According to the Stock Option Plan for Falcon (in the Management Information Circular), options can be awarded at a lower than current market price:

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APPENDIX “A”

STOCK OPTION PLAN

ARTICLE II - DEFINITIONS AND INTERPRETATION

“Discounted Market Price” shall have the definition provided in the TSX Venture Exchange Corporate Finance manual, which currently means the Market Price less the following allowable discounts:

Closing Price Discount

Up to $0.50 25%

$0.51 to $2.00 20%

Above $2.00 15%

ARTICLE VI - DISCRETIONARY STOCK OPTION GRANT PROGRAM

6.1 The Compensation Committee may, from time to time, grant Stock Options to Participants to purchase shares of Common Stock upon such terms and conditions as the Compensation Committee may determine in accordance with the following provisions:

6.1.1 Each Award shall specify the number of shares of Common Stock to which it pertains;

6.1.2 Each Award shall specify the Option Price per share, which shall not be less than the Discounted Market Price per share of Common Stock on the Date of Grant;