Document:

Employment Agreement - John V. St. John, PhD.

    
      

      

    

    

      Exhibit
        10.26

      

      

      EMPLOYMENT
        AGREEMENT

      

      This
        AGREEMENT dated as of December 1, 2006 between Uluru Delaware Inc., a Delaware
        corporation, (the wholly-owned subsidiary of Uluru Inc., a Nevada corporation),
        located at 4452 Beltway Drive, Addison, Texas, 75001 (the “Company”), and John
        V. St. John, an individual residing at 1755 Palo Duro Trail, Grapevine, Texas
        76051 (the “Executive”).

      

      W
        I T N E
        S S E T H:

      

      WHEREAS,
        the Company desires that Executive serve as the Company’s Vice President -
        Material Science; and

      

      WHEREAS,
        in order to induce Executive to agree to serve in such capacity, the Company
        hereby offers Executive certain compensation and benefits of employment,
        as
        described herein.

      

      WHEREAS,
        Executive is willing to serve in this position on the terms and conditions
        hereinafter set forth;

      

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

      

      	1.  	
              Employment

            

      

      The
        Company hereby agrees to employ Executive and Executive hereby agrees to
        be
        employed upon the terms and conditions hereinafter set forth.

      

      	2.  	
              Nature
                of Employment

            

      

      During
        the term of this Agreement, Executive shall serve as Vice President - Material
        Science and shall have such responsibilities and authority consistent with
        such
        position as may be reasonably assigned to him by the Chief Executive Officer
        of
        the Company. Executive shall devote his full time and attention and best
        efforts
        to perform successfully his duties and advance the Company’s interests. Employee
        shall abide by the Company’s policies, procedures, and practices, as they may
        exist from time to time. Executive shall be responsible to the Chief Executive
        Officer of the Company, rendering the services and performing the duties
        prescribed by the Chief Executive Officer of the Company.

      

      The
        Executive shall be employed at the Company’s offices in Addison, Texas, and his
        principal duties shall be performed primarily in Addison, Texas, except for
        business trips reasonable in number and duration.

      	3.  	
              Term

            

      

      The
        employment of the Executive hereunder shall begin on the date hereof and
        shall
        continue in full force and effect for a period of one (1) year, and thereafter
        shall be automatically renewed for successive one-year periods unless the
        Company gives the Executive written notice of termination within six (6)
        months
        prior to the end of any such period or until the occurrence of a Termination
        Date, as defined in Section 6 (the "Term").

      

      	4.  	
              Compensation

            

      

      	4.1  	
              As
                compensation for the Executive’s services during the Term, the Company
                shall pay the Executive an annual base salary at the rate of One
                Hundred
                Twenty Thousand Dollars ($120,000), payable in accordance with the
                Company’s reasonable policies, procedures, and practices, as they may
                exist from time to time. Prior to the end of each year during the
                Term,
                the Compensation Committee of the Company shall undertake an evaluation
                of
                the services of the Executive during the year then ended in accordance
                with the Company’s compensation program at the date hereof (the
                “Program”). The Company shall consider the performance of the Executive,
                his contribution to the success of the Company and entities under
                common
                control with the Company (collectively, “Affiliates”), and other factors
                and shall fix an annual base salary to be paid to the Executive during
                the
                ensuing year.

            

      

      	4.2  	
              Notwithstanding
                the foregoing, the Company may change the Program from time to time
                or
                institute a successor to the Program, but the Executive’s annual base
                salary shall in no event be less than his annual base salary in effect
                on
                the date of change, adjusted regularly to reflect increases in the
                cost of
                living and comparable compensation for like
                positions.

            

      

      	4.3  	
              The
                executive shall participate in the Company incentive compensation
                programs
                in accordance with the following subparagraphs (i) and
                (ii):

            

      

      	(i)  	
              Incentive
                Plan
                -
                The executive shall be covered by the cash bonus plan currently maintained
                by the Company and shall be afforded the opportunity thereunder to
                receive
                a target award of 10% of annual base salary payable in cash and a
                target
                award of 10% of annual base salary payable in Company Common Stock,
                to be
                awarded upon the achievement of reasonable performance goals; provided
                that the Company may from time to time change the Program or institute
                a
                successor to the Program, so long as the Executive continues to be
                eligible to receive bonus awards of percentages of annual base salary
                in
                amounts at least equal to those specified as in effect on the date
                hereof.

            

      

      	(ii)  	
              Stock
                Option Plan
                -
                Executive shall be entitled to participate in the Company’s stock option
                plan. In accordance with this plan the Board may from time to time,
                but
                without any obligation to do so, grant stock options to the Executive
                upon
                such terms and conditions as the Board shall determine in its sole
                discretion. If the Company no longer has a class of stock publicly-traded
                by reason of a Change in Control of the Company, as defined in Section
                6.3, the Company’s obligation under this Section 4.3 will be satisfied
                through options granted by the issuer with public stock then in control
                of
                the Company.

            

      

      	4.4  	
              If
                the Executive is prevented by disability, for a period of six consecutive
                months, from continuing fully to perform his obligations hereunder,
                the
                Executive shall perform his obligations hereunder to the extent he
                is able
                and after six months the Company may reduce his annual base salary
                to
                reflect the extent of the disability; provided that in no event may
                such
                rate, when added to payments received by him under any disability
                or
                qualified retirement or pension plan to which the Company, Affiliate,
                or
                Executive contributes or has contributed, be less than $120,000.
                If there
                should be a dispute about the Executive’s disability, disability shall be
                determined by the Board of Directors of the Company based upon a
                report
                from a physician, reasonably acceptable to the Executive, who shall
                have
                examined the Executive. If the Executive claims disability, the Executive
                agrees to submit to a physical examination at any reasonable time
                or times
                by a qualified physician designated by the Chairman of Board of the
                Company and reasonably acceptable to the Executive. Notwithstanding
                any
                provision in this Section, the Company shall not be obligated to
                make any
                payments to Executive on account of disability after the expiration
                of
                this Agreement.

            

      

      	5.  	
              Executive
                Benefits 

            

      

      The
        Executive shall be entitled to participate in all “employee pension benefit
        plans,” all “employee welfare benefit plans” (each as defined in the Employee
        Retirement Income Security Act of 1974) and all pay practices and other
        compensation arrangements maintained by the Company, on a basis at least
        as
        advantageous to the Executive as the basis on which other executive employees
        of
        the Company are eligible to participate and on a basis at least as advantageous
        to the Executive as the basis on which he participates therein on the date
        hereof. Executive shall, during the term of his employment hereunder, continue
        to be provided with such benefits at a level at least equivalent to the initial
        benefits provided or to be provided hereunder. Without limiting the generality
        of the foregoing, the Executive shall be entitled to the following employee
        benefits (collectively, with the benefits contemplated by this Section 5,
        the
“Benefits”):

      

      	5.1  	
              The
                Executive and Executive’s dependents shall participate, at their option in
                any medical insurance plans and programs comparable in scope to the
                coverage afforded on the date hereof, with only such contribution
                by the
                Executive toward the cost of such insurance as may be required from
                time
                to time from other executive officers of the Company. If a Change
                in
                Control of the Company, as defined in Section 6.3, shall have occurred,
                the Company may not change the carriers providing medical insurance
                immediately before the change without the consent of the Executive,
                which
                consent will not be unreasonably withheld.

            

      

      	5.2  	
              Life
                Insurance. Executive shall be entitled to group term life insurance
                coverage of an amount equal to the annual base salary as defined
                herein,
                all premiums being paid by the Company.

            

      	5.3  	
              Long-Term
                Disability Insurance. The Company shall maintain in effect long term
                disability insurance providing Executive in the event of his disability
                (as defined in Section 4.4 hereof) with compensation annually equal
                to at
                least $120,000.

            

      

      	5.4  	
              The
                Executive shall be entitled to paid time off (“PTO”) of no less than
                thirty three (33) days each year. Such PTO shall be accrued and taken
                in
                accordance with the Company’s policies and practices, as they may exist
                from time to time.

            

      

      	5.5  	
              The
                Company shall reimburse the Executive from time to time for the reasonable
                expenses incurred by the Executive in connection with the performance
                of
                his obligations hereunder.

            

      

      	5.6  	
              During
                such times as the Company is eligible and financially qualified to
                obtain
                the same, the Company shall maintain directors and officers’ liability
                insurance applicable to the Executive in amounts established by the
                Board
                of Directors.

            

      

      Notwithstanding
        the foregoing, the Company may from time to time change or substitute a plan
        or
        program under which one or more of the Benefits are provided to the Executive,
        provided that the Company first obtains the written consent of the Executive,
        which the Executive agrees not unreasonably to withhold, taking into account
        his
        personal situation.

      

      	6.  	
              Termination
                Date; Consequences for Compensation and
                Benefits

            

      

      	6.1  	
              Definition
                of Termination Date. The first to occur of the following events shall
                be
                the Termination Date:

            

      

      	6.1.1  	
              The
                date on which the Executive becomes entitled to receive long-term
                disability payments
                by reason of total and permanent
                disability;

            

      

      	6.1.2  	
              The
                Executive’s death;

            

      

      	6.1.3  	
              Voluntary
                resignation after one of the following events shall have occurred,
                which
                event shall be specified to the Company by the Executive at the time
                of
                resignation: material reduction in the responsibility, authority,
                power or
                duty of the Executive or a material breach by the Company of any
                provision
                of this Agreement, which breach continues for 30 days following notice
                by
                the Executive to the Company setting forth the nature of the breach
                (“Resignation with Reason”);

            

      

      	6.1.4  	
              Voluntary
                resignation not accompanied by a notice of reason described in Section
                6.1.3 (“General Resignation”);

            

      

      	6.1.5  	
              Discharge
                of the Executive by the Company after one of the following events
                shall
                have occurred, which event shall be specified in writing to the Executive
                by the Company at the time of discharge:

            

      	(i)  	
              a
                felonious act committed by Executive during his employment hereunder,
                

            

      

      	(ii)  	
              any
                act or omission on the part of Executive not requested or approved
                by the
                Company constituting willful malfeasance or gross negligence in the
                performance of his duties hereunder, 

            

      

      	(iii)  	
              any
                material breach of any term of this Agreement by the Executive which
                is
                not cured within 30 days after written notice from the Chief Executive
                Officer to the Employee setting forth the nature of the breach (“Discharge
                for Cause”); 

            

      

      For
        purposes of this subparagraph (6.1.5), no act or failure to act on the
        Executive’s part shall be considered “willful” unless done or omitted to be done
        by Executive not in good faith and without reasonable belief that Executive’s
        action or omission was in the best interest of the Company. Notwithstanding
        the
        foregoing, Executive shall not be deemed to have been discharged for Cause
        unless and until there shall have been delivered to Executive a copy of a
        Notice
        of Termination (as defined below) from the Chief Executive Officer of the
        Company stating that in his good faith opinion Executive was guilty of conduct
        set forth in clauses (i), (ii), or (iii) above of this subparagraph (6.1.5)
        and
        specifying the particulars thereof in detail.

      

      	6.1.6  	
              Discharge
                of the Executive by the Company not accompanied by a notice of cause
                described in Section 6.1.5 (“General
                Discharge”).

            

      

      For
        purposes of this Agreement “Notice of Termination” shall mean a notice which
        indicates the specific termination provision in this Agreement relied upon
        and
        sets forth in reasonable detail the facts and circumstances claimed to provide
        a
        basis for termination of Executive’s employment under the provision so
        indicated. Each Notice of Termination shall be delivered at least sixty (60)
        days prior to the effective date of termination.

      

      	6.2  	
              Consequences
                for Compensation and Benefits

            

      

      	(a)  	
              If
                the Termination Date occurs by reason of disability, death, General
                Resignation or Discharge for Cause, the Company shall pay compensation
                to
                the Executive through the Termination Date and shall pay to the Executive
                all Benefits accrued through the Termination Date, payable in accordance
                with the respective terms of the plans, practices and arrangements
                under
                which the Benefits were accrued.

            

      

      	(b)  	
              If
                the Termination Date occurs by reason of General Discharge or Resignation
                with Reason, (i) all stock options held by the Executive shall become
                immediately exercisable and shall remain exercisable for two (2)
                years
                after the Termination Date, (ii) the Company shall continue the health
                coverage contemplated by Section 5.1 for a period of one (1) year
                thereafter, and (iii) the Executive shall be entitled to receive,
                within
                60 days after the Termination Date, the amount set forth in Section
                6.2.1.

            

      	6.2.1  	
              The
                Executive’s annual base salary at the Termination Date plus the target
                bonus for the year in which the Termination Date occurs, multiplied
                by one
                (1) (i.e., 1 times base salary plus target
                bonus).

            

      

      	6.3  	
              Change
                in Control.

            

      

      In
        the
        event of the occurrence of a Change in Control (as defined below), this
        Agreement may be terminated by Executive upon the occurrence thereafter of
        one
        or more of the following events:

      

      1)
        Termination by Executive of his employment with the Company may be made within
        one (1) year after a Change in Control and upon the occurrence of any of
        the
        following events:

      

      	(a)  	
              A
                significant adverse change in the nature or scope of the Executive’s
                authorities, powers, functions, responsibilities or duties as a result
                of
                the Change in Control, a reduction in the aggregate of Executive’s
                existing base salary and existing Incentive Plan received from the
                Company, or termination of Executive’s rights to any existing Executive
                Benefit to which he was entitled immediately prior to the Change
                in
                Control or a reduction in scope or value thereof without the prior
                written
                consent of Executive;

            

      

      	(b)  	
              The
                liquidation, dissolution, merger, consolidation or reorganization
                of the
                Company or transfer of all or a significant portion of its business
                and/or
                assets (by liquidation, merger, consolidation, reorganization or
                otherwise) unless the successor or successors to which all or a
                significant portion of its business and/or assets have been transferred
                (directly or by operation of law) shall have assumed all duties and
                obligations of the Company under this Agreement pursuant to Section
                12.5
                hereof; or

            

      	(c)  	
              The
                Company shall relocate its principal executive offices or require
                Executive to have as his principal location of work any location
                which is
                in excess of 50 miles from the location thereof immediately prior
                to the
                relocation date or to travel from his office in the course of discharging
                his responsibilities or duties hereunder more than thirty (30) consecutive
                calendar days or an aggregate of more than ninety (90) calendar days
                in
                any consecutive 365-calendar day period without in either case his
                prior
                consent.

            

      

      2)
        Subsequent to a change in control of the Company, the failure by the Company
        to
        obtain the assumption of the obligation to perform this Agreement by any
        successor as contemplated in Section 12.5 hereof or otherwise; or

      

      3)
        Subsequent to a Change in Control of the Company, any purported termination
        of
        Executive’s employment that is not effected pursuant to a Notice of Termination
        satisfying the requirement of Section 6.1.5 hereof.

      	6.3.1  	
              A
                Change in Control of the Company shall occur upon the first to occur
                of
                the date when (a) a person or group “beneficially owns” (as defined in
                Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
                in the
                aggregate 50% or more of the outstanding shares of capital stock
                entitled
                to vote generally in the election of the Directors of the Company
                or (b)
                there occurs a sale of all or substantially all of the business and/or
                assets of the Company.

            

      

      	6.3.2  	
              If
                a Change in Control of the Company shall have occurred within six
                (6)
                months prior to the Termination Date or the Executive terminates
                this
                Agreement under Section 6.3 the Executive will be entitled to receive,
                within 60 days after the Termination Date, the Executive’s annual base
                salary at the Termination Date plus the target bonus for the year
                in which
                the Termination Date occurs multiplied by one (1) (i.e., 1 times
                base
                salary plus target bonus), all stock options held by the Executive
                shall
                become immediately exercisable and shall remain exercisable for one
                (1)
                year after the Termination Date. The Company shall continue the health
                coverage contemplated by Section 5.1 for a period of one (1) year
                thereafter.

            

      

      	6.4  	
              Liquidated
                Damages: No Duty to Mitigate Damages The amounts payable pursuant
                to
                Sections 6.2 and 6.3 shall be deemed liquidated damages for the early
                termination of this Agreement and shall be paid to the Executive
                regardless of any income the Executive may receive from any other
                employer, and the Executive shall have no duty of any kind to seek
                employment from any other employer during the balance of the
                Term.

            

      

      	7.  	
              Indemnification

            

      

      To
        the
        fullest extent permitted by law, the Company shall indemnify the Executive
        and
        hold him harmless from and against all loss, cost, liability and expense
        (including reasonable attorney’s fees) arising from the Executive’s service to
        the Company or any Affiliate, whether as officer, director, employee, fiduciary
        of any employee benefit plan or otherwise.

      

      	8.  	
              Agreement
                Not to Compete

            

      

      The
        Executive agrees that, while serving as an Executive of the Company, he will
        not, without the written consent of the Chief Executive Officer of the Company,
        serve as an employee or director of any business entity other than the Company
        and its Affiliates, but may serve as a director of a reasonable number of
        not-for-profit corporations and may devote a reasonable amount of time to
        charitable and community service.

      

      

      The
        Executive may hold stock or a limited partnership interest of 5% or less
        in any
        publicly traded entity engage in such business without violating this
        Agreement.

      

      	9.  	
              Agreement
                Not to Solicit 

            

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      For
        one
        year following any Termination Date, regardless of the reason, the Executive
        shall not solicit any employee of the Company or an Affiliate to leave such
        employment and to provide services to the Executive or any business entity
        by
        which the Executive is employed or in which the Executive has a material
        financial interest. Soliciting a former employee of the Company and its
        Affiliates to provide such services shall not be a violation of this
        Agreement.

      

      	10.  	
              Confidential
                Information

            

      

      Unless
        the Executive shall first secure consent of the Company, the Executive shall
        not
        disclose or use, either during or after the Term for a period of five (5)
        years,
        any secret or confidential information of the Company or any Affiliate, whether
        or not developed by the Executive, except as required by his duties to the
        Company or the Affiliate.

      

      Executive
        will sign a Employee Confidentiality, Inventions, and Non-Competition Agreement,
        which shall control over this Agreement if any conflict exists between it
        and
        this Agreement.

      

      	11.  	
              Arbitration

            

      

      Any
        dispute or differences concerning any provision of this Agreement which cannot
        be settled by mutual accord between the parties shall be settled by arbitration
        in Dallas, Texas in accordance with the rules then in effect of the American
        Arbitration Association, except as otherwise provided herein. The dispute
        or
        differences shall be referred to a single arbitrator, if the parties agree
        upon
        one, or otherwise to three arbitrators, one to be appointed by each party
        and a
        third arbitrator to be appointed by the first named arbitrators; and if either
        party shall refuse or neglect to appoint an arbitrator within 30 days after
        the
        other party shall have appointed an arbitrator and shall have served a written
        notice upon the first mentioned party requiring such party to make such
        appointment, then the arbitrator first appointed shall, at the request of
        the
        party appointing him, proceed to hear and determine the matters in difference
        as
        if he were a single arbitrator appointed by both parties for the purpose,
        and
        the award or determination which shall be made by the arbitrator shall be
        final
        and binding upon the parties hereto. The arbitrator or arbitrators shall
        each
        have not less than five (5) years experience in dealing with the subject
        matter
        of the dispute or differences to be arbitrated. Any award maybe enforced
        in any
        court of competent jurisdiction. The expenses of any such arbitration shall
        be
        paid by the non-prevailing party, as determined by the final order of the
        arbitrators.

      	12.  	
              Miscellaneous

            

      

      	12.1  	
              Notices

            

      

      All
        notices in connection with this Agreement shall be in writing and sent by
        postage prepaid first class mail, courier, or telefax, and if relating to
        default or termination, by certified mail, return receipt requested, addressed
        to each party at the address indicated below:

      

      If
        to the
        Company:

      Uluru
        Inc.

      4452
        Beltway Drive

      Addison,
        TX 75001

      Attn:
        Chief Executive Officer

      

      Copy
        To:

      John
        J.
        Concannon III, Esq.,

      Bingham
        Dana LLP

      150
        Federal Street

      Boston,
        MA 02110

      

      If
        to the
        Executive:

      John
        V.
        St. John

      1755
        Palo
        Duro Trail

      Grapevine,
        TX 76051

      

      Or
        to
        such other address as the addressee shall last have designated by notice
        to the
        communicating party. The date of giving of any notice shall be the date of
        actual receipt.

      

      	12.2  	
              Governing
                Law

            

      

      This
        Agreement shall be deemed a contract made and performed in the State of Texas,
        and shall be governed by the internal and substantive laws of the State of
        Texas.

      

      	12.3  	
              Severability

            

      

      Whenever
        possible, each provision of this Agreement shall be interpreted in such manner
        as to be effective and valid under applicable law, but if any provision of
        this
        Agreement is held to be invalid, illegal or unenforceable in any respect
        under
        any applicable law or rule in any jurisdiction, such invalidity, illegality
        or
        unenforceability shall not affect any other provision or in the interpretation
        in any other jurisdiction; however, such provision shall be deemed amended
        to
        conform to applicable laws and to accomplish the intentions of the
        parties.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      	12.4  	
              Entire
                Agreement; Amendment

            

      

      This
        Agreement constitutes the entire agreement of the parties and may be altered
        or
        amended or any provision hereof waived only by an agreement in writing signed
        by
        the party against whom enforcement of any alteration, amendment, or waiver
        is
        sought. No waiver by a party of any breach of this Agreement shall be considered
        as a waiver of any subsequent breach.

      

      	12.5  	
              Successors
                and Assigns

            

      

      	12.5.1  	
              The
                Company will require any successor (whether direct or indirect, by
                purchase, merger, consolidation or otherwise) to expressly assume
                and
                agree to perform this Agreement in the same manner and to the same
                extent
                that the Company would be required to perform it if no such succession
                had
                taken place. Failure of the Company to obtain such agreement prior
                to the
                effectiveness of any such succession shall be a breach of this Agreement
                and shall entitle Executive to compensation from the Company in the
                same
                amount and on the same terms as Executive would be entitled hereunder
                if
                Executive terminated his employment for Change of Control. As used
                in this
                Section 12.5.1, “Company” shall mean the Company as hereinbefore defined
                and any successor to its business and/or assets as aforesaid which
                executes and delivers the Agreement provided for in this Section
                12.5.1 or
                which otherwise becomes bound by all the terms and provisions of
                this
                Agreement by operation of law.

            

      

      	12.5.2  	
              This
                Agreement is intended to bind and inure to the benefit of and be
                enforceable by Executive and the Company, and their respective successors
                and assigns, except that Executive may not assign any of his rights
                or
                delegate any of his duties without the prior written consent of the
                Company.

            

      

      	12.6  	
              Assignability

            

      

      Neither
        this Agreement nor any benefits payable to the Executive hereunder shall
        be
        assigned, pledged, anticipated, or otherwise alienated by the Executive,
        or
        subject to attachment or other legal process by any creditor of the Executive,
        and notwithstanding any attempted assignment, pledge, anticipation, alienation,
        attachment, or other legal process, any benefit payable to the Executive
        hereunder shall be paid only to the Executive or his estate.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESSES WHEREOF, the Company and its officers hereunto duly authorized,
        and
        the Employee have signed and sealed this Agreement as of the date first written
        above.

      

      
        	
                ULURU
                  Inc.

              	 	
                Executive

              
	 	 	 	 	 
	 	 	 	 	 
	
                By:

              	
                /s/
                  Kerry P. Gray

              	 	
                By:

              	
                /s/
                  John V. St. John

              
	 	 	 	 	 
	
                Name:

              	
                Kerry
                  P. Gray

              	 	
                Name:

              	
                John
                  V. St. John

              
	
                Title:

              	
                President
                  & CEO

              	 	
                Title:

              	
                Vice
                  President - Material Science

              
	
                Date:

              	
                December
                  1, 2006

              	 	
                Date:

              	
                December
                  1, 2006Exhibit 4.1

Exhibit 4.1

OPTION AGREEMENT

THIS AGREEMENT dated the 19th day of March, 2004.

BETWEEN:

Fayz Yacoub, of

6498—

128B Street

Surrey, British Columbia V3W 9P4

(hereinafter called the “Optionor”)

OF THE FIRST PART

AND:

Interactive Exploration Inc, of

Suite 1150— 355 Burrard Street

Vancouver, British Columbia V6C 2G8

(hereinafter called the “Optionee”)

OF THE SECOND PART

WHEREAS:

A.

The Optionor is the beneficial owner of an undivided 100% interest in thirteen mineral claims (the “Claims”) as more particularly described in Schedule “A” attached hereto, situated in the Clinton Mining Division in the Province of British Columbia; and

B.

The Optionor has agreed to grant an option to sell an undivided 85% interest in and to the Claims to the Optionee upon the following terms and conditions.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the representations, warranties, covenants and agreements herein contained, the Optionor hereby gives and grants to the Optionee the sole and exclusive option (“Option”) to purchase an undivided 85% interest in and to the Claims subject to the following terms and conditions:

1.1

The Option shall be irrevocable and shall be open for exercise by payment by the Optionee to the Optionor as follows:

(a)

the payment of the sum of $10,000 upon th.e the Optionee receiving notice from the TSX Venture Exchange to the approval of the terms of this Agreement;

(b)

the payment of the sum of $10,000 one year from the date of this Agreement;

(c)

the payment of the sum of $10,000 two years from the date of this Agreement;

KLE\032101’STIRRUP\1601

(d)

the issuance of a total of 300,000 shares in the capital of the Optionee to be issued as follows:

(i)

100,000 shares upon the Optionee receiving approval from the TSX Venture Exchange to the terms of this Agreement;

(ii)

100,000 shares upon the first anniversary date of this Agreement; and

(iii) 

100,000 shares upon the second anniversary date of this Agreement;

(e)

the issuance of an additional 300,000 shares in the capital of the Optionee upon the Optionee receiving a positive feasibility study recommending placing the Claims into commercial production; and

(f)

the Optionee completing an exploration program on the Claims in the amount of $100,000 to be completed on or before the first anniversary date of this Agreement.

1.2

Upon the Optionee making the payments set out in paragraphs 1.1(a), (b) and (c), issuing the shares as set out in paragraph 1.1(d) hereof and making the exploration expenditures as set out in paragraph 1.1(1), the Option shall be deemed to have been exercised and the Optionee shall have earned an undivided 85% interest in the Claims and the Optionor and Optionee shall enter into a joint venture agreement providing for the future exploration and development of the Claims on terms in accordance with industry practices.

2.1

As additional consideration for the Optionor entering into this Agreement, the Optionee acknowledges that its interest in the Claims shall be subject to a royalty or charge in the amount of two percent (2%) of Net Smelter Returns payable to the Optionor.

2.2

For the purpose of this clause “Net Smelter Returns” shall mean the actual proceeds received by the Optionee from a smelter or other place of sale or treatment in respect of all ore removed by the Optionee from the Claims as evidenced by its returns or settlement sheets after deducting from the said proceeds all freight or other transportation costs from the Claims, to the smelter or other place of sale or treatment, but without any other deduction whatsoever. Net Smelter Returns due and payable to the Optionor hereunder shall be paid within sixty days after receipt of the said actual proceeds by the Optionee. Within ninety days after the end of each fiscal year during which any ore was shipped from the Claims the records relating to the calculation of Net Smelter Returns during that fiscal year shall be delivered to the Optionor, upon written request, who shall have sixty days after receipt of such statements to question their accuracy and failing such question, the statements shall be deemed correct. The Optionor or his representative duly appointed in writing shall have the right at all reasonable times upon written request to inspect such books and financial records of the Optionee as are relevant to the determination of Net Smelter Returns and at his own expense to make copies thereof.

2.3

The Optionee shall at any time have the right to purchase 1% of the 2% Net Smelter Return Royalty from the Optionor by paying the Optionor the sum of $500,000.

3.1

During the term of this Agreement the Optionee shall have the exclusive possession and control of the Claims and the right by its employees, agents, or contractors to explore, prospect, 

KLE\032101\5TIRRUF\1601

examine and develop the Claims in such a manner as the Optionee, in its sole discretion shall decide and based on professional geological recommendations.

4.1

The Optionor represents and warrants that it is the beneficial owner of an undivided

100% interest in and to the Claims free and clear of all liens, charges and encumbrances and conflicting claims and rights of whatsoever nature and kind, that the Claims are in good standing and that it has full power, absolute authority and capacity to enter into this Agreement without obtaining the consent of any other person or body corporate and that no other person or body corporate has any agreement, option, right or privilege capable of becoming an agreement for the purchase of the Claims or an interest therein save as might be expressly set out herein.

4.2

The Optionee represents and warrants to the Optionor it is a corporation duly organized, validly existing and in good standing under the laws of the Province of British Columbia with full power, absolute authority and capacity to enter into this Agreement and to carry out the transaction contemplated herein.

5.1

The Optionor agrees to execute and deliver to the Optionee such bills of sale, transfers or other documentation required to transfer an undivided 85% interest in and to the Claims to the Optionee concurrently upon the execution of this Agreement. The Optionee has the right to record the bills of sale, transfers and other documentation with the appropriate governmental agency to effect a transfer of the recorded ownership of the Claims to the Optionee but beneficial ownership to the Claims shall be subject to the terms of this Agreement.

6.1.

During the currency of this Agreement the Optionee agrees to:

(a)

keep the Claims free and clear of all liens and encumbrances arising from its operations hereunder and in good standing by doing and filing all necessary work and payment of all taxes required to be paid and by doing all other acts and things and making all other payments required to be made which may be necessary in that regard; and

(b)

conduct all work on or with respect to the Claims in a careful and minerlike manner and in accordance with the applicable laws of the Province of British Columbia and indemnify and save the Optionor harmless from any and all claims, suits or actions made or brought against the Optionor as a result of work done by the Optionee on or with respect to the Claims.

7.1

The Option shall forthwith terminate:

(a)

upon the failure of the Optionee to make any of the payments, or issue any shares or completing the exploration expenditures as specified in paragraph 1 hereof by the dates specified;

(b)

upon the Optionee giving notice of termination to the Optionor; or

(c)

upon the expiration of thirty days after service of notice to the Optionee in writing by the Optionor of a breach by the Optionee of any condition or covenant herein contained to be observed or performed, if such breach has not theretofore been rectified.

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7.2

Upon termination of the Option all obligations or liabilities hereunder of whatever nature of the parties shall cease and determine except for the obligation of the Optionee to leave the Claims free and clear of any liens, charges or encumbrances arising from its work thereon, or for materials or supplies delivered thereto at its request. The Optionee shall have the right for ninety days thereafter to remove any machinery, equipment or supplies brought on to the Claims by it.

7.3

In the event the Optionee terminates the Option, the Qptionee shall, forthwith transfer any interest it has in the Claims to the Optionor for the sum of $10.00.

8.

The Optionee or assigns shall at any time within one year of the start of commercial

production of the Claims have the right to purchase all of the Optionor’s 15% interest in the

Claims from the Optionor by paying the Optionor or his partners or assigns the sum of

$3,000,000 for each 5% interest.

9.

On-Track Exploration Ltd. will have the first right of refusal to conduct all exploration on the Claims during the Option, such first right of refusal to be exercised within fifteen days notice of such programs.

10.

The rights of neither party shall be prejudiced by events beyond a party’s reasonable control, including, without limiting, environmental restrictions or approvals, the exigencies of nature, government and acts of God particularly as they may affect exploration and development of the Claims but excluding the want of funds. All times herein provided for shall be extended by the period necessary to cure any such event and the party affected shall use all reasonable means to do so promptly. Each party agrees to cooperate with the other in applying for and obtaining all required federal, territorial, provincial and other governmental approvals.

11.

The data and information coming into the possession of the Optionor by virtue of this Agreement shall be kept confidential and shall not be disclosed to third parties without the written consent of the Optionee.

12.

Nothing in this Agreement shall be deemed to constitute the Optionor the partner of the Optionee except as specifically provided the agent of the other. Each party agrees to indemnify and hold the other harmless from and against the breaches of its representations, warranties, or agreements hereunder and from and against any negligent or intentional acts by it or any of its officers, agents or employees.

13.

Time shall be of the essence of this Agreement and should the parties fix new dates for the performance of any obligation time shall thereafter again be of the essence of this Agreement.

14.

The Optionor and the Optionee acknowledge this Agreement and the issuance of any shares in the capital of the Optionee are subject to the approval of all necessary regulatory authorities including the TSX Venture Exchange as applicable and agree to promptly comply with all conditions and requirements which may be required by such regulatory authorities.

15.

This Agreement shall be construed with and governed by the laws of the Province of British Columbia. All references herein to sums of money shall be deemed to refer to Canadian funds.

KLE\O32LOI\STJRRUP\l6OI

16.

Any notice given pursuant hereto shall be in writing and shall be delivered or mailed by pm-paid registered post to the other party at its address set forth in the beginning of this Agreement and if so delivered shall be deemed to be effective immediately and if so mailed shall be deemed to have been given on the fifth postal delivery day following the date of mailing.

17.

The Optionor will indemnify and save the Optionee harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement, or condition made by him and contained in this Agreement. The Optionor acknowledges and agrees that the Optionee has entered into this Agreement relying on the warranties and representations and other terms and conditions of this Agreement.

18.

An area of common interest shall be deemed to comprise that area which is included within five kilometers of the outermost boundary of the Claims as at the date of this Agreement. Except as to renewals or improvements in title to mineral claims or mineral rights held by a party prior to the date of this Agreement which have not been added to the Claims, if at anytime during the subsistence of this Agreement any party (in this paragraph only called the “Acquiring Party”) stakes or otherwise acquires, directly or indirectly, any right to or interest in any mining claims, licence, lease, grant, concession, permit, patent, or other mineral property located wholly or partly within the area of interest referred to in paragraph 18 the Acquiring Party shall forthwith give notice to the other party of that staking or acquisition, the cost thereof and all details in possession of that party with respect to the nature of the property and the known mineralization. The other party shall have a period of thirty days to give notice of whether it elects to have such additional mineral rights form part of the Claims and each party shall pay an amount equal to its % ownership of the Claims of costs in acquiring the additional mineral rights.

19.

This Agreement represents the complete understanding of the parties and shall not be deviated from except by a further written agreement. Each party agrees to execute further documents necessary to give effect to this Agreement.

20.

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators and assigns.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

FAYZ YACOUB

/s/ Fayz Yacoub

INTERACTIVE EXPLORATION INC.

Per: /s/ Len Harris

Authorized Signatory

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SCHEDULE “A”

					
	Claim Name

	Number of Units

	Record Number

	Record Date

	Expiry Date

	Stirrup 1

	1

	407567

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 2

	1

	407566

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 3

	1

	407569

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 4

	1

	407570

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 5

	1

	407571

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 6

	1

	407572

	Jan. 14, 2003

	Jan. 12, 2005

	Stirrup 7

	1

	408494

	March 4, 2004

	Feb. 28, 2005

	Stirrup 8

	1

	408495

	March 4, 2004

	Feb. 28, 2005

	Stirrup 9

	1

	408496

	March 4, 2004

	Feb. 28, 2005

	Stirrup 10

	15

	408500

	March 4, 2004

	March 1,2005

	Stirrup 11

	1

	408497

	March 4, 2004

	Feb. 28, 2005

	Stirrup 12

	1

	408498

	March 4, 2004

	March 1,2005

	Stirrup 13

	1

	408499

	March 4, 2004

	March 1,2005

These claims are situated in the Clinton Mining Division of the Province of British Columbia.

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