Lignol Adopts Shareholder Rights Plan

VANCOUVER, July 9 /CNW/ - Lignol Energy Corporation (TSX-V: LEC) ("Lignol" or "the Company"), a leading technology company in the cellulosic ethanol and biorefining sector, announced today that it has adopted a shareholder rights plan (the "Plan") to ensure the fair treatment of all Lignol shareholders during any takeover bid for Lignol's outstanding common shares, or other transaction that would involve a change of control.

The Plan is effective immediately and will provide the Board of Directors and the shareholders more time to fully consider any unsolicited take-over bid for the Company. The Plan will allow shareholders to properly evaluate and assess a takeover bid without facing undue pressure or coercion. The Plan provides Lignol's Board of Directors with additional time to consider any takeover bid and, if applicable, to explore alternative transactions that would maximize value for shareholders. Shareholders will be asked to approve the Plan at the annual general and special meeting of shareholders expected to be held before October 30, 2010 and upon receipt of such confirmation, the Plan will have an initial term which expires at the annual meeting of shareholders of the Company to be held in 2013 unless terminated earlier.

Gordon Fretwell, Chair of the Company's Corporate Governance and Nominating Committee, said the Plan is consistent with the company's objective of enhancing value for shareholders. "The Plan is structured along the same lines as other shareholders' rights plans that have been adopted by a number of TSX Venture Exchange companies. It is not in response to any specific initiative by any particular company and is not intended to prevent takeover bids that treat Lignol shareholders fairly."

Following the unanimous recommendation of Lignol's Corporate Governance and Nominating Committee, the Board of Directors adopted the plan after determining that its provisions are in the best interests of Lignol and its shareholders.

Under the terms of the Plan, a "Permitted Bid" is a bid that is open for not less than 60 days and is made for all of the common shares to all shareholders. If, at the end of the 60 days, at least 50% of the outstanding common shares, other than those owned by the offeror and certain related parties, have been tendered to the bid, the offeror may take up and pay for the common shares but must extend the bid for a further 10 days to allow other shareholders to tender.

The Plan is subject to the approval of the TSX Venture Exchange.

The complete text of the Plan is available at www.sedar.com or upon request from the Company.

About Lignol

Lignol (TSX-V: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of fuel-grade ethanol and other biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-L(TM) lignins. HP-L(TM) lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by products generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology. For more information about Lignol, please visit our website at www.lignol.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Caution concerning forward-looking statements:

Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about our ability to fund our Baseline Operations, (using the definition of "Baseline Operations" as set out in Lignol's Management's Discussion & Analysis of Financial Condition and Results of Operations for the three and nine-month periods ended January 31, 2010), the development status of our fully integrated biorefinery pilot plant in Burnaby, British Columbia, the planning and development of our previously proposed cellulosic ethanol commercial demonstration plant, our ability to exploit commercial opportunities and broaden our market opportunities for a range of cellulosic derivatives and environmentally sustainable biochemicals and our ability to pursue these opportunities with strategic partners. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements or information reflect Lignol's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of our technology at the fully integrated biorefinery pilot plant scale, our ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to finance and complete the development of the commercial demonstration plant, our ability to develop our products, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many factors could cause Lignol's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, the technological challenges that remain to be surpassed in obtaining the necessary operating data from our fully integrated biorefinery pilot plant that is required prior to completing the next design scale-up of the technology, the complexity of the development of the commercial demonstration plant, financial market conditions which will effect Lignol's ability to finance its operations, risks relating to the protection of Lignol's core technology from infringement and those risk factors which are discussed elsewhere in documents that Lignol files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

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For further information: Lignol Energy Corporation, David Turner, Tel: [phone], Email: [email protected], Email: [email protected]; The Equicom Group, James Smith, Investor Relations, Tel: [phone] ext. 229, Email: [email protected]