PURCHASE AGREEMENT

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT, dated as of October 27, 2008, is entered into by and among Lexaria Corp., a Nevada corporation with headquarters located at #000-000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx Xxxxxx X0X 0X0 (the “Company”), and C.A.B. Financial Services Ltd. of 000 Xxxxxxxx Xxxx, Xxxx, Xxxxxxx XX, and any additional purchasers whose signatures appear at the conclusion of this agreement (collectively, the “Purchaser”) as identified in Schedule 1 hereto.

W I T N E S E T H:

WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), and/or Section 4(2) of the 1933 Act; and

WHEREAS, the Purchaser wishes to purchase a 18.0% Secured Promissory Note of the Company (the “Note”), subject to and upon the terms and conditions of this Agreement and acceptance of this Agreement by the Company, on the terms and conditions referred to herein; and

WHEREAS, the Company’s obligations to repay the Note will be secured by certain specified assets of the Company pursuant to a Security Agreement (the “Security Agreement”).

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Page 1

AGREEMENT TO PURCHASE; PURCHASE PRICE.

Purchase.

(i)

Subject to the terms and conditions of this Agreement and the other Transaction Documents, the Purchaser hereby agrees to purchase Notes in the aggregate amount of $300,000 (Canadian Dollars) (the “Purchase Amount”). All of the Purchase Amount shall consist of amounts previously advanced by the Purchaser to the Company pursuant to loan agreements dated March 20, 2007 (US $50,000) and November 13, 2007 (US $250,000) (collectively, the “Loan Agreements”). The Company and the Purchaser hereby agree that the previous Loan Agreements are terminated and any amounts due and owing there under are replaced and superseded by the Notes issued by the Company pursuant to this Agreement. The Purchaser is notified and understands that a total of CDN $900,000 of Notes are being purchased by an aggregate of three separate Purchasers as identified in Schedule 1 hereto, as of the date of this Agreement, and that the Company reserves the right to issue up to but not more than another $1,100,000 of Notes under identical terms and conditions to additional Purchasers.

(ii)

The Note referred to herein shall be in the form of Annex I annexed hereto. The Note will be secured by a pledge of certain of the Company’s assets pursuant to a Security Agreement in the form of Annex II.

(iii)

In consideration for the Purchaser agreeing to Purchase the Note, the Company agrees to issue to the Purchaser the Warrants (as defined herein) in the form of Annex III hereto. Additional provisions relating to the Warrants are provided below.

(iv)

The purchase of the Note and the issuance of the Warrants to the Purchaser and the other transactions contemplated hereby are sometimes referred to herein and in the other Transaction Documents as the purchase and sale of the Securities (as defined below), and are referred to collectively as the “Transactions”.

Certain Definitions.

As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

“Affiliate” means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person.

“Certificate” means the original signed Note duly executed by the Company.

“Closing Date” means the date of the closing of the issuance of Notes.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

Page 2

“Company Control Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as defined below).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means the Person holding the relevant Securities at the relevant time.

“Last Audited Date” means October 31, 2007.

“Purchaser Control Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Purchaser pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (w) adversely affect the legality, validity or enforceability of the Securities or any of the Transaction Documents, (x) have or result in a material adverse effect on the results of operations, assets, prospects, or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, (y) adversely impair the Company's ability to perform fully on a timely basis its obligations under any of the Transaction Documents or the transactions contemplated thereby, or (z) materially and adversely affect the value of the rights granted to the Purchaser in the Transaction Documents.

“Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

“Principal Trading Market” means the Over the Counter Bulletin Board or such other market on which the Common Stock is principally traded at the relevant time, but shall not include the “pink sheets.”

“Securities” means the Note, the Warrants, the Warrant Shares, and any shares of common stock of the Company that may be issued to the Purchaser in connection with any other agreements between the parties.

“Security Agreement” means the Security Agreement dated as of October 24, 2008 between the Company and the Purchaser.

“Shares” means the shares representing any or all of the Warrant Shares.

“State of Incorporation” means Nevada.

“Subsidiary” means any subsidiary of the Company.

Page 3

“Trading Day” means any day during which the Principal Trading Market shall be open for business.

“Transfer Agent” means, at any time, the transfer agent for the Company’s Common Stock.

“Transaction Documents” means this Purchase Agreement, the Note, the Security Agreement, the form of Warrant and includes all ancillary documents referred to in those agreements.

“Warrants” means, collectively, share purchase warrants entitling the Purchaser to acquire Shares of the Company’s common stock, and the number of Series A and B Warrants issuable shall be determined by the Purchase Amount divided by $0.45, which Warrants shall have the following terms:

(i)

each Series A Warrant entitling the holder to purchase one-half of one Warrant Share for a term of one year from issuance and an exercise price of US$0.45 per whole Warrant Share;

(ii)

each Series B Warrant entitling the holder to purchase one-half of one Warrant Share for a term of two years from issuance and an exercise price of US$0.90 per whole Warrant Share; and

(iii)

Mandatory conversion of the Warrants at the option of the Company upon the Company’s Common Stock closing at 200% of the applicable exercise price for twenty consecutive Trading Days.

“Warrant Shares” means shares of Common Stock underlying the Warrants.

Form of Payment; Delivery of Certificates.

(i)

The Purchaser shall pay the Purchase Amount by delivering immediately available good funds in United States Dollars to the Company on the Closing Date.

(ii)

On the Closing Date, the Company shall deliver the Certificates and the Warrants, each duly executed on behalf of the Company to the Purchaser.

(iii)

By signing this Agreement, each of the Purchaser and the Company agrees to all of the terms and conditions of the Transaction Documents, all of the provisions of which are incorporated herein by this reference as if set forth in full.

Method of Payment. Payment of the Purchase Amount shall be made by wire transfer of funds to:

BANK OF MONTREAL

000 XXXXXXX XXXXXX

XXXXXXXXX XX XXXXXX

Attn: Xxxxxxx Xxxxxxx, 0-000-000-0000 xxxxxxx.xxxxxxx@XXX.xxx

SWIFT BIC XXXXXXXX

XXXXXXX0

Page 4

CANADIAN BANK #

001

TRANSIT #

0004 (or use 00040 if a 5 digit # is required)

ACCOUNT NUMBER

00040 001 0000000 CDN Dollars

BENEFICIARY NAME

Lexaria Corp

000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000

Xxxxxxxxx XX X0X 0X0

IMPORTANT:

To send funds from a US Bank

INTERMEDIARY BANK

WACHOVIA BANK, NA

SWIFT CODE

XXXXXX0XXXX

ABA #

000000000

2. PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows:

Without limiting Purchaser's right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with the 1933 Act, the Purchaser is purchasing the Securities for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof.

The Purchaser is (i) an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and to evaluate the merits and risks of an investment in the Securities, and (iv) able to afford the entire loss of its investment in the Securities.

The Purchaser is an “accredited investor” as that term is defined in National Instrument 45-106 and is eligible to acquire the Securities as described in section 2.3 of NI45-106 by virtue of being an "accredited investor" as defined in NI45-106, and it is not a Person that is or has been created or used solely to purchase or hold securities as an "accredited investor" as described in paragraph (m) of the definition of "accredited investor" in NI45-106.

All subsequent offers and sales of the Securities by the Purchaser shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from registration.

The Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the

Page 5

Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

The Purchaser and its advisors, if any, have been furnished with or have been given access to all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Purchaser, including those set forth on in any annex attached hereto. The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and have received complete and satisfactory answers to any such inquiries. Without limiting the generality of the foregoing, the Purchaser has also had the opportunity to obtain and to review the Company's filings on XXXXX listed on Annex IV hereto (the documents listed on such Annex IV, to the extent available on XXXXX or otherwise provided to the Purchaser as indicated on said Annex IV, collectively, the “Company's SEC Documents”).

The Purchaser understands that its investment in the Securities involves a high degree of risk.

The Purchaser hereby represents that, in connection with its purchase of the Securities, it has not relied on any statement or representation by the Company or any of its officers, directors and employees or any of their respective attorneys or agents, except as specifically set forth herein.

The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.

This Agreement and the other Transaction Documents to which the Purchaser is a party, and the transactions contemplated thereby, have been duly and validly authorized, executed and delivered on behalf of the Purchaser and are valid and binding agreements of the Purchaser enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally.

COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date that:

Rights of Others Affecting the Transactions. There are no preemptive rights of any shareholder of the Company, as such, to acquire the Note, or any shares of the Company’s common stock that may be issued to the Purchaser in connection with any other agreements between the parties, in the event such shares are issued. No party other than a Purchaser has a currently exercisable right of first refusal which would be applicable to any or all of the transactions contemplated by the Transaction Documents.

Status. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company

Page 6

is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have or result in a Material Adverse Effect. The Company has registered its stock and is obligated to file reports pursuant to Section 12 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The Common Stock is, or immediately following the Closing Date will be, quoted on the Principal Trading Market. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation.

Authorized Shares.

(i)

The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.001 par value, of which 24,369,500 shares are outstanding as of the date hereof.

(ii)

All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. The Company has sufficient authorized and unissued shares of Common Stock as may be necessary to effect the issuance of the Shares on the Closing Date.

(iii)

As of the Closing Date, the Shares shall have been duly authorized by all necessary corporate action on the part of the Company, and, when issued on the Closing Date or pursuant to other relevant provisions of the Transaction Documents, in each case in accordance with their respective terms, will be duly and validly issued, fully paid and non-assessable and will not subject the Holder thereof to personal liability by reason of being such Holder.

Transaction Documents and Stock. This Agreement and each of the other Transaction Documents, and the transactions contemplated thereby, have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement is, and the Note and each of the other Transaction Documents, when executed and delivered by the Company, will be, valid and binding agreements of the Company enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally.

Non-contravention. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company, the issuance of the Securities, and the consummation by the Company of the other transactions contemplated by this Agreement, each of the Notes and the other Transaction Documents do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the certificate of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock except as herein set forth, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other

Page 7

governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.

Approvals. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the shareholders of the Company is required to be obtained by the Company for the issuance and sale of the Securities to the Purchaser as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.

Filings. None of the Company’s SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made, not misleading. Since October 31, 2007, the Company has timely filed all requisite forms, reports and exhibits thereto, if any, required to be filed by the Company with the SEC.

Absence of Certain Changes. Since the Last Audited Date, there has been no material adverse change and no Material Adverse Effect, except as disclosed in the Company’s SEC Documents. Since the Last Audited Date, except as provided in the Company’s SEC Documents, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to shareholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other tangible assets, or canceled any debts owed to the Company by any third party or claims of the Company against any third party, except in the ordinary course of business consistent with past practices; (v) waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any increases in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment.

Full Disclosure. To the best of the Company’s knowledge, there is no fact known to the Company (other than general economic conditions known to the public generally or as disclosed in the Company’s SEC Documents) that has not been disclosed in writing to the Purchaser that would reasonably be expected to have or result in a Material Adverse Effect.

Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or nongovernmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse

Page 8

Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Transaction Documents. The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which it or any of its properties is bound, that involve the transaction contemplated herein or that, alone or in the aggregate, could reasonably be expect to have a Material Adverse Effect.

Absence of Events of Default. Except as set forth in Section 3(e) and 3(g) hereof, (i) neither the Company nor any of its subsidiaries is in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material indenture, mortgage, deed of trust or other material agreement to which it is a party or by which its property is bound, and (ii) no Event of Default (or its equivalent term), as defined in the respective agreement to which the Company or its subsidiary is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term) (as so defined in such agreement), has occurred and is continuing, which would have a Material Adverse Effect.

Absence of Certain Company Control Person Actions or Events. To the Company’s knowledge, none of the following has occurred during the past three (3) years with respect to a Company Control Person:

(1)

A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such Company Control Person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2)

Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3)

Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

(i)

acting, as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice in connection with such activity;

(ii)

engaging in any type of business practice; or

Page 9

(iii)

engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

(4)

Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such Company Control Person to engage in any activity described in paragraph (3) of this item, or to be associated with Persons engaged in any such activity; or

(5)

Such Company Control Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed, suspended, or vacated.

No Undisclosed Liabilities or Events. To the best of the Company’s knowledge, the Company has no liabilities or obligations other than those disclosed in the Transaction Documents or the Company's SEC Documents or those incurred in the ordinary course of the Company's business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect. No event or circumstances has occurred or exists with respect to the Company or its properties, business, operations, condition (financial or otherwise), or results of operations, which, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed. There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (x) change the articles or certificate of incorporation or other charter document or by-laws of the Company, each as currently in effect, with or without shareholder approval, which change would reduce or otherwise adversely affect the rights and powers of the shareholders of the Common Stock or (y) materially or substantially change the business, assets or capital of the Company, including its interests in subsidiaries.

No Integrated Offering. Neither the Company nor any of its Affiliates nor any Person acting on its or their behalf has, directly or indirectly, at any time since October 31, 2007, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.

Dilution. Any shares of the Company’s common stock issued to the Purchaser in connection with any agreements between the parties hereto, in the event such shares are issued may have a dilutive effect on the ownership interests of the other shareholders (and Persons having the right to become shareholders) of the Company. The Company's executive officers and directors have studied and fully understand the nature of the Securities being sold hereby and recognize that they have such a potential dilutive effect. The board of directors of the Company has concluded, in its good faith business judgment, that such issuance is in the best interests of the Company.

Page 10

Fees to Brokers, Finders and Others. The Company has taken no action which would give rise to any claim by any Person for brokerage commission, finder's fees or similar payments by Purchaser relating to this Agreement or the transactions contemplated hereby. Purchaser shall have no obligation with respect to such fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this paragraph that may be due in connection with the transactions contemplated hereby. The Company shall indemnify and hold harmless each of Purchaser, its employees, officers, directors, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of any such claimed or existing fees, as and when incurred.

Confirmation. The Company confirms that all statements of the Company contained herein shall survive acceptance of this Agreement by the Purchaser. The Company agrees that, if any events occur or circumstances exist prior to the Closing Date or the release of the Purchase Amount to the Company which would make any of the Company’s representations, warranties, agreements or other information set forth herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Purchaser (directly or through its counsel, if any) in writing prior to such date of such fact, specifying which representation, warranty or covenant is affected and the reasons therefore.

Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith. Each Transaction Agreement has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

SEC Reports; Financial Statements. Other than as previously disclosed to the Purchaser, the Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company comply in all material respects with applicable accounting

Page 11

requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.

Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business except in each case as could not have a Material Adverse Effect.

Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

Title to Assets. The Company and the Subsidiaries have good and marketable title to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance.

Transactions with Affiliates and Employees. Except as disclosed in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors),

Page 12

including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $50,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company, (iii) existing debts owed by the Company as identified in previously filed SEC documents, and (iv) for other employee benefits, including stock option agreements under any stock option plan of the Company.

Xxxxxxxx-Xxxxx; Internal Accounting Controls. The Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company's most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. The Company's certifying officers have evaluated the effectiveness of the Company's controls and procedures as of the date prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company's internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other factors that could significantly affect the Company's internal controls.

Solvency. Based on the financial condition of the Company as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the Company's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company's existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company

Page 13

does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The financial statements of the Company set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,001 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company's balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,001 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

aa.

Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.

bb.

No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers. By making this representation the Company does not, in any manner, waive the attorney/client privilege or the confidentiality of the communications between the Company and its lawyers.

cc.

Accountants. The Company’s accountants are Xxxxx Xxx LLP. To the Company’s knowledge, such accountants, who the Company expects will express their opinion with respect to the financial statements for the fiscal year ended 2008, are a registered public accounting firm as required by the Securities Act.

dd.

Separate Account. The Company will create a new and separate bank account at The Bank of Montreal, into which it will on a regular basis that is not less than quarterly and not more than monthly, deposit the lesser of US$20,000 per month or 25% of its net received cash flow from sales of oil and/or natural gas from the Belmont Lake xxxxx known as PP-F-1 and PP-F-3. The aggregate funds deposited into this account are to be reserved, unless such requirement is waived in writing by all the Purchasers, solely for the use of repaying principal amounts of debt owing to the Purchasers under the terms of this agreement.

CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

Page 14

Transfer Restrictions. The Purchaser acknowledges that (1) the Securities have not been and are not being registered under the provisions of the 1933 Act and, the Shares have not been and are not being registered under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Purchaser shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule 144 promulgated under the 1933 Act (“Rule 144") may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither the Company nor any other Person is under any obligation to register the Securities (other than pursuant to the Registration Rights Provisions) under the 1933 Act or to comply with the terms and conditions of any exemption thereunder.

Restrictive Legend. The Purchaser acknowledges and agrees that the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKET ARE MET.”

Filings. The Company undertakes and agrees to make all necessary filings in connection with the sale of the Securities to the Purchaser under any United States laws and regulations applicable to the Company, or by any domestic securities exchange or trading market.

Reporting Status. So long as the Purchaser beneficially owns any of the Shares or has a security interest in the Pledged Shares, the Company shall file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly available, and shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such

Page 15

termination. The Company will take all reasonable action under its control to maintain the continued listing and quotation and trading of its Common Stock on the Principal Trading Market or a listing on the NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will comply in all material respects with the Company’s reporting, filing and other obligations under the by-laws or rules of the Principal Trading Market and/or the National Association of Securities Dealers, Inc., as the case may be, applicable to it for so long as the Purchaser beneficially owns any of the Shares.

Use of Proceeds. The Company will use the proceeds received hereunder (excluding amounts paid by the Company for legal fees in connection with the sale of the Securities) for working capital.

Senior Debt. The debt incurred by the Company pursuant to the Transactions Documents shall be senior to any Company debt presently outstanding.

Warrant. The Company agrees to issue the Warrants to the Purchaser on the Closing Date. The form of Warrant is provided in Annex III annexed hereto, the terms of which are incorporated herein by reference.

Publicity, Filings, Releases, Etc. Each of the parties hereby consents to the inclusion of the text of the Transaction Documents in filings made with the SEC as well as any descriptive text accompanying or part of such filing which is accurate and reasonably determined by the Company’s counsel to be legally required. The Company will, after the Closing Date, promptly file a Current Report on Form 8-K or, if appropriate, a quarterly or annual report on the appropriate form, and a press release, referring to the transactions contemplated by the Transaction Documents.

TRANSFER AGENT INSTRUCTIONS.

The Company warrants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 4(a) hereof, it will give its transfer agent no instructions inconsistent with instructions to issue Common Stock to the Holder as contemplated in the Transaction Documents. Nothing in this Section shall affect in any way the Purchaser's obligations and agreement to comply with all applicable securities laws upon resale of the Securities. If the Purchaser provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Purchaser of any of the Securities in accordance with clause (1)(B) of Section 4(a) of this Agreement is not required under the 1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of this Agreement) permit the transfer or reissue of the Shares represented by one or more certificates for Common Stock without legend (or where applicable, by electronic registration) in such name and in such denominations as specified by the Purchaser.

The Company will authorize the Transfer Agent to give information relating to the Company directly to the Holder or the Holder’s representatives upon the request of the Holder or any such representative, to the extent such information relates to (i) the status of shares of Common Stock issued or claimed to be issued to the Holder in connection with a Notice of Exercise or transfer of Pledged Shares to the Holder, or (ii) the aggregate number of

Page 16

outstanding shares of Common Stock of all shareholders (as a group, and not individually) as of a current or other specified date. At the request of the Holder, the Company will provide the Holder with a copy of the authorization so given to the Transfer Agent.

CLOSING DATE.

The Closing Date shall occur on the date which is the fifth Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run.

The closing of the Transactions shall occur on the Closing Date at the offices of the Purchaser and shall take place no later than 3:00 P.M., PST, on such day or such other time as is mutually agreed upon by the Company and the Purchaser.

CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

The Purchaser understands that the Company's obligation to sell the Note and the Warrants to the Purchaser pursuant to this Agreement on the Closing Date is conditioned upon:

The execution and delivery of this Agreement by the Purchaser;

Delivery by the Purchaser to the Company of good funds as payment in full of an amount equal to the Purchase Amount in accordance with this Agreement;

The accuracy on such Closing Date of the representations and warranties of the Purchaser contained in this Agreement, each as if made on such date, and the performance by the Purchaser on or before such date of all covenants and agreements of the Purchaser required to be performed on or before such date; and

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.

CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.

The Company understands that the Purchaser’s obligation to purchase any Notes and its acceptance of any shares of the Company’s common stock that may be issued in connection with any agreements between the parties hereto on a Closing Date is conditioned upon:

The execution and delivery of this Agreement and the other Transaction Documents by the Company;

Delivery by the Company to the Purchaser of the Certificates in accordance with this Agreement or any other agreements between the parties;

Page 17

The execution and delivery of the Security Agreement, and UCC-1 Financing Statement on certain of the Company’s assets;

The execution and delivery of the Warrants;

The Notes to be issued shall be senior to all other debt of the Company other than previously issued Notes.

The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date;

The Purchaser’s determination, to its satisfaction acting reasonably, as to the Company’s use of the proceeds of the Note.

The Company must be current with all required Exchange Act filings.

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained; and

From and after the date hereof to and including the Closing Date, each of the following conditions will remain in effect: (i) the trading of the Common Stock shall not have been suspended by the SEC or on the Principal Trading Market; (ii) trading in securities generally on the Principal Trading Market shall not have been suspended or limited; (iii) no minimum prices shall been established for securities traded on the Principal Trading Market; and (iv) there shall not have been any Material Adverse Effect in regards to the Company.

INDEMNIFICATION AND REIMBURSEMENT.

(i) The Company agrees to indemnify and hold harmless the Purchaser and its officers, directors, employees, and agents, and each Purchaser Control Person from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “Damages”), joint or several, and any action in respect thereof to which the Purchaser, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Purchaser Control Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, as such Damages are incurred, except to the extent such Damages result primarily from Purchaser's failure to perform any covenant or agreement contained in this Agreement or the Purchaser's or its officer’s, director’s, employee’s, agent’s or Purchaser Control Person’s negligence, recklessness or bad faith in performing its obligations under this Agreement.

(ii)

The Company hereby agrees that, if the Purchaser, other than by reason of its negligence, illegal or willful misconduct (in each case, as determined by a non-appealable judgment to such effect), (x) becomes involved in any capacity in any action,

Page 18

proceeding or investigation brought by any shareholder of the Company, in connection with or as a result of the consummation of the transactions contemplated by this Agreement or the other Transaction Documents, or if the Purchaser is impleaded in any such action, proceeding or investigation by any Person, or (y) becomes involved in any capacity in any action, proceeding or investigation brought by the SEC, any self-regulatory organization or other body having jurisdiction, against or involving the Company or in connection with or as a result of the consummation of the transactions contemplated by this Agreement or the other Transaction Documents, or (z) is impleaded in any such action, proceeding or investigation by any Person, then in any such case, the Company shall indemnify, defend and hold harmless the Purchaser from and against and in respect of all losses, claims, liabilities, damages or expenses resulting from, imposed upon or incurred by the Purchaser, directly or indirectly, and reimburse such Purchaser for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith, as such expenses are incurred. The indemnification and reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Affiliates of the Purchaser who are actually named in such action, proceeding or investigation, and partners, directors, agents, employees and Purchaser Control Persons (if any), as the case may be, of the Purchaser and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Purchaser, any such Affiliate and any such Person. The Company also agrees that neither the Purchaser nor any such Affiliate, partner, director, agent, employee or Purchaser Control Person shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company in connection with or as a result of the consummation of this Agreement or the other Transaction Documents, except as may be expressly and specifically provided in or contemplated by this Agreement.

All claims for indemnification by any Indemnified Party (as defined below) under this Section shall be asserted and resolved as follows:

(i)

In the event any claim or demand in respect of which any Person claiming indemnification under any provision of this Section (an “Indemnified Party”) might seek indemnity under paragraph (a) of this Section is asserted against or sought to be collected from such Indemnified Party by a Person other than a party hereto or an Affiliate thereof (a “Third Party Claim”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification that is being asserted under any provision of this Section against any Person (the “Indemnifying Party”), together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a “Claim Notice”) with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party's ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether the Indemnifying Party disputes its liability or the amount of its

Page 19

liability to the Indemnified Party under this Section and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. The following provisions shall also apply.

(x) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this paragraph (b) of this Section, then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to paragraph (a) of this Section). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this subparagraph (x), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this subparagraph (x), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under paragraph (a) of this Section with respect to such Third Party Claim.

(y) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party

Page 20

will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this subparagraph (y), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in subparagraph(z) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this subparagraph (y) or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this subparagraph (y), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.

(z) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under paragraph (a) of this Section or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under paragraph (a) of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

(ii)

In the event any Indemnified Party should have a claim under paragraph (a) of this Section against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under paragraph (a) of this Section specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an "Indemnity Notice") with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails

Page 21

to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under paragraph (a) of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that it the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar rights of the indemnified party against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to.

10.

JURY TRIAL WAIVER. The Company and the Purchaser hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with the Transaction Documents.

11.

GOVERNING LAW: MISCELLANEOUS.

(i) This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the state courts of the State of Nevada as in connection with any dispute arising under this Agreement or any of the other Transaction Documents and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. To the extent determined by such court, the Company shall reimburse the Purchaser for any reasonable legal fees and disbursements incurred by the Purchaser in enforcement of or protection of any of its rights under any of the Transaction Documents. Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

(ii) The Company and the Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and the other Transaction Documents and to enforce specifically the terms and provisions hereof and thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

Page 22

This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.

The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.

This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.

This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

12.

NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of

(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,

(b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

(c) the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) days’ advance written notice similarly given to each of the other parties hereto):

COMPANY:

At the address set forth at the head of this Agreement.

Attn: Xxxxxxx XxxXxxxxx

Telephone No.: 000-000-0000

Page 23

Fax No.: 000-000-0000

Xxxx Xxxxxxxxx

XxxXxxxxx Xxxxxx Corporate and Securities Lawyers

Telephone No.: 000-000-0000

Fax No.: 000-000-0000

PURCHASER:

C.A.B. Financial Services Ltd

Attn:

Xxxxx Xxxxx

Telephone No.: 000-000-0000

Fax No.: 000-000-0000

14.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company’s and the Purchaser’s representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Certificates and the payment of the Purchase Amount, and shall inure to the benefit of the Purchaser and the Company and their respective successors and assigns.

[Balance of page intentionally left blank]

Page 24

IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser and the Company as of the date set first above written.

___/s/___Chris Bunka___________________

(the Purchaser)

By: ____C.A.B. Financial Services Ltd_____

Name: Xxxxx Xxxxx

Title: President

LEXARIA CORP.

By: ___/s/ Xxxxxxx MacMillan_______________

(Signature of Authorized Person)

__Leonard MacMillan, Vice President_________

Printed Name and Title

Page 25

SCHEDULE 1

SCHEDULE OF PURCHASERS

ANNEX I

FORM OF NOTE

ANNEX II

SECURITY AGREEMENT

ANNEX III

FORM OF WARRANT

ANNEX IV

COMPANY’S SEC DOCUMENTS AVAILABLE ON XXXXX

Page 26

SCHEDULE 1

OCTOBER 27, 2008 PURCHASERS

C.A.B. Financial Services Ltd.

$300,000

Xxxxx Xxxxx

$400,000

Morgan Bunka

$200,000

Page 27

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT, dated as of October 27, 2008, is entered into by and among Lexaria Corp., a Nevada corporation with headquarters located at #000-000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx Xxxxxx X0X 0X0 (the “Company”), and Xxxxx Xxxxx of 0000 Xxxxxxxx Xxxxx, Xxxxxxx XX X0X0X0, and any additional purchasers whose signatures appear at the conclusion of this agreement (collectively, the “Purchaser”) as identified in Schedule 1 hereto.

W I T N E S E T H:

WHEREAS, the Company’s obligations to repay the Note will be secured by certain specified assets of the Company pursuant to a Security Agreement (the “Security Agreement”).

Page 1

AGREEMENT TO PURCHASE; PURCHASE PRICE.

Purchase.

(i)

Subject to the terms and conditions of this Agreement and the other Transaction Documents, the Purchaser hereby agrees to purchase Notes in the aggregate amount of $400,000 (Canadian Dollars) (the “Purchase Amount”). US$62,000 of the Purchase Amount shall consist of amounts previously advanced by the Purchaser to the Company pursuant to a loan agreement dated May 14, (the “Loan Agreement”). The Company and the Purchaser hereby agree that the previous Loan Agreement is terminated and any amounts due and owing there under are replaced and superseded by the Notes issued by the Company pursuant to this Agreement. The Purchaser is notified and understands that a total of CDN $900,000 of Notes are being purchased by an aggregate of three separate Purchasers as identified in Schedule 1 hereto, as of the date of this Agreement, and that the Company reserves the right to issue up to but not more than another $1,100,000 of Notes under identical terms and conditions to additional Purchasers.

(ii)

(iii)

(iv)

Certain Definitions.

As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

“Certificate” means the original signed Note duly executed by the Company.

“Closing Date” means the date of the closing of the issuance of Notes.

Page 2

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means the Person holding the relevant Securities at the relevant time.

“Last Audited Date” means October 31, 2007.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

“Security Agreement” means the Security Agreement dated as of October 24, 2008 between the Company and the Purchaser.

“Shares” means the shares representing any or all of the Warrant Shares.

“State of Incorporation” means Nevada.

“Subsidiary” means any subsidiary of the Company.

Page 3

“Trading Day” means any day during which the Principal Trading Market shall be open for business.

“Transfer Agent” means, at any time, the transfer agent for the Company’s Common Stock.

“Transaction Documents” means this Purchase Agreement, the Note, the Security Agreement, the form of Warrant and includes all ancillary documents referred to in those agreements.

(i)

each Series A Warrant entitling the holder to purchase one-half of one Warrant Share for a term of one year from issuance and an exercise price of US$0.45 per whole Warrant Share;

(ii)

each Series B Warrant entitling the holder to purchase one-half of one Warrant Share for a term of two years from issuance and an exercise price of US$0.90 per whole Warrant Share; and

(iii)

Mandatory conversion of the Warrants at the option of the Company upon the Company’s Common Stock closing at 200% of the applicable exercise price for twenty consecutive Trading Days.

“Warrant Shares” means shares of Common Stock underlying the Warrants.

Form of Payment; Delivery of Certificates.

(i)

The Purchaser shall pay the Purchase Amount by delivering immediately available good funds in United States Dollars to the Company on the Closing Date.

(ii)

On the Closing Date, the Company shall deliver the Certificates and the Warrants, each duly executed on behalf of the Company to the Purchaser.

(iii)

Method of Payment. Payment of the Purchase Amount shall be made by wire transfer of funds to:

BANK OF MONTREAL

000 XXXXXXX XXXXXX

XXXXXXXXX XX XXXXXX

Attn: Xxxxxxx Xxxxxxx, 0-000-000-0000 xxxxxxx.xxxxxxx@XXX.xxx

SWIFT BIC XXXXXXXX

XXXXXXX0

Page 4

CANADIAN BANK #

001

TRANSIT #

0004 (or use 00040 if a 5 digit # is required)

ACCOUNT NUMBER

00040 001 0000000 CDN Dollars

BENEFICIARY NAME

Lexaria Corp

000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000

Xxxxxxxxx XX X0X 0X0

IMPORTANT:

To send funds from a US Bank

INTERMEDIARY BANK

WACHOVIA BANK, NA

SWIFT CODE

XXXXXX0XXXX

ABA #

000000000

2. PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows:

All subsequent offers and sales of the Securities by the Purchaser shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from registration.

Page 5

The Purchaser understands that its investment in the Securities involves a high degree of risk.

The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.

COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date that:

Page 6

Authorized Shares.

(i)

The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.001 par value, of which 24,369,500 shares are outstanding as of the date hereof.

(ii)

(iii)

Page 7

governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.

Page 8

(1)

(2)

Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3)

(i)

(ii)

engaging in any type of business practice; or

Page 9

(iii)

engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

(4)

(5)

Page 10

Page 11

Page 12

Page 13

aa.

bb.

cc.

dd.

CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

Page 14

Page 15

Use of Proceeds. The Company will use the proceeds received hereunder (excluding amounts paid by the Company for legal fees in connection with the sale of the Securities) for working capital.

Senior Debt. The debt incurred by the Company pursuant to the Transactions Documents shall be senior to any Company debt presently outstanding.

TRANSFER AGENT INSTRUCTIONS.

Page 16

CLOSING DATE.

CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

The Purchaser understands that the Company's obligation to sell the Note and the Warrants to the Purchaser pursuant to this Agreement on the Closing Date is conditioned upon:

The execution and delivery of this Agreement by the Purchaser;

Delivery by the Purchaser to the Company of good funds as payment in full of an amount equal to the Purchase Amount in accordance with this Agreement;

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.

CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.

The execution and delivery of this Agreement and the other Transaction Documents by the Company;

Delivery by the Company to the Purchaser of the Certificates in accordance with this Agreement or any other agreements between the parties;

Page 17

The execution and delivery of the Security Agreement, and UCC-1 Financing Statement on certain of the Company’s assets;

The execution and delivery of the Warrants;

The Notes to be issued shall be senior to all other debt of the Company other than previously issued Notes.

The Purchaser’s determination, to its satisfaction acting reasonably, as to the Company’s use of the proceeds of the Note.

The Company must be current with all required Exchange Act filings.

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained; and

INDEMNIFICATION AND REIMBURSEMENT.

(ii)

Page 18

All claims for indemnification by any Indemnified Party (as defined below) under this Section shall be asserted and resolved as follows:

(i)

Page 19

Page 20

(ii)

Page 21

10.

11.

GOVERNING LAW: MISCELLANEOUS.

Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

Page 22

This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.

The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.

This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

12.

NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of

(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,

(b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

(c) the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

COMPANY:

At the address set forth at the head of this Agreement.

Attn: Xxxxxxx XxxXxxxxx

Telephone No.: 000-000-0000

Page 23

Fax No.: 000-000-0000

Xxxx Xxxxxxxxx

XxxXxxxxx Xxxxxx Corporate and Securities Lawyers

Telephone No.: 000-000-0000

Fax No.: 000-000-0000

PURCHASER:

Xxxxx Xxxxx

Attn:

Xxxxx Xxxxx

Telephone No.: 000-000-0000

Fax No.: 000-000-0000

14.

[Balance of page intentionally left blank]

Page 24

IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser and the Company as of the date set first above written.

___/s/__Chris Bunka_____________________

(the Purchaser)

By: _____Chris Bunka ___________________

Name:

Title:

LEXARIA CORP.

By: ___/s/ Xxxxxxx MacMillan_______________

(Signature of Authorized Person)

__Leonard MacMillan, Vice President_________

Printed Name and Title

Page 25

SCHEDULE 1

SCHEDULE OF PURCHASERS

ANNEX I

FORM OF NOTE

ANNEX II

SECURITY AGREEMENT

ANNEX III

FORM OF WARRANT

ANNEX IV

COMPANY’S SEC DOCUMENTS AVAILABLE ON XXXXX

Page 26

SCHEDULE 1

OCTOBER 27, 2008 PURCHASERS

C.A.B. Financial Services Ltd.

$300,000

Xxxxx Xxxxx

$400,000

Morgan Bunka

$200,000

Page 27

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT, dated as of October 27, 2008, is entered into by and among Lexaria Corp., a Nevada corporation with headquarters located at #000-000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx Xxxxxx X0X 0X0 (the “Company”), and Morgan Bunka of 0000 Xxxxxxxxxxx Xxxxx, Xxxxxxxx XX X0X 0X0, and any additional purchasers whose signatures appear at the conclusion of this agreement (collectively, the “Purchaser”) as identified in Schedule 1 hereto.

W I T N E S E T H:

WHEREAS, the Company’s obligations to repay the Note will be secured by certain specified assets of the Company pursuant to a Security Agreement (the “Security Agreement”).

Page 1

AGREEMENT TO PURCHASE; PURCHASE PRICE.

Purchase.

(i)

Subject to the terms and conditions of this Agreement and the other Transaction Documents, the Purchaser hereby agrees to purchase Notes in the aggregate amount of $200,000 (Canadian Dollars) (the “Purchase Amount”). $50,000 of the Purchase Amount shall consist of amounts previously advanced by the Purchaser to the Company pursuant to a loan agreement dated June 3, 2008 (the “Loan Agreement”). The Company and the Purchaser hereby agree that the previous Loan Agreement is terminated and any amounts due and owing there under are replaced and superseded by the Notes issued by the Company pursuant to this Agreement. The Purchaser is notified and understands that a total of CDN $900,000 of Notes are being purchased by an aggregate of three separate Purchasers as identified in Schedule 1 hereto, as of the date of this Agreement, and that the Company reserves the right to issue up to but not more than another $1,100,000 of Notes under identical terms and conditions to additional Purchasers.

(ii)

(iii)

(iv)

Certain Definitions.

As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

“Certificate” means the original signed Note duly executed by the Company.

“Closing Date” means the date of the closing of the issuance of Notes.

Page 2

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means the Person holding the relevant Securities at the relevant time.

“Last Audited Date” means October 31, 2007.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

“Security Agreement” means the Security Agreement dated as of October 24, 2008 between the Company and the Purchaser.

“Shares” means the shares representing any or all of the Warrant Shares.

“State of Incorporation” means Nevada.

“Subsidiary” means any subsidiary of the Company.

Page 3

“Trading Day” means any day during which the Principal Trading Market shall be open for business.

“Transfer Agent” means, at any time, the transfer agent for the Company’s Common Stock.

“Transaction Documents” means this Purchase Agreement, the Note, the Security Agreement, the form of Warrant and includes all ancillary documents referred to in those agreements.

(i)

each Series A Warrant entitling the holder to purchase one-half of one Warrant Share for a term of one year from issuance and an exercise price of US$0.45 per whole Warrant Share;

(ii)

each Series B Warrant entitling the holder to purchase one-half of one Warrant Share for a term of two years from issuance and an exercise price of US$0.90 per whole Warrant Share; and

(iii)

Mandatory conversion of the Warrants at the option of the Company upon the Company’s Common Stock closing at 200% of the applicable exercise price for twenty consecutive Trading Days.

“Warrant Shares” means shares of Common Stock underlying the Warrants.

Form of Payment; Delivery of Certificates.

(i)

The Purchaser shall pay the Purchase Amount by delivering immediately available good funds in United States Dollars to the Company on the Closing Date.

(ii)

On the Closing Date, the Company shall deliver the Certificates and the Warrants, each duly executed on behalf of the Company to the Purchaser.

(iii)

Method of Payment. Payment of the Purchase Amount shall be made by wire transfer of funds to:

BANK OF MONTREAL

000 XXXXXXX XXXXXX

XXXXXXXXX XX XXXXXX

Attn: Xxxxxxx Xxxxxxx, 0-000-000-0000 xxxxxxx.xxxxxxx@XXX.xxx

SWIFT BIC XXXXXXXX

XXXXXXX0

Page 4

CANADIAN BANK #

001

TRANSIT #

0004 (or use 00040 if a 5 digit # is required)

ACCOUNT NUMBER

00040 001 0000000 CDN Dollars

BENEFICIARY NAME

Lexaria Corp

000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000

Xxxxxxxxx XX X0X 0X0

IMPORTANT:

To send funds from a US Bank

INTERMEDIARY BANK

WACHOVIA BANK, NA

SWIFT CODE

XXXXXX0XXXX

ABA #

000000000

2. PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows:

All subsequent offers and sales of the Securities by the Purchaser shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from registration.

Page 5

The Purchaser understands that its investment in the Securities involves a high degree of risk.

The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.

COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date that:

Page 6

Authorized Shares.

(i)

The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.001 par value, of which 24,369,500 shares are outstanding as of the date hereof.

(ii)

(iii)

Page 7

governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.

Page 8

(1)

(2)

Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3)

(i)

(ii)

engaging in any type of business practice; or

Page 9

(iii)

engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

(4)

(5)

Page 10

Page 11

Page 12

Page 13

aa.

bb.

cc.

dd.

CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

Page 14

Page 15

Use of Proceeds. The Company will use the proceeds received hereunder (excluding amounts paid by the Company for legal fees in connection with the sale of the Securities) for working capital.

Senior Debt. The debt incurred by the Company pursuant to the Transactions Documents shall be senior to any Company debt presently outstanding.

TRANSFER AGENT INSTRUCTIONS.

Page 16

CLOSING DATE.

CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

The Purchaser understands that the Company's obligation to sell the Note and the Warrants to the Purchaser pursuant to this Agreement on the Closing Date is conditioned upon:

The execution and delivery of this Agreement by the Purchaser;

Delivery by the Purchaser to the Company of good funds as payment in full of an amount equal to the Purchase Amount in accordance with this Agreement;

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.

CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.

The execution and delivery of this Agreement and the other Transaction Documents by the Company;

Delivery by the Company to the Purchaser of the Certificates in accordance with this Agreement or any other agreements between the parties;

Page 17

The execution and delivery of the Security Agreement, and UCC-1 Financing Statement on certain of the Company’s assets;

The execution and delivery of the Warrants;

The Notes to be issued shall be senior to all other debt of the Company other than previously issued Notes.

The Purchaser’s determination, to its satisfaction acting reasonably, as to the Company’s use of the proceeds of the Note.

The Company must be current with all required Exchange Act filings.

There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained; and

INDEMNIFICATION AND REIMBURSEMENT.

(ii)

Page 18

All claims for indemnification by any Indemnified Party (as defined below) under this Section shall be asserted and resolved as follows:

(i)

Page 19

Page 20

(ii)

Page 21

10.

11.

GOVERNING LAW: MISCELLANEOUS.

Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

Page 22

This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.

The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.

This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

12.

NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of

(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,

(b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

(c) the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

COMPANY:

At the address set forth at the head of this Agreement.

Attn: Xxxxxxx XxxXxxxxx

Telephone No.: 000-000-0000

Page 23

Fax No.: 000-000-0000

Xxxx Xxxxxxxxx

XxxXxxxxx Xxxxxx Corporate and Securities Lawyers

Telephone No.: 000-000-0000

Fax No.: 000-000-0000

PURCHASER:

Morgan Bunka

Attn:

Morgan Bunka

Telephone No.: 000-000-0000

Fax No.:

14.

[Balance of page intentionally left blank]

Page 24

IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser and the Company as of the date set first above written.

__/s/_Morgan Bunka___________________

(the Purchaser)

By: _________Morgan Bunka____________

Name:

Title:

LEXARIA CORP.

By: ____/s/ Xxxxx Bunka___________

(Signature of Authorized Person)

__Chris Bunka, President__________

Printed Name and Title

Page 25

SCHEDULE 1

SCHEDULE OF PURCHASERS

ANNEX I

FORM OF NOTE

ANNEX II

SECURITY AGREEMENT

ANNEX III

FORM OF WARRANT

ANNEX IV

COMPANY’S SEC DOCUMENTS AVAILABLE ON XXXXX

Page 26

SCHEDULE 1

OCTOBER 27, 2008 PURCHASERS

C.A.B. Financial Services Ltd.

$300,000

Xxxxx Xxxxx

$400,000

Morgan Bunka

$200,000

Page 27

Document Metadata

Table of Contents

PURCHASE AGREEMENT

Document Metadata