Document:

REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this "Agreement")
      is made
      and entered into as of September 27, 2007, by and among Jade Mountain
      Corporation, a Nevada corporation (the "Company"),
      and
      the investors signatory hereto (each an "Investor"
      and
      collectively, the "Investors").
      

    

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as the
      date hereof among the Company and the Investors (the “Purchase
      Agreement”).

    

    The
      Company and the Investors hereby agree as follows: 

    

    1.    
Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement will have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms have the respective
      meanings set forth in this Section 1:

     

    “2007
      Delivery Date”
      means
      the date on which the 2007 Make Good Shares are required to be delivered to
      the
      Investors by the Make Good Pledgors pursuant to the Make Good Escrow
      Agreement.

     

    “2008
      Delivery Date”
      means
      the date on which the 2008 Make Good Shares are required to be delivered to
      the
      Investors by the Make Good Pledgors pursuant to the Make Good Escrow
      Agreement.

     

    “Advice”
      has
      the
      meaning set forth in Section 6(d).

     

    “Commission
      Comments”
means
      written comments
      pertaining solely to Rule 415 which
      are
      received by the Company from the Commission (and a copy of which shall have
      been
      provided by the Company to the Holders) to a filed Registration Statement which
      requires the Company limit the amount of shares which may be included therein
      to
      a number of shares which is less than such amount sought to be included therein
      as filed with the Commission.

     

    “Common
      Stock”
      means
      the common stock of the Company, par value $0.0001 per share, and any securities
      into which such common stock may hereafter be reclassified or for which it
      may
      be exchanged as a class.

     

    “Effective
      Date”
      means,
      as to a Registration Statement, the date on which such Registration Statement
      is
      first declared effective by the Commission.

     

    “Effectiveness
      Date”
      means

     

    (a)
      with
      respect to the
      initial Registration Statement required to be filed under Section 2(a), the
      earlier of (i) the 150th
      day
      following the Closing Date, and (ii) the fifth Trading Day following the date
      on
      which the Company is notified by the Commission that such Registration Statement
      will not be reviewed or is no longer subject to further review and comments,
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)
      with
      respect to a Registration Statement required to be filed under Section 2(b),
      the
      earlier of: (i) the 60th
      day
      following the Filing
      Date
      for any
      Registration Statement required to be filed under Section 2(b),
      and (ii)
      the fifth Trading Day following the date on which the Company is notified by
      the
      Commission that such Registration Statement will not be reviewed or is no longer
      subject to further review and comments; 

     

    (c)
      with
      respect to a Registration Statement required to be filed under Section 2(c),
      the
      earlier of: (i) the 90th day following the date on which the Company becomes
      eligible to utilize Form S-3 to register the resale of Common Stock;
and
      (ii)
      the fifth Trading Day following the date on which the Company is notified by
      the
      Commission that the initial Registration Statement will not be reviewed or
      is no
      longer subject to further review and comments, and 

     

    (d)
      with
      respect to a Registration Statement required to be filed under Section 2(d),
      the
      earlier of: (i) the 90th
      day
      following the 2007 Delivery Date; provided,
      that,
      if the Commission reviews and has written comments to such filed Registration
      Statement that would require the filing of a pre-effective amendment thereto
      with the Commission, then the Effectiveness Date under this clause (d)(i) shall
      be the 120th
      day
      following the 2007 Delivery Date, and (ii) the fifth Trading Day following
      the
      date on which the Company is notified by the Commission that the Registration
      Statement will not be reviewed or is no longer subject to further review and
      comments, and 

     

    (e)
      with
      respect to a Registration Statement required to be filed under Section 2(e),
      the
      earlier of: (i) the 90th
      day
      following the 2008 Delivery Date; provided,
      that,
      if the Commission reviews and has written comments to such filed Registration
      Statement that would require the filing of a pre-effective amendment thereto
      with the Commission, then the Effectiveness Date under this clause (e)(i) shall
      be the 120th
      day
      following the 2008 Delivery Date, and (ii) the fifth Trading Day following
      the
      date on which the Company is notified by the Commission that the Registration
      Statement will not be reviewed or is no longer subject to further review and
      comments. 

     

    "Effectiveness
      Period"
      means,
      as to any Registration Statement required to be filed pursuant to this
      Agreement, the period commencing on the Effective Date of such Registration
      Statement and ending on the earliest to occur of (a) the second anniversary
      of
      such Effective Date, (b) such time as all of the Registrable Securities covered
      by such Registration Statement have been publicly sold by the Holders of the
      Registrable Securities included therein, or (iii) such time as all of the
      Registrable Securities covered by such Registration Statement may be sold by
      the
      Holders pursuant to Rule 144(k) as determined by the counsel to the Company
      pursuant to a written opinion letter to such effect, addressed and acceptable
      to
      the Company's transfer agent and the affected Holders.

     

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

     

    “Filing
      Date”
      means

     

    (a)
      with
      respect to the initial Registration Statement required to be filed under Section
      2(a), the 45th
      day
      following the Closing Date, 

     

    
      
        
        

      

      
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    (b)
      with
      respect to any
      Registration Statements
      required
      to be filed under Section 2(b),
      each
      such Registration Statement shall be filed by
      the
      earlier of (i) for
      the
      initial Registration Statement required to be filed under Section 2(b),
the
      six-month anniversary of the Effective Date of the Registration Statement
      required to be filed under Section 2(a) and for
      all
      subsequent Registration Statements required to be filed under Section 2(b),
      the
      six-month anniversary of the Effective Date of the immediately preceding
      Registration Statement required to be filed under Section 2(b), as applicable,
      and (ii)
      the
      5th
      Trading
      Day following
      the earliest day on which any such Registration
      Statement may be filed in accordance with then current SEC Guidance.
      

     

    (c)
      with
      respect to a Registration Statement required to be filed under Section 2(c),
      the
      30th
      day
      following the date on which the Company becomes eligible to utilize Form S-3
      to
      register the resale of Common Stock, 

     

    (d)
      with
      respect to the Registration Statement required to be filed under Section 2(d),
      the 45th
      day
      following the 2007 Delivery Date (provided that if the Company is then eligible
      to utilize Form S-3 to register the resale of Common Stock, the Filing Date
      under this clause (d) shall be 30 days following the 2007 Delivery
      Date)
      and

     

    (e)
      with
      respect to the Registration Statement required to be filed under Section 2(e),
      the 45th
      day
      following the 2008 Delivery Date (provided that if the Company is then eligible
      to utilize Form S-3 to register the resale of Common Stock, the Filing Date
      under this clause (e) shall be 30 days following the 2008 Delivery
      Date).

     

    “Holder”
      or
“Holders”
      means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    “Indemnified
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Losses”
      has the
      meaning set forth in Section 5(a).

     

    “New
      York Courts”
      means
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan.

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    “Prospectus”
      means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    
      
        
        

      

      
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    “Registrable
      Securities”
      means:
      (i) the Shares, (ii) any shares of Common Stock issuable upon the exercise
      of
      warrants issued to any placement agent (the “Placement
      Agent Warrant Shares”)
      as
      compensation in connection with the financing that is the subject of the
      Purchase Agreement, (iii) the 2007 Make Good Shares, as applicable, (iv) the
      2008 Make Good Shares, as applicable and (v) any securities issued or issuable
      upon any stock split, dividend or other distribution, recapitalization or
      similar event, or any price adjustment as a result of such stock splits, reverse
      stock splits or similar events with respect to any of the securities referenced
      in (i), (ii), (iii), or (iv) above.

     

    “Registration
      Statement”
      means
      the initial registration statement required to be filed in accordance with
      Section 2(a) and any additional registration statement(s) required to be filed
      under Section 2(b), Section 2(c), Section 2(d) or Section 2(e), including (in
      each case) the Prospectus, amendments and supplements to such registration
      statements or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference therein. Registration Statement will also include
      any
      other required or acceptable form and any successor form promulgated by the
      Commission.

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      415”
      means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      424”
      means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “SEC
      Guidance”
means
      any publicly-available written or oral guidance, comments, requirements or
      requests of the Commission staff .

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

     

    “Shares”
means
      the shares of Common Stock issued or issuable to the Investors pursuant to
      the
      Purchase Agreement. 

     

    2.    Registration.

     

    (a) On
      or
      prior to the applicable Filing Date, the Company shall prepare and file with
      the
      Commission a Registration Statement covering the resale of
      all
      the Registrable Securities (other than in the case of the Registration Statement
      to be filed under this Section 2(a), the 2007 Make Good Shares and the 2008
      Make
      Good Shares) not already covered by an existing and effective Registration
      Statement for an offering to be made on a continuous basis pursuant to Rule
      415,
      on Form SB-2 (or on such other form appropriate for such purpose). Such
      Registration Statement shall contain (except if otherwise required pursuant
      to
      written comments received from the Commission upon a review of such Registration
      Statement, other than as to the characterization of any Holder as an
      underwriter, which shall not occur without such Holder’s consent) the “Plan of
      Distribution” attached hereto as Annex
      A
      and the
      disclosure attached hereto as Annex
      C.
      The
      Company shall cause such Registration Statement to be declared effective under
      the Securities Act as
      soon as
      possible but, in any event, no later than its Effectiveness Date, and shall
      use
      its reasonable best efforts to keep the Registration Statement continuously
      effective during the entire Effectiveness Period. In the event that the amount
      of securities which may be included in the Registration Statement filed pursuant
      to this Section 2(a) is limited due to Commission Comments, the inclusion of
      the
      Shares in such initial Registration Statement shall take precedence over and
      shall not be cut back until the following securities of the Company are cut
      back
      and removed from such Registration Statement (in the following order): (i)
      all
      other Registrable Securities and (ii) any securities of the Company to be
      included in such Registration Statement pursuant to Section 6(b). By 5:00 p.m.
      (New York City time) on the Business Day immediately following the Effective
      Date of such Registration Statement, the Company shall file with the Commission
      in accordance with Rule 424 under the Securities Act the final prospectus to
      be
      used in connection with sales pursuant to such Registration Statement (whether
      or not such filing is technically required under such Rule).

     

    
      
        
        

      

      
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    (b) If
      all of
      the Registrable Securities to be included in the Registration Statement filed
      pursuant to Section 2(a) cannot be so included due to Commission Comments,
      then
      the Company shall prepare and file by the applicable
      Filing
      Date for such Registration Statement(s),
      such
      number of
      additional Registration Statements
      as may be necessary in order to ensure that
      all
      Registrable Securities (other
      than the 2007 Make Good Shares and 2008 Make Good Shares, unless the 2007
      Delivery Date or 2008 Delivery Date, as the case may be, shall have occurred)
      are
      covered
      by an existing and effective Registration Statement.
      Accordingly, if for example, an initial Registration Statement is filed under
      Section 2(b) to register Registable Securities removed from a Registration
      Statement filed under Section 2(a) due to Commission Comments and Commission
      Comments again require shares to be removed for such newly filed Registration
      Statement under this Section 2(b), then the Company will prepare and file
      additional Registration Statements until such time as all such required shares
      are covered by effective Registration Statements. In
      the
      event that the amount of securities which may be included in any such
      Registration Statement is limited due to Commission Comments, the inclusion
      of
      the Shares in such Registration Statement shall take precedence over and shall
      not be cut back until the following securities of the Company are cut back
      and
      removed from any such Registration Statement (in the following order): (i)
      all
      other Registrable Securities (other than the 2007 Make Good Shares and the
      2008
      Make Good Shares, if applicable) and (ii) any securities of the Company to
      be
      included in such Registration Statement pursuant to Section 6(b). Any
      Registration Statements to be filed under this Section shall be
      for an
      offering to be made on a continuous basis pursuant to Rule 415, on Form SB-2
      (or
      on such other form appropriate for such purpose). Such Registration Statement
      shall contain (except if otherwise required pursuant to written comments
      received from the Commission upon a review of such Registration Statement,
      other
      than as to the characterization of any Holder as an underwriter, which shall
      not
      occur without such Holder’s consent) the "Plan of Distribution" attached hereto
      as Annex
      A.
      The
      Company shall cause such Registration Statement to be declared effective under
      the Securities Act as soon as possible but, in any event, by its Effectiveness
      Date, and shall use its reasonable best efforts to keep such Registration
      Statement continuously effective under the Securities Act during the entire
      Effectiveness Period. By 5:00 p.m. (New York City time) on the Business Day
      immediately following the Effective Date of such Registration Statement, the
      Company shall file with the Commission in accordance with Rule 424 under the
      Securities Act the final prospectus to be used in connection with sales pursuant
      to such Registration Statement (whether or not such filing is technically
      required under such Rule).

     

    
      
        
        

      

      
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    (c) Following
      any date on which the Company becomes eligible to use a registration statement
      on Form S-3 to register the Registrable Securities for resale, the Company
      shall
      file a Registration Statement on Form S-3 covering all such Registrable
      Securities (or a post-effective amendment on Form S-3 to the then effective
      Registration Statement) and shall cause such Registration Statement to be filed
      by the Filing Date for such Registration Statement and declared effective under
      the Securities Act as soon as possible thereafter, but in any event prior to
      the
      Effectiveness Date therefor. Such
      Registration Statement shall contain (except if otherwise required pursuant
      to
      written comments received from the Commission upon a review of such Registration
      Statement, other than as to the characterization of any Holder as an
      underwriter, which shall not occur without such Holder’s consent) the “Plan of
      Distribution” attached hereto as Annex
      A
      and the
      disclosure attached hereto as Annex
      C.
      The
      Company shall use its reasonable best efforts to keep such Registration
      Statement continuously effective under the Securities Act during the entire
      Effectiveness Period. By 5:00 p.m. (New York City time) on the Business Day
      immediately following the Effective Date of such Registration Statement, the
      Company shall file with the Commission in accordance with Rule 424 under the
      Securities Act the final prospectus to be used in connection with sales pursuant
      to such Registration Statement (whether or not such filing is technically
      required under such Rule).

     

    (d) On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a Registration Statement covering the resale of the 2007 Make Good Shares on
      Form SB-2 or S-3 if the Company is then eligible to utilize such Form (or on
      such other form appropriate for such purpose) and shall cause such Registration
      Statement to be filed by the Filing Date for such Registration Statement and
      declared effective under the Securities Act as soon as possible thereafter,
      but
      in any event prior to the Effectiveness Date therefor. Such Registration
      Statement shall contain (except if otherwise required pursuant to written
      comments received from the Commission upon a review of such Registration
      Statement, other than as to the characterization of any Holder as an
      underwriter, which shall not occur without such Holder’s consent) the “Plan of
      Distribution” attached hereto as Annex
      A
      and the
      disclosure attached hereto as Annex
      C.
      The
      Company shall use its reasonable best efforts to keep such Registration
      Statement continuously effective under the Securities Act during the entire
      Effectiveness Period which is applicable to it. By 5:00 p.m. (New York City
      time) on the Business Day immediately following the Effective Date of such
      Registration Statement, the Company shall file with the Commission in accordance
      with Rule 424 under the Securities Act the final prospectus to be used in
      connection with sales pursuant to such Registration Statement (whether or not
      such filing is technically required under such Rule).

     

    (e) On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a Registration Statement covering the resale of the 2008 Make Good Shares on
      Form SB-2 or Form S-3 if the Company is then eligible to utilize such Form
      (or
      on such other form appropriate for such purpose) and shall cause such
      Registration Statement to be filed by the Filing Date for such Registration
      Statement and declared effective under the Securities Act as soon as possible
      thereafter, but in any event prior to the Effectiveness Date therefor. Such
      Registration Statement shall contain (except if otherwise required pursuant
      to
      written comments received from the Commission upon a review of such Registration
      Statement, other than as to the characterization of any Holder as an
      underwriter, which shall not occur without such Holder’s consent) the “Plan of
      Distribution” attached hereto as Annex
      A and
      the
      disclosure attached hereto as Annex
      C.
      The
      Company shall use its reasonable best efforts to keep such Registration
      Statement continuously effective under the Securities Act during the entire
      Effectiveness Period which is applicable to it. By 5:00 p.m. (New York City
      time) on the Business Day immediately following the Effective Date of such
      Registration Statement, the Company shall file with the Commission in accordance
      with Rule 424 under the Securities Act the final prospectus to be used in
      connection with sales pursuant to such Registration Statement (whether or not
      such filing is technically required under such Rule).

     

    
      
        
        

      

      
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    (f) If:
      (i) a
      Registration Statement is not filed on or prior to its applicable Filing Date
      covering the Registrable Securities required under this Agreement to
      be
      included therein (if the Company files a Registration Statement without
      affording the Holders the opportunity to review and comment on the same as
      required by Section 3(a) hereof, the Company shall not be deemed to have
      satisfied this clause (i)), or (ii) a Registration Statement is not declared
      effective by the Commission on or prior to its required Effectiveness Date
      or if
      by the third Business Day immediately following the applicable Effective Date
      the Company shall not have filed a “final” prospectus for the Registration
      Statement with the Commission under Rule 424(b), in accordance with Section
      2(a), (b), (c), (d) or (e) herein, as the case may be, (whether or not such
      a
      prospectus is technically required by such Rule), or (iii) after its applicable
      Effective Date, without regard for the reason thereunder or efforts therefore,
      such Registration Statement ceases for any reason to be effective and available
      to the Holders as to all the Registrable Securities to which it is required
      to
      cover at any time prior to the expiration of its Effectiveness Period for more
      than an aggregate of 30 Trading Days (which need not be consecutive) (any such
      failure or breach being referred to as an “Event,”
      and for
      purposes of clauses (i) or (ii) the date on which such Event occurs, or for
      purposes of clause (iii) the date which such 30 Trading Day-period is exceeded,
      being referred to as “Event
      Date”),
      then
      in addition to any other rights the Holders may have hereunder or under
      applicable law: on each such Event Date and on each monthly anniversary of
      each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      1.0% of the aggregate Investment Amount paid by such Holder for Securities
      pursuant to the Purchase Agreement; provided,
      however,
      that
      the total amount of partial liquidated damages payable by the Company pursuant
      to all Events under this Section shall be capped at an aggregate of 10.0% of
      the
      aggregate Investment Amount paid by the Investors under the Purchase Agreement.
      The partial liquidated damages pursuant to the terms hereof shall apply on
      a
      daily pro-rata basis for any portion of a month prior to the cure of an Event
      except in the case of the first Event Date. In no event will the Company be
      liable for liquidated damages under this Agreement in excess of 1.0% of the
      aggregate Investment Amount of the Investors in any 30-day period. The Company
      will not be liable for liquidated damages under this Agreement with respect
      to
      the Placement Agent Warrant Shares. The Company shall not be liable for
      liquidated damages under this Agreement as to any Registrable Securities which
      are not permitted by the Commission to be included in a Registration Statement
      due solely to Commission Comments from the time that it is determined that
      such
      Registrable Securities are not permitted to be registered solely due to
      Commission Comments until such time as the provisions of this Agreement as
      to
      the next applicable Registration Statement required to be filed hereunder are
      triggered, in which case the provisions of this Section 2(f) shall once again
      apply, if applicable.

     

    
      
        
        

      

      
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    (g) Each
      Holder agrees
      to
      furnish to the Company a completed Questionnaire in the form attached to this
      Agreement as Annex
      B
      (a
“Selling
      Holder Questionnaire”).
      The
      Company shall not be required to include the Registrable Securities of a Holder
      in a Registration Statement and shall not be required to pay any liquidated
      or
      other damages under Section 2(f) to any Holder who fails to furnish to the
      Company a fully completed Selling Holder Questionnaire at least three Trading
      Days prior to the Filing Date (subject to the requirements set forth in Section
      3(a)).

     

    3.    Registration
      Procedures.

     

    In
      connection with the Company's registration obligations hereunder, the Company
      shall:

     

    (a) Not
      less
      than seven Trading Days prior to the filing of a Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto, the Company shall
      furnish to each Holder copies of the “Selling Stockholders” section of such
      document, the “Plan of Distribution” and any risk factor contained in such
      document that addresses specifically this transaction or the Selling
      Stockholders, as proposed to be filed which documents will be subject to the
      review of such Holder. Each
      Holder shall have six Trading Days to comment in writing. The Company shall
      not
      file a Registration Statement, any Prospectus or any amendments or supplements
      thereto in which the“Selling
      Stockholder” section thereof differs from the disclosure received from a Holder
      in its Selling Holder Questionnaire (as amended or supplemented). The Company
      shall not file a Registration Statement, any Prospectus or any amendments or
      supplements thereto in which it (i) characterizes any Holder as an
      underwriter, (ii) excludes a particular Holder due to such Holder refusing
      to be named as an underwriter, or (iii) reduces the number of Registrable
      Securities being registered on behalf of a Holder except in accordance with
      Article 2 of this Agreement, without such Holder’s express written
      authorization.

     

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to each Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep such Registration Statement continuously
      effective as to the applicable Registrable Securities for its Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in accordance with Section 2(b) in order to register for resale
      under
      the Securities Act all of the required Registrable Securities; (ii) cause the
      related Prospectus to be amended or supplemented by any required Prospectus
      supplement, and as so supplemented or amended to be filed pursuant to Rule
      424;
      (iii) respond as promptly as reasonably possible to any comments received from
      the Commission with respect to each Registration Statement or any amendment
      thereto; (iv) as promptly as reasonably possible make available and provide
      notice of their availability to the Holders true and complete copies of all
      correspondence from and to the Commission relating to such Registration
      Statement that would not result in the disclosure to the Holders of material
      and
      non-public information concerning the Company; and (v) comply in all material
      respects with the provisions of the Securities Act and the Exchange Act with
      respect to the Registration Statements and the disposition of all the
      Registrable Securities covered by each Registration Statement.

     

    
      
        
        

      

      
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    (c) Notify
      the Holders as promptly as reasonably possible (and, in the case of (i)(A)
      below, not less than three Trading Days prior to such filing and, in the case
      of
      (v) below, not less than three Trading Days prior to the financial statements
      in
      any Registration Statement becoming ineligible for inclusion therein) and (if
      requested by any such Person) confirm such notice in writing no later than
      one
      Trading Day following the day (i)(A) when a Prospectus or any Prospectus
      supplement or post-effective amendment to a Registration Statement is proposed
      to be filed; (B) when the Commission notifies the Company whether there will
      be
      a “review” of such Registration Statement and whenever the Commission comments
      in writing on such Registration Statement (the Company shall make available
      (and
      provide notice of their availability) true and complete copies thereof and
      all
      written responses thereto to each of the Holders that pertain to the Holders
      as
      a Selling Stockholder or to the Plan of Distribution, but not information which
      the Company believes would constitute material and non-public information);
      and
      (C) with respect to each Registration Statement or any post-effective amendment,
      when the same has become effective; (ii) of any request by the Commission or
      any
      other Federal or state governmental authority for amendments or supplements
      to a
      Registration Statement or Prospectus or for additional information; (iii) of
      the
      issuance by the Commission of any stop order suspending the effectiveness of
      a
      Registration Statement covering any or all of the Registrable Securities or
      the
      initiation of any Proceedings for that purpose; (iv) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (v) of the occurrence of any event or passage of time that makes
      the financial statements included in a Registration Statement ineligible for
      inclusion therein or any statement made in such Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      such
      Registration Statement, Prospectus or other documents so that, in the case
      of
      such Registration Statement or the Prospectus, as the case may be, it will
      not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

     

    (d) Use
      its
      reasonable best efforts to avoid the issuance of, or, if issued, obtain the
      withdrawal of (i) any order suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

     

    (e) Make
      available (and provide notice of their availability) to each Holder, without
      charge, at least one conformed copy of each Registration Statement and each
      amendment thereto and all exhibits to the extent requested by such Person
      (including those previously furnished) promptly after the filing of such
      documents with the Commission.

     

    (f) Promptly
      deliver to each Holder, without charge, as many copies of each Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as such Persons may reasonably request. The Company hereby
      consents to the use of such Prospectus and each amendment or supplement thereto
      by each of the selling Holders in connection with the offering and sale of
      the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (g) Prior
      to
      any public offering of Registrable Securities, register or qualify the
      Registrable Securities for offer and sale under the securities or Blue Sky
      laws
      of each jurisdiction within the United States as any Holder may request, to
      keep
      each such registration or qualification (or exemption therefrom) effective
      during the Effectiveness Period and to do any and all other acts or things
      necessary or advisable to enable the disposition in such jurisdictions of the
      Registrable Securities covered by the Registration Statements.

     

    (h) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be delivered to a transferee
      pursuant to the Registration Statements, which certificates shall be free,
      to
      the extent permitted by the Purchase Agreement, of all restrictive legends,
      and
      to enable such Registrable Securities to be in such denominations and registered
      in such names as any such Holders may request.

     

    (i) Upon
      the
      occurrence of any event contemplated by Section 3(c)(v), as promptly as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to the affected Registration Statements or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, no Registration Statement nor any Prospectus
      will
      contain an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not
      misleading.

     

    4.    Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with any
      Trading Market on which the Common Stock is then listed for trading, and (B)
      in
      compliance with applicable state securities or Blue Sky laws), (ii) printing
      expenses (including, without limitation, expenses of printing certificates
      for
      Registrable Securities and of printing prospectuses if the printing of
      prospectuses is reasonably requested by the holders of a majority of the
      Registrable Securities included in the Registration Statement), (iii) messenger,
      telephone and delivery expenses, (iv) fees and disbursements of counsel for
      the
      Company, (v) Securities Act liability insurance, if the Company so desires
      such
      insurance, and (vi) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement. In addition, the Company shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    5.    Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, agents, investment advisors,
      partners, members and employees of each of them, each Person who controls any
      such Holder (within the meaning of Section 15 of the Securities Act or Section
      20 of the Exchange Act) and the officers, directors, agents and employees of
      each such controlling Person, to the fullest extent permitted by applicable
      law,
      from and against any and all losses, claims, damages, liabilities, costs
      (including, without limitation, reasonable costs of preparation and reasonable
      attorneys' fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in any Registration Statement, any Prospectus
      or
      any form of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein (in the case of any Prospectus or form of prospectus
      or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading, except to the extent, but only to the extent, that (1) such
      untrue statements or omissions are based solely upon information regarding
      such
      Holder furnished in writing to the Company by such Holder expressly for use
      therein, or to the extent that such information relates to such Holder or such
      Holder's proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in
      the Registration Statement, such Prospectus or such form of Prospectus or in
      any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex
      A
      hereto
      for this purpose) or (2) in the case of an occurrence of an event of the type
      specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of an Advice or an amended or supplemented Prospectus, but only if and to the
      extent that following the receipt of the Advice or the amended or supplemented
      Prospectus the misstatement or omission giving rise to such Loss would have
      been
      corrected. The Company shall notify the Holders promptly of the institution,
      threat or assertion of any Proceeding of which the Company is aware in
      connection with the transactions contemplated by this Agreement. The action
      or
      inaction of any Holder shall not impair the indemnification rights of any other
      Holder hereunder.

    

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, arising solely out of or based solely
      upon: (x) such Holder's failure to comply with the prospectus delivery
      requirements of the Securities Act or (y) any untrue statement of a material
      fact contained in any Registration Statement, any Prospectus, or any form of
      prospectus, or in any amendment or supplement thereto, or arising solely out
      of
      or based solely upon any omission of a material fact required to be stated
      therein or necessary to make the statements therein not misleading to the
      extent, but only to the extent that, (1) such untrue statements or omissions
      are
      based solely upon information regarding such Holder furnished in writing to
      the
      Company by such Holder expressly for use therein, or to the extent that such
      information relates to such Holder or such Holder's proposed method of
      distribution of Registrable Securities and was reviewed and expressly approved
      in writing by such Holder expressly for use in the Registration Statement (it
      being understood that the Holder has approved Annex
      A
      hereto
      for this purpose), such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto or (2) in the case of an occurrence of an event
      of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an
      outdated or defective Prospectus after the Company has notified such Holder
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      such Holder of an Advice or an amended or supplemented Prospectus, but only
      if
      and to the extent that following the receipt of the Advice or the amended or
      supplemented Prospectus the misstatement or omission giving rise to such Loss
      would have been corrected. In no event shall the liability of any selling Holder
      hereunder be greater in amount than the dollar amount of the net proceeds
      received by such Holder upon the sale of the Registrable Securities giving
      rise
      to such indemnification obligation.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (c)  Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have
      proximately and materially adversely prejudiced the Indemnifying
      Party.

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a conflict of interest is likely to exist if the same counsel
      were to represent such Indemnified Party and the Indemnifying Party (in which
      case, if such Indemnified Party notifies the Indemnifying Party in writing
      that
      it elects to employ separate counsel at the expense of the Indemnifying Party,
      the Indemnifying Party shall not have the right to assume the defense thereof
      and such counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld. No Indemnifying Party shall, without the prior written consent of
      the
      Indemnified Party, effect any settlement of any pending Proceeding in respect
      of
      which any Indemnified Party is a party, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten Trading Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided, that the Indemnifying Party may require such Indemnified
      Party to undertake to reimburse all such fees and expenses to the extent it
      is
      finally judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder).

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party (by reason of public policy or otherwise), then each
      Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
      contribute to the amount paid or payable by such Indemnified Party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties' relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
      incurred by such party in connection with any Proceeding to the extent such
      party would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party in
      accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

     

    6.    Miscellaneous.

     

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, will be entitled to
      specific performance of its rights under this Agreement. The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b) No
      Piggyback on Registrations.
      Except
      as and to the extent specified in Schedule
      3.1 (v)
      to the
      Purchase Agreement, neither the Company nor any of its security holders (other
      than the Holders in such capacity pursuant hereto) may include securities of
      the
      Company in a Registration Statement other than the Registrable Securities,
      and
      the Company shall not during the Effectiveness Period enter into any agreement
      providing any such right to any of its security holders.

    

    (c) Compliance.
      Each
      Holder severally and not jointly covenants and agrees that it will comply with
      the prospectus delivery requirements of the Securities Act as applicable to
      it
      in connection with sales of Registrable Securities pursuant to the Registration
      Statement.

    

    (d) Discontinued
      Disposition.
      Each
      Holder severally and not jointly agrees by its acquisition of Registrable
      Securities that, upon receipt of a notice from the Company of the occurrence
      of
      any event of the kind described in Section 3(c), such Holder will forthwith
      discontinue disposition of such Registrable Securities under the Registration
      Statement until such Holder's receipt of the copies of the supplemented
      Prospectus and/or amended Registration Statement or until it is advised in
      writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph.

    

    (e) Piggy-Back
      Registrations.
      If at
      any time during
      the Effectiveness Period, there
      is
      not an effective Registration Statement covering all of the Registrable
      Securities and the Company shall determine to prepare and file with the
      Commission a registration statement relating to an offering for its own account
      or the account of others under the Securities Act of any of its equity
      securities, other than on Form S-4 or Form S-8 (each as promulgated under the
      Securities Act) or their then equivalents relating to equity securities to
      be
      issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall send to each Holder written notice of
      such
      determination and, if within fifteen days after receipt of such notice, any
      such
      Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities not
      theretofore registered such Holder requests to be registered, subject to
      customary underwriter cutbacks applicable to all holders of registration
      rights.

    

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this Section 6(f),
      may
      not be amended, modified or supplemented, and waivers or consents to departures
      from the provisions hereof may not be given, unless the same shall be in writing
      and signed by the Company and the Holders of no less than a majority in interest
      of the then outstanding Registrable Securities. Notwithstanding the foregoing,
      a
      waiver or consent to depart from the provisions hereof with respect to a matter
      that relates exclusively to the rights of certain Holders and that does not
      directly or indirectly affect the rights of other Holders may be given by
      Holders of at least a majority of the Registrable Securities to which such
      waiver or consent relates; provided,
      further
      that no amendment or waiver to any provision of this Agreement relating to
      naming any Holder or requiring the naming of any Holder as an underwriter may
      be
      effected in any manner without such Holder’s prior written consent. Section 2(a)
      may not be amended or waived except by written consent of each Holder affected
      by such amendment or waiver. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (g) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile (provided the sender receives a machine-generated
      confirmation of successful transmission) at the facsimile number specified
      in
      this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
      on
      any Trading Day, or (c) upon actual receipt by the party to whom such notice
      is
      required to be given if sent by any means other than facsimile transmission.
      The
      address for such notices and communications shall be as follows:

    

    
      	
              If
                to the Company:

            	
              Jade
                Mountain Corporation

            
	 	
              211
                West Wall Street

            
	 	
              Midland,
                Texas 79701

            
	 	
              Facsimile:

            
	 	
              Attn.:
                President

            
	 	 
	
              With
                a copy to:

            	
              Guzov
                Ofsink, LLC

            
	 	
              600
                Madison Avenue, 14th Floor

            
	 	
              New
                York, New York 10022

            
	 	
              Facsimile:
                (212) 688-7273

            
	 	
              Attn.:
                Darren L. Ofsink, Esq.

            
	 	 
	
              If
                to an Investor: 

            	
              To
                the address set forth under such Investor's name on the signature
                pages
                hereto.

            
	 	 
	
              If
                to any other Person who is then the registered Holder:

            
	 
	 	
              To
                the address of such Holder as it appears in the stock transfer books
                of
                the Company

            

    

     

    or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person.

     

    (h) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights or obligations hereunder without
      the prior written consent of each Holder. Each Holder may assign its respective
      rights hereunder in the manner and to the Persons as permitted under the
      Purchase Agreement. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (i) Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof. 

     

    (j) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all Proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement (whether brought against a party hereto or its
      respective Affiliates, employees or agents) will be commenced in the New York
      Courts. Each party hereto hereby irrevocably submits to the exclusive
      jurisdiction of the New York Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction
      of any New York Court, or that such Proceeding has been commenced in an improper
      or inconvenient forum. Each party hereto hereby irrevocably waives personal
      service of process and consents to process being served in any such Proceeding
      by mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for 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 hereto hereby irrevocably waives, to the fullest
      extent permitted by applicable law, any and all right to trial by jury in any
      Proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby. If either party shall commence a Proceeding to enforce
      any
      provisions of this Agreement, then the prevailing party in such Proceeding
      shall
      be reimbursed by the other party for its attorney’s fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      Proceeding.

     

    (k) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (l) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of the
      parties that they would have executed the remaining terms, provisions, covenants
      and restrictions without including any of such that may be hereafter declared
      invalid, illegal, void or unenforceable.

     

    (m) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (n) Independent
      Nature of Investors' Obligations and Rights.
      The
      obligations of each Investor under this Agreement are several and not joint
      with
      the obligations of each other Investor, and no Investor shall be responsible
      in
      any way for the performance of the obligations of any other Investor under
      this
      Agreement. Nothing contained herein or in any Transaction Document, and no
      action taken by any Investor pursuant thereto, shall be deemed to constitute
      the
      Investors as a partnership, an association, a joint venture or any other kind
      of
      entity, or create a presumption that the Investors are in any way acting in
      concert or as a group with respect to such obligations or the transactions
      contemplated by this Agreement or any other Transaction Document. Each Investor
      acknowledges that no other Investor will be acting as agent of such Investor
      in
      enforcing its rights under this Agreement. Each Investor shall be entitled
      to
      independently protect and enforce its rights, including without limitation
      the
      rights arising out of this Agreement, and it shall not be necessary for any
      other Investor to be joined as an additional party in any Proceeding for such
      purpose. The Company acknowledges that each of the Investors has been provided
      with the same Registration Rights Agreement for the purpose of closing a
      transaction with multiple Investors and not because it was required or requested
      to do so by any Investor.

     

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    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of September 27, 2007.

     

    
      	
              JADE
                MOUNTAIN CORPORATION

            
	 	 
	 	 
	
              By:

            	 
	 	
              Name:
                

            
	 	
              Title:

            

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES OF INVESTORS TO FOLLOW]

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
       

      IN
        WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
        as
        of September 27, 2007.

       

      
        	
                NAME
                  OF INVESTING ENTITY

              
	 	 
	 	 
	 
	 	 
	 	 
	
                By:
                  

              	 
	 	
                Name:

              
	 	
                Title:

              
	 	 
	 	 
	
                ADDRESS
                  FOR NOTICE

              
	 	 
	
                c/o:
                  

              	 
	 	 
	
                Street:
                  

              	 
	 	 
	
                City/State/Zip:
                  

              	 
	 	 
	
                Attention:
                  

              	 
	 	 
	
                Tel:

              	 
	 	 
	
                Fax:

              	 
	 	 
	
                Email:

              	 

      

       

      
        
          19

        

        
           

          
            

          

        

        
           

        

      

    

     

    Annex
      A

     

    Plan
      of Distribution

     

    The
      Selling Stockholders and any of their pledgees, donees, transferees, assignees
      and successors-in-interest may, from time to time, sell any or all of their
      shares of Common Stock on any stock exchange, market or trading facility on
      which the shares are traded or quoted or in private transactions. These sales
      may be at fixed or negotiated prices. The Selling Stockholders may use any
      one
      or more of the following methods when selling shares:

     

    
      	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits Investors;

            

    

     

    
      	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	
              ·

            	
              to
                cover short sales made after the date that this Registration Statement
                is
                declared effective by the Commission;

            

    

     

    
      	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
              ·

            	
              a
                combination of any such methods of sale;
                and

            

    

     

    
      	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act, if available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated. The
      Selling Stockholders do not expect these commissions and discounts to exceed
      what is customary in the types of transactions involved.

     

    The
      Selling Stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of Common Stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell shares of Common Stock from time to time under this
      prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act of 1933 amending the list
      of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    Upon
      the
      Company being notified in writing by a Selling Stockholder that any material
      arrangement has been entered into with a broker-dealer for the sale of Common
      Stock through a block trade, special offering, exchange distribution or
      secondary distribution or a purchase by a broker or dealer, a supplement to
      this
      prospectus will be filed, if required, pursuant to Rule 424(b) under the
      Securities Act, disclosing (i) the name of each such Selling Stockholder and
      of
      the participating broker-dealer(s), (ii) the number of shares involved, (iii)
      the price at which such the shares of Common Stock were sold, (iv)the
      commissions paid or discounts or concessions allowed to such broker-dealer(s),
      where applicable, (v) that such broker-dealer(s) did not conduct any
      investigation to verify the information set out or incorporated by reference
      in
      this prospectus, and (vi) other facts material to the transaction. In addition,
      upon the Company being notified in writing by a Selling Stockholder that a
      donee
      or pledgee intends to sell more than 500 shares of Common Stock, a supplement
      to
      this prospectus will be filed if then required in accordance with applicable
      securities law.

     

    The
      Selling Stockholders also may transfer the shares of Common Stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this
      prospectus.

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be "underwriters" within the meaning of
      the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Discounts, concessions, commissions and
      similar selling expenses, if any, that can be attributed to the sale of the
      securities will be paid by the Selling Stockholder and/or the purchasers. Each
      Selling Stockholder has represented and warranted to the Company that it
      acquired the securities subject to this registration statement in the ordinary
      course of such Selling Stockholder’s business and, at the time of its purchase
      of such securities such Selling Stockholder had no agreements or understandings,
      directly or indirectly, with any person to distribute any such securities.
      

     

    The
      Company has advised each Selling Stockholder that it may not use shares
      registered on this Registration Statement to cover short sales of Common Stock
      made prior to the date on which this Registration Statement shall have been
      declared effective by the Commission. If a Selling Stockholder uses this
      prospectus for any sale of the Common Stock, it will be subject to the
      prospectus delivery requirements of the Securities Act. The Selling Stockholders
      will be responsible to comply with the applicable provisions of the Securities
      Act and Exchange Act, and the rules and regulations thereunder promulgated,
      including, without limitation, Regulation M, as applicable to such Selling
      Stockholders in connection with resales of their respective shares under this
      Registration Statement.

     

    The
      Company is required to pay all fees and expenses incident to the registration
      of
      the shares, but the Company will not receive any proceeds from the sale of
      the
      Common Stock. The Company has agreed to indemnify the Selling Stockholders
      against certain losses, claims, damages and liabilities, including liabilities
      under the Securities Act. 

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    Annex
      B

     

    JADE
      MOUNTAIN CORPORATION

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Common
      Stock”),
      of
      Jade Mountain Corporation, a Nevada corporation (the “Company”)
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      Registration Statement for the registration and resale of the Registrable
      Securities, in accordance with the terms of the Registration Rights Agreement,
      dated as of September 27, 2007 (the “Registration
      Rights Agreement”),
      among
      the Company and the Investors named therein. A copy of the Registration Rights
      Agreement is available from the Company upon request at the address set forth
      below. All capitalized terms used and not otherwise defined herein shall have
      the meanings ascribed thereto in the Registration Rights Agreement.

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1.   
Name.

     

    
      	 	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            

    

     

    
      	 
	 

    

    

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities Listed in Item 3 below are
                held:

            

    

     

    
      	 
	 

    

    

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by the
                questionnaire):

            

    

     

    
      
        	 
	 

      

       

    

    2.
      Address for Notices to Selling Securityholder:

     

    
      	 
	 
	 
	
              Telephone: 

            	 
	
              Fax: 

            	 
	
              Contact Person: 

            	 

    

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    3.
      Beneficial Ownership of Registrable Securities:

     

    
      	 	 	
              Type
                and Principal Amount of Registrable Securities beneficially
                owned:

            

    

     

    
      	 
	 
	 
	 

    

     

    4.
      Broker-Dealer Status:

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes
       ̈      No
       ̈ 

     

    
      	 	
              Note:

            	
              If
                yes, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    
      	 	
              (b)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes
       ̈      No
       ̈ 

     

    
      	 	
              (c)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                bought
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes
       ̈      No
       ̈ 

     

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    5.
      Beneficial Ownership of Other Securities of the Company Owned by the Selling
      Securityholder.

     

    Except
      as set forth below in this Item 5, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the Registrable
      Securities listed above in Item 3.

     

    
      	 	 	
              Type
                and Amount of Other Securities beneficially owned by the Selling
                Securityholder:

            

    

     

    
      	 

	 

	 

    

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    6.
      Relationships with the Company:

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

     

    
      	 
	 
	 

    

     

    7.
      The
      Company has advised each Selling Stockholder that it may not use shares
      registered on the Registration Statement to cover short sales of Common Stock
      made prior to the date on which the Registration Statement is declared effective
      by the Commission, in accordance with 1997 Securities and Exchange Commission
      Manual of Publicly Available Telephone Interpretations Section A.65. If a
      Selling Stockholder uses the prospectus for any sale of the Common Stock, it
      will be subject to the prospectus delivery requirements of the Securities Act.
      The Selling Stockholders will be responsible to comply with the applicable
      provisions of the Securities Act and Exchange Act, and the rules and regulations
      thereunder promulgated, including, without limitation, Regulation M, as
      applicable to such Selling Stockholders in connection with resales of their
      respective shares under the Registration Statement.

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      and prior to the Effective Date for the Registration Statement.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 6 and the inclusion of such
      information in the Registration Statement and the related prospectus. The
      undersigned understands that such information will be relied upon by the Company
      in connection with the preparation or amendment of the Registration Statement
      and the related prospectus. 

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      	
              Dated:

            	 
 	
            	
              Beneficial Owner:
                

            	  

    

     

    
      	 	 	 
	 	
              By:

            	 

	 	
            	 	
              Name:

            
	 	
            	 	
              Title:

            

    

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    Mark
      Cawley, Esq.,

    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th
      Floor

    New
      York, NY 10022

    Fax:
      (212) 688-7273

     

    
      
        
        

      

      
        B-4

        
          

        

      

      
        
        

      

    

     

    Annex
      C

     

    PRC
      regulations relating to the establishment of offshore special purpose companies
      by PRC residents, if applied to us, may subject the PRC resident shareholders
      of
      us or our parent company to personal liability and limit our ability to acquire
      PRC companies or to inject capital into our PRC subsidiary, limit our PRC
      subsidiary's ability to distribute profits to us or otherwise materially
      adversely affect us.

     

    In
      October 2005 SAFE issued a public notice, the Notice on Relevant Issues in
      the
      Foreign Exchange Control over Financing and Return Investment Through Special
      Purpose Companies by Residents Inside China, or the SAFE notice, which requires
      PRC residents, including both legal persons and natural persons, to register
      with the competent local SAFE branch before establishing or controlling any
      company outside of China, referred to as an "offshore special purpose company,"
      for the purpose of overseas equity financing involving onshore assets or equity
      interests held by them. In addition any PRC resident that is the shareholder
      of
      an offshore special purpose company is required to amend its SAFE registration
      with the local SAFE branch with respect to that offshore special purpose company
      in connection with any increase or decrease of capital transfer of shares,
      merger, division, equity investment or creation of any security interest over
      any assets located in China. Moreover, if the offshore special purpose company
      was established and owned the onshore assets or equity interests before the
      implementation date of the SAFE notice, a retroactive SAFE registration is
      required to have been completed before March 31, 2006. If any PRC shareholder
      of
      any offshore special purpose company fails to make the required SAFE
      registration and amendment, the PRC subsidiaries of that offshore special
      purpose company may he prohibited from distributing their profits and the
      proceeds from any reduction in capital, share transfer or liquidation to the
      offshore special purpose company. Moreover, failure to comply with the SAFE
      registration and amendment requirements described above could result in
      liability under PRC laws for evasion of applicable foreign exchange
      restrictions. After
      the
      SAFE notice, an implementation rules on the SAFE notice was issued on May 29,
      2007 which provides for implementation guidance and supplements the procedures
      as provided in the SAFE notice. For an
      offshore
      special purpose company
      which was established and owned the onshore assets or equity interests before
      the implementation
      date of the SAFE notice, a retroactive SAFE registration requirement is
      repeated.

     

    Due
      to
      lack of official interpretation of
      SAFE
      notice and implementation rules,
      some of
      the terms and provisions in the SAFE remain unclear and implementation by
      central SAFE and local SAFE branches of the SAFE notice has been inconsistent
      since its adoption. Based on the advice of our PRC counsel, ______, and after
      consultation with relevant SAFE officials, we believe the PRC resident
      shareholders of our parent company, _____, were required to complete their
      respective SAFE registrations pursuant to the SAFE notice. Moreover, because
      of
      uncertainty over how the SAFE notice and its implementation rules will be
      interpreted and implemented, and how or whether SAFE notice and implementation
      rules will apply it to us, we cannot predict how it will affect our business
      operations or future strategies. For example our present and prospective PRC
      subsidiaries’ ability to conduct foreign exchange activities, such as the
      remittance of dividends and foreign currency-denominated borrowings, may be
      subject to compliance with the SAFE notice by our or our parent company's PRC
      resident beneficial holders. In addition, such PRC residents may not always
      be
      able to complete the necessary registration procedures required by the SAFE
      notice. We also have little control over either our present or prospective
      direct or indirect shareholders or the outcome of such registration procedures.
      A failure by our or our parent company's PRC resident beneficial holders or
      future PRC resident shareholders to comply with the SAFE notice, if SAFE
      requires it, could subject us to fines or legal sanctions, restrict our overseas
      or cross-border investment activities, limit our subsidiary's ability to make
      distributions or pay dividends or affect our ownership structure, which could
      adversely affect our business and prospects.

    

    
      
        
        

      

      
        C-1ARGYLE
        SECURITY, INC.

      2007
        OMNIBUS SECURITIES AND INCENTIVE PLAN

      STOCK
        OPTION AGREEMENT

      EMPLOYEE
        NON-QUALIFIED STOCK OPTION

       

      THIS
        AGREEMENT made as of_______________, 200_, by and between Argyle Security,
        Inc.,
        a Delaware corporation
        (the “Company”),
        and
        _______________ (the “Optionee”).

       

      WITNESSETH:

       

      WHEREAS,
        the Company has adopted the Argyle Security, Inc. 2007 Omnibus Securities
        and
        Incentive Plan (the “Plan”)
        for
        the benefit of its employees, nonemployee directors and consultants and the
        employees, nonemployee directors and consultants of its affiliates,
        and

       

      WHEREAS,
        the Committee has authorized the grant to the Optionee of an Option under
        the
        Plan, on the terms and conditions set forth in the Plan and as hereinafter
        provided,

       

      NOW,
        THEREFORE, in consideration of the premises contained herein, the Company
        and
        the Optionee hereby agree as follows:

       

      1. Definitions.

       

      Terms
        used in this Agreement which are defined in the Plan shall have the same
        meaning
        as set forth in the Plan.

       

      2. Grant
        of Option.

       

      The
        Committee hereby grants to the Optionee an option to purchase [insert
        #
        of
        shares] shares
        of
        the Company’s Common Stock (“Shares”)
        for an
        Option price per Share equal to [insert
        price]
        (not
        less than the Fair Market Value of a Share on the date of this Agreement)
        (the
“Option”).
        The
        Option is intended by the Committee to be a Non-Qualified Stock Option and
        the
        provisions hereof shall be interpreted on a basis consistent with such
        intent.

       

      3. Option
        Terms and Exercise Period.

       

      (a) The
        Option shall be exercised, and payment by the Optionee of the Option price
        shall
        be made, pursuant to the terms of the Plan.

       

      (b) All
        or
        any part of the Option may be exercised by the Optionee no later than the
        tenth
        (10th) anniversary of the date of this Agreement.

       

      (c) [Except
        as
        otherwise provided in Section 10,]
        this
        Agreement and the Option shall terminate on the earlier of (i) the tenth
        (10th)
        anniversary of the date of this Agreement or (ii) the date the Option is
        fully
        exercised.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4. Vesting.

       

      The
        Option shall vest and become exercisable pursuant to the following
        schedule:

       

      Insert
        Vesting Schedule/Performance Goals

       

      Notwithstanding
        the above schedule, the Optionee shall be one hundred percent (100%) vested
        in
        the Option if the Optionee’s employment with the Company shall terminate on
        account of the Optionee’s (a) Total and Permanent Disability, (b) death or (c)
        retirement upon or after attaining age sixty-five (65) with at least five
        (5)
        full years of service for the Company and/or an Affiliate. The Optionee shall
        forfeit any unvested portion of the Option upon termination of employment
        with
        the Company for any reason other than the Optionee’s Total and Permanent
        Disability, death or retirement upon or after attaining age sixty-five
        (65).

       

      5. Termination
        of Employment.

       

      Sections
        6.2., 6.4 and 6.5 of the Plan shall control.

       

      6. Restrictions
        on Transfer of Option.

       

      This
        Agreement and the Option shall not be transferable otherwise than (a) by
        will or
        by the laws of descent and distribution or (b) by gift to any Family Member
        of
        the Optionee, and the Option shall be exercisable, during the Optionee’s
        lifetime, solely by the Optionee, except on account of the Optionee’s Total and
        Permanent Disability or death, and solely by the transferee in the case of
        a
        transfer by gift to a Family Member of the Optionee.

       

      7. Exercise
        of Option.

       

      (a) The
        Option shall become exercisable at such time as shall be provided herein
        or in
        the Plan and shall be exercisable by written notice of such exercise, in
        the
        form prescribed by the Committee, to the Secretary of the Company, at its
        principal office. The notice shall specify the number of Shares for which
        the
        Option is being exercised.

       

      (b) Shares
        purchased pursuant to the Option shall be paid for in full at the time of
        such
        purchase in cash, in Shares, including Shares acquired pursuant to the Plan,
        or
        part in cash and part in Shares. Shares transferred in payment of the Option
        price shall be valued as of the date of transfer based on their Fair Market
        Value.

       

      8. Regulation
        by the Committee.

       

      This
        Agreement and the Option shall be subject to the administrative procedures
        and
        rules as the Committee shall adopt. All decisions of the Committee upon any
        question arising under the Plan or under this Agreement, shall be conclusive
        and
        binding upon the Optionee and any person or persons to whom any portion of
        the
        Option has been transferred by will, by the laws of descent and distribution
        or
        by gift to a Family Member of the Optionee.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      9. Rights
        as a Shareholder.

       

      The
        Optionee shall have no rights as a shareholder with respect to Shares subject
        to
        the Option until certificates for Shares of Common Stock are issued to the
        Optionee.

       

      10. [Change
        of Control.

       

      Notwithstanding
        the vesting requirements contained in Section 4, upon a Change of Control,
        in
        the sole discretion of the Committee, either (a) the Option shall automatically
        become fully vested and exercisable as of the date of such Change of Control,
        or
        (b) the Option shall terminate and the Company shall, within 30 days, make
        a
        cash payment to the Optionee equal to the product of (i) the number of Shares
        set forth in Section 1, multiplied by (ii) the excess of the Fair Market
        Value
        of a Share of Common Stock immediately prior to the Change of Control over
        the
        Option price. If the Company fails to make the payment described in clause
        (b)
        of the immediately preceding sentence within 30 days following the Change
        of
        Control, the Option shall automatically become fully vested and exercisable
        as
        of the next day.

       

      For
        purposes of this Agreement, the term “Change
        of Control”
shall
        mean (i) for an Optionee who is a party to an employment agreement with the
        Company or an Affiliate which agreement provides for a definition of “Change of
        Control” therein, “Change
        of Control”
shall
        have the same meaning as provided for in such agreement, or (ii) for an
        Optionee who is not a party to such an agreement, “Change
        of Control”
shall
        mean the earliest of the following to occur:

       

      (a) The
        public announcement by the Company or any person (other than the Company,
        any
        subsidiary of the Company or any employee benefit plan of the Company or
        of any
        subsidiary of the Company) (“Person”)
        that
        such Person, who or which, together with all “affiliates” and “associates”
(within the meanings of such terms under Rule 12b-2 of the Exchange Act)
        of such
        Person, shall be the beneficial owner of fifty percent (50%) or more of the
        Company’s voting stock then outstanding;

       

      (b) The
        commencement of, or after the first public announcement of any Person to
        commence, a tender or exchange offer the consummation of which would result
        in
        any Person becoming the beneficial owner of the Company’s voting stock
        aggregating fifty percent
        (50%) or more of the Company’s then outstanding voting stock;

       

      (c) The
        announcement of any transaction relating to the Company required to be described
        pursuant to the requirements of Item 6(e) of Schedule 14A of Regulation 14A
        of
        the Securities and Exchange Commission under the Exchange Act;

       

      (d) A
        proposed change in the constituency of the Board such that, during any period
        of
        two (2) consecutive years, individuals who at the beginning of such period
        constitute the Board cease for any reason to constitute at least a majority
        thereof, unless the election or nomination for election by the shareholders
        of
        the Company of each new director was approved by a vote of at least two-thirds
        (2/3) of the directors then still in office who were members of the Board
        at the
        beginning of the period;

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (e) The
        Company enters into an agreement of merger, consolidation, share exchange
        or
        similar transaction with any other corporation other than a transaction which
        would result in the Company’s voting stock outstanding immediately prior to the
        consummation of such transaction continuing to represent (either by remaining
        outstanding or by being converted into voting stock of the surviving entity)
        at
        least two-thirds (2/3) of the combined voting power of the Company’s or such
        surviving entity’s outstanding voting stock immediately after such
        transaction;

       

      (f) The
        Board
        approves a plan of liquidation or dissolution of the Company or an agreement
        for
        the sale or disposition by the Company (in one transaction or a series of
        transactions) of all or substantially all of the Company’s assets to a person or
        entity which is not an affiliate of the Company; or

       

      (g) Any
        other
        event which shall be deemed by a majority of the members of the Board to
        constitute a “Change of Control.”

       

      Notwithstanding
        anything to the contrary contained in this Section 10, the Board is hereby
        authorized to make any modifications to the above “Change of Control” definition
        as it determines in its sole discretion to be necessary for purposes of
        compliance with Section 409A of the Code, to the extent applicable.]

       

      11. Reservation
        of Shares.

       

      With
        respect to the Option, the Company hereby agrees to at all times reserve
        for
        issuance and/or delivery upon payment by the Optionee of the Option price,
        such
        number of Shares as shall be required for issuance and/or delivery upon such
        payment pursuant to the Option.

       

      12. Delivery
        of Share Certificates.

       

      Within
        a
        reasonable time after the exercise of the Option the Company shall cause
        to be
        delivered to the Optionee, his or her legal representative or his or her
        beneficiary, a certificate for the Shares purchased pursuant to the exercise
        of
        the Option.

       

      13. Withholding.

       

      In
        the
        event the Optionee elects to exercise the Option (or any part thereof) ,
        if the
        Company or an Affiliate shall be required to withhold any amounts by reason
        of
        any federal, state or local tax rules or regulations in respect of the issuance
        of Shares to the Optionee, the Company or Affiliate shall be entitled to
        deduct
        and withhold such amounts.

       

      14. Amendment.

       

      The
        Committee may amend this Agreement at any time and from time to time;
provided,
        however,
        that no
        amendment of this Agreement that would materially and adversely impair the
        Optionee’s rights or entitlements with respect to the Option shall be effective
        without the prior written consent of the Optionee (unless such amendment
        is
        required in order to cause the Award hereunder to qualify as “performance-based”
compensation within the meaning of Section 162 (m) of the Code and applicable
        interpretive authority thereunder).

       

      15. Plan
        Terms.

       

      The
        terms
        of the Plan are hereby incorporated herein by reference.

       

      16. Effective
        Date of Grant.

       

      The
        Option shall be effective as of the date first written above.

       

      17. Optionee
        Acknowledgment.

       

      By
        executing this Agreement, the Optionee hereby acknowledges that he or she
        has
        received and read the Plan and this Agreement and that he or she agrees to
        be
        bound by all of the terms of both the Plan and this Agreement.

       

      
        
          
            	
                    ATTEST:
                      

                  	ARGYLE
                    SECURITY, INC.
	 	 	 
	                           
	
                    By: 

                  	
                                                    

                  
	 	 	 
	 	Its:	
                                                    

                  
	 	 
	WITNESS:	 
	                            	 
	 	
                                    ,
                      Awardee 

                    [Name]

                  

          

        

      

       

      
        
          
          

        

        
          4

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