Filed by Automated Filing Services Inc. (604)609-0244 - Solar Enertech Corp. - Exhibit 10.1






SECURITIES PURCHASE AGREEMENT

          SECURITIES
  PURCHASE AGREEMENT (the "Agreement"), dated as of March 7, 2007,
  by and among Solar Enertech Corp., a Nevada corporation, with headquarters located
  at 1600 Adams Drive, Menlo Park, California, 94025 (the "Company") and
  the investors listed on the Schedule of Buyers attached hereto (individually,
  a "Buyer" and collectively, the "Buyers").

WHEREAS:

          A.
  The Company and each Buyer is executing and delivering this Agreement in reliance
  upon the exemption from securities registration afforded by Section 4(2) of
  the Securities Act of 1933, as amended (the "1933 Act"), and Rule 506
  of Regulation D ("Regulation D") as promulgated by the United States
  Securities and Exchange Commission (the "SEC") under the 1933 Act.

          B.
  The Company has authorized two new series of convertible notes of the Company,
  in the forms attached hereto as Exhibit A (the " Series A Notes")
  and Exhibit B (the “Series B Notes”), (collectively
  the “Notes”), which Notes shall be convertible into the Company's
  common stock, par value $0.001 per share (the "Common Stock") (as converted,
  the “Series A Conversion Shares” or “Series B Conversion
  Shares”), in accordance with the terms of the Notes (the Series A Conversion
  Shares and the Series B Conversion Shares shall collectively be referred to
  herein as the “Conversion Shares”).

          C.
  Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
  and conditions stated in this Agreement, (i) that aggregate principal amount
  of the Notes set forth opposite such Buyer's name in column (3) on the Schedule
  of Buyers attached hereto (which aggregate amount for all Buyers shall be $13,300,000
  comprised of Series A Notes and Series B Notes in amounts as subscribed by the
  Buyers) and (ii) warrants, in substantially the form attached hereto as Exhibit
  C (the "Series A Warrants") and Exhibit D (the “Series
  B Warrants”), (collectively the “Warrants”) to acquire
  up to that number of additional shares of Common Stock set forth opposite such
  Buyer's name in column (4) of the Schedule of Buyers (as exercised, the “Series
  A Warrant Shares” and “Series B Warrant Shares”, collectively
  referred to herein as the " Warrant Shares").

          D.
  Contemporaneously with the execution and delivery of this Agreement, the Company
  and the purchasers of the Series A Notes and Series A Warrants are executing
  and delivering a Registration Rights Agreement, substantially in the form attached
  hereto as Exhibit E (the "Registration Rights Agreement"),
  pursuant to which the Company will agree to provide certain registration rights
  with respect to the Registrable Securities (as defined in the Registration Rights
  Agreement) under the 1933 Act and the rules and regulations promulgated thereunder,
  and applicable state securities laws.

          E.
  The Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively
  are referred to herein as the "Securities".

          NOW,
  THEREFORE, the Company and each Buyer hereby agree as follows:




          1.
  PURCHASE AND SALE OF NOTES AND WARRANTS. 

                    (a)
  Purchase of Notes and Warrants.

                              (i)
  Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions
  set forth in Sections 6 and 7 below, the Company shall issue and sell to each
  Buyer, and each Buyer severally, but not jointly, agrees to purchase from the
  Company on either the Initial Closing Date ( as defined below) or the Final
  Closing Date (as defined below), (x) a principal amount of Notes as is set forth
  opposite such Buyer's name in column (3) on the Schedule of Buyers and (y) Warrants
  to acquire up to that number of Warrant Shares as is set forth opposite such
  Buyer's name in column (4) on the Schedule of Buyers, (the "Closing").

                              (ii)
  Closing. The date and time of the initial Closing (the "Initial Closing")
  shall be no later than 10:00 a.m., New York City time on March 9, 2007 (or such
  later date as is mutually agreed to by the Company and each Buyer) (the “Initial
  Closing Date”) after notification of satisfaction (or waiver) of the
  conditions to the Closing set forth in Sections 6 and 7 below, with the final
  Closing (the “Final Closing”) to occur within seven calendar
  days of the actual date of the Initial Closing (the “Final Closing Date”)
  and in any event no later than March 16, 2007, each to occur at the offices
  of Richardson & Patel LLP, 405 Lexington Avenue, 26th Floor, New York, New
  York 10174 unless the Company and the Buyers (as defined below) agree otherwise.
  The Initial Closing and the Final Closing may be referred to herein collectively
  as a “Closing”. 

                              (iii)
  Purchase Price. The aggregate purchase price for the Notes and Warrants
  to be purchased by each such Buyer at each Closing (the "Purchase Price")
  shall be the amount set forth opposite each Buyer's name in column (5) of the
  Schedule of Buyers. The aggregate Purchase Price amount for all Buyers in the
  Initial Closing shall be $8,300,000, which shall consist of up to $5,000,000
  principal amount of Series A Notes and up to $3,300,000 principal amount of
  Series B Notes. The aggregate Purchase Price amount for all Buyers in the Final
  Closing shall be up to $5,000,000 principal amount of Series B Notes. The minimum
  Purchase Price for the Initial Closing shall be $1,000,000 per Buyer, subject
  to the Company, the Buyers, and the Agent (as defined below) agreeing to a lesser
  amount. The minimum Purchase Price for the Final Closing shall be $1,000,000
  per Buyer.

                    (b)
  Form of Payment. On each of the Initial Closing Date and the Final Closing
  Date, (i) each Buyer, shall deliver its Purchase Price to the Escrow Agent (as
  defined below) pursuant to Section 2 of the Escrow Agreement, dated as of March
  5, 2007, by and among the Company, the Agent (as defined in Section 3(g)) and
  American Stock Transfer and Trust Company ("Escrow Agent"), a financial
  institution chartered under the laws of the State of New York, attached hereto
  as Exhibit F (the "Escrow Agreement") and (ii) the Company shall
  deliver to each Buyer the Notes (allocated in the principal amounts as such
  Buyer shall request) which such Buyer is then purchasing hereunder along with
  the Warrants (allocated in the amounts as such Buyer shall request) which such
  Buyer is purchasing, in each case duly executed on behalf of the Company and
  registered in the name of such Buyer or its designee. 

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          2.
  BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not
  jointly, represents and warrants with respect to only itself that:

                    (a)
  No Sale or Distribution. Such Buyer is acquiring the Notes and Warrants,
  and upon conversion of the Notes and exercise of the Warrants will acquire the
  Conversion Shares issuable upon conversion of the Notes and the Warrant Shares
  issuable upon exercise of the Warrants, as principal for its own account and
  not with a view towards, or for resale in connection with, the public sale or
  distribution thereof, except pursuant to sales registered or exempted under
  the 1933 Act; provided, however, that by making the representations herein,
  such Buyer does not agree to hold any of the Securities for any minimum or other
  specific term and reserves the right to dispose of the Securities at any time
  in accordance with or pursuant to a registration statement or an exemption under
  the 1933 Act and pursuant to the applicable terms of the Transaction Documents
  (as defined in Section 3(b)). Such Buyer is acquiring the Securities hereunder
  in the ordinary course of its business. Such Buyer does not presently have any
  agreement or understanding, directly or indirectly, with any Person (as defined
  in Section 3(t)) to distribute any of the Securities.

                    (b)
  Accredited Investor Status. Such Buyer is an "accredited investor" as
  that term is defined in Rule 501(a) of Regulation D and has delivered an executed
  representation letter concurrently with the execution and delivery of this Agreement
  evidencing the manner in which such Buyer satisfies such definition of "accredited
  investor" and containing certain other representations, warranties and acknowledgements
  of the Buyer.

                    (c)
  Reliance on Exemptions. Such Buyer understands that the Securities are
  being offered and sold to it in reliance on specific exemptions from the registration
  requirements of United States federal and state securities laws and that the
  Company is relying in part upon the truth and accuracy of, and such Buyer's
  compliance with, the representations, warranties, agreements, acknowledgments
  and understandings of such Buyer set forth herein in order to determine the
  availability of such exemptions and the eligibility of such Buyer to acquire
  the Securities.

                    (d)
  Information. Such Buyer and its advisors, if any, have been furnished
  with all materials relating to the business, finances and operations of the
  Company and materials relating to the offer and sale of the Securities that
  have been requested by such Buyer. Such Buyer and its advisors, if any, have
  been afforded the opportunity to ask questions of the Company. Neither such
  inquiries nor any other due diligence investigations conducted by such Buyer
  or its advisors, if any, or its representatives shall modify, amend or affect
  such Buyer's right to rely on the Company's representations and warranties contained
  herein. Such Buyer understands that its investment in the Securities involves
  a high degree of risk and is able to afford a complete loss of such investment.
  Such Buyer has sought such accounting, legal and tax advice as it has considered
  necessary to make an informed investment decision with respect to its acquisition
  of the Securities.

                    (e)
  No Governmental Review. Such Buyer 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 or the fairness
  or suitability of the 

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investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

                    (f)
  Transfer or Resale. Such Buyer understands that except as provided in
  the Registration Rights Agreement (which relates solely to the Common Stock
  issuable pursuant to the terms of the Series A Notes and upon exercise of the
  Series A Warrants): (i) the Securities have not been and are not being registered
  under the 1933 Act or any state securities laws, and may not be offered for
  sale, sold, assigned or transferred unless (A) subsequently registered thereunder,
  (B) such Buyer shall have delivered to the Company an opinion of counsel, in
  a form reasonably acceptable to the Company, to the effect that such Securities
  to be sold, assigned or transferred may be sold, assigned or transferred pursuant
  to an exemption from such registration, or (C) such Buyer provides the Company
  with reasonable assurance that such Securities can be sold, assigned or transferred
  pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended
  (or a successor rule thereto) (collectively, "Rule 144"), notwithstanding
  the foregoing, the requirement to deliver a legal opinion as set out in clause
  (B) above shall not apply to transfers to an affiliate of the Buyer; (ii) any
  sale of the Securities made in reliance on Rule 144 may be made only in accordance
  with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale
  of the 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 defined
  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 (iii) neither
  the Company nor any other Person is under any obligation to register the Securities
  under the 1933 Act or any state securities laws or to comply with the terms
  and conditions of any exemption thereunder. The Securities may be pledged in
  connection with a bona fide margin account or other loan or financing arrangement
  secured by the Securities and such pledge of Securities shall not be deemed
  to be a transfer, sale or assignment of the Securities hereunder, and no Buyer
  effecting a pledge of Securities shall be required to provide the Company with
  any notice thereof or otherwise make any delivery to the Company pursuant to
  this Agreement or any other Transaction Document (as defined in Section 3(b)),
  including, without limitation, this Section 2(f).

                    (g)
  Legends. Such Buyer understands that the certificates or other instruments
  representing the Notes and Warrants and, solely with respect to the Series A
  Conversion Shares and the Series A Warrant Shares until such time as the resale
  of the Series A Conversion Shares and the Series A Warrant Shares have been
  registered under the 1933 Act as contemplated by the Registration Rights Agreement,
  the stock certificates representing the Conversion Shares and the Warrant Shares,
  except as set forth below, shall bear any legend as required by the "blue sky"
  laws of any state and a restrictive legend in substantially the following form
  (and a stop-transfer order may be placed against transfer of such stock certificates):

	 	NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
      [EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
      NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
      OF (A) AN EFFECTIVE REGISTRATION 	 


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	 	STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
      THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
      TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
      THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.	 


The legend set forth above shall be removed and the Company shall
  issue a certificate without such legend to the holder of the Securities upon
  which it is stamped, if, unless otherwise required by state securities laws,
  (i) such Securities are registered for resale under the 1933 Act, (ii) in connection
  with a sale, assignment or other transfer, such holder provides the Company
  with an opinion of a law firm reasonably acceptable to the Company (with Richardson
  & Patel LLP being deemed acceptable), in a form reasonably acceptable to
  the Company, to the effect that such sale, assignment or transfer of the Securities
  may be made without registration under the applicable requirements of the 1933
  Act, or (iii) such holder provides the Company with reasonable assurance that
  the Securities can be sold, assigned or transferred pursuant to Rule 144 or
  Rule 144A.

                    (h)
  Validity; Enforcement. This Agreement and the Registration Rights Agreement
  to which such Buyer of Series A Notes and Series A Warrants is a party have
  been duly and validly authorized, executed and delivered on behalf of such Buyer
  and shall constitute the legal, valid and binding obligations of such Buyer
  enforceable against such Buyer in accordance with their respective terms, except
  as such enforceability may be limited by general principles of equity or to
  applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
  other similar laws relating to, or affecting generally, the enforcement of applicable
  creditors' rights and remedies.

                    (i)
  No Conflicts. The execution, delivery and performance by such Buyer of
  this Agreement and the Registration Rights Agreement (solely with respect to
  the Buyers of Series A Notes and Series A Warrants) and the consummation by
  such Buyer of the transactions contemplated hereby and thereby will not (i)
  result in a violation of the organizational documents of such Buyer or (ii)
  conflict with, or constitute a default (or an event which with notice or lapse
  of time or both would become a default) under, or give to others any rights
  of termination, amendment, acceleration or cancellation of, any agreement, indenture
  or instrument to which such Buyer is a party, or (iii) result in a violation
  of any law, rule, regulation, order, judgment or decree (including federal and
  state securities laws) applicable to such Buyer, except in the case of clauses
  (ii) and (iii) above, for such conflicts, defaults, rights or violations which
  would not, individually or in the aggregate, reasonably be expected to have
  a material adverse effect on the ability of such Buyer to perform its obligations
  hereunder.

                    (j)
  Residency. Such Buyer is a resident of that jurisdiction specified below
  its address on the Schedule of Buyers.

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                    (k)
  Buyer's Broker Fees. Each Buyer shall be responsible for the payment
  of any placement agent's fees, financial advisory fees, or brokers' commissions
  for placement agents, financial advisors and/or brokers engaged by such Buyer
  relating to or arising out of the transactions contemplated hereby.

                    (l)
  Certain Trading Activities. Other than the transactions contemplated
  herein, since the time that such Buyer was first contacted by the Company, the
  Agent or any other Person regarding this investment in the Company neither the
  Buyer nor any Affiliate of such Buyer which (x) had knowledge of the transactions
  contemplated hereby, (y) has or shares discretion relating to such Buyer's investments
  or trading or information concerning such Buyer's investments and (z) is subject
  to such Buyer's review or input concerning such Affiliate's investments or trading
  (collectively, "Trading Affiliates") has directly or indirectly, nor
  has any Person acting on behalf of or pursuant to any understanding with such
  Buyer or Trading Affiliate, effected or agreed to effect any transactions in
  the securities of the Company. Such Buyer hereby covenants and agrees not to,
  and shall cause its Trading Affiliates not to, engage, directly or indirectly,
  in any transactions in the securities of the Company or involving the Company's
  securities during the period from the date hereof until the earlier to occur
  of (i) such time as the transactions contemplated by this Agreement are first
  publicly announced as described in Section 4(i) hereof or (ii) such time as
  this Agreement is terminated in full pursuant to Section 8 hereof. Other than
  to other Persons party to this Agreement and those expressly acknowledged by
  the Company, such Buyer has maintained the confidentiality of the existence
  and terms of this transaction. "Short Sales" include, without limitation,
  all “short sales” as defined in Rule 200 promulgated under Regulation
  SHO under the Exchange Act and all types of direct and indirect stock pledges,
  forward sale contracts, options, puts, calls, short sales, swaps and similar
  arrangements (including on a total return basis), and sales and other transactions
  through non-U.S. broker-dealers or foreign regulated brokers. Such Buyer acknowledges
  the SEC's position set forth in Item 65, Section 5 under Section A, of the Manual
  of Publicly Available Telephone Interpretations, dated July 1997, compiled by
  the Office of Chief Counsel, Division of Corporation Finance, and such Buyer
  will adhere to such position.

          3.
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
  and warrants to each of the Buyers that, as of the date hereof and as of each
  of the Initial Closing Date and the Final Closing Date:

                    (a)
  Organization and Qualification. The Company and its "Subsidiaries"
  (which for purposes of this Agreement means any joint venture or any entity
  in which the Company, directly or indirectly, owns any of the capital stock
  or holds an equity or similar interest) are entities duly organized and validly
  existing and in good standing under the laws of the jurisdiction in which they
  are formed, and have the requisite power and authorization to own their properties
  and to carry on their business as now being conducted. Each of the Company and
  its Subsidiaries is duly qualified as a foreign entity to do business and, is
  in good standing in every jurisdiction in which its ownership of property or
  the nature of the business conducted by it makes such qualification necessary,
  except to the extent that the failure to be so qualified or be in good standing
  would not reasonably be expected to have a Material Adverse Effect. As used
  in this Agreement, "Material Adverse Effect" means any material adverse
  effect on the business, properties, assets, operations, results of operations,
  condition (financial or otherwise) or prospects of the Company and its Subsidiaries,
  individually or taken as a whole, or on the 

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transactions contemplated hereby or in the other Transaction
Documents or by the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below). The Company
has no Subsidiaries except as set forth on Schedule 3(a).

                    (b)
  Authorization; Enforcement; Validity. The Company has the requisite corporate
  power and authority to enter into and perform its obligations under this Agreement,
  the Notes, the Warrants, the Registration Rights Agreement, the Transfer Agent
  Instructions (as defined in Section 5(b)), and each of the other agreements
  entered into by the parties hereto in connection with the transactions contemplated
  by this Agreement (collectively, the "Transaction Documents") and to
  issue the Securities in accordance with the terms hereof and thereof. The execution
  and delivery of the Transaction Documents by the Company and the consummation
  by the Company of the transactions contemplated hereby and thereby, including,
  without limitation, the issuance of the Notes and Warrants, the reservation
  for issuance and the issuance of the Conversion Shares issuable upon conversion
  of the Notes and the reservation for issuance and issuance of Warrant Shares
  issuable upon exercise of the Warrants have been duly authorized by the Company's
  Board of Directors and, except as set forth in Section 3(e), no further filing,
  consent, or authorization is required by the Company, its Board of Directors
  or its stockholders. This Agreement and the other Transaction Documents of even
  date herewith have been duly executed and delivered by the Company, and constitute
  the legal, valid and binding obligations of the Company, enforceable against
  the Company in accordance with their respective terms, except as such enforceability
  may be limited by general principles of equity or applicable bankruptcy, insolvency,
  reorganization, moratorium, liquidation or similar laws relating to, or affecting
  generally, the enforcement of applicable creditors' rights and remedies.

                    (c)
  Issuance of Securities. The issuance of the Notes and Warrants are duly
  authorized and are free from all taxes, liens and charges with respect to the
  issue thereof. At Closing, the Company shall have reserved from its duly authorized
  capital stock not less than the sum of 120% of the maximum number of shares
  of Common Stock issuable (x) upon conversion of the Notes (without taking into
  account any limitations on the conversion of the Notes set forth in the Notes)
  and (y) upon exercise of the Warrants (without taking into account any limitations
  on the exercise of the Warrants set forth in the Warrants). Upon conversion
  or exercise in accordance with the Notes or the Warrants, as the case may be,
  the Conversion Shares and the Warrant Shares, respectively, will be validly
  issued, fully paid and nonassessable and free from all preemptive or similar
  rights, taxes, liens and charges with respect to the issue thereof, with the
  holders being entitled to all rights accorded to a holder of Common Stock. Assuming
  the accuracy of each of the representations and warranties set forth in Section
  2 of this Agreement, the offer and issuance by the Company of the Securities
  is exempt from registration under the 1933 Act.

                    (d)
  No Conflicts. Except as set forth on Schedule 3(d), the execution,
  delivery and performance of the Transaction Documents by the Company and the
  consummation by the Company of the transactions contemplated hereby and thereby
  (including, without limitation, the issuance of the Notes and Warrants and reservation
  for issuance and issuance of the Conversion Shares and the Warrant Shares) will
  not (i) result in a violation of any articles of incorporation, articles of
  formation, any articles of designations or other constituent documents of the
  Company or any of its Subsidiaries, any capital stock of the Company or any
  of its 

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Subsidiaries or bylaws of the Company or any of its
Subsidiaries or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any respect
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of the OTC
Bulletin Board (the "Principal Market")) applicable to the Company or any
of its Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected.

                    (e)
  Consents. Neither the Company nor any of its Subsidiaries is required
  to obtain any consent, authorization or order of, or make any filing or registration
  with, any court, governmental agency or any regulatory or self-regulatory agency
  or any other Person in order for it to execute, deliver or perform any of its
  obligations under or contemplated by the Transaction Documents, in each case
  in accordance with the terms hereof or thereof, except for the following consents,
  authorizations, orders, filings and registrations (none of which is required
  to be filed or obtained before the Closing): (i) the filing with the SEC of
  one or more Registration Statements in accordance with the requirements of the
  Registration Rights Agreement and (ii) the filing of a listing application for
  the Conversion Shares and the Warrant Shares with the Principal Market, if applicable,
  which shall be done pursuant to the rules of the Principal Market. The Company
  and its Subsidiaries are unaware of any facts or circumstances that might prevent
  the Company from obtaining or effecting any of the registration, application
  or filings pursuant to the preceding sentence. The Company is not in violation
  of the listing requirements of the Principal Market and has no knowledge of
  any facts that would reasonably lead to delisting or suspension of the Common
  Stock on the Principal Market in the foreseeable future.

                    (f)
  Acknowledgement Regarding Buyer’s Trading Activity. Anything in
  this Agreement or elsewhere herein to the contrary notwithstanding (except as
  set forth in Section 2(l)), it is understood and acknowledged by the Company
  (i) that none of the Buyers have been asked by the Company to agree, nor has
  any Buyer agreed, to desist from purchasing or selling, long and/or short, securities
  of the Company, or “derivative” securities based on securities issued
  by the Company or to hold the Securities for any specified term; (ii) that past
  or future open market or other transactions by any Buyer, including Short Sales,
  and specifically including, without limitation, Short Sales or “derivative”
  transactions, before or after the Closing of this or future private placement
  transactions, may negatively impact the market price of the Company’s publicly-traded
  securities; (iii) that any Buyer, and counter-parties in “derivative”
  transactions to which any such Buyer is a party, directly or indirectly, presently
  may have a “short” position in the Common Stock, and (iv) that each
  Buyer shall not be deemed to have any affiliation with or control over any arm’s
  length counter-party in any “derivative” transaction. The Company
  further understands and acknowledges that (a) one or more Buyers may engage
  in hedging activities at various times during the period that the Securities
  are outstanding, including, without limitation, during the periods that the
  value of the Warrant Shares deliverable with respect to Securities are being
  determined and (b) such hedging activities (if any) could reduce the value of
  the existing stockholders' equity interests in the Company at and after the
  time that the hedging activities are being conducted. The Company acknowledges
  that such aforementioned hedging activities do not constitute a breach of any
  of the Transaction Documents.

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                    (g)
  Acknowledgment Regarding Buyer's Purchase of Securities. The Company
  acknowledges and agrees that each Buyer is acting solely in the capacity of
  an arm's length purchaser with respect to the Transaction Documents and the
  transactions contemplated hereby and thereby and that no Buyer is (i) an officer
  or director of the Company, (ii) an "affiliate" of the Company or any of its
  Subsidiaries (as defined in Rule 144 of the 1933 Act) or (iii) to the knowledge
  of the Company, a "beneficial owner" of more than 10% of the shares of Common
  Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act
  of 1934, as amended (the "1934 Act")). The Company further acknowledges
  that no Buyer is acting as a financial advisor or fiduciary of the Company or
  any of its Subsidiaries (or in any similar capacity) with respect to the Transaction
  Documents and the transactions contemplated hereby and thereby, and any advice
  given by a Buyer or any of its representatives or agents in connection with
  the Transaction Documents and the transactions contemplated hereby and thereby
  is merely incidental to such Buyer's purchase of the Securities. The Company
  further represents to each Buyer that the Company's decision to enter into the
  Transaction Documents has been based solely on the independent evaluation by
  the Company and its representatives.

                    (h)
  No General Solicitation; Placement Agent's Fees. Neither the Company,
  nor any of its Subsidiaries or affiliates, nor any Person acting on its or their
  behalf, has engaged in any form of general solicitation or general advertising
  (within the meaning of Regulation D) in connection with the offer or sale of
  the Securities. The Company shall be responsible for the payment of any placement
  agent's fees, financial advisory fees, or brokers' commissions (other than for
  persons engaged by any Buyer or its investment advisor) relating to or arising
  out of the transactions contemplated hereby. The Company acknowledges that it
  has engaged Knight Capital Markets, LLC as placement agent (the "Agent")
  in connection with the sale of the Securities. The fees and expenses payable
  to the Agent are set forth on Schedule 3(h) attached hereto. Other than
  the Agent, neither the Company nor any of its Subsidiaries has engaged any placement
  agent or other agent in connection with the sale of the Securities.

                    (i)
  No Integrated Offering. None of the Company, its Subsidiaries, any of
  their affiliates, and any Person acting on their behalf has, directly or indirectly,
  made any offers or sales of any security or solicited any offers to buy any
  security, under circumstances that would require registration of any of the
  Securities under the 1933 Act or cause this offering of the Securities to be
  integrated with prior offerings by the Company for purposes of the 1933 Act
  or any applicable stockholder approval provisions, including, without limitation,
  under the rules and regulations of any exchange or automated quotation system
  on which any of the securities of the Company are listed or designated. None
  of the Company, its Subsidiaries, their affiliates and any Person acting on
  their behalf will take any action or steps referred to in the preceding sentence
  that would require registration of any of the Securities under the 1933 Act
  or cause the offering of the Securities to be integrated with other offerings.

                    (j)
  Dilutive Effect. The Company understands and acknowledges that the number
  of Conversion Shares issuable upon conversion of the Notes and the Warrant Shares
  issuable upon exercise of the Warrants will increase in certain circumstances.
  The Company further acknowledges that its obligation to issue Conversion Shares
  upon conversion of the Notes in accordance with this Agreement and the Notes
  and its obligation to issue the Warrant Shares upon exercise of the Warrants
  in accordance with this Agreement and the Warrants is, in each 

- 9 -




case, absolute and unconditional, regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of the Company.

                    (k)
  Application of Takeover Protections; Rights Agreement. Except as set
  forth on Schedule 3(k), the Company and its board of directors have taken
  all necessary action, if any, in order to render inapplicable any control share
  acquisition, business combination, poison pill (including any distribution under
  a rights agreement) or other similar anti-takeover provision under the Articles
  of Incorporation (as defined in Section 3(r)) or the laws of the state of its
  incorporation which is or could become applicable to any Buyer as a result of
  the transactions contemplated by this Agreement, including, without limitation,
  the Company's issuance of the Securities and any Buyer's ownership of the Securities.
  The Company and its board of directors have taken all necessary action, if any,
  in order to render inapplicable any stockholder rights plan or similar arrangement
  relating to accumulations of beneficial ownership of Common Stock or a change
  in control of the Company.

                    (l)
  SEC Documents; Financial Statements. Except as set forth on Schedule
  3(l), during the two (2) years prior to the date hereof, the Company
  has filed all reports, schedules, forms, statements and other documents required
  to be filed by it with the SEC pursuant to the reporting requirements of the
  1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
  included therein and financial statements, notes and schedules thereto and documents
  incorporated by reference therein being hereinafter referred to as the "SEC
  Documents"). The Company has delivered to the Buyers or their respective
  representatives true, correct and complete copies of the SEC Documents not available
  on the EDGAR system. As of their respective filing dates, the SEC Documents
  complied in all material respects with the requirements of the 1934 Act and
  the rules and regulations of the SEC promulgated thereunder applicable to the
  SEC Documents, and none of the SEC Documents, at the time they were filed with
  the SEC, 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 the light of the circumstances under which they were
  made, not misleading. As of their respective filing dates, the financial statements
  of the Company included in the SEC Documents complied as to form in all material
  respects with applicable accounting requirements and the published rules and
  regulations of the SEC with respect thereto. Such financial statements have
  been prepared in accordance with generally accepted accounting principles, consistently
  applied, during the periods involved (except (i) as may be otherwise indicated
  in such financial statements or the notes thereto, or (ii) in the case of unaudited
  interim statements, to the extent they may exclude footnotes or may be condensed
  or summary statements) and fairly present in all material respects the financial
  position of the Company as of the dates thereof and the results of its operations
  and cash flows for the periods then ended (subject, in the case of unaudited
  statements, to normal year-end audit adjustments). No other information provided
  by or on behalf of the Company to the Buyers which is not included in the SEC
  Documents, including, without limitation, information referred to in Section
  2(d) of this Agreement or in any disclosure schedules, contains any untrue statement
  of a material fact or omits to state any material fact necessary in order to
  make the statements therein, in the light of the circumstance under which they
  are or were made not misleading.

                    (m)
  Absence of Certain Changes. Except as set forth on Schedule 3(m)(i),
  since September 30, 2006 (the end of the Company’s latest fiscal year),
  there has been no 

- 10 -




material adverse change and no material adverse development in
the business, properties, operations, condition (financial or otherwise),
results of operations or prospects of the Company or its Subsidiaries. Except as
disclosed in Schedule 3(m)(ii), since September 30, 2006, the Company has
not (i) declared or paid any dividends, (ii) sold any assets, individually or in
the aggregate, in excess of $25,000 outside of the ordinary course of business
or (iii) had capital expenditures, individually or in the aggregate, in excess
of $100,000. Neither the Company nor any of its Subsidiaries has taken any steps
to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. The Company and its Subsidiaries, individually and on
a consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(m),
"Insolvent" means, with respect to any Person (as defined in Section
3(t)), (i) the present fair saleable value of such Person's assets is less than
the amount required to pay such Person's total Indebtedness (as defined in
Section 3(t)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature or
(iv) such Person has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.

                    (n)
  No Undisclosed Events, Liabilities, Developments or Circumstances. Other
  than in the ordinary course of business, no event, liability, development or
  circumstance has occurred or exists, or is contemplated to occur with respect
  to the Company, its Subsidiaries or their respective business, properties, prospects,
  operations or financial condition, that would (I) individually or in the aggregate
  have a Material Adverse Effect on the Company or (II) be required to be disclosed
  by the Company under applicable securities laws on a registration statement
  filed with the SEC relating to an issuance and sale by the Company of its Common
  Stock and which has not been publicly announced.

                    (o)
  Conduct of Business; Regulatory Permits. Neither the Company nor any
  of its Subsidiaries is in violation of any term of or in default under its Articles
  of Incorporation or its Bylaws or their organizational charter or bylaws, respectively.
  Neither the Company nor any of its Subsidiaries is in violation of any judgment,
  decree or order or any statute, ordinance, rule or regulation applicable to
  the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries
  will conduct its business in violation of any of the foregoing, except for possible
  violations which could not, individually or in the aggregate, reasonably be
  expected to have a Material Adverse Effect. Without limiting the generality
  of the foregoing, the Company is not in violation of any of the rules, regulations
  or requirements of the Approved Market and has no knowledge of any facts or
  circumstances that would reasonably lead to delisting or suspension of the Common
  Stock by its Approved Market in the foreseeable future. Since March 10, 2006,
  (i) the Common Stock has been designated for quotation on the Principal Market,
  (ii) trading in the Common Stock has not been suspended by the SEC or the Principal
  Market and (iii) the Company has received no communication, written or oral,
  from the SEC or the Principal Market regarding the suspension or delisting of
  the Common Stock from the Principal Market. Except as set forth on Schedule
  3(o), the Company and its Subsidiaries possess all certificates, authorizations
  and permits issued by the appropriate regulatory authorities necessary to conduct


- 11 -




their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

                    (p)
  Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries
  nor any director, officer, agent, employee or other Person acting on behalf
  of the Company or any of its Subsidiaries has, in the course of its actions
  for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate
  funds for any unlawful contribution, gift, entertainment or other unlawful expenses
  relating to political activity; (ii) made any direct or indirect unlawful payment
  to any foreign or domestic government official or employee from corporate funds;
  (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt
  Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
  payoff, influence payment, kickback or other unlawful payment to any foreign
  or domestic government official or employee.

                    (q)
  Sarbanes-Oxley Act. The Company is in compliance with any and all applicable
  requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the
  date hereof, and any and all applicable rules and regulations promulgated by
  the SEC thereunder that are effective as of the date hereof.

                    (r)
  Transactions With Affiliates. Except as set forth in the SEC Documents
  filed at least ten (10) days prior to the date hereof and other than the grant
  of stock options disclosed on Schedule 3(r), none of the officers, directors
  or employees of the Company or any of its Subsidiaries is presently a party
  to any transaction with the Company or any of its Subsidiaries (other than for
  ordinary course services as employees, officers or directors), 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 such officer, director or employee or, to
  the knowledge of the Company or any of its Subsidiaries, any corporation, partnership,
  trust or other entity in which any such officer, director, or employee has a
  substantial interest or is an officer, director, trustee or partner.

                    (s)
  Equity Capitalization. As of the date hereof, the authorized capital
  stock of the Company consists of 200,000,000 shares of Common Stock of which
  as of the date hereof, 78,807,012 are issued and outstanding, and 6,107,000
  shares are reserved for issuance pursuant to securities (other than the aforementioned
  options, the Notes and the Warrants) exercisable or exchangeable for, or convertible
  into, shares of Common Stock. All of such outstanding shares have been, or upon
  issuance will be, validly issued and are fully paid and nonassessable. Except
  as disclosed in Schedule 3(s): (i) none of the Company's capital stock
  is subject to preemptive rights or any other similar rights or any liens or
  encumbrances suffered or permitted by the Company; (ii) there are no outstanding
  options, warrants, scrip, rights to subscribe to, calls or commitments of any
  character whatsoever relating to, or securities or rights convertible into,
  or exercisable or exchangeable for, any capital stock of the Company or any
  of its Subsidiaries, or contracts, commitments, understandings or arrangements
  by which the Company or any of its Subsidiaries is or may become bound to issue
  additional capital stock of the Company or any of its Subsidiaries or options,
  warrants, scrip, rights to subscribe to, calls or commitments of any 

- 12 -




character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries; (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound; (iv) there are no financing statements securing obligations in any
material amounts, either singly or in the aggregate, filed in connection with
the Company or any of its Subsidiaries; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except pursuant
to the Registration Rights Agreement); (vi) there are no outstanding securities
or instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company has
furnished to the Buyers true, correct and complete copies of the Company's
Articles of Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and the Company's Bylaws, as amended and as
in effect on the date hereof (the "Bylaws"), and the terms of all
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock and the material rights of the holders thereof in respect
thereto.

                    (t)
  Indebtedness and Other Contracts. Except as disclosed in Schedule
  3(t), neither the Company nor any of its Subsidiaries (i) has any outstanding
  Indebtedness (as defined below), (ii) is a party to any contract, agreement
  or instrument, the violation of which, or default under which, by the other
  party(ies) to such contract, agreement or instrument could reasonably be expected
  to result in a Material Adverse Effect, (iii) is in violation of any term of
  or in default under any contract, agreement or instrument relating to any Indebtedness,
  except where such violations and defaults would not result, individually or
  in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
  agreement or instrument relating to any Indebtedness, the performance of which,
  in the judgment of the Company's officers, has or is expected to have a Material
  Adverse Effect. Schedule 3(t) provides a detailed description of the
  material terms of any such outstanding Indebtedness. For purposes of this Agreement:
  (x) "Indebtedness" of any Person means, without duplication (A) all indebtedness
  for borrowed money, (B) all obligations issued, undertaken or assumed as the
  deferred purchase price of property or services, including (without limitation)
  "capital leases" in accordance with generally accepted accounting principles
  (other than trade payables entered into in the ordinary course of business),
  (C) all reimbursement or payment obligations with respect to letters of credit,
  surety bonds and other similar instruments, (D) all obligations evidenced by
  notes, bonds, debentures or similar instruments, including obligations so evidenced
  incurred in connection with the acquisition of property, assets or businesses,
  (E) all indebtedness created or arising under any conditional sale or other
  title retention agreement, or incurred as financing, in either case with respect
  to any property or assets acquired with the proceeds of such indebtedness (even
  though the rights and remedies of the 

- 13 -




seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with generally
accepted accounting principles, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y) "Contingent
Obligation" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) "Person" means an
individual or legal entity, including but not limited to a corporation, a
limited liability company, a partnership, a joint venture, a trust, an
unincorporated organization and a government or any department or agency
thereof.

                    (u)
  Absence of Litigation. Except as set forth in Schedule 3(u), there
  is no action, suit, proceeding, inquiry or investigation before or by the Principal
  Market, any court, public board, government agency, self-regulatory organization
  or body pending or, to the knowledge of the Company, threatened against or affecting
  the Company or any of its Subsidiaries, the Common Stock or any of the Company's
  Subsidiaries or any of the Company's or its Subsidiaries' officers or directors.

                    (v)
  Insurance. Except as set forth on Schedule 3(v), the Company and
  each of its Subsidiaries are insured by insurers of recognized financial responsibility
  against such losses and risks and in such amounts as management of the Company
  believes to be prudent and customary in the businesses in which the Company
  and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary
  has been refused any insurance coverage sought or applied for and neither the
  Company nor any such Subsidiary has any reason to believe that it will not be
  able to renew its existing insurance coverage as and when such coverage expires
  or to obtain similar coverage from similar insurers as may be necessary to continue
  its business at a cost that would not have a Material Adverse Effect.

                    (w)
  Employee Relations. Neither the Company nor any of its Subsidiaries is
  a party to any collective bargaining agreement or employs any member of a union.
  The Company and its Subsidiaries believe that their relations with their employees
  are good. No executive officer of the Company or any of its Subsidiaries (as
  defined in Rule 501(f) of the 1933 Act) has notified the Company or any such
  Subsidiary that such officer intends to leave the Company or any such Subsidiary
  or otherwise terminate such officer's employment with the Company or any such
  Subsidiary. No executive officer of the Company or any of its Subsidiaries,
  is, or is now expected to be, in violation of any material term of any employment
  contract, confidentiality, disclosure or proprietary information agreement,
  non-competition agreement, or any other contract or agreement or any restrictive
  covenant, and the continued employment of each such 

- 14 -




executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries, to their knowledge, are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

                    (x)
  Title. Except as set forth on Schedule 3(x), the Company and its
  Subsidiaries have good and marketable title in fee simple to all real property
  and good and marketable title to all personal property owned by them which is
  material to the business of the Company and its Subsidiaries, in each case free
  and clear of all liens, encumbrances and defects except such as are described
  in Schedule 3(x) or such as do not materially affect the value of such
  property and do not interfere with the use made and proposed to be made of such
  property by the Company and any of its Subsidiaries. Any real property and facilities
  held under lease by the Company and any of its Subsidiaries are held by them
  under valid, subsisting and enforceable leases with such exceptions as are not
  material and do not interfere with the use made and proposed to be made of such
  property and buildings by the Company and its Subsidiaries.

                    (y)
  Intellectual Property Rights. The Company and its Subsidiaries own or
  possess adequate rights or licenses to use all trademarks, service marks and
  all applications and registrations therefor, trade names, patents, patent rights,
  copyrights, original works of authorship, inventions, trade secrets and other
  intellectual property rights ("Intellectual Property Rights") necessary
  to conduct their respective businesses as now conducted. None of the Company's
  registered, or applied for, Intellectual Property Rights, to the extent the
  Company has such Intellectual Property Rights, have expired or terminated or
  have been abandoned, or are expected to expire or terminate or expected to be
  abandoned, within three years from the date of this Agreement. The Company does
  not have any knowledge of any infringement by the Company or its Subsidiaries
  of Intellectual Property Rights of others. There is no claim, action or proceeding
  being made or brought, or to the knowledge of the Company, being threatened,
  against the Company or its Subsidiaries regarding its Intellectual Property
  Rights. Neither the Company nor any of its Subsidiaries is aware of any facts
  or circumstances which might give rise to any of the foregoing infringements
  or claims, actions or proceedings. The Company and its Subsidiaries have taken
  reasonable security measures to protect the secrecy, confidentiality and value
  of all of their Intellectual Property Rights.

                    (z)
  Environmental Laws. Except as set forth on Schedule 3(z), the
  Company and its Subsidiaries, to their knowledge, (i) are in compliance with
  any and all Environmental Laws (as hereinafter defined), (ii) have received
  all permits, licenses or other approvals required of them under applicable Environmental
  Laws to conduct their respective businesses, (iii) are in compliance with all
  terms and conditions of any such permit, license or approval, (iv) do not own
  or operate any real property contaminated with any substance that is in violation
  of Environmental Laws, and (v) is liable for any off-site disposal or contamination
  pursuant to any Environmental Laws where, in each of the foregoing clauses (i),
  (ii), (iii), (iv) and (v) the failure to so comply could be reasonably expected
  to have, individually or in the aggregate, a Material Adverse Effect. There
  is no civil, criminal or administrative action, suit, investigation, inquiry
  or proceeding pending or, to the knowledge of the Company, threatened by or
  before any court or governmental authority against the Company or any of its
  Subsidiaries relating to or arising from 

- 15 -




the Company's nor any Subsidiary's non-compliance with any
Environmental Laws, nor has the Company received written notice of any alleged
violations of Environmental Laws. The term "Environmental Laws" means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.

                              (aa)
  Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted
  right to vote, and (subject to limitations imposed by applicable law) to receive
  dividends and distributions on, all capital securities of its Subsidiaries as
  owned by the Company or such Subsidiary.

                              (bb)
  Tax Status. Except as set forth on Schedule 3(bb), the Company
  and each of its Subsidiaries (i) has made or filed all foreign, federal and
  state income and all other tax returns, reports and declarations required by
  any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
  assessments and charges that are material in amount, shown or determined to
  be due on such returns, reports and declarations, except those being contested
  in good faith and (iii) has set aside on its books provision reasonably adequate
  for the payment of all taxes for periods subsequent to the periods to which
  such returns, reports or declarations apply. There are no unpaid taxes in any
  material amount claimed to be due by the taxing authority of any jurisdiction,
  and the officers of the Company know of no basis for any such claim.

                              (cc)
  Internal Accounting and Disclosure Controls. The Company and each of
  its 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 generally accepted accounting principles and to maintain asset and liability
  accountability, (iii) access to assets or incurrence of liabilities is permitted
  only in accordance with management's general or specific authorization and (iv)
  the recorded accountability for assets and liabilities is compared with the
  existing assets and liabilities at reasonable intervals and appropriate action
  is taken with respect to any difference. The Company maintains disclosure controls
  and procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that
  are effective in ensuring that information required to be disclosed by the Company
  in the reports that it files or submits under the 1934 Act is recorded, processed,
  summarized and reported, within the time periods specified in the rules and
  forms of the SEC, including, without limitation, controls and procedures designed
  in to ensure that information required to be disclosed by the Company in the
  reports that it files or submits under the 1934 Act is accumulated and communicated
  to the Company's management, including its principal executive officer or officers
  and its principal financial officer or officers, as appropriate, to allow timely
  decisions regarding required disclosure. During the twelve months prior to the
  date 

- 16 -




hereof neither the Company nor any of its Subsidiaries have
received any notice or correspondence from any accountant relating to any
potential material weakness in any part of the system of internal accounting
controls of the Company or any of its Subsidiaries.

                              (dd)
  Ranking of Notes. Except as set forth on Schedule 3(dd), no Indebtedness
  of the Company is senior to or ranks pari passu with the Notes in right
  of payment, whether with respect of payment of redemptions, interest, damages
  or upon liquidation or dissolution or otherwise.

                              (ee)
  Off Balance Sheet Arrangements. There is no transaction, arrangement,
  or other relationship between the Company and an unconsolidated or other off
  balance sheet entity that is required to be disclosed by the Company in its
  1934 Act filings and is not so disclosed or that otherwise would be reasonably
  likely to have a Material Adverse Effect.

                              (ff)
  Investment Company Status. The Company is not, and upon consummation
  of the sale of the Securities will not be, an "investment company," a company
  controlled by an "investment company" or an "affiliated person" of, or "promoter"
  or "principal underwriter" for, an "investment company" as such terms are defined
  in the Investment Company Act of 1940, as amended.

                              (gg)
  Transfer Taxes. On each of the Initial Closing Date and the Final Closing
  Date, all stock transfer or other taxes (other than income or similar taxes)
  which are required to be paid in connection with the sale and transfer of the
  Securities to be sold to each Buyer hereunder will be, or will have been, fully
  paid or provided for by the Company, and all laws imposing such taxes will be
  or will have been complied with.

                              (hh)
  Manipulation of Price. The Company has not, and to its knowledge no one
  acting on its behalf has, (i) taken, directly or indirectly, any action designed
  to cause or to result in the stabilization or manipulation of the price of any
  security of the Company to facilitate the sale or resale of any of the Securities,
  (ii) other than the Agent, sold, bid for, purchased, or paid any compensation
  for soliciting purchases of, any of the Securities, or (iii) other than the
  Agent, paid or agreed to pay to any person any compensation for soliciting another
  to purchase any other securities of the Company.

                              (ii)
  Disclosure. All disclosure provided by the Company to the Buyers regarding
  the Company or any of its Subsidiaries, their business and the transactions
  contemplated hereby in the Transaction Documents and the Schedules to this Agreement
  is true and correct and does not contain any untrue statement of a material
  fact or omit to state any material fact necessary in order to make the statements
  made therein, in the light of the circumstances under which they were made,
  not misleading. Each press release issued by the Company or any of its Subsidiaries
  during the twelve (12) months preceding the date of this Agreement did not at
  the time of release contain any untrue statement of a material fact or omit
  to state a material fact required to be stated therein or necessary in order
  to make the statements therein, in the light of the circumstances under which
  they were made, not misleading. No event or circumstance has occurred or information
  exists with respect to the Company or any of its Subsidiaries or its or their
  business, properties, prospects, operations or financial conditions, 

- 17 -




which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.

          4.
  COVENANTS.

                    (a)
  Best Efforts. Each party shall use its best efforts to timely satisfy
  each of the conditions to be satisfied by it as provided in Sections 6 and 7
  of this Agreement.

                    (b)
  Form D and Blue Sky. The Company agrees to file a Form D with respect
  to the Securities as required under Regulation D and to provide a copy thereof
  to each Buyer promptly after such filing. The Company shall, on or before the
  Initial Closing Date, take such action as the Company shall reasonably determine
  is necessary in order to obtain an exemption for or to qualify the Securities
  for sale to the Buyers at the Closing pursuant to this Agreement under applicable
  securities or "Blue Sky" laws of the states of the United States (or to obtain
  an exemption from such qualification), and shall provide evidence of any such
  action so taken to the Buyers on or prior to each of the Initial Closing Date
  and the Final Closing Date. The Company shall make all filings and reports relating
  to the offer and sale of the Securities required under applicable securities
  or "Blue Sky" laws of the states of the United States following the Initial
  Closing Date or the Final Closing Date, as the case may be.

                    (c)
  Reporting Status. Until the date on which the Investors (as defined in
  the Registration Rights Agreement) shall have sold all the Conversion Shares
  and Warrant Shares and none of the Notes or Warrants is outstanding, (the "Reporting
  Period"), the Company shall timely file all reports required to be filed
  with the SEC pursuant to the 1934 Act, and the Company 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 termination.

                    (d)
  Use of Proceeds. The Company will use the proceeds from the sale of the
  Securities for general corporate purposes, and not for (A) the repayment of
  any outstanding Indebtedness of the Company or any of its Subsidiaries or (B)
  redemption or repurchase of any of its or its Subsidiaries' equity securities.

                    (e)
  Financial Information. The Company agrees to send the following to each
  Buyer during the Reporting Period (i) unless the following are filed with the
  SEC through EDGAR and are available to the public through the EDGAR system,
  within one (1) Business Day after the filing thereof with the SEC, a copy of
  its Annual Reports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or 10-QSB,
  any interim reports or any consolidated balance sheets, income statements, stockholders'
  equity statements and/or cash flow statements for any period other than annual,
  any Current Reports on Form 8-K and any registration statements (other than
  on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same
  day as the release thereof, facsimile or e-mailed copies of all press releases
  issued by the Company or any of its Subsidiaries, and (iii) copies of any notices
  and other information made available or given to the stockholders of the Company
  generally, contemporaneously with the making available or giving thereof to
  the stockholders. As used herein, "Business Day" means any day other
  than Saturday, Sunday or other day on which commercial banks in the City of
  New York or the city of Denver are authorized or required by law to remain closed.

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                    (f)
  Listing. The Company shall promptly secure the listing of all of the
  Registrable Securities (as defined in the Registration Rights Agreement), all
  of the Series B Conversion Shares and all of the Series B Warrant Shares upon
  each national securities exchange and automated quotation system, if any, upon
  which the Common Stock is then listed (subject to official notice of issuance)
  and shall maintain, in accordance with the Notes and Warrants, such listing
  of all Registrable Securities, Series B Conversion Shares and Series B Warrant
  Shares from time to time issuable under the terms of the Transaction Documents.
  The Company shall maintain the Common Stocks' authorization for quotation on
  the Principal Market or an Approved Market (as defined below). Neither the Company
  nor any of its Subsidiaries shall take any action which would be reasonably
  expected to result in the delisting or suspension of the Common Stock on the
  Principal Market or an Approved Market. As used herein, "Approved Market"
  shall mean any of the following: The New York Stock Exchange, The NASDAQ Global
  Select Market, The NASDAQ Global Market, The NASDAQ Capital Market or the American
  Stock Exchange. The Company shall pay all fees and expenses in connection with
  satisfying its obligations under this Section 4(f).

                    (g)
  Fees. Subject to Section 8 below, at Closing, the Company shall pay to
  Richardson & Patel LLP (or its designees) and legal counsel for any Buyer
  all reasonable legal fees and disbursements incurred in connection with the
  transactions contemplated by the Transaction Documents, up to an aggregate amount
  of $40,000. The Company shall be responsible for the payment of any placement
  agent's fees, financial advisory fees, or broker's commissions relating to or
  arising out of the transactions contemplated hereby, including, without limitation,
  any fees payable to the Agent. The Company shall pay, and hold each Buyer harmless
  against, any liability, loss or expense (including, without limitation, reasonable
  attorney's fees and out-of-pocket expenses) arising in connection with any claim
  relating to any such payment.

                    (h)
  Pledge of Securities. The Company acknowledges and agrees that the Securities
  may be pledged by a Buyer in connection with a bona fide margin agreement or
  other loan or financing arrangement that is secured by the Securities. The pledge
  of Securities shall not be deemed to be a transfer, sale or assignment of the
  Securities hereunder, and no Investor effecting a pledge of Securities shall
  be required to provide the Company with any notice thereof or otherwise make
  any delivery to the Company pursuant to this Agreement or any other Transaction
  Document, including, without limitation, Section 2(f) hereof; provided that
  an Investor and its pledgee shall be required to comply with the provisions
  of Section 2(f) hereof in order to effect a sale, transfer or assignment of
  Securities to such pledgee. The Company hereby agrees to execute and deliver
  such documentation as a pledgee of the Securities may reasonably request in
  connection with a pledge of the Securities to such pledgee by an Investor.

                    (i)
  Disclosure of Transactions and Other Material Information. On or before
  8:30 a.m., New York City time, on the first Business Day following the date
  of this Agreement, the Company shall issue a press release and file a Current
  Report on Form 8-K describing the terms of the transactions contemplated by
  the Transaction Documents in the form required by the 1934 Act and attaching
  the material Transaction Documents (including, without limitation, this Agreement,
  the form of the Notes, the form of the Warrants and the form of the Registration
  Rights Agreement) as exhibits to such filing (including all attachments, the
  "8-K Filing"). The Company shall not, and shall cause each of its Subsidiaries
  and its and each of their respective 

- 19 -




officers, directors, employees and agents, not to, provide any
Buyer with any material, nonpublic information regarding the Company or any of
its Subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of such Buyer. From and after the deadline
specified above, if a Buyer has, or believes it has, received any such material,
nonpublic information regarding the Company or any of its Subsidiaries, it shall
provide the Company with written notice thereof. The Company shall, within five
(5) Trading Days (as defined in the Notes) of receipt of such notice, make
public disclosure of such material, nonpublic information. In the event of a
breach of the foregoing covenant by the Company, any of its Subsidiaries, or any
of its or their respective officers, directors, employees and agents, in
addition to any other remedy provided herein or in the Transaction Documents, a
Buyer shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material, nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents. No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any
such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries
nor any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations. Without the prior
written consent of any applicable Buyer, neither the Company nor any of its
Subsidiaries or affiliates shall disclose the name of such Buyer in any filing,
announcement, release or otherwise.

                    (j)
  Restriction on Redemption and Cash Dividends. So long as any Notes are
  outstanding, the Company shall not, directly or indirectly, redeem, or declare
  or pay any cash dividend or distribution on, the Common Stock without the prior
  express written consent of the holders of Notes representing not less than a
  75% of the aggregate principal amount of the then outstanding Notes.

                    (k)
  Additional Notes; Variable Securities; Dilutive Issuances. So long as
  any Buyer beneficially owns any Securities, the Company will not issue any Notes
  other than to the Buyers as contemplated hereby and the Company shall not issue
  any other securities that would cause a breach or default under the Notes. For
  so long as any Notes or Warrants remain outstanding, the Company shall not,
  in any manner, issue or sell any rights, warrants or options to subscribe for
  or purchase Common Stock or directly or indirectly convertible into or exchangeable
  or exercisable for Common Stock at a price which varies or may vary with the
  market price of the Common Stock, including by way of one or more reset(s) to
  any fixed price unless the conversion, exchange or exercise price of any such
  security cannot be less than the then applicable Conversion Price (as defined
  in the Notes) with respect to the Common Stock into which any Note is convertible
  or the then applicable Exercise Price (as defined in the Warrants) with respect
  to the Common Stock into which any Warrant is exercisable; provided that anti-dilution
  provisions similar to those contained in the Notes or Warrants shall not be
  deemed for the purposes of this provision to be securities convertible or exercisable
  at prices that vary with the market price of the Common Stock. For so long as
  any Notes or Warrants remain outstanding, the Company shall not, in any manner,
  enter into or affect any Dilutive Issuances (as defined in the Notes) if the
  effect of such Dilutive Issuance is to cause the Company to be 

- 20 -




required to issue upon conversion of any Note or exercise of
any Warrant any shares of Common Stock in excess of that number of shares of
Common Stock which the Company may issue upon conversion of the Notes and
exercise of the Warrants without breaching the Company's obligations under the
rules or regulations of the Principal Market.

                    (l)
  Corporate Existence. So long as any Buyer beneficially owns any Securities,
  the Company shall not be party to any Fundamental Transaction (as defined in
  the Notes) unless the Company is in compliance with the applicable provisions
  governing Fundamental Transactions set forth in the Notes and the Warrants.

                    (m)
  Reservation of Shares. The Company shall take all action necessary to
  at all times have authorized and reserved for the purpose of issuance no less
  than, from each of the Initial Closing Date and the Final Closing Date, 120%
  of the sum of the number of shares of Common Stock issuable (i) upon conversion
  of the Notes issued at the Closing and (ii) upon exercise of the Warrants issued
  at the Closing (without taking into account any limitations on the Conversion
  of the Notes or exercise of the Warrants set forth in the Notes and Warrants,
  respectively).

                    (n)
  Conduct of Business. The business of the Company and its Subsidiaries
  shall not be conducted in violation of any law, ordinance or regulation of any
  governmental entity, except where such violations would not result, either individually
  or in the aggregate, in a Material Adverse Effect.

                    (o)
  Delivery of Certificates. Upon conversion or exercise of the Notes and
  Warrants, respectively, and request for removal of restrictive legends on the
  shares of Common Stock issuable in connection therewith, certificates for shares
  of Common Stock will be delivered to the Investor within three (3) Trading Days.
  If such delivery is made more than two (2) additional Trading Days after conversion
  or exercise or request for removal of legend, as the case may be, the Company
  will compensate the Investor at a rate of $100 per day for each of the first
  ten (10) Trading Days and $200 per day thereafter for each $10,000 of securities.
  In such event, after the first such ten (10) Trading Days noted above, the Investor
  will also have right to rescind its conversion notice for the Notes and/or its
  exercise notice for the Warrants. In addition, if the certificates have not
  been delivered by the fifth (5th) Trading Day, then, if the Investor
  has sold shares of Common Stock after the conversion or exercise date, as the
  case may be, the Company will compensate Investor for extra costs, if any, incurred
  to cover the sale, all as agreed upon and reflected in the Transaction Documents.

                    (p)
  Additional Issuances of Securities.

                              (i)
  For purposes of this Section 4(p), the following definitions shall apply.

                                        (1)
  "Convertible Securities" means any stock or securities (other than Options)
  convertible into or exercisable or exchangeable for shares of Common Stock.

                                        (2)
  "Options" means any rights, warrants or options to subscribe for or purchase
  shares of Common Stock or Convertible Securities.

- 21 -




                                        (3)
  "Common Stock Equivalents" means, collectively, Options and Convertible
  Securities.

                              (ii)
  From the the date hereof until the date that is twelve (12) months after the
  Effective Date of the Registration Statement which caused the registration of
  the number of Registrable Securities equal to clause (I) of the definition of
  Initial Required Registration Amount in the Registration Rights Agreement (the
  "Trigger Date"), the Company will not, directly or indirectly, file any
  registration statement with the SEC other than the Initial Registration Statement
  (as defined in the Registration Rights Agreement). The Registrable Securities
  will be the only securities registered under any Registration Statement filed
  pursuant to the Registration Rights Agreement.

                              (iii)
  For a period of ninety (90) days after the Effective Date of the Registration
  Statement, (x) the Company will not sell, issue or transfer for consideration
  any Common Stock Equivalents without prior written approval of 75% of the unconverted
  Note holders, except the Company may sell, issue or transfer for consideration
  Common Stock Equivalents in a public offering or a strategic investment by the
  Company, and (y) all Company directors, officers and employees are prevented
  from selling, or otherwise transferring for consideration, any shares of Common
  Stock.

                              (iv)
  Right of First Refusal. For a period of twelve (12) months following
  the earlier to occur of: (i) the Final Closing Date, or (ii) March 16, 2007,
  unless the Company shall have first complied with this Section 4(p)(iv), the
  Company will not, directly or indirectly, offer, sell, grant any option to purchase,
  or otherwise dispose of (or announce any offer, sale, grant or any option to
  purchase or other disposition of) any of its or its Subsidiaries' equity or
  equity equivalent securities, including without limitation any debt, preferred
  stock or other instrument or security that is, at any time during its life and
  under any circumstances, convertible into or exchangeable or exercisable for
  shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
  disposition or announcement being referred to as a "Subsequent Placement"):

                              (1)
  The Company shall deliver to each Buyer an irrevocable written notice (the "Offer
  Notice") of any proposed or intended issuance or sale or exchange (the "Offer")
  of the securities being offered (the "Offered Securities") in a Subsequent
  Placement, which Offer Notice shall (v) identify and describe the Offered Securities,
  (w) describe the price and other terms upon which they are to be issued, sold
  or exchanged, and the number or amount of the Offered Securities to be issued,
  sold or exchanged, (x) identify the persons or entities (if known) to which
  or with which the Offered Securities are to be offered, issued, sold or exchanged,
  (y) offer to issue and sell to or exchange with such Buyers all of the Offered
  Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion
  of the aggregate principal amount of Notes purchased hereunder (the "Basic
  Amount"), and (b) with respect to each Buyer that elects to purchase its
  Basic Amount, any additional portion of the Offered Securities attributable
  to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase
  or acquire should the other Buyers subscribe for less than their Basic Amounts
  (the "Undersubscription Amount"), which process shall be repeated until
  the Buyers shall have an opportunity to subscribe for any remaining Undersubscription
  Amount.

- 22 -




                              (2)
  To accept an Offer, in whole or in part, such Buyer must deliver a written notice
  to the Company prior to the end of the tenth (10th) Business Day
  after such Buyer's receipt of the Offer Notice (the "Offer Period"),
  setting forth the portion of such Buyer's Basic Amount that such Buyer elects
  to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
  the Undersubscription Amount, if any, that such Buyer elects to purchase (in
  either case, the "Notice of Acceptance"). If the Basic Amounts subscribed
  for by all Buyers are less than the total of all of the Basic Amounts, then
  each Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance
  shall be entitled to purchase, in addition to the Basic Amounts subscribed for,
  the Undersubscription Amount it has subscribed for; provided, however,
  that if the Undersubscription Amounts subscribed for exceed the difference between
  the total of all the Basic Amounts and the Basic Amounts subscribed for (the
  "Available Undersubscription Amount"), each Buyer who has subscribed
  for any Undersubscription Amount shall be entitled to purchase only that portion
  of the Available Undersubscription Amount as the Basic Amount of such Buyer
  bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription
  Amounts, subject to rounding by the Company to the extent its deems reasonably
  necessary.

                              (3)
  The Company shall have fifteen (15) Business Days from the expiration of the
  Offer Period above to offer, issue, sell or exchange all or any part of such
  Offered Securities as to which a Notice of Acceptance has not been given by
  the Buyers (the "Refused Securities"), but only to the offerees described
  in the Offer Notice (if so described therein) and only upon terms and conditions
  (including, without limitation, unit prices and interest rates) that are not
  more favorable to the acquiring person or persons or less favorable to the Company
  than those set forth in the Offer Notice and (ii) to publicly announce (a) the
  execution of such Subsequent Placement Agreement (as defined below), and (b)
  either (x) the consummation of the transactions contemplated by such Subsequent
  Placement Agreement or (y) the termination of such Subsequent Placement Agreement,
  which shall be filed with the SEC on a Current Report on Form 8-K with such
  Subsequent Placement Agreement and any documents contemplated therein filed
  as exhibits thereto.

                              (4)
  In the event the Company shall propose to sell less than all the Refused Securities
  (any such sale to be in the manner and on the terms specified in Section 4(p)(iv)(3)
  above), then each Buyer may, at its sole option and in its sole discretion,
  reduce the number or amount of the Offered Securities specified in its Notice
  of Acceptance to an amount that shall be not less than the number or amount
  of the Offered Securities that such Buyer elected to purchase pursuant to Section
  4(p)(iv)(2) above multiplied by a fraction, (i) the numerator of which shall
  be the number or amount of Offered Securities the Company actually proposes
  to issue, sell or exchange (including Offered Securities to be issued or sold
  to Buyers pursuant to Section 4(p)(iv)(3) above prior to such reduction) and
  (ii) the denominator of which shall be the original amount of the Offered Securities.
  In the event that any Buyer so elects to reduce the number or amount of Offered
  Securities specified in its Notice of Acceptance, the Company may not issue,
  sell or exchange more than the reduced number or amount of the Offered Securities
  unless and until such securities have again been offered to the Buyers in accordance
  with Section 4(p)(iv)(1) above.

- 23 -




                              (5)
  Upon the closing of the issuance, sale or exchange of all or less than all of
  the Refused Securities, the Buyers shall acquire from the Company, and the Company
  shall issue to the Buyers, the number or amount of Offered Securities specified
  in the Notices of Acceptance, as reduced pursuant to Section 4(p)(iv)(4) above
  if the Buyers have so elected, upon the terms and conditions specified in the
  Offer. Notwithstanding anything to the contrary contained in this Agreement,
  if the Company does not consummate the closing of the issuance, sale or exchange
  of all or less than all of the Refused Securities within fifteen (15) Business
  Days of the expiration of the Offer Period, the Company shall issue to the Buyers
  the number or amount of Offered Securities specified in the Notices of Acceptance,
  as reduced pursuant to Section 4(p)(iv)(4) above if the Buyers have so elected,
  upon the terms and conditions specified in the Offer. The purchase by the Buyers
  of any Offered Securities is subject in all cases to the preparation, execution
  and delivery by the Company and the Buyers of a purchase agreement relating
  to such Offered Securities reasonably satisfactory in form and substance to
  the Buyers and their respective counsel.

                              (6)
  Any Offered Securities not acquired by the Buyers or other persons in accordance
  with Section 4(p)(iv)(3) above may not be issued, sold or exchanged until they
  are again offered to the Buyers under the procedures specified in this Agreement.

                              (7)
  The Company and the Buyers agree that if any Buyer elects to participate in
  the Offer, (x) neither the operative agreement concerning the Subsequent Placement
  (the "Subsequent Placement Agreement" with respect to such Offer nor
  any other transaction documents related thereto (collectively, the "Subsequent
  Placement Documents") shall include any term or provisions whereby any Buyer
  shall be required to agree to any restrictions in trading as to any securities
  of the Company owned by such Buyer prior to such Subsequent Placement, and (y)
  any registration rights set forth in such Subsequent Placement Documents shall
  be similar in all material respects to the registration rights contained in
  the Registration Rights Agreement.

                              (8)
  Notwithstanding anything to the contrary in this Section 4(p) and unless otherwise
  agreed to by the Buyers, the Company shall either confirm in writing to the
  Buyers that the transaction with respect to the Subsequent Placement has been
  abandoned or shall publicly disclose its intention to issue the Offered Securities,
  in either case in such a manner such that the Buyers will not be in possession
  of material nonpublic information, by the fifteen (15th) Business
  Day following expiration of the Offer Period. If by the fifteen (15th)
  following expiration of the Offer Period no public disclosure regarding a transaction
  with respect to the Offered Securities has been made, and no notice regarding
  the abandonment of such transaction has been received by the Buyers, such transaction
  shall be deemed to have been abandoned and the Buyers shall not be deemed to
  be in possession of any material, non-public information with respect to the
  Company. Should the Company decide to pursue such transaction with respect to
  the Offered Securities, the Company shall provide each Buyer with another Offer
  Notice and each Buyer will again have the right of participation set forth in
  this Section 4(p)(iv). The Company shall not be permitted to deliver more than
  one such Offer Notice to the Buyers in any 60-day period.

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                              (v)
  The restrictions contained in subsections (ii), (iii) and (iv) of this Section
  4(p) shall not apply in connection with the issuance of any Excluded Securities
  (as defined in the Notes)

                              (q)
  Company’s Disclosure of Material, Non-Public Information.

Notwithstanding anything to the contrary stated herein,
the Company, in connection with this financing, has disclosed several
discrete pieces of material, non-public information to the Buyers (the
“Information”), in addition to the existence and terms of the financing. The
Company covenants that the Information will be disclosed in the ordinary course
of its business, either by Form 8-K or press release, or both, on or before
April 1, 2007, at which point the Buyers will no longer be in possession of any
material, non-public information. In the event of a breach of the foregoing
covenant by the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company. No Buyer shall have any liability to the Company,
its Subsidiaries, or any of its or their respective officers, directors,
employees, stockholders or agents for any such disclosure.

          5.
  REGISTER; TRANSFER AGENT INSTRUCTIONS.

                              (a)
  Register. The Company shall maintain at its principal executive offices
  (or such other office or agency of the Company as it may designate by notice
  to each holder of Securities), a register for the Notes and the Warrants in
  which the Company shall record the name and address of the Person in whose name
  the Notes and the Warrants have been issued (including the name and address
  of each transferee), the principal amount of Notes held by such Person, the
  number of Conversion Shares issuable upon conversion of the Notes and the number
  of Warrant Shares issuable upon exercise of the Warrants held by such Person.
  The Company shall keep the register open and available at all times during business
  hours for inspection of any Buyer or its legal representatives.

                              (b)
  Transfer Agent Instructions. The Company shall issue irrevocable instructions
  to its transfer agent, and any subsequent transfer agent, to issue certificates
  or credit shares to the applicable balance accounts at The Depository Trust
  Company ("DTC"), registered in the name of each Buyer or its respective
  nominee(s), for the Conversion Shares and the Warrant Shares issued at the Closing
  or upon conversion of the Notes or exercise of the Warrants in such amounts
  as specified from time to time by each Buyer to the Company upon conversion
  of the Notes or exercise of the Warrants in the form of Exhibit G attached
  hereto (the "Transfer Agent Instructions"). The Company warrants that
  no instruction other than the Transfer Agent Instructions referred to in this
  Section 5(b), and stop transfer instructions to give effect to Section 2(g)
  hereof, will be given by the Company to its transfer agent, and that the Conversion
  Shares and the Warrant Shares shall otherwise be freely transferable on the
  books and records of the Company as and to the extent provided in this Agreement
  and the other Transaction Documents. If a Buyer effects a sale, assignment or
  transfer of the Securities in accordance with Section 2(f), the Company shall
  permit the transfer and shall promptly instruct its transfer agent to issue
  one or more certificates or credit shares to the applicable balance accounts
  at DTC in such name and 

- 25 -




in such denominations as specified by such Buyer to effect such
sale, transfer or assignment. In the event that such sale, assignment or
transfer involves Conversion Shares or Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee or
transferee, as the case may be, without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

                              (c)
  Additional Relief. If the Company shall fail for any reason or for no
  reason to issue to such holder unlegended certificates or to credit the holder's
  balance account with DTC within two (2) Trading Days of (x) receipt of documents
  necessary for the removal of legend set forth above or (y) the date of its obligation
  to deliver the shares of Common Stock as contemplated pursuant to clause (ii)
  below (the "Deadline Date"), then the Company will compensate the holder
  at a rate of $100 per day for each of the first ten (10) Trading Days and $200
  per day thereafter for each $10,000 of securities. If the Company shall fail
  for any reason or for no reason to issue to such holder unlegended certificates
  or to credit the holder's balance account with DTC within five (5) Trading Days
  of the Deadline Date and if on or after the Trading Day (as defined in the Warrants)
  immediately following such Deadline Date, the holder purchases (in an open market
  transaction or otherwise) shares of Common Stock to deliver in satisfaction
  of a sale by the holder of shares of Common Stock that the holder anticipated
  receiving from the Company (a "Buy-In"), then the Company shall, within
  three (3) Trading Days after the holder's request and in the holder's discretion,
  either (i) pay cash to the holder in an amount equal to the holder's total purchase
  price (including brokerage commissions, if any) for the shares of Common Stock
  so purchased (the "Buy-In Price"), at which point the Company's obligation
  to deliver such certificate (and to issue such shares of Common Stock) shall
  terminate, or (ii) promptly honor its obligation to deliver to the holder a
  certificate or certificates representing such shares of Common Stock and pay
  cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
  over the product of (A) such number of shares of Common Stock, times (B) the
  Closing Bid Price on the Deadline Date. "Closing Bid Price" means, for
  any security as of any date, the last closing price for such security on Principal
  Market, as reported by Bloomberg, or, if the Principal Market begins to operate
  on an extended hours basis and does not designate the closing bid price then
  the last bid price of such security prior to 4:00:00 p.m., New York Time, as
  reported by Bloomberg, or, if the Principal Market is not the principal securities
  exchange or trading market for such security, the last closing price of such
  security on the principal securities exchange or trading market where such security
  is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
  the last closing price of such security in the over-the-counter market on the
  electronic bulletin board for such security as reported by Bloomberg, or, if
  no closing bid price is reported for such security by Bloomberg, the average
  of the bid prices of any market makers for such security as reported in the
  "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
  If the Closing Bid Price cannot be calculated for a security on a particular
  date on any of the foregoing bases, the Closing Bid Price of such security on
  such date shall be the fair market value as mutually 

- 26 -




determined by the Company and the holder. If the Company and
the holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 22 of the Registration Rights
Agreement. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.

          6.
  CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

The obligation of the Company hereunder to issue and sell the
  Notes and the related Warrants to each Buyer at the Closing is subject to the
  satisfaction, at or before each of the Initial Closing Date or the Final Closing
  Date, as the case may be, of each of the following conditions, provided that
  these conditions are for the Company's sole benefit and may be waived by the
  Company at any time in its sole discretion by providing each Buyer with prior
  written notice thereof:

                                        (i)
  Such Buyer shall have executed each of the Transaction Documents to which it
  is a party and delivered the same to the Company.

                                        (ii)
  Such Buyer and each other Buyer shall have delivered to the Company the Purchase
  Price for the Notes and the related Warrants being purchased by such Buyer at
  the Closing by wire transfer of immediately available funds pursuant to the
  wire instructions provided by the Company.

                                        (iii)
  The representations and warranties of such Buyer shall be true and correct in
  all material respects (except for those representations and warranties that
  are qualified by materiality or Material Adverse Effect, which shall be true
  and correct in all respects) as of the date when made and as of the Initial
  Closing Date or the Final Closing Date, as the case may be, as though made at
  that time (except for representations and warranties that speak as of a specific
  date, which shall be true and correct as of such specified date), and such Buyer
  shall have performed, satisfied and complied in all material respects with the
  covenants, agreements and conditions required by this Agreement to be performed,
  satisfied or complied with by such Buyer at or prior to the Initial Closing
  Date or the Final Closing Date, as the case may be.

          7.
  CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

                    The
  obligation of each Buyer hereunder to purchase the Notes and the related Warrants
  at the Closing is subject to the satisfaction, at or before each of the Initial
  Closing Date or the Final Closing Date, as the case may be, of each of the following
  conditions, provided that these conditions are for each Buyer's sole benefit
  and may be waived by such Buyer at any time in its sole discretion by providing
  the Company with prior written notice thereof:

                                        (i)
  The Company shall have duly executed and delivered (physically or by electronic
  copy) to such Buyer (i) each of the Transaction Documents (not including the
  Registration Rights Agreement or the Transfer Agent Instructions to each purchaser
  of Series B Notes and Series B Warrants), (ii) the Notes (allocated in such
  principal amounts as such Buyer shall request), being purchased by such Buyer
  at the Closing pursuant to this Agreement, and (iii) the related Warrants (allocated
  in such amounts as such Buyer shall request) being purchased by such Buyer at
  the Closing pursuant to this Agreement.

- 27 -




                                        (ii)
  Such Buyer shall have received the opinion of Lawler & Associates, the Company's
  outside counsel (“Opinion of Counsel”), dated as of the Closing
  Date, in substantially the form of Exhibit H attached hereto.

                                        (iii)
  The Company shall have delivered to such Buyer of Notes and Warrants a copy
  of the Transfer Agent Instructions, in the form of Exhibit G attached
  hereto, which instructions shall have been delivered to the Company's transfer
  agent.

                                        (iv)
  The Company shall have delivered to such Buyer a certificate evidencing the
  formation and good standing of the Company and each of its Subsidiaries in such
  entity's jurisdiction of formation issued by the Secretary of State (or comparable
  office) of such jurisdiction, as of a date within 10 days of the Initial Closing
  Date.

                                        (v)
  The Company shall have delivered to such Buyer a certificate evidencing the
  Company's qualification as a foreign corporation and good standing issued by
  the Secretary of State (or comparable office) of each jurisdiction in which
  the Company conducts business, as of a date within 10 days of the Initial Closing
  Date.

                                        (vi)
  The Company shall have delivered to such Buyer a certified copy of the Articles
  of Incorporation as certified by the Secretary of State of the State of Nevada
  within ten (10) days of the Initial Closing Date.

                                        (vii)
  The Company shall have delivered to such Buyer a certificate, executed by the
  Secretary of the Company and dated as of each of the Initial Closing Date and
  the Final Closing Date, as the case may be, as to (i) the resolutions consistent
  with Section 3(b) as adopted by the Company's Board of Directors in a form reasonably
  acceptable to such Buyer, (ii) the Articles of Incorporation and (iii) the Bylaws,
  each as in effect at the Closing, in the form attached hereto as Exhibit
  I.

                                        (viii)
  The representations and warranties of the Company shall be true and correct
  in all material respects (except for those representations and warranties that
  are qualified by materiality or Material Adverse Effect, which shall be true
  and correct in all respects) as of the date when made and as of each of the
  Initial Closing Date and the Final Closing Date as though made at that time
  (except for representations and warranties that speak as of a specific date,
  which shall be true and correct as of such specified date) and the Company shall
  have performed, satisfied and complied in all material respects with the covenants,
  agreements and conditions required by the Transaction Documents to be performed,
  satisfied or complied with by the Company at or prior to the Initial Closing
  Date and the Final Closing Date. Such Buyer shall have received a certificate,
  executed by the Chief Executive Officer of the Company, dated as of each of
  the Initial Closing Date and the Final Closing Date, to the foregoing effect
  and as to such other matters as may be reasonably requested by such Buyer in
  the form attached hereto as Exhibit J.

                                        (ix)
  The Company shall have delivered to such Buyer a letter from the Company's transfer
  agent certifying the number of shares of Common Stock outstanding as of a date
  within five days of the Initial Closing Date.

- 28 -




                                        (x)
  The Common Stock (I) shall be designated for quotation or listed on the Principal
  Market and (II) shall not have been suspended, as of the Initial Closing Date
  or the Final Closing Date, by the SEC or the Principal Market from trading on
  the Principal Market nor shall suspension by the SEC or the Principal Market
  have been threatened, as of the Initial Closing Date or the Final Closing Date,
  either (A) in writing by the SEC or the Principal Market or (B) by falling below
  the minimum listing maintenance requirements of the Principal Market.

                                        (xi)
  The Company shall have obtained all governmental, regulatory or third party
  consents and approvals, if any, necessary for the sale of the Securities.

                                        (xii)
  The Company shall have delivered to each Buyer a lock-up agreement in the form
  attached hereto as Exhibit K executed and delivered by each director
  and officer of the Company.

                                        (xiii)
  The Company shall have received waivers, in the form attached hereto as Exhibit
  L (a "Piggy-Back Waiver"), from holders of all of the securities
  set forth on Schedule 7(xiii) attached hereto.

                                        (xiv)
  Contemporaneously with the Initial Closing, the Company shall have raised no
  less than $8,300,000 pursuant the transaction contemplated hereby.

                                        (xv)
  The Company shall have delivered to such Buyer such other documents relating
  to the transactions contemplated by this Agreement as such Buyer or its counsel
  may reasonably request.

          8.
  TERMINATION. In the event that the Closing shall not have occurred with
  respect to a Buyer on or before five (5) Business Days from the date hereof
  due to the Company's or such Buyer's failure to satisfy the conditions set forth
  in Sections 6 and 7 above (and the nonbreaching party's failure to waive such
  unsatisfied condition(s)), the nonbreaching party shall have the option to terminate
  this Agreement with respect to such breaching party at the close of business
  on such date without liability of any party to any other party; provided,
  however, that if this Agreement is terminated pursuant to this Section
  8, the Company shall remain obligated to reimburse the non-breaching Buyers
  for the expenses described in Section 4(g) above.

          9.
  MISCELLANEOUS.

                              (a)
  Governing Law; Jurisdiction; Jury Trial. All questions concerning the
  construction, validity, enforcement and interpretation of this Agreement shall
  be governed by the internal laws of the State of New York, without giving effect
  to any choice of law or conflict of law provision or rule (whether of the State
  of New York or any other jurisdictions) that would cause the application of
  the laws of any jurisdictions other than the State of New York. Each party hereby
  irrevocably submits to the exclusive jurisdiction of the state and federal courts
  sitting in The City of New York, Borough of Manhattan, for the adjudication
  of any dispute hereunder or in connection herewith or with any transaction contemplated
  hereby or discussed herein, and hereby irrevocably waives, and agrees not to
  assert in any suit, action or proceeding, any claim that it is not personally
  subject to the jurisdiction of any such court, that such suit, action or proceeding
  is brought in an inconvenient forum or that the venue of such suit, action or


- 29 -




proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                              (b)
  Counterparts. This Agreement may be executed in two or more identical
  counterparts, all of which shall be considered one and the same agreement and
  shall become effective when counterparts have been signed by each party and
  delivered to the other party; provided that a facsimile signature shall be considered
  due execution and shall be binding upon the signatory thereto with the same
  force and effect as if the signature were an original, not a facsimile signature.

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

                              (d)
  Severability. 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
  in that jurisdiction or the validity or enforceability of any provision of this
  Agreement in any other jurisdiction.

                              (e)
  Entire Agreement; Amendments. This Agreement and the other Transaction
  Documents supersede all other prior oral or written agreements between the Buyers,
  the Company, their affiliates and Persons acting on their behalf with respect
  to the matters discussed herein, and this Agreement, the other Transaction Documents
  and the instruments referenced herein and therein contain the entire understanding
  of the parties with respect to the matters covered herein and therein and, except
  as specifically set forth herein or therein, neither the Company nor any Buyer
  makes any representation, warranty, covenant or undertaking with respect to
  such matters. No provision of this Agreement may be amended other than by an
  instrument in writing signed by the Company and the holders of at least 60%
  of the aggregate number of Conversion Shares and Warrant Shares issued and issuable
  hereunder, and any amendment to this Agreement made in conformity with the provisions
  of this Section 9(e) shall be binding on all Buyers and holders of Securities
  as applicable. No provision hereof may be waived other than by an instrument
  in writing signed by the party against whom enforcement is sought. No such amendment
  shall be effective to the extent that it applies to less than all of the holders
  of the applicable Securities then outstanding. No consideration shall be offered
  or paid to any Person to amend or consent to a waiver or modification of any
  provision of any of the Transaction Documents unless the same consideration
  also is offered to all of the parties to the Transaction Documents, holders
  of Notes or holders of the Warrants, as the case may be. The Company has not,
  directly or indirectly, made any agreements with any Buyers relating to the
  terms or conditions of the transactions contemplated by the Transaction Documents
  except as set forth in the Transaction Documents. Without limiting the foregoing,
  the Company confirms that, 

- 30 -




except as set forth in this Agreement, no Buyer has made any
commitment or promise or has any other obligation to provide any financing to
the Company or otherwise.

                              (f)
  Notices. Any notices, consents, waivers or other communications required
  or permitted to be given under the terms of this Agreement must be in writing
  and will be deemed to have been delivered: (i) upon receipt, when delivered
  personally; (ii) upon receipt, when sent by facsimile (provided confirmation
  of transmission is mechanically or electronically generated and kept on file
  by the sending party); or (iii) one Business Day after deposit with an overnight
  courier service, in each case properly addressed to the party to receive the
  same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Solar Enertech Corp. 
1600 Adams
Drive 
Menlo Park, California, 94025
 Telephone: (650) 688-5800

Facsimile: (650) 989-6709
Attention: Leo Shi Young, Chairman and CEO

Copy to:

CD Farber Law Corporation 
2602 -
1111 Beach Avenue 
Vancouver, British Columbia, Canada 
Telephone: (604)
608-4226 
Facsimile: (604) 608-4223 
Attention: Christopher J. Farber

If to the Agent:

Knight Capital Markets LLC 
100
Manhattanville Road 
Purchase, New York 10577 
Telephone: (212)
479-2320
 Facsimile: (914) 251-5812 
Attention: Barry Freeman

Copy to:

Richardson & Patel LLP 
405
Lexington Avenue, 26th Floor 
New York, New York 10174

Telephone: (212) 907-6686 
Facsimile: (212) 907-6687 
Attention: Jody
R. Samuels, Esq

- 31 -




If to a Buyer, to its address and facsimile number set
forth on the Schedule of Buyers, with copies to such Buyer's representatives as
set forth on the Schedule of Buyers, 

with a copy (for informational
purposes only) to both:

Knight Capital Markets LLC 
100
Manhattanville Road 
Purchase, New York 10577 
Telephone: (914) 251-5811

Facsimile: (914) 251-5812 
Attention: Joshua Jedwab

And

Richardson & Patel LLP 
405
Lexington Avenue, 26th Floor 
New York, New York 10174

Telephone: (212) 907-6686 
Facsimile: (212) 907-6687 
Attention: Jody
R. Samuels, Esq.

or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

                              (g)
  Successors and Assigns. This Agreement shall be binding upon and inure
  to the benefit of the parties and their respective successors and assigns, including
  any purchasers of the Notes or the Warrants. The Company shall not assign this
  Agreement or any rights or obligations hereunder without the prior written consent
  of the holders of at least 60% of the aggregate number of Conversion Shares
  and Warrant Shares issued and issuable hereunder, including by way of a Fundamental
  Transaction (unless the Company is in compliance with the applicable provisions
  governing Fundamental Transactions set forth in the Notes and the Warrants).
  A Buyer may assign some or all of its rights hereunder without the consent of
  the Company, in which event such assignee shall be deemed to be a Buyer hereunder
  with respect to such assigned rights

                              (h)
  No Third Party Beneficiaries. This Agreement is intended for the benefit
  of the parties hereto and their respective permitted successors and assigns,
  and is not for the benefit of, nor may any provision hereof be enforced by,
  any other Person.

                              (i)
  Survival. Unless this Agreement is terminated under Section 8, the representations
  and warranties of the Company and the Buyers contained in Sections 2 and 3,
  and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive
  the Closing. Each 

- 32 -




Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.

                              (j)
  Further Assurances. Each party shall do and perform, or cause to be done
  and performed, all such further acts and things, and shall execute and deliver
  all such other agreements, certificates, instruments and documents, as any other
  party may reasonably request in order to carry out the intent and accomplish
  the purposes of this Agreement and the consummation of the transactions contemplated
  hereby.

                              (k)
  Indemnification. In consideration of each Buyer's execution and delivery
  of the Transaction Documents and acquiring the Securities thereunder and in
  addition to all of the Company's other obligations under the Transaction Documents,
  the Company shall defend, protect, indemnify and hold harmless each Buyer and
  each other holder of the Securities and all of their stockholders, partners,
  members, officers, directors, employees and direct or indirect investors and
  any of the foregoing Persons' agents or other representatives (including, without
  limitation, those retained in connection with the transactions contemplated
  by this Agreement) (collectively, the "Indemnitees") from and against
  any and all actions, causes of action, suits, claims, losses, costs, penalties,
  fees, liabilities and damages, and expenses in connection therewith (irrespective
  of whether any such Indemnitee is a party to the action for which indemnification
  hereunder is sought), and including reasonable attorneys' fees and disbursements
  (the "Indemnified Liabilities"), incurred by any Indemnitee as a result
  of, or arising out of, or relating to (a) any misrepresentation or breach of
  any representation or warranty made by the Company in the Transaction Documents
  or any other certificate, instrument or document contemplated hereby or thereby,
  (b) any breach of any covenant, agreement or obligation of the Company contained
  in the Transaction Documents or any other certificate, instrument or document
  contemplated hereby or thereby or (c) any cause of action, suit or claim brought
  or made against such Indemnitee by a third party (including for these purposes
  a derivative action brought on behalf of the Company) and arising out of or
  resulting from (i) the execution, delivery, performance or enforcement of the
  Transaction Documents or any other certificate, instrument or document contemplated
  hereby or thereby, (ii) any transaction financed or to be financed in whole
  or in part, directly or indirectly, with the proceeds of the issuance of the
  Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i),
  or (iv) the status of such Buyer or holder of the Securities as an investor
  in the Company pursuant to the transactions contemplated by the Transaction
  Documents. The Company shall not be obligated to indemnify an Indemnitee pursuant
  to this Section 9(k) for Indemnified Liabilities to the extent such Indemnified
  Liabilities are caused by acts of gross negligence or willful misconduct on
  the part of such Indemnitee. To the extent that the foregoing undertaking by
  the Company may be unenforceable for any reason, the Company shall make the
  maximum contribution to the payment and satisfaction of each of the Indemnified
  Liabilities that is permissible under applicable law. Except as otherwise set
  forth herein, the mechanics and procedures with respect to the rights and obligations
  under this Section 9(k) shall be the same as those set forth in Section 6 of
  the Registration Rights Agreement.

                              (l)
  No Strict Construction. The language used in this Agreement will be deemed
  to be the language chosen by the parties to express their mutual intent, and
  no rules of strict construction will be applied against any party.

- 33 -




                              (m)
  Remedies. Each Buyer and each holder of the Securities shall have all
  rights and remedies set forth in the Transaction Documents and all rights and
  remedies which such holders have been granted at any time under any other agreement
  or contract and all of the rights which such holders have under any law. Any
  Person having any rights under any provision of this Agreement shall be entitled
  to enforce such rights specifically (without posting a bond or other security),
  to recover damages by reason of any breach of any provision of this Agreement
  and to exercise all other rights granted by law. Furthermore, the Company recognizes
  that in the event that it fails to perform, observe, or discharge any or all
  of its obligations under the Transaction Documents, any remedy at law may prove
  to be inadequate relief to the Buyers. The Company therefore agrees that the
  Buyers shall be entitled to seek temporary and permanent injunctive relief in
  any such case without the necessity of proving actual damages and without posting
  a bond or other security.

                              (n)
  Rescission and Withdrawal Right. Notwithstanding anything to the contrary
  contained in (and without limiting any similar provisions of) the Transaction
  Documents, whenever any Buyer exercises a right, election, demand or option
  under a Transaction Document and the Company does not timely perform its related
  obligations within the periods therein provided, then such Buyer may rescind
  or withdraw, in its sole discretion from time to time upon written notice to
  the Company, any relevant notice, demand or election in whole or in part without
  prejudice to its future actions and rights.

                              (o)
  Payment Set Aside. To the extent that the Company makes a payment or
  payments to the Buyers hereunder or pursuant to any of the other Transaction
  Documents or the Buyers enforce or exercise their rights hereunder or thereunder,
  and such payment or payments or the proceeds of such enforcement or exercise
  or any part thereof are subsequently invalidated, declared to be fraudulent
  or preferential, set aside, recovered from, disgorged by or are required to
  be refunded, repaid or otherwise restored to the Company, a trustee, receiver
  or any other Person under any law (including, without limitation, any bankruptcy
  law, foreign, state or federal law, common law or equitable cause of action),
  then to the extent of any such restoration the obligation or part thereof originally
  intended to be satisfied shall be revived and continued in full force and effect
  as if such payment had not been made or such enforcement or setoff had not occurred.

                              (p)
  Independent Nature of Buyers' Obligations and Rights. The obligations
  of each Buyer under any Transaction Document are several and not joint with
  the obligations of any other Buyer, and no Buyer shall be responsible in any
  way for the performance of the obligations of any other Buyer under any Transaction
  Document. Nothing contained herein or in any other Transaction Document, and
  no action taken by any Buyer pursuant hereto or thereto, shall be deemed to
  constitute the Buyers as, and the Company acknowledges that the Buyers do not
  so constitute, a partnership, an association, a joint venture or any other kind
  of entity, or create a presumption that the Buyers are in any way acting in
  concert or as a group, and the Company will not assert any such claim with respect
  to such obligations or the transactions contemplated by the Transaction Documents
  and the Company acknowledges that the Buyers are not acting in concert or as
  a group with respect to such obligations or the transactions contemplated by
  the Transaction Documents. The Company acknowledges and each Buyer confirms
  that it has independently participated in the negotiation of the transaction
  contemplated hereby with the advice of its own counsel and advisors. Each Buyer
  shall be entitled to independently protect 

- 34 -




and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.

[Signature Pages Follow]

- 35 -




                              IN
  WITNESS WHEREOF, each Buyer and the Company have caused their respective
  signature page to this Securities Purchase Agreement to be duly executed as
  of the date first written above.

	 	COMPANY: 
	 	 
	 	SOLAR ENERTECH CORP. 
	 	 	  
	 	 	  
	 	 	  
	 	By: 	__________________________________
	 	 	Name: Leo Shi Young 
	 	 	Title: Chairman and CEO 






     IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.

Series A Principal Amount: 

_____________________


Series B Principal Amount: 

_____________________

	 	BUYERS: 
	 	  
	 	  
	 	  
	 	By: ___________________________________
	 	Name: 
	 	Title: 
	 	  
	 	  
	 	  
	 	  
	 	
      Address: 

      ___________________________________

      ___________________________________

      ___________________________________







SCHEDULE OF SERIES A NOTE AND SERIES A WARRANT BUYERS

	(1) 	(2) 	(3) 	(4) 	(5) 	(6) 
	  	  	Aggregate 	  	  	  
	  	  	Principal 	  	  	Legal Representative's 
	  	Address and 	Amount of Series A 	Number of Series A 	  	Address and Facsimile 
	Buyer 	Facsimile Number 	Notes 	Warrants 	Purchase Price 	Number 
	 	 	 	 	 	 
	
       

       
	 	 	 	 	 
	
       

       
	 	 	 	 	 
	
       

       
	 	 	 	 	 


SCHEDULE OF SERIES B NOTE AND SERIES B WARRANT BUYERS

	(1) 	(2) 	(3) 	(4) 	(5) 	(6) 
	  	  	  	  	  	  
	  	  	Aggregate 	  	  	  
	  	  	Principal 	  	  	Legal Representative's 
	  	Address and 	Amount of Series A 	Number of Series A 	  	Address and Facsimile 
	Buyer 	Facsimile Number 	Notes 	Warrants 	Purchase Price 	Number 
	 	 	 	 	 	 
	
       

       
	 	 	 	 	 
	
       

       
	 	 	 	 	 
	
       

       
	 	 	 	 	 






EXHIBITS

	Exhibit A 	Form of Series A Notes 
	Exhibit B 	Form of Series B Notes 
	Exhibit C 	Form of Series A Warrants 
	Exhibit D 	Form of Series B Warrants 
	Exhibit E 	Form of Registration Rights Agreement 
	Exhibit F 	Form of Escrow Agreement 
	Exhibit G 	Form of Transfer Agent Instructions 
	Exhibit H 	Form of Opinion of Company’s Counsel
    
	Exhibit I 	Form of Secretary's Certificate 
	Exhibit J 	Form of Officer’s Certificate 
	Exhibit K 	Form of Lock-Up Agreement 
	Exhibit L 	Form of Waiver Letter 


SCHEDULES

	Schedule 3(a) 	Subsidiaries 
	Schedule 3(d) 	No Conflicts 
	Schedule 3(h) 	Placement Agent's Fees 
	Schedule 3(k) 	Application of Takeover Protections 
	Schedule 3(l) 	SEC Documents 
	Schedule 3(m)(i) &(ii) 	Absence of Certain Changes 
	Schedule 3(o) 	Regulatory Permits 
	Schedule 3(r) 	Transactions with Affiliates 
	Schedule 3(s) 	Equity Capitalization 
	Schedule 3(t) 	Indebtedness and Other Contracts 
	Schedule 3(u) 	Absence of Litigation 
	Schedule 3(v) 	Insurance 
	Schedule 3(x) 	Title 
	Schedule 3(z) 	Environmental Laws 
	Schedule 3(bb) 	Tax Status 
	Schedule 3(dd) 	Ranking of Notes 
	Schedule 7(xiii) 	Piggyback Waivers