March 31, 2006 Tannisah Kruse 3780 West Broadway Vancouver, BC V6R 2C1 Dear Ms Kruse, Re: Settlement Agreement

March 31, 2006

Tannisah Xxxxx
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX X0X 0X0

Dear Xx Xxxxx,

Re:       Settlement Agreement

We write this letter to offer to settle all outstanding matters between Lexington Energy Services Inc. (“Lexington”) and you (“Xxxxx”) on the following terms:

1.	Xxxxx will resign as Director, Chief Financial Officer, Chief Accounting Officer, Secretary and Treasurer, effective immediately, by signing Schedule A to this Agreement;
2.	Xxxxx shall co-operate with Lexington during the next 30 days to assist in a smooth transition to Lexington's new CFO and shall be available to answer questions, and shall sign documents as required to carry out the terms of this Agreement and as required to complete transactions for Lexington which occurred while she was a director and officer of Lexington. Lexington shall pay Xxxxx the sum of $50 (US) per hour, plus applicable GST and legitimate expenses, for such services that Xxxxx performs commencing April 4, 2006. Lexington will pay Xxxxx’x invoices in this regard on a weekly basis;
3.	The parties acknowledge that the following are the only securities in Lexington that have been issued or granted to Xxxxx since Lexington's inception:
	a.	On June 1, 2005, 5,000,000 common shares were issued to Xxxxx at a price of $0.0001 per share;
	b.	On November 2, 2005, 250,000 common shares were issued to Xxxxx at a price of $0.03 per share (pursuant to a subscription agreement dated October 25, 2005; and
	c.	On October 1, 2005, 250,000 stock options to purchase common shares in Lexington at a price of $0.10 during a period of two years were issued

		to Xxxxx pursuant to an option agreement dated October 1, 2005 (the “Xxxxx Options”)
	(together, the "Xxxxx Securities");
4.	The Xxxxx Securities shall be dealt with as follows:
	a.	Lexington consents to the sale of 4,750,000 common shares of Lexington by Xxxxx to a third party;
	x.	Xxxxx shall retain 500,000 common shares of Lexington. Lexington will register 250,000 of these shares in the name of Tannisah Xxxxx with the Securities and Exchange Commission on Form SB-2. Lexington intends to file the Form SB-2 within the next month and shall cause the250,000 shares to be qualified no later than the later of the date of approval of the SB-2 or 90 days from Xxxxx’x resignation;
	x.	Xxxxx shall be entitled, notwithstanding her resignation, to retain all of the Xxxxx Options on the terms previously granted to her, which Options shall expire on October 1, 2007;
	d.	Although the Xxxxx Options are not currently registered, Lexington shall continue to treat the Xxxxx Options, and any shares represented by or acquired pursuant to the Xxxxx Options, and confer benefits to the Xxxxx Options in the same fashion as the Options issued to other Directors and Officers of Lexington at or around the same time. Lexington shall, without limitation, grant an extension to, or register all (or a portion) of, the Xxxxx Options in the event that such benefits are conferred on the other option holders;
	e.	The remaining 250,000 shares (the “Unregistered Shares”) shall not be immediately registered. Lexington represents and warrants that the Unregistered Shares will be free-trading, and qualified for sale, subject only to the maximum following restrictions: (i) the Unregistered Shares cannot be sold until 90 days after the date Lexington receives its symbol allowing its shares to be sold over a qualified exchange or the OTC-BB; and (ii) thereafter, Xxxxx’x sales of the Unregistered Shares will be limited to a maximum of 1% of the total of all the issued shares of Lexington every 90 day period; and
	f.	Lexington shall co-operate with Xxxxx and promptly take all steps, execute all documents, send all such correspondence, and direct all such actions of its attorneys, transfer agents, and agents as may be reasonably required to carry out and effect the steps set in 4 a –e above, and to cause, without limitation, delivery of certificates to Xxxxx when requested as permitted or required above.

5.	Lexington and Xxxxx acknowledge the termination of the Management Agreement, dated October 1, 2005, between Lexington and Xxxxx as of March 28, 2006, and further acknowledge that no monies are owed to either party under the Management Agreement other than as follows:
	a.	Lexington shall reimburse Xxxxx for all expenses she has properly incurred or paid on behalf of Lexington or Lexington's directors including expenses for a mobile phone in the name of Xxxxx Xxxxxxx.
6.	Lexington and Xxxxx shall sign Schedule B to this agreement, and shall fully release each other, and Lexington’s directors, officers, subsidiaries and agents from any and all claims;
7.	All references to currency in this Agreement are in U.S. dollars;
8.	Lexington shall indemnify Xxxxx if Xxxxx is a party to or threatened to be made a party to or otherwise involved in any proceeding by reason of Xxxxx'x previous status and/or acts or omissions as a director or officer of Lexington or by reason of any action alleged to have been taken or omitted in connection therewith, against all legal costs, expenses, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by Xxxxx or on Xxxxx'x behalf in connection with such proceeding, if Xxxxx acted in good faith and acted in a manner which Xxxxx reasonably believed to be in the best interests of Lexington and, with respect to any criminal proceeding, had no reasonable cause to believe that Xxxxx'x conduct was unlawful; and
9.	Both parties acknowledge that the Sony Vail laptop computer which Xxxxx has been using belongs to Lexington and Xxxxx agrees that she shall return the computer to Lexington immediately upon signing this Agreement. Prior to and after the return of the computer, Lexington and Xxxxx shall co-operate to ensure that all personal information and data of Xxxxx on the computer and the hard drive shall be deleted and shall remain private and confidential to Xxxxx, and shall not permit any party to use the computer until such information and data has been secured to Xxxxx.
10.	As part of the transition, Xxxxx will deliver to Lexington the corporate credit card, the corporate bank cards and any and keys in her possession, and Lexington shall assume all corporate invoices and accounts that are currently charged to Xxxxx or for which she is liable, including Quotestream, Xxxxxx and Shaw. Lexington shall take steps to remove Xxxxx as the guarantor on the corporate credit card.

If you accept our settlement offer and agree to all of the terms outlined above, kindly sign your name below. By signing below, you acknowledge that you fully accept all the terms of this agreement described above, and you acknowledge that you have been advised to seek independent legal advice and you have either sought such advice or declined to do so.

Yours truly,

LEXINGTON ENERGY SERVICES INC. per:

/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, President

AGREED AND ACCEPTED:

/s/ Tannisah Xxxxx		Date:
Tannisah Xxxxx
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX X0X 0X0
Telephone:
/s/ Xxxxxxx Xxxxxxx		Date:
Witness: Xxxxxxx Xxxxxxx
Address: 1200 – 000 Xxxx Xxxxxx
Telephone: 000 000 0000

Schedule A

LEXINGTON ENERGY SERVICES INC.
(the “Company”)

Resignation of Director and Officer

I hereby resign as Director, Chief Financial Officer, Chief Accounting Officer, Secretary and Treasurer of the Company effective immediately.

Dated:  March 28, 2006		/s/ Tannisah Xxxxx
		Tannisah Xxxxx

Schedule B

MUTUAL RELEASE

This Mutual Release (the “Release”), is made and entered into as of the this 31st day of March, 2006, by and between Lexington Energy Services Inc., a Nevada corporation (“Lexington”); and Tannisah Xxxxx, an individual resident of British Columbia.

Recitals:

WHEREAS, Lexington and Xxxxx entered into that certain Management Agreement dated October 1, 2005 (the “Management Agreement”); and

WHEREAS, the parties desire to terminate Xxxxx’x employment under the Management Agreement as described herein, and to accept Xxxxx'x resignation as a director and officer of the Company;

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, and agreements of the parties provided below, the parties to this Release, intending to be legally bound, do hereby agree as follows:

1. Mutual Releases.

1.1 Terms of Mutual Releases. Lexington on one hand and Xxxxx on the other hand irrevocably, unconditionally, and fully releases and forever discharges, and covenants not to xxx or otherwise institute or cause to be instituted or in any way participate in legal or administrative proceedings against (except as required by law), with respect to any matter whatsoever, the other and (if and to the extent applicable) each of its subsidiaries and affiliates, and their respective directors, officers, shareholders, employees, agents, successors and assigns, of and from any and all debts, demands, actions, causes of action, suits, claims, judgments, damages, costs, expenses, attorneys’ fees, penalties, obligations and liabilities, of every kind, character, nature and description, whether now known or unknown, suspected or claimed, whether vested, fixed or contingent, whether at law or in equity, that either Lexington or Xxxxx, as applicable, ever had or now has for, upon or by reason of any agreement (written or oral), matter, cause, event, occurrence, or state of facts whatsoever made, occurring or taking place at any time on or prior to the date hereof that relate to the Management Agreement (and Xxxxx’x performance of services thereunder) or to Xxxxx’x position as, and performance of acts as, a director and officer of the Company. Lexington acknowledges that it has reviewed and is aware of the expenditures undertaken by Xxxxx on behalf of the Company, and the cheques and monies she has caused the Company to expend. The Company acknowledges that all such expenditures are appropriate and that all such expenditures are specifically covered by this release.

1.2 Certain Exceptions to Mutual Releases.

(a) The following provisions of the Management Agreement shall remain in effect: section 5 (Non-solicitation), section 6 (Confidential Information), and section 8 (Company’s Property).

(b) The foregoing release in Section 1.1 shall not be deemed to apply to any breach by any party of its obligations set forth in this Release or in the settlement agreement between the parties dated March 31, 2006.

(c) The Company’s indemnity in favor of Xxxxx shall survive the foregoing release.

2. Miscellaneous Provisions.

2.1 Contents of Agreement; Parties in Interest; etc. This Release, which includes the schedules, exhibits and the other documents, agreements, certificates and instruments executed and delivered pursuant to or in connection with this Release (collectively, the “Release Documents”) sets forth the entire understanding and agreement of the parties hereto with respect to the transactions contemplated hereby. It shall not be assigned, amended, or modified except by written instrument duly executed by each of the parties hereto. Any and all prior or contemporaneous negotiations, agreements, representations, warranties, and understandings between or among the parties regarding the subject matter hereof, whether written or oral, are superseded in their entirety by this Release and the other Release Documents and shall not create any liability on the part of any party hereto in favor of any other party (or parties), except as otherwise expressly set forth in this Release and in the other Release Documents. Xxxxx represents and warrants that she has fully read this Release, that she understands all the terms and conditions set forth herein, and that she is entering into this Release voluntarily and without promise or benefit other than as set forth herein. Nothing contained in this Agreement shall constitute or be treated as an admission by Lexington or Xxxxx of liability, of any wrongdoing, or of any violation of law.

2.2 Waiver. Any term or provision of this Release may be waived at any time by the Party entitled to the benefit thereof by a written instrument duly executed by such Party.

2.3 British Columbia Law to Govern. THIS RELEASE SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF BRITISH COLUMBIA, WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

2.4 No Benefit to Others. The representations, warranties, covenants, and agreements contained in this Release are for the sole benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and assigns, and nothing contained in this Release or the other Release Documents shall be construed as conferring any rights on any other persons.

2.5 Headings, Gender. All section headings contained in this Release are for convenience of reference only, do not form a part of this Release and shall not affect in any way the meaning or interpretation of this Release. Words used in this Release, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context requires.

2.6 Schedules and Exhibits. All exhibits and schedules referred to in this Release are incorporated in this Release by reference and are intended to be and hereby are specifically made a part of this Release.

2.7 Severability. The invalidity or unenforceability of any provision of this Release in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

2.8 Counterparts. This Release may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

2.9 Assistance of Counsel. Lexington on the one hand, and Xxxxx on the other hand, acknowledge that they have had the assistance of counsel in negotiating and preparing the terms of this Release; therefore, this Release shall be construed without regard to any presumption or other rule requiring construction against the party causing the Release to be drafted.

2.10 Actions and Proceedings. Lexington and Xxxxx consent to the exclusive jurisdiction and venue of provincial courts in British Columbia in any action or judicial proceeding brought by Lexington or Xxxxx to enforce, construe or interpret this Release or the other Release Documents. The reasonable attorney’s fees of the parties prevailing in any action or judicial proceeding brought by a party to enforce, construe or interpret this Release or the other Release Documents shall be paid by the non-prevailing party in such dispute.

2.11 Execution by Facsimile. Any party may deliver an executed copy of this Release and any documents contemplated hereby by facsimile transmission to another party, and such delivery shall have the same force and effect as any other delivery of a manually signed copy of this Release or of such other documents.

2.12 Survival of Representations, Warranties, Covenants and Agreements. Xxxxx and Lexington have the right to rely fully upon the representations, warranties, covenants and agreements of the other contained in this Release. The representations, warranties, covenants, and agreements of Xxxxx and Lexington contained in this Release will survive the execution and delivery of this Release.

2.13 Transition Procedures and Non-disparagement. Xxxxx agrees to assist Lexington for a period of 30 days to assist the Lexington in the transition of her departure. The indemnity and release provided by Lexington set out above applies to Xxxxx’x efforts, acts, and omissions undertaken in this regard. Without limiting her obligations in section 8 of the Management Agreement, Xxxxx shall immediately return to Lexington all of Lexington’s property, including, but not limited to, keys, passcards, credit cards, customer lists, rolodexes, tapes, software, computer files, marketing and sales materials, and any other record, document or piece of equipment belonging to Lexington. Xxxxx shall not retain any copies of Lexington’s property, including any copies existing in electronic form, that are in Xxxxx’x possession or control. Xxxxx agrees that she has not and will not destroy, delete, or alter any property of Lexington without Lexington’s consent. Lexington on one hand, and Xxxxx on the other hand, each agrees not to disparage or defame, in writing or orally, the other party, and as applicable, its or his services, products, subsidiaries and affiliates, and their respective directors, officers, shareholders, employees, agents, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have duly executed this Release on the date first written above.

LEXINGTON ENERGY SERVICES INC. per:

/s/ Xxxxx Xxxxxxx		Date:
Xxxxx Xxxxxxx,
President
/s/ Tannisah Xxxxx		Date:
Tannisah Xxxxx
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX X0X 0X0
Telephone:
/s/ Xxxxxxx Xxxxxxx		Date:
Witness: Xxxxxxx Xxxxxxx
Address:
Telephone: 000 000 0000