

     9.2 Environmental  Covenants.  The Corporation and each Material Subsidiary
covenants  and agrees  with  Holder  that so long as Holder  retains any Class A
Shares or Class B Shares, then, unless another time frame is specifically stated
herein, they will:

          (a) advise Holder immediately upon becoming aware of any environmental
problem  relating to the  Corporation's or any Material  Subsidiary's  business,
properties or assets;

          (b)   provide   Holder  with   copies  of  all   communications   with
environmental officials,  Governmental Authorities and all environmental studies
or assessments  prepared for any of the Corporation or any Material  Subsidiary;
and

          (c) not install on or under any of their properties, storage tanks for
petroleum  products or  Hazardous  Materials,  without  Holder's  prior  written
consent  and only  upon  full  compliance  with all  Environmental  Laws and the
standards and requirements of the Governmental  Authorities having  jurisdiction
over the Corporation's or any Material Subsidiary's activities or assets.

10.  CORPORATION'S POSITIVE COVENANTS

     The  Corporation  covenants  and agrees  with Holder that so long as Holder
retains any Class A Shares or Class B Shares, then, unless another time frame is
specifically stated herein:

     10.1  To  Grant  Stock  Options.   Forthwith  following  the  Closing,  the
Corporation  shall grant, or reserve for granting,  the Stock Options set out in
Schedule D.

                                       20

<PAGE>

     10.2 To Pay Amounts Due. The  Corporation  will duly and  punctually pay or
cause to be paid to Holder all amounts,  in cash,  shares or  otherwise,  due to
Holder under the  Transaction  Documents at the dates and places,  in the manner
mentioned therein.

     10.3 Use of Proceeds.  The Corporation  shall use the net proceeds from the
sale of the Class A Shares for general corporate working capital purposes.

     10.4 To Carry on Its Business.  The  Corporation  will,  and will cause the
Material  Subsidiaries  to,  carry on their  business in a proper and  efficient
manner,  and will keep or cause to be kept  proper  books of account and make or
cause to be made therein true and faithful entries of all material  dealings and
transactions in relation to its business.

     10.5 Maintain Existence. The Corporation shall, and shall cause each of the
Material  Subsidiaries to, at all times maintain its corporate existence and the
corporate existence of all the Material Subsidiaries.

     10.6  Compliance  with  Laws.  The  Corporation  shall,  and will cause the
Material  Subsidiaries to, carry on its business in material compliance with all
Laws.

     10.7 Perform Obligations. The Corporation and each Material Subsidiary will
observe and perform, in a timely fashion all obligations,  covenants, agreements
and  undertakings on each of its part required to be observed or performed under
the terms of the Transaction  Documents.  The  Corporation  will, and will cause
each of the Material  Subsidiaries to, from time to time, punctually observe and
perform all of their material  obligations,  including,  but not limited to, the
obligations pursuant to the Material Contracts.

     10.8 Reduce Payables. The Corporation, together with representatives of the
Holder, will use all reasonable commercial efforts to negotiate the reduction in
the accounts payable of the Corporation as of the date of this Agreement.

     10.9  Amend  Global  Facility.  The  Corporation  will  use all  reasonable
commercial  efforts to negotiate an amendment to the Global  Facility  providing
for an agreement  by Global,  subject to the right to convert all or any part of
the Global Facility into Common Shares at a price of $2.00 per Common Share, not
to  demand  repayment  of the  principal  of the  Global  Facility,  unless  the
Corporation is in default under the Global Facility, until November 23, 2005.

     10.10 No Liens.  The  Corporation and each Material  Subsidiary  shall keep
their property,  assets and undertakings  free and clear of all Liens other than
the Permitted Encumbrances.

     10.11 Renew Rights.  The Corporation and each Material  Subsidiary shall at
all times  renew or cause to be  preserved  and  renewed  all  material  rights,
powers,  permits,  consents,  privileges,  franchises,  licences,  goodwill  and
intellectual  property owned by it and necessary for the conduct of its business
and shall at all times comply with all Laws applicable to them.

     10.12 Maintain  Records.  The Corporation shall keep proper books of record
and  account  in which full and  correct  entry  shall be made of all  financial
transactions,   assets  and  business  of  the   Corporation  and  the  Material

                                       21

<PAGE>

Subsidiaries in accordance with generally accepted accounting principles applied
in the United States or Canada, as the case may be.

     10.13 Furnish  Information.  The Corporation  shall promptly provide Holder
with all  information  requested by Holder from time to time  concerning its, or
any Material  Subsidiary's,  financial  condition  and property and shall permit
representatives  of Holder to inspect any of its, or any  Material  Subsidiary's
property and to examine and take extracts  from  financial  books,  accounts and
records  including  but not limited to accounts  and records  stored in computer
data banks and computer software systems, and to discuss its financial condition
with the  Corporation's  senior  officers and the  Corporation's  auditors.  The
Corporation   shall  forthwith   provide  to  Holder  copies  of  all  financial
statements,  both audited and unaudited,  as they become  available from time to
time;

     10.14 Notice of Claim.  The Corporation  shall promptly give written notice
to Holder  of: (i) the  commencement  of any claim,  litigation,  proceeding  or
investigation against the Corporation or any Material Subsidiary or any of their
assets;  (ii) any damage to or  destruction  of any of the assets or property of
the Corporation or any Material  Subsidiary  which might give rise to a material
insurance claim; and (iii) the occurrence of any Event of Default (as defined in
the Class A Special Rights and  Restrictions  and the Class B Special Rights and
Restrictions) under the Transaction Documents.

     10.15 To Insure.  The  Corporation  shall maintain all risks  comprehensive
insurance  coverage with reputable insurers  reasonably  satisfactory to Holder,
and to provide  Holder with evidence of such  insurance,  in amounts and against
risks normally insured by owners of similar  businesses (which  insurance,  at a
minimum,  shall  cover  against  risk of  loss  or  damage  to  property  of the
Corporation and each Material  Subsidiary up to its full replacement  value, and
including  public liability and damage to property of third parties and business
interruption  insurance)  and the  Corporation  shall provide  written notice to
Holder  within  twenty-four  (24) hours of any material  change to the insurance
coverage of the Corporation or any Material Subsidiary or any material change by
the Corporation or any Material Subsidiary of any of their insurers.

     10.16 To  Repair.  The  Corporation  and  each  Material  Subsidiary  shall
maintain  and  preserve  all of their  respective  property  and  assets in good
repair,  working order and condition  (reasonable  wear and tear  excepted) and,
from time to time, make all needed and proper repairs,  renewals,  replacements,
additions  and  improvements  thereto,  so that the  business  carried on by the
Corporation  and the Material  Subsidiaries  may be properly and  advantageously
conducted at all times in accordance with prudent business practices;

     10.17 To Pay Taxes. The Corporation shall, and shall the cause the Material
Subsidiaries to pay, and discharge promptly when due, all taxes, assessments and
other  governmental  charges or levies imposed upon it or upon its properties or
assets or upon any part  thereof,  as well as all claims of any kind  (including
claims for labour, materials and supplies) which, if unpaid, would by law become
a Lien;  provided however that the Corporation  shall not be required to pay any
such tax,  assessment,  charge or levy or claim if the amount,  applicability or
validity  thereof  shall  currently be  contested  in good faith by  appropriate
proceedings and if the Corporation shall have set aside on its books the reserve
to the extent required by generally  accepted  accounting  principles applied in

                                       22

<PAGE>

the  United  States  or  Canada,  as the  case  may be,  in an  amount  which is
reasonably adequate with respect thereto.

     10.18  Remittances.  The  Corporation  shall,  and shall cause the Material
Subsidiaries  to, pay,  on a timely  basis and within the  prescribed  period of
time, all remittances owed to any Government Authority as required by Law.

     10.19 Notice of Financing.  The  Corporation  shall provide to Holder prior
written  notice  of any  proposed  debt or  equity  financing  made by or to the
Corporation or any Material Subsidiary.

     10.20  Reservation  of  Shares.  The  Corporation  will  reserve  and  keep
available, for so long as may be required, that maximum number of its authorized
but  unissued  capital  shares as may be required for the issuance of any of the
Securities.

     10.21 Listing of Common Shares.  The  Corporation  shall use all reasonable
commercial best efforts to maintain the listing of its Common Shares on the NASD
OTCBB or such other exchange on which the Common Shares are then listed.

     10.22 To Pay Expenses.  The Corporation  shall pay all expenses  (including
legal fees and  disbursements  on a solicitor and his own client  basis),  of or
incurred  by  Holder  in  connection  with the  enforcement  of the  Transaction
Documents.

     10.23 Reporting  Requirements.  The Corporation  shall duly and timely file
all materials,  reports,  financial statements,  disclosures and other documents
required by law, including all reporting required by the Security Rules.

     10.24 Removal of Legends.  At the request of Holder from time to time,  the
Corporation  shall  furnish  Holder and the  Corporation's  transfer  agent with
directions  from the  Corporation in connection  with the removal of any legends
placed on the Securities  pursuant to subsection  8.2(l),  subject to receipt by
the Corporation of satisfactory legal opinions from counsel to the Holder.

11.  CORPORATION'S NEGATIVE COVENANTS

     The  Corporation  covenants  and agrees  with Holder that so long as Holder
retains any Class A Shares or Class B Shares, then, unless another time frame is
specifically stated herein:

     11.1 Not to Pay Dividends.  The Corporation  and the Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to be unreasonably  withheld declare,  pay or set aside for payment any dividend
of any capital shares of the Corporation or any Material  Subsidiary  other than
in connection with the Class A Shares and the Class B Shares.

     11.2 Not to Issue Shares.  The  Corporation  and the Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to be  unreasonably  withheld,  issue any class of shares in the  capital of the
Corporation or the Material  Subsidiaries or any rights,  warrants or options to
acquire, or instruments convertible into or exchangeable for any class of shares

                                       23

<PAGE>

in the  capital of the  Corporation  or the  Material  Subsidiaries,  other than
securities  issuable  pursuant  to the  securities  set out in Schedule G and no
greater than 110,000  Common Shares to be issued at One Dollar ($1.00) per share
to certain existing shareholders of the Corporation.

     11.3 Not to Create Liens.  The  Corporation  and the Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to be unreasonably  withheld,  other than Permitted  Encumbrances,  make,  give,
create or permit or attempt to make,  give or create  Liens on the assets of the
Corporation or any Material Subsidiary other than the Permitted Encumbrances.

     11.4 Not to Sell Assets.  The  Corporation  and the  Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to be unreasonably  withheld,  make any sale of or dispose of any substantial or
material  part  of  its,  or any  Material  Subsidiary's,  business,  assets  or
undertaking,  or shares or assets of any  subsidiary,  outside  of the  ordinary
course of business.

     11.5 Not to Borrow Money.  The  Corporation  and the Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to be unreasonably withheld borrow or cause any Material Subsidiary or any other
subsidiary  to borrow money from any Person save and except for  purchase  money
security interests,  chattel mortgages, and equipment leases entered into in the
ordinary course of business, and borrowing pursuant to the CAPCO Facility.

     11.6  No  Loans  to   Shareholders.   The   Corporation  and  the  Material
Subsidiaries  shall not,  without the prior written consent of the Holder,  such
consent to not to be unreasonably  withheld,  make loans to any  shareholders of
the Corporation or any Affiliates of any such shareholders.

     11.7 Not to Increase  CAPCO  Facility.  The  Corporation  and the  Material
Subsidiaries  shall not,  without the prior written consent of the Holder,  such
consent  to not to be  unreasonably  withheld,  whether  in respect of the CAPCO
Facility or otherwise,  allow the  aggregate of such amounts,  together with all
other  indebtedness  of the  Corporation  and  CCB(US)  to CAPCO,  to exceed One
Million Dollars ($1,000,000.00).

     11.8 No Guarantees.  The  Corporation and the Material  Subsidiaries  shall
not, without the prior written consent of the Holder,  such consent to not to be
unreasonably withheld,  guarantee the obligations of any other Person,  directly
or indirectly.

     11.9 Capital  Expenditures.  The Corporation and the Material  Subsidiaries
shall not, without the prior written consent of the Holder,  such consent to not
to  be  unreasonably  withheld,  make  any  capital  expenditure  in  excess  of
One-Hundred  Thousand  Dollars  ($100,000.00)  which is (i) not in the  ordinary
course  of  business  and  (ii)   attributable  to  the  core  business  of  the
Corporation.

                                       24

<PAGE>

12.  REGISTRATION RIGHTS

     12.1  Definitions.  As used in this Article 12, the  following  terms shall
have the following respective meanings:

          (a)  "registered,"  and  "registration"  shall refer to a registration
effected by preparing and filing a registration statement or prospectus,  as the
case may be, in compliance with the Securities Act or the Canadian Rules, as the
case may be,  and the  declaration  or  ordering  of the  effectiveness  of such
registration statement by the applicable Governmental Authority.

          (b) "Registrable Securities" shall mean the Securities and any capital
shares  of the  Corporation  issued as a  dividend  or other  distribution  with
respect to or in exchange for or in replacement of the Securities.

12.2 Piggyback Registration.

          (a) Request for Inclusion.  If at any time after the date hereof there
is a  registration  by  the  Corporation  which  permits  the  inclusion  of any
Registrable Securities which are not then registered under the Securities Act or
the Canadian  Rules, as the case may be, or are not otherwise  tradable  without
restriction  under the Securities Act or the Canadian Rules, as the case may be,
the Corporation will promptly give Holder written notice thereof and, subject to
subsection   12.2(b),   shall  include  in  the  registration   (the  "Piggyback
Registration")  all of  the  Registrable  Securities  requested  to be  included
therein  pursuant to the written  request of Holder  received within twenty (20)
days after delivery of the Corporation's notice.

          (b)  Underwriting.   If  the  Piggyback  Registration  relates  to  an
underwritten  public offering,  the Corporation shall so advise Holder as a part
of the written notice given pursuant to subsection  12.2(a).  In such event, the
right of Holder to participate in such  registration  shall be conditioned  upon
Holder's  participation  in such  underwriting  in accordance with the terms and
conditions  thereof and Holder  shall enter into an  underwriting  agreement  in
customary form with the underwriter and the Corporation.  In connection with any
underwritten  registration,  the  Corporation  will enter  into an  underwriting
agreement reasonably  satisfactory to Holder containing  customary  underwriting
provisions, including indemnification and contribution provisions.

     12.3  Expenses of  Registration.  All stock  transfer  taxes,  underwriting
discounts,  expenses for special  counsel of a selling  stockholder  and selling
commissions  incurred  by the  Corporation  relating to  Registrable  Securities
included in any Piggyback Registration shall be reimbursed by Holder.

     12.4  Termination of  Registration  Rights.  The right of Holder to request
inclusion of Registrable Securities in any registration pursuant to this Article
12 shall  terminate  at the date that is the  earlier of: (i) that date that all
Registrable  Securities  have been  registered  under the  Securities Act or the
Canadian  Rules,  as the case may be, or have otherwise been sold to the public;
(ii) the date that all  Registrable  Securities  are eligible for resale without
restriction under the Securities Act and the Canadian Rules.

                                       25

<PAGE>

13.  INDEMNITY

     The Corporation and each Material  Subsidiary  agrees to indemnify and hold
Holder and its officers,  directors,  employees,  agents and advisors  (each, an
"Indemnified  Person")  harmless  from and against  any and all suits,  actions,
demands, obligations,  proceedings,  claims, damages, losses, liabilities, costs
and expenses of any kind or nature whatsoever  (including any and all reasonable
professional  fees and  disbursements  incurred by Holder in connection with the
preparation, negotiation and enforcement of the Transaction Documents) which may
be  instituted,  asserted  against or  incurred by any  Indemnified  Person as a
result of or arising out of, any breach of the  representations,  warranties  or
covenants of the Corporation or any of the Material Subsidiaries hereunder,  any
breach or  violation of any Laws,  the  transactions  contemplated  hereunder or
under  any  other  Transaction  Documents,  any  investigation,   litigation  or
proceeding in connection  herewith or any other Transaction  Documents,  and the
enforcement,  performance,  administration,  action  or  inaction  by any of the
Indemnified  Persons of or under this Agreement or any of the other  Transaction
Documents,  including,  without  limitation,  relating to the  operation  of the
Corporation's,  or any Material  Subsidiary's,  business  and any  environmental
liability (collectively,  the "Indemnified  Liabilities"),  except to the extent
that any such  Indemnified  Liabilities  are  finally  determined  by a court of
competent  jurisdiction to have resulted solely from such  Indemnified  Person's
gross  negligence  or  wilful   misconduct.   No  Indemnified  Person  shall  be
responsible  or  liable  to any  other  party  to this  Agreement  or any  other
Transaction Document,  any heir, executor,  administrator,  other legal personal
representative, successor, assignee or third party beneficiary of such Person or
any other Person asserting claims derivatively through such party, for indirect,
punitive, exemplary or consequential damages which may be alleged or incurred as
a result of or arising out of any of the above,  including,  without limitation,
any  of  the  transactions  contemplated  under  this  Agreement  or  any  other
Transaction  Document.  This  indemnity  is  severable  and  distinct  from  the
remainder of this Agreement and shall survive any  termination of this Agreement
or any other Transaction Document for any reasons whatsoever.

14.  EXPENSE REIMBURSEMENTS

     The Corporation hereby agrees to reimburse Holder for all of its reasonable
and documented  legal expenses,  disbursements  and taxes incurred in connection
with the transactions contemplated hereby to a maximum of Fifty Thousand Dollars
($50,000.00).

15.  MISCELLANEOUS

     15.1 Currency.  Except as may be otherwise expressly  provided,  all dollar
amounts  herein  are  references  to lawful  currency  of the  United  States of
America.

     15.2 Force  Majeure.  Notwithstanding  anything  in this  Agreement  to the
contrary, if any party is prevented from or delayed in performing any obligation
under this  Agreement,  and such failure in  occasioned  by any cause beyond its
reasonable  control,  excluding  only  lack  of  finances,  then  the  time  for
observance of the condition or  performance  of the obligation in question shall
be  extended  for a period  equivalent  to the  total  period  the  cause of the
prevention  or delay  persists or remains in effect  regardless of the length of
such  total  period.  Any party to this  Agreement  claiming  suspension  of its
obligations as aforesaid  shall  promptly  notify the other party to that effect

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<PAGE>

and shall take all reasonable  steps to remove or remedy the cause and effect of
the force majeure described in the notice insofar as it is reasonably able to do
so and as soon as possible;  provided that the terms of settlement of any labour
disturbance  or dispute,  strike or lockout shall be wholly in the discretion of
the party claiming  suspension of its  obligations by reason  thereof,  and that
party shall not be required  to accede to the  demands of its  opponents  in any
such labour disturbance or dispute, strike or lockout solely to remedy or remove
the force majeure  thereby  constituted.  The party  claiming  suspension of its
obligations  shall  promptly  notify the other party when the cause of the force
majeure has been removed.

     15.3  Governing  Law.  Except  where  otherwise  required by the law of any
jurisdiction   as  it  relates  to  certain   corporate  and   securities   laws
requirements,  the validity,  interpretation  and enforcement of the Transaction
Documents shall be governed by and construed in accordance with, the laws of the
Province of British Columbia and of Canada applicable  therein.  The Corporation
and Holder submit to the  jurisdiction  of the Courts of the Province of British
Columbia and agree to be bound by any suit,  action or  proceeding  commenced in
such Courts and by any order or  judgment  resulting  from such suit,  action or
proceeding,  but the  foregoing  will in no way  limit  the  right of  Holder to
commence suites,  actions, or proceedings based on the Transaction  Documents in
any jurisdiction it deems appropriate.

     15.4 Further Assurances.  Each party to this Agreement covenants and agrees
that,  from time to time prior to or subsequent to the Closing Date, it will, at
the request and expense of the  requesting  party,  execute and deliver all such
documents  and do all such  other  acts and  things as any  other  party to this
Agreement,  acting reasonably, may from time to time request be executed or done
in  order  to  better  evidence  or  perfect  or  effectuate  the   transactions
contemplated in this Agreement.

     15.5 Survival.  The representations,  warranties,  covenants and agreements
made herein shall survive any  investigation  made by or on behalf of Holder and
the  closing of the  transactions  contemplated  hereby.  All  statements  as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Corporation pursuant hereto in connection with the transactions
contemplated  hereby shall be deemed to be representations and warranties by the
Corporation hereunder solely as of the date of such certificate or instrument.

     15.6  Successors  and  Assigns.  Holder shall not be entitled to assign its
rights  under any of the  Transaction  Documents,  without  the  consent  of the
Corporation,  which  consent  shall not be  unreasonably  withheld  or  delayed;
provided,  however,  that no such consent shall be required for Holder to assign
such rights to any person or group of persons controlling or owning the majority
of all  beneficial  interests  of Holder,  any other entity  controlled  by such
person or persons, or an entity controlled by Holder,  provided that such entity
shall  continue to be so controlled by such persons or Holder as applicable  and
shall  continue to be an  "accredited  investor"  within the meaning of (i) Rule
501(a) of  Regulation D as  promulgated  under the  Securities  Act; and (ii) MI
45-103.  The  provisions  hereof  shall  inure to the benefit of, and be binding
upon, the successors,  permitted assigns, heirs, executors and administrators of
the parties hereto.

     15.7 Entire  Agreement;  Amendment and Waiver.  The  Transaction  Documents
expressly  delivered  pursuant hereto or thereto  supersede any other agreement,
whether  written or oral, that may have been made or entered into by the parties

                                       27

<PAGE>

hereto relating to the matters  contemplated hereby, and constitute the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subjects hereof and thereof,  and no party shall be liable or bound to any other
in any  manner by any  representations,  warranties,  covenants  and  agreements
except as  specifically  set  forth or  incorporated  by  reference  herein  and
therein. Neither the Transaction Documents, nor any term thereof may be amended,
waived,  discharged or terminated  except by a written  instrument signed by the
Corporation and Holder.

     15.8  Severability.  In case  any  provision  of this  Agreement  shall  be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

     15.9  Notices.  All notices  required or  permitted  hereunder  shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be  notified;  (ii) when sent by  confirmed  telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next Business
Day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt  requested,  postage prepaid;  or (iv) one (1) Business Day after
deposit  with a  nationally  recognized  overnight  courier,  special  next  day
delivery, with verification of receipt. All communications shall be sent:

                  to the Corporation at:

                  Clearly Canadian Beverage Corporation
                  2489 Bellevue Avenue West
                  Vancouver, British Columbia
                  V7V 1E1
                  facsimile:  (604) 922-2286
                  Attention:  Mr. Bruce Morley

                  to Holder, at:

                  BG Capital Group Ltd.
                  Slot #2000 A.P. 59223
                  Nassau, Bahamas

                  with a copy to:

                  Brent Lokash Law Corporation
                  17th Floor, 808 Nelson Street
                  Vancouver, B.C. V6Z 2H2
                  facsimile: (604) 681-9579
                  Attention: Brent Lokash

or at such other address as the  Corporation or Holder may designate by ten (10)
days advance written notice to the other parties hereto.

     15.10  Time of  Essence.  Time shall be of the  essence of the  Transaction
Documents.

                                       28

<PAGE>

     15.11 Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts,  each of which shall be an original,  but all of which together
shall constitute one instrument. This Agreement may be executed and delivered by
facsimile.

     15.12  Broker's  Fees.  Each party hereto  represents  and warrants that no
agent,  broker,  investment banker,  person or firm acting on behalf of or under
the  authority  of such party  hereto is or will be entitled to any  broker's or
finder's fee or any other  commission  directly or indirectly in connection with
the transactions  contemplated  herein other than a One Hundred Thousand Dollars
($100,000.00)  finder's  fee  payable  from the  Corporation  to Y&R  Investment
Capital Inc.

     15.13  Schedules:  The following  are the exhibits and schedules  delivered
concurrently with, and incorporated in, this Agreement:

            Schedule A   -   2005 Budgeted Targets

            Schedule B   -   2005 Pro Forma Budget

            Schedule C   -   Description of Lands

            Schedule D   -   New Stock Option Plan

            Schedule E   -   Class A Special Rights and Restrictions

            Schedule F   -   Class B Special Rights and Restrictions

            Schedule G   -   Capitalization Table

            Schedule H   -   List of Intellectual Property

            Schedule I   -   Projected Outstanding Fully Diluted Common Shares

                            [signatures on next page]

                                       29

<PAGE>

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on the
date first set forth above.

CLEARLY CANADIAN BEVERAGE
CORPORATION.

By:
   -------------------------------------------
   Name:
   Title:

BG CAPITAL GROUP LTD.:

By:
   ----------------------------------------------
   Name:
   Title:

<PAGE>

                                   SCHEDULE A

                              2005 BUDGETED TARGETS

On a pre-bonus and  pre-deferred  compensation  basis, the 2005 Budgeted Targets
for the  Corporation  for the fiscal  year ended  December  31, 2005 shall be as
follows:

1.   the  Corporation  is to  achieve  not less than  $16,000,000  in Sales,  as
     referred to in the Corporation's audited financial statements; and

2.   the Loss from Operations (based on "normalized  EBITDA"), as referred to in
     the Corporation's  audited financial  statements,  will not be greater than
     $1,100,000,   as   adjusted  to  exclude  any   additional   expenses   for
     extraordinary  or  non-recurring  items that are required by the  Company's
     auditors or authorized by the Corporation's  board of directors (which will
     include the  representatives  of BG Capital)  and which are not included in
     the 2005 Pro Forma Budget.

The above targets for Sales and Loss from  Operations  for the year are based on
the  $1,000,000  preferred  share  subscription  funding from BG Capital and the
$3,000,000 brokered private placement  subscription proceeds being received from
standard  securities  being received by the Company on or before April 30, 2005.
If such funding is received after April 30, 2005, the targets for Sales and Loss
from Operations for the year will be reduced to reflect such delay in receipt of
the funds.

For purposes of this  Agreement,  the term  "normalized  EBITDA" means  earnings
before  interest,  taxes,  depreciation and amortization and other expenses (ie.
gross profit less selling,  general and  administrative  expenses) and such term
contemplates  and includes such  adjustments  as are necessary to neutralize the
effect on earnings of expenses of an  extraordinary  or unusual or non-recurring
nature with respect to the continuing operations of the business. Extraordinary,
unusual  and  non-recurring  items  are to be  interpreted  in  accordance  with
Canadian generally accepted accounting principles.

<PAGE>

                                   SCHEDULE B

                              2005 PRO FORMA BUDGET

<PAGE>

                                   SCHEDULE C

                              DESCRIPTION OF LANDS

1.   Formosa Property

In the Village of Formosa,  in the  Township of Culross,  in the County of Bruce
and being composed of:

FIRSTLY:  Lot Number 17 in the said Village of Formosa,  according to Registered
Plan Number 282.

SECONDLY: Lot Number 18, in the said Village of Formosa, according to Registered
Plan Number 282,  SAVE AND EXCEPT from said Lot number 18 the Southerly 197 feet
of said Lot Number 18, more particularly described as follows:

COMMENCING at the South-east angle of said Lot number 18;

THENCE Northerly along the Easterly limit of said Lot, a distance of 197 feet;

THENCE Westerly parallel to the Southern limit of said Lot, a distance of 466.62
feet more or less to the Westerly limit of said Lot;

THENCE Southerly along the Westerly limit of said Lot, a distance of 197 feet;

THENCE Easterly along the Southerly limit of said Lot, a distance of 466.62 feet
to the place of beginning. As previously described in instrument number 239756.

2.   Collingwood Property

(a)  Part of the West Half of Lot 9,  concession  14, in the Township of Osprey,
     in the County of Grey and being more particularly described as follows:

     COMMENCING at the Northeasterly angle of the West Half of said Lot 9;

     HENCE  Westerly and along the Northerly  limit of the said Lot the distance
     of 350 feet;

     HENCE  Southerly  and  parallel to the  Easterly  limit of the said Lot the
     distance of 500 feet;

     HENCE  Easterly and parallel to the Northerly  limit of the said Lot to the
     distance of 350 feet to the dividing  line between the West and East Halves
     of the said Lot;

     HENCE  Northerly  and along the said dividing line the distance of 500 feet
     to the place of beginning.

<PAGE>

     The aforesaid  lands being the same lands at those  described in Instrument
     No. 139825.

(b)  Part Lot 9, Concession 14, designated as part 2 on Plan 17R-1177,  Township
     of Osprey, County of Grey

     Registry Division of Grey (No. 16)

<PAGE>

                                   SCHEDULE D

                              NEW STOCK OPTION PLAN

     Stock  Options  under new stock  option  plan  shall be fully  vested  upon
     granting, except where otherwise indicated below. Stock Options will expire
     five (5) years from the date of granting provided that they will be subject
     to earlier expiration after a period of one (1) year following  termination
     of the option holder.

<TABLE>
<S>                                                                               <C>
Total Stock Options Available Under Plan:                                         1,750,000
-----------------------------------------

Allocation of Options:

Stock Options issued to Doug Mason exercisable @ $1.00 US:                          500,000
Stock Option issued to Bruce Morley exercisable @ $1.00 US:                         100,000
Stock Option issued to Tom Koltai exercisable @ $1.00 US:                           100,000

Stock Options issued in part consideration for termination compensation under
the Consulting/Employment Agreements (which options vest upon termination) to
the following:

         Doug Mason (Criterion Capital Corporation) exercisable @ $1.00 US:         150,000
         Bruce Morley (Bruce E. Morley Law Corporation) exercisable @ $1.00 US:     100,000
         Tom Koltai exercisable @ $1.00 US:                                         100,000

Options allocated by Doug Mason as incentive for the following management and
employees:

         Kevin Doran exercisable @ $1.00 US:                                         75,000
         Valerie Samson exercisable @ $1.00 US:                                      15,000
         Clive Shallow exercisable @ $1.00 US:                                       15,000
         Sead Hamzagic exercisable @ $1.00 US:                                       45,000

Options to be allocated to representatives of BG Capital that
become officers, directors, employees or consultants of the
Corporation exercisable @$1.00 US:                                                  550,000
                                                                                    -------

Total Options to be allocated:                                                    1,750,000
                                                                                  =========
</TABLE>

<PAGE>

                                   SCHEDULE E

                     CLASS A SPECIAL RIGHTS AND RESTRICTIONS

<PAGE>

                                   SCHEDULE F

                     CLASS B SPECIAL RIGHTS AND RESTRICTIONS

<PAGE>

                                   SCHEDULE G

                              CAPITALIZATION TABLE

Authorized Capital of the Corporation:
--------------------------------------

1.   210,000,000  shares  divided into  200,000,000  Common  Shares  without par
     value; and

2.   10,000,000 preferred shares with a par value of $1.00 Cdn per share.

Issued Capital of the Corporation:
----------------------------------

10,803,682 Common Shares

Convertible Securities of the Corporation:
------------------------------------------

<TABLE>
----------------------------------------------------------------------------------------------------------

PRIVATE PLACEMENT WARRANTS:                                        Exercise Price
<S>                                                                        <C>                     <C>
Nov.24/00 - 5 year warrants issued re private placement
              (expiring Nov. 24, 2005)                                     $1.10 Cdn               565,000
Mar. 4/04 - 2 year warrants issued to Dundee Securities
                  (expiring Mar. 4/06)                                     $0.34 Cdn               250,000
                                                                                                   -------
TOTAL PRIVATE PLACEMENT WARRANTS:                                                                  815,500
----------------------------------------------------------------------------------------------------------

STOCK OPTIONS:                                                        Exercise Price
Employee/Director (expiring: April 4, 2006)                                $0.65 Cdn                25,169
Employee/Director (expiring: Oct. 29, 2006)                                $0.65 Cdn                76,234
Employee/Director (expiring: Nov. 4, 2006)                                 $0.65 Cdn                 2,488
Employee (expiring Mar. 27, 2007)                                          $0.65 Cdn                   588
Employee/Director (expiring Jan. 5, 2008)                                  $0.65 Cdn               134,118
Director (expiring: Sept. 3, 2008)                                         $0.65 Cdn                 5,882
Employee/Officer (expiring Dec. 23, 2009)                                  $0.65 Cdn                94,857
Director (expiring Nov. 15, 2010)                                          $1.05 Cdn                25,000
Employee/Director (expiring Feb. 21, 2011)                                 $1.15 Cdn               255,000
Employee (expiring August 23, 2011)                                        $1.35 Cdn                25,000
Director/Officer (expiring May 15, 2012)                                   $1.25 Cdn               370,000
Employee (expiring Sept. 23, 2012)                                         $1.00 Cdn                40,000
Director/Officer (expiring Feb. 11, 2013)                                  $0.70 Cdn               230,000
Employee/Director/Officer (expiring April 29, 2013)                        $0.65 Cdn               265,000
Consultant (expiring April 29, 2008)                                       $0.65 Cdn                35,000
Employee (expiring September 8, 2013)                                      $0.65 Cdn                10,000
Consultant (expiring April 15, 2006)                                       $0.40 Cdn               100,000
                                                                                                   -------
TOTAL STOCK OPTIONS:                                                                             1,694,336
----------------------------------------------------------------------------------------------------------

CONVERTIBLE DEBENTURES
Dec.02/02 - 1 year (plus 3 year extension) convertible debenture           $0.80 Cdn               837,500
(expiring Dec. 2, 2006)
------------------------------------------------------------------------------------- ---------------------
</TABLE>

<PAGE>

Authorized Capital of Blue Mountain:
------------------------------------

1.   unlimited number of common shares; and

2.   unlimited number of preference shares.

Issued Capital of Blue Mountain:
--------------------------------

11,875 common shares

Authorized Capital of CCB(US):
------------------------------

1,000 common shares

Issued Capital of CCB(US):
--------------------------

100 common shares

<PAGE>

                                   SCHEDULE H

                          LIST OF INTELLECTUAL PROPERTY

<PAGE>

                                   SCHEDULE I

                PROJECTED OUTSTANDING FULLY DILUTED COMMON SHARES

<TABLE>
<S>                                                              <C>
Shares Outstanding (after 10:1 rollback):                        1,080,368

Conversion of existing debentures and secured
loans for Management & associates :                                635,953 (approximately)

Shares to be issued to Mason, Eymann and US Group, et al.          100,000 (approximately)

Conversion of Global Loan:                                         406,500

US$3,000,000 new funding:                                        3,000,000

New Stock Options (@ US$1.00):                                   1,750,000

Old Stock Options (@ between Cdn$4.00 - Cdn$13.50):                169,433

Finders Fee to BG Capital:                                         450,000

Preferred Conversion Fees:                                         200,000

GRAND TOTAL PROJECTED SHARES
OUTSTANDING:                                                     7,792,254
</TABLE>EXHIBIT 4.5

                      CLEARLY CANADIAN BEVERAGE CORPORATION

                                STOCK OPTION PLAN

                                 APRIL 29, 2005

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I......................................................................1

DEFINITIONS AND INTERPRETATION.................................................1

   1.1       Definitions.......................................................1
   1.2       Choice of Law.....................................................3
   1.3       Headings..........................................................3

ARTICLE II.....................................................................3

PURPOSE AND PARTICIPATION......................................................3

   2.1       Purpose...........................................................3
   2.2       Participation.....................................................4
   2.3       Notification of Award.............................................4
   2.4       Copy of Plan......................................................4
   2.5       Limitation........................................................4

ARTICLE III....................................................................4

TERMS AND CONDITIONS OF OPTIONS................................................4

   3.1       Board to Allot Shares.............................................4
   3.2       Number of Shares..................................................5
   3.3       Exercise Price....................................................5
   3.4       Term of Option....................................................5
   3.5       Termination of Option.............................................5
   3.6       Vesting...........................................................6
   3.7       Effect of a Take-Over Bid.........................................6
   3.8       Acceleration of Expiry Date.......................................7
   3.9       Effect of a Change of Control.....................................7
   3.10      Assignment of Options.............................................7
   3.11      Adjustments.......................................................7

ARTICLE IV.....................................................................7

EXERCISE OF OPTION.............................................................7

   4.1       Exercise of Option................................................7
   4.2       Issue of Share Certificates.......................................8
   4.3       Condition of Issue................................................8

ARTICLE V......................................................................8

STOCK APPRECIATION RIGHTS......................................................8

   5.1       Stock Appreciation Rights.........................................8
   5.2       Stock Appreciation Rights Tied to Options.........................8
   5.3       Terms of Stock Appreciation Rights................................8

<PAGE>

                                     - 2 -

ARTICLE VI.....................................................................9

ADMINISTRATION.................................................................9

   6.1       Administration....................................................9
   6.2       Interpretation....................................................9

ARTICLE VII....................................................................9

AMENDMENT AND TERMINATION......................................................9

   7.1       Prospective Amendment.............................................9
   7.2       Retrospective Amendment...........................................9
   7.3       Termination......................................................10
   7.4       Agreement........................................................10
   7.5       Optionee Status..................................................10

ARTICLE VIII..................................................................10

APPROVALS REQUIRED FOR PLAN...................................................10

   8.1       Substantive Amendments to Plan...................................10

<PAGE>

                                STOCK OPTION PLAN

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

1.1  Definitions

As used herein, unless anything in the subject matter or context is inconsistent
therewith, the following terms shall have the meanings set forth below:

     (a)  "Administrator"  means,  initially,  the  secretary of the Company and
          thereafter  shall  mean  such  director  or other  senior  officer  or
          employee of the Company as may be designated as  Administrator  by the
          Board from time to time;

     (b)  "affiliate"  has the meaning  ascribed  thereto in the  Securities Act
          (British Columbia);

     (c)  "associate"  has the meaning  ascribed  thereto in the  Securities Act
          (British Columbia);

     (d)  "Award Date" means the date on which the Board grants and  announces a
          particular Option;

     (e)  "Board" means the board of directors of the Company;

     (f)  "Change of Control" the acquisition by any person or by any person and
          a joint actor, whether directly or indirectly, of voting securities of
          the Company,  which,  when added to all other voting securities of the
          Company at the time held by such  person or by such person and a joint
          actor,  totals for the first time not less than fifty percent (50%) of
          the outstanding voting securities of the Company or the votes attached
          to those securities are sufficient,  if exercised, to elect a majority
          of the board of Directors of the Company;

     (g)  "Company" means Clearly Canadian Beverage Corporation;

     (h)  "Consultant" means an individual or Consultant Company,  other than an
          Employee or a Director of the Company, that:

          (i)  is engaged to provide  services to the Company or to an affiliate
               of the  Company,  other than  services  provided in relation to a
               distribution;

          (ii) provides  the  services  under a  written  contract  between  the
               Company  or the  affiliate  and the  individual  or a  Consultant
               Company; and

          (iii)spends or will spend a  significant  amount of time and attention
               on the affairs and business of the Company or an affiliate of the
               Company;

     (i)  "Consultant  Company" means, for an individual  consultant,  a company
          which the individual consultant is an employee or shareholder;

<PAGE>

                                     - 2 -

     (j)  "Director"  means any  individual  holding  the office of  director or
          officer of the Company or an affiliate of the Company;

     (k)  "Employee" means:

          (i)  an individual who is considered an employee of the Company or its
               subsidiary  under the  Income  Tax Act  (Canada)  (i.e.  for whom
               income tax, employment  insurance and CPP deductions must be made
               at source);

          (ii) an  individual  who  works  full-time  for  the  Company  or  its
               subsidiary  providing  services  normally provided by an employee
               and who is  subject  to the same  control  and  direction  by the
               Company  over the details and methods of work,  as an employee of
               the Company,  but for whom income tax  deductions are not made at
               source; or

          (iii)an  individual  who  works  part-time  for  the  Company  or  its
               subsidiary on a continuing and regular basis  providing  services
               normally  provided by an employee  and who is subject to the same
               control and direction by the Company over the details and methods
               of work as an  employee of the  Company,  but for whom income tax
               deductions are not made at source;

     (l)  "Exchange"  means the OTC  Bulletin  Board or,  if the  Shares  are no
          longer  listed  for  trading  on the OTC  Bulletin  Board,  such other
          exchange or quotation  system on which the Shares are listed or quoted
          for trading;

     (m)  "Exercise  Notice"  means the notice  respecting  the  exercise  of an
          Option,  in the form set out as Schedule "B" hereto,  duly executed by
          the Option Holder;

     (n)  "Exercise  Period" means the period  during which a particular  Option
          may be exercised  and is the period from and  including the Award Date
          through to and including the Expiry Date, subject to the provisions of
          the Plan relating to the vesting of Options;

     (o)  "Exercise  Price"  means the price at which an Option may be exercised
          as determined in accordance with paragraph 3.3;

     (p)  "Expiry Date" means the date  determined in accordance with paragraphs
          3.4 and 3.8 and after which a particular Option cannot be exercised;

     (q)  "insider" has meaning  ascribed thereto in the Securities Act (British
          Columbia);

     (r)  "Management Company Employee" means an individual employed by a person
          providing  management,  or other consulting,  services to the Company,
          which  are  required  for  the  ongoing  successful  operation  of the
          business enterprise of the Company, but excluding a person involved in
          investor relations activities;

     (s)  "Option"  means an option to acquire  Shares,  awarded to a  Director,
          Employee or Consultant pursuant to the Plan;

<PAGE>

                                     - 3 -

     (t)  "Option Certificate" means the certificate,  substantially in the form
          set out as Schedule "A" hereto, evidencing an Option;

     (u)  "Option Holder" means a Director,  Employee or Consultant, or a former
          Director,  Employee  or  Consultant,  who  holds  an  unexercised  and
          unexpired Option or, where applicable,  the Personal Representative of
          such person;

     (v)  "Plan" means this Clearly Canadian  Beverage  Corporation stock option
          plan dated April 29, 2005;

     (w)  "Personal Representative" means:

          (i)  in the case of a deceased  Option  Holder,  the  executor (or the
               administrator of the deceased duly appointed by a court or public
               authority having jurisdiction to do so); and

          (ii) in the case of an Option  Holder  who for any reason is unable to
               manage his or her affairs,  the person  entitled by law to act on
               behalf of such Option Holder;

     (x)  "Securities Act" means the Securities Act,  R.S.B.C.  1996,  c.418, as
          amended, as at the date hereof; and

     (y)  "Share" or  "Shares"  means,  as the case may be,  one or more  common
          shares without par value in the capital of the Company.

1.2  Choice of Law

The  Plan  is  established  under  and  the  provisions  of the  Plan  shall  be
interpreted and construed in accordance with the laws of the Province of British
Columbia.

1.3  Headings

The  headings  used  herein are for  convenience  only and are not to affect the
interpretation of the Plan.

                                   ARTICLE II

                            PURPOSE AND PARTICIPATION

2.1  Purpose

The purpose of the Plan is to provide the Company with a share-related mechanism
to attract, retain and motivate qualified Directors,  Employees and Consultants,
to reward such of those  Directors,  Employees and Consultants as may be awarded
Options  under the Plan by the Board  from time to time for their  contributions
toward  the long term goals of the  Company  and to enable  and  encourage  such
Directors, Employees and Consultants to acquire Shares as long term investments.

<PAGE>

                                     - 4 -

2.2  Participation

The Board  shall,  from time to time,  in its sole  discretion  determine  those
Directors, Employees and Consultants, if any, to whom Options are to be awarded.
If the Board elects to award an Option to a Director,  the Board  shall,  in its
sole discretion but subject to paragraph 3.2,  determine the number of Shares to
be acquired  on the  exercise of such  Option.  If the Board  elects to award an
Option to an Employee or Consultant,  the number of Shares to be acquired on the
exercise of such Option shall be determined by the Board in its sole discretion,
and in so doing the Board may take into account the following criteria:

     (a)  the  remuneration  paid to the Employee or  Consultant as at the Award
          Date in relation to the total  remuneration  payable by the Company to
          all of its Employees and Consultants as at the Award Date;

     (b)  the length of time that the Employee or  Consultant  has been employed
          or engaged by the Company; and

     (c)  the quality of work performed by the Employee or Consultant.

2.3  Notification of Award

Following  the  approval  by  the  Board  of  the  awarding  of an  Option,  the
Administrator  shall  notify the Option  Holder of the award and may provide the
Option Holder with an Option Certificate representing the Option so awarded.

2.4  Copy of Plan

Each  Option  Holder,  concurrently  with the notice of the award of the Option,
shall be  provided  with a copy of the Plan,  unless a copy has been  previously
provided  to the Option  Holder.  A copy of any  amendment  to the Plan shall be
promptly provided by the Administrator to each Option Holder.

2.5  Limitation

The Plan does not give any Option  Holder that is a Director  the right to serve
or  continue  to serve as a Director  of the Company nor does it give any Option
Holder that is an Employee  or  Consultant  the right to be or to continue to be
employed or engaged by the Company.

                                   ARTICLE III

                         TERMS AND CONDITIONS OF OPTIONS

3.1  Board to Allot Shares

The Shares to be issued to Option  Holders upon the exercise of Options shall be
allotted and authorized for issuance by the Board prior to the exercise thereof.

<PAGE>

                                     - 5 -

3.2  Number of Shares

The maximum number of Shares issuable under the Plan shall not exceed  1,750,000
Shares.  Additionally,  if at any time the Company is subject to restrictions on
stock option grants prescribed by applicable  securities laws or by an Exchange,
the Company shall not grant Options which exceed such restrictions.

If any Option is exercised or expires or  otherwise  terminates  for any reason,
the number of Shares in respect of which the Option is  exercised  or expired or
terminated shall again be available for the purposes of the Plan.

3.3  Exercise Price

The Exercise Price shall be that price per share,  as determined by the Board in
its sole discretion as of the Award Date, at which an Option Holder may purchase
a Share upon the exercise of an Option,  and shall not be less than the weighted
average  trading price of the Company's  Shares traded through the facilities of
the  Exchange  (or,  if the  Shares  are no longer  listed  for  trading  on the
Exchange,  then such other exchange or quotation  system on which the Shares are
listed or quoted for trading) for the 10 trading days  preceding the Award Date,
less any  discount  permitted  by the  Exchange,  or such other  price as may be
required by the Exchange.  Notwithstanding the foregoing,  the Exercise Price of
all Options granted on the first Award Date shall be US$1.00.

3.4  Term of Option

Subject to  paragraph  3.5,  the Expiry  Date of an Option  shall be the date so
fixed by the Board at the time the particular  Option is awarded,  provided that
such date shall not be later than the fifth anniversary of the Award Date of the
Option.

3.5  Termination of Option

An Option Holder may,  subject to any vesting  provisions  applicable to Options
hereunder,  exercise  an  Option in whole or in part at any time or from time to
time during the Exercise  Period  provided that, with respect to the exercise of
part of an Option, the Board may at any time and from time to time fix a minimum
or maximum  number of Shares in respect of which an Option  Holder may  exercise
part of any Option held by such Option  Holder.  Any Option or part  thereof not
exercised  within the Exercise  Period shall terminate and become null, void and
of no effect as of 5:00 p.m. local time in Vancouver,  British Columbia,  on the
Expiry  Date.  The Expiry Date of an Option  shall be the earlier of the date so
fixed by the Board at the time the Option is awarded  and the date  established,
if  applicable,  in  sub-paragraphs  (a) to (c) below  (the  "Early  Termination
Date"):

     (a)  Death

          In the event  that the  Option  Holder  should  die while he or she is
          still a Director (if he or she holds his or her Option as Director) or
          Employee  or  Consultant  (if he or she  holds  his or her  Option  as
          Employee or Consultant),  the Early  Termination  Date shall be twelve
          (12) months from the date of death of the Option Holder; or

<PAGE>

                                     - 6 -

     (b)  Ceasing to hold Office

          In the  event  that the  Option  Holder  holds  his or her  Option  as
          Director of the Company and such Option Holder ceases to be a Director
          of the Company  other than by reason of death,  the Early  Termination
          Date of the  Option  shall be  twelve  (12)  months  from the date the
          Option Holder ceases to be a Director of the Company unless the Option
          Holder  ceases to be a Director  of the Company  but  continues  to be
          engaged by the Company as an  Employee,  in which case the Expiry Date
          shall remain unchanged.

     (c)  Ceasing to be Employed or a Consultant

          In the event  that the  Option  Holder  holds his or her  Option as an
          Employee or Consultant of the Company and such Option Holder ceases to
          be an Employee or  Consultant  of the Company  other than by reason of
          death,  the Early  Termination Date of the Option shall be twelve (12)
          months  from the date the Option  Holder  ceases to be an  Employee or
          Consultant of the Company.

3.6  Vesting

All  Options  granted  pursuant  to the Plan  will be  subject  to such  vesting
requirements as may be prescribed by the Exchange,  if applicable,  or as may be
imposed by the Board.

3.7  Effect of a Take-Over Bid

If a bona fide offer (an "Offer")  for Shares is made to an Option  Holder or to
shareholders  of the  Company  generally  or to a class  of  shareholders  which
includes the Option Holder,  which Offer, if accepted in whole or in part, would
result in the  offeror  becoming  a control  person of the  Company,  within the
meaning of the Securities  Act, the Company shall,  immediately  upon receipt of
notice of the Offer, notify each Option Holder of full particulars of the Offer,
whereupon  all Shares  subject to Options will become vested and the Options may
be  exercised  in whole or in part by each  Option  Holder so as to permit  each
Option  Holder to tender the  Shares  received  upon  exercise  of his  Options,
pursuant to the Offer. However, if:

     (a)  the Offer is not completed within the time specified therein; or

     (b)  all of the Shares acquired by the Option Holder on the exercise of his
          Option and tendered pursuant to the Offer are not taken up or paid for
          by the offeror in respect thereof,

then the Shares  received upon the exercise of such  Options,  or in the case of
clause (b) above, the Shares that are not taken up and paid for, may be returned
by each Option Holder to the Company and  reinstated as authorized  but unissued
Shares and with respect to such returned Shares, the Options shall be reinstated
as if they had not been  exercised  and the terms upon which such Shares were to
become vested  pursuant to paragraph 3.6 shall be reinstated.  If any Shares are
returned to Company  under this  paragraph  3.7, the Company  shall  immediately
refund the exercise price to the Option Holder for such Shares.

<PAGE>

                                     - 7 -

3.8  Acceleration of Expiry Date

If at any time when an Option granted under the Plan remains  unexercised and an
Offer is made by an offeror,  the  Directors  may,  upon  notifying  each Option
Holder of full  particulars of the Offer,  declare all Shares  issuable upon the
exercise  of  Options  granted  under the  Plan,  vested,  and,  notwithstanding
paragraphs  3.4 and 3.5,  declare  that the Expiry Date for the  exercise of all
unexercised  Options  granted under the Plan is  accelerated so that all Options
will either be exercised or will expire prior to the date upon which Shares must
be tendered pursuant to the Offer.

3.9  Effect of a Change of Control

If a Change of Control  occurs,  all Shares subject to each  outstanding  Option
will become  vested,  whereupon all Options may be exercised in whole or in part
by the Option Holders.

3.10 Assignment of Options

Options may not be assigned or transferred,  provided  however that the Personal
Representative  of an Option  Holder may, to the extent  permitted  by paragraph
4.1, exercise the Option within the Exercise Period.

3.11 Adjustments

If prior to the  complete  exercise  of any Option the Shares are  consolidated,
subdivided,  converted,  exchanged or reclassified or in any way substituted for
(collectively  the  "Event"),  an  Option,  to the  extent  that it has not been
exercised,  shall be adjusted by the Board in accordance  with such Event in the
manner the Board deems  appropriate.  No fractional  Shares shall be issued upon
the  exercise  of any Option and  accordingly,  if as a result of the Event,  an
Option Holder would become  entitled to a fractional  Share,  such Option Holder
shall have the right to purchase only the next lowest whole number of Shares and
no  payment or other  adjustment  will be made with  respect  to the  fractional
interest so disregarded.  Additionally, no lots of Shares in an amount less than
500 Shares shall be issued upon the exercise of the Option unless such amount of
Shares represents the balance left to be exercised under the Option.

                                   ARTICLE IV

                               EXERCISE OF OPTION

4.1  Exercise of Option

An  Option  may  be  exercised  only  by  the  Option  Holder  or  the  Personal
Representative   of  any  Option  Holder.  An  Option  Holder  or  the  Personal
Representative  of any Option  Holder may exercise an Option in whole or in part
at any time or from  time to time  during  the  Exercise  Period up to 5:00 p.m.
local time in  Vancouver,  British  Columbia on the Expiry Date by delivering to
the Administrator an Exercise Notice,  the applicable  Option  Certificate and a
certified cheque or bank draft payable to Clearly Canadian Beverage  Corporation
in an amount equal to the aggregate Exercise Price of the Shares to be purchased
pursuant to the exercise of the Option.

<PAGE>

                                     - 8 -

4.2  Issue of Share Certificates

As soon as  practicable  following  the  receipt  of the  Exercise  Notice,  the
Administrator shall cause to be delivered to the Option Holder a certificate for
the Shares  purchased  pursuant to the exercise of the Option.  If the number of
Shares  purchased  is less  than the  number  of Shares  subject  to the  Option
Certificate   surrendered,   the  Administrator   shall  forward  a  new  Option
Certificate  to the Option  Holder  concurrently  with delivery of the aforesaid
share certificate for the balance of Shares available under the Option.

4.3  Condition of Issue

The issue of Shares by the  Company  pursuant  to the  exercise  of an Option is
subject to this Plan and compliance with the laws,  rules and regulations of all
regulatory bodies applicable to the issuance and distribution of such Shares and
to the listing  requirements  of any stock  exchange or  exchanges  on which the
Shares may be listed.  The Option  Holder  agrees to comply  with all such laws,
rules and  regulations  and agrees to furnish to the  Company  any  information,
report and/or  undertakings  required to comply with and to fully cooperate with
the Company in complying with such laws, rules and regulations.

                                    ARTICLE V

                            STOCK APPRECIATION RIGHTS

5.1  Stock Appreciation Rights

Any option  granted under the Plan or  incorporated  into the Plan may include a
stock  appreciation  right,  either  at the time of grant or by  adding it to an
existing Option; subject, however, to the grant of such stock appreciation right
being in compliance with the applicable regulations and policies of the Exchange
(or any other exchange or exchanges on which the Shares are then traded).

5.2  Stock Appreciation Rights Tied to Options

Stock  appreciation  rights which may be granted  pursuant to this Plan shall be
exercisable to the extent,  and only to the extent,  the Option with which it is
included is exercisable.  To the extent that a stock appreciation right included
in or attached to an Option granted hereunder is exercised,  the Option to which
it is included or attached  shall be deemed to have been  exercised to a similar
extent.

5.3  Terms of Stock Appreciation Rights

A stock  appreciation  right  granted  pursuant  to this Plan shall  entitle the
Option Holder to elect to surrender to the Company,  unexercised,  the Option to
which it is included, or any portion thereof, and to receive from the Company in
exchange  therefore  that number of Shares,  disregarding  fractions,  having an
aggregate  value equal to the excess of the value of one Share over the exercise
price per Share specified in such Option,  times the number of Shares called for
by the Option, or portion thereof, which is so surrendered. The value of a Share
shall be determined for these purposes,  unless otherwise specified or permitted
by applicable  regulatory policies,  based on the weighted average trading price
per share on the Exchange for the five trading days  immediately  preceding  the
date the Company receives notice of the exercise of the stock appreciation right
(or, if the Shares are no longer listed for trading on the  Exchange,  then such
other exchange or quotation  system on which the Shares are listed or quoted for
trading).

<PAGE>

                                     - 9 -

                                   ARTICLE VI

                                 ADMINISTRATION

6.1  Administration

The Plan shall be administered by the  Administrator  on the instructions of the
Board.  The Board may make,  amend and  repeal at any time and from time to time
such  regulations  not  inconsistent  with the Plan as it may deem  necessary or
advisable  for the  proper  administration  and  operation  of the Plan and such
regulations  shall  form  part  of the  Plan.  The  Board  may  delegate  to the
Administrator  or  any  Director,  officer  or  employee  of  the  Company  such
administrative duties and powers as it may see fit.

6.2  Interpretation

The  interpretation  by the Board of any of the  provisions  of the Plan and any
determination by it pursuant thereto shall be final and conclusive and shall not
be subject to any  dispute by any Option  Holder.  No member of the Board or any
person acting  pursuant to authority  delegated by it hereunder  shall be liable
for any action or  determination  in  connection  with the Plan made or taken in
good faith and each member of the Board and each such  person  shall be entitled
to  indemnification  with  respect to any such  action or  determination  in the
manner provided for by the Company.

                                   ARTICLE VII

                            AMENDMENT AND TERMINATION

7.1  Prospective Amendment

Subject to applicable  regulatory  and, if required by any relevant law, rule or
regulation applicable to the Plan, to shareholder  approval,  the Board may from
time to time  amend  the  Plan  and  the  terms  and  conditions  of any  Option
thereafter to be granted and,  without limiting the generality of the foregoing,
may make such  amendment  for the purpose of meeting any changes in any relevant
law, rule or regulation  applicable to the Plan, any Option or the Shares or for
any other  purpose  which  may be  permitted  by all  relevant  laws,  rules and
regulations provided always that any such amendment shall not alter the terms or
conditions  of any Option or impair any right of any Option  Holder  pursuant to
any Option awarded prior to such amendment.  Notwithstanding the foregoing,  the
Board may,  subject to the  requirements  of the Exchange,  amend the terms upon
which each Option shall become  vested with  respect to Shares  without  further
approval of the Exchange,  other  regulatory  bodies having  authority  over the
Company or the Plan or the shareholders.

7.2  Retrospective Amendment

Subject to applicable  regulatory approval and, if required by any relevant law,
rule or regulation  applicable to the Plan, to shareholder  approval,  the Board
may from time to time  retrospectively  amend the Plan and,  with the consent of
the affected Option Holders,  retrospectively  amend the terms and conditions of
any Options which have been previously granted.

<PAGE>

                                     - 10 -

7.3  Termination

The Board may  terminate  the Plan at any time  provided  that such  termination
shall not alter the terms or conditions of any Option or impair any right of any
Option  Holder  pursuant  to any  Option  awarded  prior  to the  date  of  such
termination.  Notwithstanding the termination of the Plan, the Company,  Options
awarded under the Plan, Option Holders and Shares issuable under Options awarded
under the Plan shall continue to be governed by the provisions of the Plan.

7.4  Agreement

The Company  and every  person to whom an Option is awarded  hereunder  shall be
bound by and subject to the terms and conditions of the Plan.

7.5  Optionee Status

For stock  options  granted to  Employees,  Consultants  or  Management  Company
Employees,  the Company  represents  that each such Option Holder will be a bona
fide Employee, Consultant or Management Company Employee, as the case may be.

                                  ARTICLE VIII

                           APPROVALS REQUIRED FOR PLAN

8.1  Substantive Amendments to Plan

Any  substantive  amendments  to the Plan shall be subject to the Company  first
obtaining the approvals, if required, of:

     (a)  the shareholders or disinterested shareholders, as the case may be, of
          the  Company  at  general  meeting  where  required  by the  rules and
          policies of the  Exchange,  or any stock  exchange on which the Shares
          may then be listed for trading; and

     (b)  the  Exchange,  or any stock  exchange on which the Shares may then be
          listed for trading.

Approved by the directors on April 29, 2005.

ON BEHALF OF THE BOARD

---------------------------------------
Douglas L. Mason, Director

<PAGE>

                                  SCHEDULE "A"

                      CLEARLY CANADIAN BEVERAGE CORPORATION

                                STOCK OPTION PLAN

                               OPTION CERTIFICATE

This  Certificate  is issued  pursuant  to the  provisions  of Clearly  Canadian
Beverage  Corporation  (the  "Company")  Stock  Option  Plan  (the  "Plan")  and
evidences  that  ___________________  (the  "Holder") is the holder of an option
(the "Option") to purchase up to ___________ common shares (the "Shares") in the
capital  stock of the  Company  at a  purchase  price of  $_________  per Share.
Subject to the provisions of the Plan:

     (a)  the Award Date of this Option is ____________; and

     (b)  the Expiry Date of this Option is ________________.

The right to  purchase  Shares  under  the  Option  will  vest in the  Holder in
increments over the term of the Option as follows:

--------------------------------------------------------------------------------
Date                          Cumulative Number of Shares which may be Purchased
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

This Option may be exercised in  accordance  with its terms at any time and from
time to time from and  including  the Award Date through to and  including up to
5:00 local time in Vancouver,  British  Columbia on the Expiry Date, by delivery
to the Administrator of the Plan an Exercise Notice, in the form provided in the
Plan,  together  with this  Certificate  and a  certified  cheque or bank  draft
payable to "Clearly  Canadian  Beverage  Corporation"  in an amount equal to the
aggregate of the Exercise  Price of the Shares in respect of which the Option is
being  exercised.  If the  Optionee is an  employee,  consultant  or  management
company  employee,  the  Optionee  confirms  that  it is a bona  fide  employee,
consultant or management company employee, as the case may be.

The foregoing Option has been awarded this ___ day of ____________________.

By signing this  Certificate,  the Option  Holder  acknowledges  that the Option
Holder has read and  understands the Plan and agrees to the terms and conditions
of the Plan and this Certificate.

<PAGE>

                                              CLEARLY CANADIAN
                                              BEVERAGE  CORPORATION

                                              Per:
-------------------------------               ----------------------------------
(NAME OF OPTION HOLDER)

<PAGE>

                                  SCHEDULE "B"

                                 EXERCISE NOTICE
                                 ---------------

TO:  The Administrator, Stock Option Plan
     c/o Clearly Canadian Beverage Corporation

     2489 Bellevue Avenue
     West Vancouver, B.C. V7V 1E1

1.  EXERCISE  OF OPTION  (Do not  complete  this  section  if  exercising  stock
appreciation rights)

The  undersigned  hereby  irrevocably  gives  notice,  pursuant  to the  Clearly
Canadian Beverage Corporation (the "Company") Stock Option Plan (the "Plan"), of
the  exercise  of the Option to acquire  and  hereby  subscribes  for (cross out
inapplicable item):

(a)  all of the Shares; or

(b)  _____________  of  the  Shares,   which  are  the  subject  of  the  option
     certificate attached hereto.

Calculation of total Exercise Price:

(i)  number of Shares to be acquired on exercise:       __________ shares

(ii) times the Exercise Price per Share:                $_________

     Total Exercise Price, as enclosed herewith:        $_________

The  undersigned  tenders  herewith a cheque or bank draft  (circle  one) in the
amount of $______________,  payable to Clearly Canadian Beverage  Corporation in
an amount equal to the total Exercise Price of the Shares, as calculated above.

2. EXERCISE OF STOCK  APPRECIATION  RIGHT  (Complete  only if  exercising  stock
appreciation rights)

The undersigned  hereby  irrevocably gives notice,  pursuant to the Plan, of the
exercise  of  the  stock   appreciation   right  provided  under  the  Plan  and
accordingly, wishes to receive such number of Shares as calculated in accordance
with the Plan. As consideration for the Shares, the undersigned hereby agrees to
cancel (cross out inapplicable item):

     (a)  all of the Rights; or

     (b)  ______________ of the Rights.

<PAGE>

3. DELIVERY OF SHARE CERTIFICATE

The Company is directed to deliver the share  certificate  evidencing the number
of Shares to be issued to the undersigned  pursuant to this Exercise Notice,  to
the undersigned at the following address:

        ----------------------------

        ----------------------------

        ----------------------------

        ----------------------------

All the capitalized  terms,  unless  otherwise  defined in this Exercise Notice,
will have the meaning provided in the Plan.

DATED the ___ day of __________________.

---------------------------------       ----------------------------------------
Witness                                 Signature of Option Holder

---------------------------------       ----------------------------------------
Name of Witness (Print)                 Name of Option Holder (Print)

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