Subscription Agreement with R. Rutherford dated January 12, 2010

Name to appear on certificate(s)

Name and account reference, if applicable

Account reference, if applicable

Contact person

Address of intermediary

Address for delivery

(a)

the Subscriber is purchasing as principal and is either:

(c)

if the Subscriber is a U.S. Person (as defined under Regulation S promulgated under the U.S. Securities Act (“Regulation S”), which definition includes an individual resident in the United States and an estate or trust of which any executor or administrator or trustee, respectively, is a U.S. Person), then:

 

(i)

the Subscriber understands that the Shares have not been and will not be registered under the U.S. Securities Act or any applicable state securities laws, and that the sale contemplated hereby is being made in reliance on an exemption from registration pursuant to Section 4(6) of the U.S. Securities Act to accredited investors (as that term is defined in Rule 501(a) of Regulation D under the U.S. Securities Act, (an “Accredited Investor”)); and

 

(ii)

the Subscriber agrees that if it decides to offer, sell or otherwise transfer any of the Shares, it will not offer, sell or otherwise transfer any of such Shares directly or indirectly, unless:

 

(A)

the Company’s securities are publicly traded on a national securities exchange in Canada or the United States, the NASDAQ Stock Market or the OTC Bulletin Board; or

 

(B)

the Company consents, in its sole discretion, in writing to such transfer and the transfer is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S (or such successor rule or regulation then in effect), if applicable, and in compliance with applicable state securities laws and it has prior to such sale furnished to the Company an opinion of counsel, in a form reasonably satisfactory to the Company regarding compliance with Rule 904 and any applicable state securities laws; or the transfer is made pursuant to an exemption from the registration requirements under the U.S. Securities Act provided by Rule 144A or 144 thereunder, if available, and in accordance with any applicable state securities laws and it has prior to such sale furnished to the Company an opinion of counsel, in a form reasonably satisfactory to the Company regarding compliance with Rule 144A or 144, as applicable, and any applicable state securities laws; and

 

(iii)

the Subscriber understands and acknowledges that upon the issuance thereof, and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, the certificates representing the Shares shall bear the following legends:

(d)

the Subscriber acknowledges that:

 

(i)

no securities commission or similar regulatory authority has reviewed or passed on the merits of the Shares;

 

(ii)

there is no government or other insurance covering the Shares;

 

(iii)

there are risks associated with the purchase of the Shares;

 

(iv)

there are restrictions on the Subscriber’s ability to resell the Shares and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Shares;

 

(v)

the Subscriber is restricted from using certain of the civil remedies available under the applicable securities laws;

 

(vi)

the Subscriber may not receive information that might otherwise be required to be provided to the Subscriber under the applicable securities laws if the exemptions were not being used;

 

 

(vii)

the Company is relieved from certain obligations that would otherwise apply under the applicable securities laws if the exemptions were not being used; and

 

(viii)

the Company is relying  on exemptions in applicable securities laws from the requirements to provide the Subscriber with a prospectus and to sell the Shares through a person registered to sell securities and the Subscriber understands that the exemptions release the Company from the requirements to provide the Subscriber with a prospectus and to sell the Shares through a person registered to sell securities under the Securities Act (British Columbia) and, as a consequence of acquiring the Shares pursuant to those exemptions, certain protections, rights and remedies provided by the Securities Act (British Columbia), including statutory rights of rescission or damages, will not be available to the Subscriber;

(e)

the Subscriber is subscribing for the Shares as principal for its own account and not for the benefit of any other person (within the meaning of applicable securities laws) and not with a view to resale or distribution of all or any of the Shares or, if it is not subscribing as principal, it acknowledges that the Company may be required by law to disclose to certain regulatory authorities the identity of each beneficial Subscriber for the Shares for whom it is acting;

(f)

the Shares are subject to a number of resale restrictions, including a restriction on trading.  Until the restriction on trading expires, the Subscriber will not be able to trade the Shares unless the Shares are registered or the Subscriber complies with an exemption from the prospectus requirements;

(g)

the offer and sale of the Shares was not accomplished by an advertisement or other general solicitation (and the Subscriber has not attended any seminar or meeting whose attendees have been invited by general solicitation or general advertisement) and the Subscriber was not induced to purchase the Shares as a result of any advertisement or general solicitation made by the Company;

(h)

if the Subscriber is a corporation, the Subscriber is a valid and subsisting corporation and was not organized for the purpose of acquiring the Shares, has the necessary corporate capacity and authority to execute and deliver this Agreement and to observe and perform its covenants and obligations hereunder and has taken all necessary corporate action in respect thereof, or, if the Subscriber is an individual, partnership, syndicate, trust or other form of unincorporated organization, the Subscriber has the necessary legal capacity and authority to execute and deliver this Agreement and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof, and, in either case, upon the Company executing and delivering this Agreement, this Agreement will constitute a legal, valid and binding contract of the Subscriber enforceable against the Subscriber in accordance with its terms and neither the agreement resulting from such acceptance nor the completion of the transactions contemplated hereby conflicts with, or will conflict with, or results, or will result, in a breach or violation of any law applicable to the Subscriber, any constating documents of the Subscriber or any agreement to which the Subscriber is a party or by which the Subscriber is bound;

(i)

this subscription is given for valuable consideration and may not be withdrawn or revoked by the Subscriber;

(j)

the Company may for any reason, at any time before acceptance of this Agreement, terminate the offering of Shares and, upon termination, the Company will return the Funds to the Subscriber without interest or deduction;

(k)

the Shares will be subject to the following resale or transfer restrictions:

 

(i)

the Shares will be subject to resale restrictions under applicable securities laws including resale restrictions under the Securities Act (British Columbia) that include a hold period of at least four months;

 

 

(ii)

the Subscriber will not be able to resell, assign or otherwise dispose of the Shares unless they are subsequently distributed under a prospectus, registration statement or in compliance with all applicable resale restrictions;

 

(iii)

the Company may be required to legend the certificates representing the Shares regarding these and any other restrictions on resale; and

 

(iv)

the Company is under no obligation to file a registration statement, or register the resale of the Shares under a prospectus or registration statement, or assist the Subscriber in complying with any exemption from the prospectus or registration statement requirements or resale restrictions set out under applicable securities laws; provided, however, that in connection with any underwritten public offering by the Company, during the period of duration (not to exceed 180 days) specified by the Company and an underwriter of common stock of the Company following the effective date of a registration statement of the Company with respect to such offering, the Subscriber will not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase, pledge, or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any of the Shares of the Company held by the Subscriber at any time during such period except common stock included in such registration.  If requested by such underwriter, the Subscriber agrees to execute a lock-up agreement in such form as the underwriter may reasonably propose.

(l)

the Subscriber will not resell, assign or otherwise dispose of the Shares other than in accordance with all applicable securities laws and the requirements of any exchange or over-the-counter market upon which any securities of the Company are then listed;

(m)

the Subscriber’s investment in the Shares is speculative and involves a high degree of risk, substantial financing for the Company may be required in the future, and there is no assurance that any such additional financing can be obtained;

(n)

the Subscriber is able to bear the economic risks of an investment in the Shares, including, without limiting the generality of the foregoing, the risk of losing part or all of the Funds, and the inability to sell, convert, exchange or transfer the Shares at a price which would enable the Subscriber to recoup his, her or its investment in the Shares;

(o)

other than any persons to whom the Company has agreed to pay a brokerage or finder’s fee, there is no person acting or purporting to act in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee.  If any person establishes a claim that any fee or other compensation is payable in connection with this subscription for the Shares, the Subscriber covenants to indemnify and hold harmless the Company with respect thereto and with respect to all costs reasonably incurred in the defence thereof;

(p)

the Subscriber, and each beneficial person for whom it is contracting hereunder, has been advised to consult its own legal advisors with respect to trading in the Shares and with respect to the resale restrictions imposed by the securities laws of the state in which the Subscriber resides, the U.S. Securities Act and the rules and regulations thereunder, and any other applicable securities laws, and acknowledges that no representation has been made respecting the applicable hold periods or other resale restrictions applicable to such securities which restrict the ability of the Subscriber (or others for whom it is contracting hereunder) to resell such securities, that the Subscriber (or others for whom it is contracting hereunder) is solely responsible to find out what these restrictions are and the Subscriber is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and the Subscriber is aware that it (or beneficial persons for whom it is contracting hereunder) may not be able to resell such securities except in accordance with limited exemptions under the securities laws (including the U.S. Securities Act) and other applicable securities laws;

(q)

the Subscriber will execute, deliver, file and otherwise assist the Company in filing any report, undertaking or document with respect to the purchase, sale, conversion or exchange of the Shares as required by counsel for the Company;

(r)

the Subscriber hereby authorizes the Company to correct any minor errors in, or complete any minor information missing from, any document which has been executed by the Subscriber and delivered to the Company with respect to the Subscriber’s subscription;

(s)

if, for any reason, the offering of Shares is terminated or the Subscriber’s subscription is rejected, the Subscriber will have no claims against the Company, its directors and officers, shareholders, agents, advisors and affiliates and shall have no interest in the Company or in any property or assets of the Company;

(t)

the Subscriber acknowledges that there are risks associated with the purchase of and investment in the Shares and the Subscriber, and each beneficial person for whom it is contracting hereunder, is knowledgeable, sophisticated and experienced in business and financial matters and is capable of evaluating the merits and risks of an investment in the Shares, fully understands the restrictions on resale of the Shares and is able to bear the economic risk of an investment in the Shares;

(u)

the Subscriber is familiar with the aims and objectives of the Company and the proposed use of the proceeds received by the Company from the sale of the Shares and is aware of the risk and other characteristics of an investment in the Shares;

(v)

in evaluating the merits and risks of an investment in the Shares, the Subscriber has relied solely upon the advice of his, her or its legal, tax and investment advisors and not any oral or written statement made by, or on behalf of, the Company or its advisors;

(w)

THE SUBSCRIBER IS RESPONSIBLE FOR OBTAINING HIS, HER OR ITS OWN LEGAL, INVESTMENT AND TAX ADVICE;

(x)

the Company may pay a commission or fee in respect of the sale of the Shares;

(y)

the Subscriber, and each beneficial person for whom it is acting hereunder, is a resident in the jurisdiction set out on the first page of this Agreement.  Such address was not created and is not used solely for the purpose of acquiring the Shares and the Subscriber and any beneficial person who was solicited to purchase in such jurisdiction and is acquiring the Shares for its own account or for the account of another accredited investor (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act) over which the Subscriber exercises sole investment discretion, and as to which the Subscriber has the authority to make the statements set forth in this Agreement, in each case not with a view to, or for offer or sale in connection with, any resale, distribution or other disposition of the Shares in any transaction that would be in violation of the U.S. Securities Act or applicable state securities laws; and

(z)

the Subscriber, if an individual, is at least 18 years of age.  If the Subscriber is an association or entity, each individual member of the association or entity is at least 18 years of age.  If the Subscriber is acquiring the Shares for the account of another person, such person if an individual is at least 18 years of age, or if such person is an association or entity, each individual member of the association or entity is over 18 years of age.

 

(a)

the Company is a valid and subsisting corporation duly incorporated and in good standing under the laws of the jurisdiction in which it is incorporated;

(b)

the Company is duly registered and licensed to carry on business in the jurisdictions in which it carries on business or owns property where required under the laws of those jurisdictions;

(c)

the Company will reserve or set aside sufficient shares in its treasury to issue the Shares;

(d)

the issue and sale of the Shares by the Company does not and will not conflict with, and does not and will not result in a breach of, any of the terms of the Company’s incorporating documents or any agreement or instrument to which the Company is a party; and

(e)

this Agreement has been or will be by the Closing, duly authorized by all necessary corporate action on the part of the Company, and the Company has full corporate power and authority to undertake the offering.

(a)

a director, executive officer, employee or control person of the Company or an affiliate of the Company

(b)

a spouse, parent, grandparent, brother, sister or child of a director, executive officer or control person of the Company or an affiliate of the Company

(c)

a parent, grandparent, brother, sister or child of the spouse of a director, executive officer or control person of the Company or an affiliate of the Company

(d)

a close personal friend of a director, executive officer or control person of the Company or an affiliate of the Company

(e)

a close business associate of a director, executive officer or control person of the Company or an affiliate of the Company

(f)

a founder of the Company or a spouse, parent, grandparent, brother, sister, child, close personal friend or close business associate of a founder of the Company

(g)

a parent, grandparent, brother, sister or child of the spouse of a founder of the Company

(h)

a company, partnership or other entity which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons or companies as described in paragraphs (a) to (g) above

(i)

purchasing the Shares as principal with an aggregate value of more than CDN$150,000

(j)

an accredited investor

2.

if the Subscriber has checked one or more of boxes (b), (c), (d), (e), (f), (g) or (h) in section 1 above, the director(s), executive officer(s), control person(s) or founder(s) of the Company with whom the Subscriber has the relationship is:

3.

If the Subscriber has ticked box (j) in section 1 above, the Subscriber acknowledges and agrees that the Company shall not consider the Subscriber’s request for the Shares for acceptance unless the Subscriber provides to the Company:

 

(a)

the information required in sections 4 and 5; and

 

(b)

such other supporting documentation that the Company or its legal counsel may request to establish the Subscriber’s qualification as an “accredited investor”;

4.

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

5.

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

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

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

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

an entity, other than an individual or investment fund, that has net assets of at least CDN$5,000,000 as shown on its most recently prepared financial statements;

an entity registered under the securities legislation of a jurisdiction of Canada as an advisor or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (British Columbia) or any entity organized in a foreign jurisdiction that is analogous to any such person or entity; or

an entity in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons or companies that are accredited investors.

o   Category 1

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

x   Category 2

A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US $1,000,000.

o   Category 3

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

A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.

o Category 5

A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States).

o   Category 6

A director or executive officer of the Company.

o   Category 7

A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act.

o   Category 8

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