Document:

cltech8k032408ex101.htm

    
       

      Exhibit
10.1

       

      HFTA

      Livermore
California

      
 

    

    
      

      

    

    

    

    

    SUBLICENSE
AGREEMENT

    

    AMONG

    

    SRS
ENERGY, INC.,

    

    CLEANTECH
BIOFUELS, INC

    

    AND

    

    HFTA

    

    FOR

    

    METHODS
AND APPARATUS FOR TREATING BIOMASS MATERIAL

    

    

    

    

    

    

    

    

    

    

    

    
      	 
      	
              U.S.
      Patent Nos.:  5,221,357, 5,366,558,

              5,536,325,
      5,628,830, and 6,019,900

            

    

    

    

    
      

      

    

    

     

    
      
        
           

          
            	
                  	
                     

                  	
                  

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    
 

    
      	
              HFTA

              LIVERMORE,
      CALIFORNIA

            	 
      

    

    

    
      

      

    

     

    
 

    SUBLICENSE
AGREEMENT FOR

    METHODS
AND APPARATUS FOR TREATING BIOMASS MATERIAL

    

     

    

    
      	 
      	
              U.S.
      Patent Nos.:  5,221,357, 5,366,558,

              5,536,325,
      5,628,830, and 6,019,900

            

    

     

    

    
      

      

    

     

     

    This
sublicense agreement (“Agreement”) is effective March 20, 2008 (“Effective
Date”), by and between HFTA, a California corporation, having
its  principal place of business at 2424 Covey
Way,  Livermore, California 94550-6803 (“HFTA”), CleanTech Biofuels
Inc., a Delaware corporation having its principal place of business at 7386
Pershing Avenue, St. Louis, MO 63130 (“CTB”), and SRS Energy, Inc., a
wholly-owned subsidiary of CTB  (“SUBLICENSEE”) (collectively, the
“Parties”). The parties agree as follows:

    

    1.    BACKGROUND

    

    
      	
              1.1  

            	
              Regents
      of the University of California (“REGENTS”) has an assignment of the
      technology invented by Inventors David Brink, Ph.D., and Ramnik Singh,
      Ph.D., employed by the University of California, Berkeley (the
      "INVENTION"), as described in United States Patent Nos. 5,221,357,
      5,366,558, 5,536,325, 5,628,830, and 6,019,900 under REGENTS' PATENT
      RIGHTS as defined below, which are directed to the
    INVENTION.

            

    

    

    
      	
              1.2  

            	
              REGENTS
      and HFTA have executed an exclusive license agreement for REGENTS’ PATENT
      RIGHTS to the INVENTION that allows HFTA to grant sublicenses to the
      INVENTION.

            

    

    

    
      	
              1.3  

            	
              CTB
      and SUBLICENSEE have provided HFTA with a commercialization plan for the
      INVENTION and business strategy in order to evaluate its capabilities as a
      SUBLICENSEE.

            

    

    

    
      	
              1.4  

            	
              HFTA
      and SUBLICENSEE wish to have the INVENTION perfected and marketed as soon
      as possible so that products resulting there from may be available for
      public use and benefit.

            

    

    

    
      	
              1.5  

            	
              SUBLICENSEE
      wishes to acquire a sublicense under REGENTS' PATENT RIGHTS for the
      purpose of undertaking development and to manufacture, use, sell, and
      offer for sale LICENSED PRODUCTS as defined
  below.

            

    

    

    

    2.    DEFINITIONS

    

    
      	
               
      2.1   

            	
              "REGENTS'
      PATENT RIGHTS" means REGENTS' rights in U.S. Patent Numbers 5,221,357;
      5,366,558; 5,536,325; and 5,628,830, entitled "Method of Treating Biomass
      Material" issued on June 22, 1993; November 22, 1994; July 16, 1996; and
      May 13, 1997, respectively, to Dr. David L. Brink, and U.S. Patent Number
      6,019,900, entitled “Single Stage Denitrification Anaerobic Digestion”
      issued on February 1, 2000, to Dr. David L. Brink and Dr. Ramnik Singh,
      and assigned to REGENTS; and continuing applications thereof including
      divisions, substitutions, extensions and continuation-in-part applications
      (only to the extent, however, that claims in the continuation-in-part
      applications are entitled to the priority filing date of the parent patent
      application), any patents issuing on said application or continuing
      applications including reissues; and any corresponding foreign patents or
      applications.

            

    

    

    
      	
               
      2.2   

            	
              "LICENSED
      PRODUCTS" means all kits, compositions of matter, articles of manufacture,
      materials, and products, the manufacture, use, SALE, offer for SALE, or
      import of which: a) would require the performance of the LICENSED METHOD;
      or b) but for the license granted pursuant to this Agreement, would
      infringe, or contribute to or induce the infringement of, a valid claim of
      any issued, unexpired patent under REGENTS' PATENT RIGHTS or a claim being
      prosecuted in a pending patent application under REGENTS’ PATENT
      RIGHTS.  A claim in an issued patent under REGENTS’ PATENT
      RIGHTS will be presumed valid unless and until it has been held to be
      invalid by a final judgment of a court of competent jurisdiction from
      which no appeal can be or is taken.

            

    

    

    
      	
               
      2.3   

            	
              “ETHANOL
      PRODUCT” means a Licensed Product comprised of ethanol or ethyl alcohol
      and any form thereof, including, but not limited to, all blended,
      reprocessed, denatured, hydrated, dehydrated, or reformulated
      forms.

            

    

    

    
      	
               
      2.4   

            	
              “GENERATED
      PRODUCT” means all kits, compositions of matter, materials, products, and
      co-products and all derivations, modifications, improvements, and
      developments thereon, including secondary products, derivatives, and
      byproducts thereof that have been generated, collected, identified, made,
      produced, or co-produced through the use of a Licensed Product or Licensed
      Service or the practice of the Licensed Method and the manufacture, use,
      Sale, offer for Sale, or import of which in a particular country does not
      infringe the Patent Rights.

            

    

    

    
      	
              2.5  

            	
              "LICENSED
      METHOD" means any process or method the use or practice of which, but for
      the license pursuant to this Agreement, would infringe, or contribute to
      or induce the infringement of, any issued or pending claim under REGENTS'
      PATENT RIGHTS in that country in which the LICENSED METHOD is used or
      practiced.

            

    

    

    
      	
              2.6  

            	
              "NET
      SALES" means the gross invoice price charged and the
      value of non-cash consideration owed to, LICENSEE, or a
      SUBLICENSEE, for SALES of LICENSED
      PRODUCTS, LICENSED
      SERVICES, and LICENSED
      METHODS, less the
      sum of the following actual and customary deductions where
      applicable:  cash, trade or quantity discounts; sales, use,
      tariff, import/export duties or other excise taxes when included in gross
      sales, but not value-added taxes assessed or income taxes derived from
      such sales; transportation charges; and allowances or credits to customers
      because of rejections or returns.

            

    

    

    
      	
              2.7  

            	
              "PROOF
      OF CONCEPT VALIDATION" means the use of the Licensed Method via equipment
      purchased pursuant to the Bill of Sale dated January 24, 2008 and attached
      to this Agreement to produce Pentose and Hexose sugars from biomass
      generated from municipal solid waste ("MSW") and other sources at
      efficiencies that SUBLICENSEE determines is sufficient to proceed with
      utilizing the LICENSED METHOD in a larger scale demonstration plant, which
      SUBLICENSEE shall be required to pursue consistent with its obligations
      under Article 6hereof.  SUBLICENSEE shall provide written notice
      of PROOF OF CONCEPT VALIDATION as soon as   practicable
      after completing the foregoing analysis and
  testing.

            

    

    
      	
              2.8  

            	
              "COMMERCIAL
      DEMONSTRATION" means the use of the Licensed Method in a continuous flow
      reactor to produce Pentose and Hexose sugars from biomass generated from
      municipal solid waste and other sources at efficiencies that SUBLICENSEE
      determines are sufficient to proceed with utilizing the LICENSED METHOD in
      a commercial plant, which SUBLICENSEE shall be required to pursue
      consistent with its obligations under Article
      6hereof.  SUBLICENSEE shall provide written notice of COMMERCIAL
      DEMONSTRATION as soon as   practicable after completing the
      foregoing analysis and testing.

            

    

    

    
      	
              2.9  

            	
              “SALE"
      means, for LICENSED PRODUCTS and LICENSED SERVICES, the act of selling,
      leasing or otherwise transferring, providing, or furnishing such product
      or service, and for LICENSED METHOD the act of performing such method, for
      any use or for any consideration.  Correspondingly, "SELL" means
      to make or cause to be made a SALE, and "SOLD" means to have made or caused to be
      made a SALE.  A "COMMERCIAL SALE" is a SALE for more than Fifty
      Thousand Dollars ($50,000) or a series of SALES within a three month
      period for sums which exceed said
amount.

            

    

    

    
      	
              2.10  

            	
              "LICENSED
      SERVICE" means a service provided using LICENSED PRODUCTS or LICENSED
      METHOD.

            

    

    

    

    3.    GRANT

    

    
      	
              3.1  

            	
              Subject
      to the limitations set forth in this Agreement, including the license
      granted to the U.S. Government and the rights reserved in Paragraph 3.3,
      HFTA hereby grants and SUBLICENSEE hereby accepts an exclusive worldwide
      license under REGENTS' PATENT RIGHTS to make, use, offer for SALE, import,
      and SELL LICENSED PRODUCTS and LICENSED SERVICES, and to practice LICENSED
      METHOD, when the feedstock is cellulosic or lignocellulosic material
      derived from MSWand no other party shall be entitled to use the REGENT’S
      PATENT RIGHTS for such purposes except as specifically set forth to the
      contrary in Paragraph  3.3 hereof.  In addition,
      subject to the foregoing limitations, HFTA hereby grants and SUBLICENSEE
      hereby accepts a non-exclusive worldwide license under REGENTS' PATENT
      RIGHTS to make, use, offer for SALE, import, and SELL LICENSED PRODUCTS
      and LICENSED SERVICES, and to practice LICENSED METHOD, when the feedstock
      is cellulosic or lignocellulosic material not derived from
    MSW

            

    

    

    
      	
              3.2  

            	
              The
      license under Paragraph 3.1 commences on the Effective Date and ends on
      the date of the last-to-expire patent under REGENTS' PATENT
      RIGHTS.

            

    

    

    
      	
              3.3  

            	
              Nothing
      in this Agreement will be deemed to limit the right of REGENTS to publish
      any and all technical data resulting from any research performed by
      REGENTS relating to the INVENTION, and to make and use the INVENTION,
      LICENSED PRODUCTS, and LICENSED SERVICES and practice LICENSED METHOD and
      associated technology and to allow other educational and non-profit
      institutions to do so for educational and research purposes; provided no
      such use shall be for any purpose that would result in the SALE of any
      LICENSED PRODUCT, LICENSED SERVICE, or LICENSED
  METHOD.

            

    

    

    
      	
              3.4  

            	
              This
      Agreement will terminate immediately if SUBLICENSEE files a claim
      including in any way the assertion that any portion of the REGENTS' PATENT
      RIGHTS is invalid or unenforceable, where the filing is by the
      SUBLICENSEE, a third party on behalf of the SUBLICENSEE, or a third party
      at the written urging of the
SUBLICENSEE.

            

    

    

    
      	
              3.5  

            	
              SUBLICENSEE
      will have a continuing responsibility to keep HFTA informed of its status
      as a large/small entity, as defined in 15 U.S.C.
  632.

            

    

    

    
      	
              3.6  

            	
              The
      INVENTION was funded in part by the U.S. Government.  In
      accordance with PL 96-517 as amended by PL 98-620, to the extent required
      by law or regulation, any products covered by patent applications or
      patents claiming the INVENTION and sold in the United States will be
      substantially manufactured in the United
States.

            

    

    

    
      	
              3.7  

            	
              SUBLICENSEE
      is prohibited from granting any sublicenses without written agreement of
      HFTA and payment of such additional license fees and royalties as may be
      specified by HFTA in such agreement and as may be required by
      REGENTS.

            

    

     

    
      	
              3.8  

            	
              The
      Parties expect that in proving the concept, scaling up to commercial
      production, and building and operating plants, and otherwise, they will
      make new discoveries, inventions and refinements of the subject
      technology.   All future innovations, processes,
      enhancements, inventions and patents relating to the use of hydrolysis to
      extract useful compounds from biomass, other than inventions included in
      REGENTS’ PATENT RIGHTS, (“NEW TECHNOLOGY”) shall be owned in equal share
      by HFTA and SUBLICENSEE. If these parties agree that any NEW TECHNOLOGY
      merits a patent, then they shall share equally in the cost of applying for
      such patent.  If only one party supports the patent application
      for NEW TECHNOLOGY, and the other does not, then that party may proceed to
      apply for the patent and if it issues, may recoup its unshared patent cost
      from the other party by collecting all license fees and royalties for that
      patent until it has recouped two hundred percent (200%) of the unshared
      patent costs, after which the license fees and royalties shall be shared
      equally. HFTA hereby grants to SUBLICENSEE an exclusive license to utilize
      NEW TECHNOLOGY at no additional royalty other than royalty stated in
      Article 5 of this Agreement, except that the term of this Agreement shall
      be extended automatically to the expiration date of any subsequently
      issued patent.

            

    

    

    

    4.    LICENSE ISSUE
FEE

    

    
      	
            	
              a)  

            	
              4.1    SUBLICENSEE
      will pay to HFTA a non-creditable, non-refundable license issue fee as
      follows:Twenty Five Thousand United States Dollars ($25,000) within three
      (3) days following the Effective Date of this Agreement
    and;

            

    

    

    
      	
            	
              b)  

            	
              One
      Hundred Fifty Thousand United States Dollars ($150,000) on or before
      September 1, 2009;

            

    

    

    
      	
            	
              c)  

            	
              Stock
      Issuance. Upon Execution of this Agreement, CTB shall deposit 2,887,687
      shares of its common stock, $0.001 par value per share, (the “Shares”)
      into an escrow account with an escrow agent mutually satisfactory to the
      parties.  Upon the earlier to occur of the date six months from
      the date of this Agreement, or date of PROOF OF CONCEPT VALIDATION,
      962,682 of such Shares shall be released from escrow and become the
      property of HFTA.  Upon the earlier to occur of the date 450
      days from the date of this Agreement or date of COMMERCIAL VALIDATION,
      1,925,005 of such shares shall be released from escrow to
      HFTA.  Notwithstanding the foregoing, if at any time CTB sells
      substantially all of its assets or capital stock, the Shares shall be
      released from escrow simultaneous with the closing of such transaction and
      become the property of HFTA. In the event that the Agreement is legally
      terminated prior to any such release date, those shares not yet released
      from escrow shall be cancelled.

            

    

    

    5.    ROYALTIES

     

    
      
 

      
        	
                5.1  

              	
                As
      further consideration for all the rights and licenses granted to
      SUBLICENSEE, SUBLICENSEE will pay to HFTA  an earned royalty at
      a rate based on the NET SALES of Products as set forth below (“Earned
      Royalty”):

              

      

       

    

    
    

    
      	
            	
              (a)  

            	
              Four
      percent (4.0%) of the NET SALES of any ETHANOL PRODUCTS to the extent that
      the price paid per gallon is in excess of $1.50, three percent (3.0%) of
      the NET SALES of any ETHANOL PRODUCTS if the price paid per gallon is
      between $1.30 to $1.50, and two percent (2.0%) of any ETHANOL PRODUCTS if
      the price paid per gallon is less the $1.30;
    and  

            

    

    

    
      	
            	
              (b)  

            	
              SUBLICENSEE
      shall pay to HFTA an Earned Royalty at the rate of seven and one half
      percent (7.5%) based on the NET SALES of all non-ethanol products
      including, LICENSED PRODUCTS, GENERATED PRODUCTS, LICENSED METHOD, OR
      LICENSED SERVICES.

            

    

     

    
      
        	
                5.2  

              	
                
                  Royalties
      accruing to HFTA during any calendar quarter will be paid to
      HFTA  within sixty (60) days after the end of such calendar
      quarter.

                

              

      

       

    

    
      	
                
      5.3   

            	
              SUBLICENSEE
      shall pay HFTA minimum annual royalties as
  follows:

            

    

    

    
      	
            	
              (a)  

            	
               Twenty
      Five Thousand Dollars ($25,000) on or before the earlier of one year after
      the first SALE or sixty (60) days following the end of the year
      2010;

            

    

    

    
      	
            	
              (b)  

            	
              Twenty
      Five Thousand Dollars ($25,000) sixty (60) days following the end of the
      year 2011;

            

    

    

    
      	
            	
              (c)  

            	
              Sixty
      Thousand Dollars ($60,000) sixty (60) days following the end of the year
      2012;

            

    

    

    
      	
            	
              (d)  

            	
              Such
      sum increasing annually by Twenty Thousand Dollars ($20,000) for each year
      thereafter, but not to exceed the sum of One Hundred Twenty Thousand
      ($120,000) per year.

            

    

    

    
      	
            	
              (e)  

            	
              Minimum
      annual royalties for each year will be offset by royalties paid by
      SUBLICENSEE for NET SALES in that calendar year.   In the
      event the royalties paid exceed the specified minimum for that year, then
      no minimum royalty shall be due for that
year.

            

    

    

    
      	
               
      5.4   

            	
              All
      payments due HFTA will be payable in United States
      dollars.  When LICENSED PRODUCTS, LICENSED SERVICES, or LICENSED
      METHOD are SOLD for monies other than United States dollars, earned
      royalties will first be determined in the foreign currency of the country
      in which the SALE was made and then converted into equivalent United
      States dollars.  The exchange rate will be that rate quoted in
      the Wall Street
      Journal on the last business day of the reporting
      period.

            

    

    

    
      	
                
      5.5   

            	
              Payments
      due for SALES occurring in any country outside the United States will not
      be reduced by any taxes, fees, or other charges imposed by the government
      of such country on the remittance of royalty
      income.  SUBLICENSEE will also be responsible for all bank
      transfer charges.

            

    

    

    
      	
               
      5.6   

            	
              SUBLICENSEE
      will make all payments under this Agreement by check payable to "HFTA" and
      forward it to HFTA at the address shown in Article 19 (Notices) or by wire
      transfer if instructed to do so by
HFTA.

            

    

    

    

    6.     DUE
DILIGENCE

    

    
      	
               6.1  
      

            	
              SUBLICENSEE,
      upon execution of this Agreement, will diligently proceed with the
      development, manufacture, and SALE of LICENSED PRODUCTS, LICENSED
      SERVICES, and LICENSED METHOD, and will diligently market them in
      quantities sufficient to meet the market demand.  The parties
      acknowledge that in the process of commercializing new technology,
      frequently unforeseen challenges and/or opportunities arise that were not
      initially envisioned by the parties.  In the event that
      SUBLICEENSE encounters any such challenges or opportunities that could
      delay or enhance the development contemplated in this Agreement,
      SUBLICENSEE shall include such matters in its regular reports due
      hereunder.

            

    

    
      	
              6.2  

            	
               The
      SUBLICENSEE will obtain all necessary governmental approvals in each
      jurisdiction where LICENSED PRODUCTS are manufactured, used, SOLD,
      imported, or offered for SALE. In addition to its obligations under
      Paragraph 6.1, SUBLICENSEE specifically commits to achieving the following
      objectives in its due diligence activities under this
      Agreement:

            

    

    

    
      	
              (a)  

            	
              On
      or before February 1, 2009, secure sufficient funding to build a small
      (greater than 25 dry tons of biomass per operating day) commercial
      plant;

            

    

    

    
      	
              (b)  

            	
              On
      or before March 1, 2009, operate a continuous flow demonstration (greater
      than one dry ton of biomass per operating day)
  plant;

            

    

    

    
      	
              (c)  

            	
               On
      or before January 1, 2010, secure sufficient funding to build a large
      (greater than 250 dry tons of biomass per operating day) commercial
      plant;

            

    

    

    
      	
              (d)  

            	
              On
      or before September 1, 2010, start the COMMERCIAL SALE of ETHANOL PRODUCT
      at one or more commercial plants;
and

            

    

    

    
      	
              (e)  

            	
               On
      or before June 1, 2012, start COMMERCIAL SALE of ETHANOL PRODUCT at one or
      more large commercial plants;

            

    

    

    7.     PROGRESS AND
ROYALTY REPORTS

     

    
      	
              7.1  

            	
              For
      the period beginning March 31, 2008 SUBLICENSEE will submit to HFTA a
      semi-annual progress report covering SUBLICENSEE's activities related to
      the development and testing of all LICENSED PRODUCTS, LICENSED SERVICES
      and LICENSED METHOD and the obtaining of necessary governmental approvals,
      if any, for marketing in the United States.  These progress
      reports will be made for all development activities until the first SALE
      occurs in the United States.

            

    

    

    
      	
              7.2  

            	
              Each
      progress report will be a sufficiently detailed summary of activities of
      SUBLICENSEE so that HFTA may evaluate and determine SUBLICENSEE’s progress
      in development of LICENSED PRODUCTS, LICENSED SERVICES, and LICENSED
      METHOD, and in meeting its diligence obligations under Article 6, and will
      include (but not be limited to) the following: summary of work completed
      and in progress; current schedule of anticipated events and milestones,
      including diligence milestones under Paragraph 6.2; and anticipated market
      introduction dates..

            

    

    

    
      	
              7.3  

            	
              SUBLICENSEE
      also will report to HFTA in its next progress and royalty reports, the
      date of first SALE.

            

    

    

    
      	
              7.4  

            	
              After
      the first COMMERCIAL SALE anywhere in the world, SUBLICENSEE will make
      quarterly royalty reports to HFTA within sixty (60) days after quarters
      ending March 31, June 30, September 30, and December 31, of each
      year.  Each such royalty report will include at least the
      following:

            

    

    

    
      	
              (a)  

            	
              The
      quantities of LICENSED PRODUCTS manufactured and
  SOLD;

            

    

    

    
      	
              (b)  

            	
              Gross
      revenue from SALE of LICENSED PRODUCTS, LICENSED SERVICES and LICENSED
      METHOD;

            

    

    

    
      	
              (c)  

            	
              NET
      SALES pursuant to Paragraph 2.6;
and

            

    

    

    
      	
              (d)  

            	
              Total
      royalties due HFTA.

            

    

    

    
      	
               
      7.5   

            	
              If
      no SALES have occurred during the report period, a statement to this
      effect is required in the royalty report for that
  period.

            

    

    

    

    8.    BOOKS AND RECORDS

    

    
      	
               
      8.1   

            	
              SUBLICENSEE
      will keep full, true, and accurate books and records containing all
      particulars that may be necessary for the purpose of showing the amount of
      royalties payable to HFTA and SUBLICENSEE’s compliance with other
      obligations under this Agreement.  Said books and records will
      be kept at SUBLICENSEE's principal place of business or the principal
      place of business of the appropriate division of SUBLICENSEE to which this
      Agreement relates.  Said books and records and the supporting
      data will be open at all reasonable times during normal business hours
      upon reasonable notice, for five (5) years following the end of the
      calendar year to which they pertain, to the inspection and audit by
      representatives of HFTA for the purpose of verifying SUBLICENSEE's royalty
      statement or compliance in other respects with this
      Agreement.  Such representatives will be bound to hold all
      information in confidence except as necessary to communicate SUBLICENSEE's
      non-compliance with this Agreement to HFTA, or to pursue claims for unpaid
      royalties and license fees or for breach or default of this
      Agreement.

            

    

    

    
      	
               
      8.2   

            	
              The
      fees and expenses of HFTA’S representatives performing such an examination
      will be borne by HFTA.  However, if an error in underpaid
      royalties to HFTA of more than five percent (5%) of the total royalties
      due for any calendar quarter is discovered, then the fees and expenses of
      these representatives will be borne by
  SUBLICENSEE.

            

    

    

    

    9.    LIFE OF THE
AGREEMENT

    

    
      	
               
      9.1   

            	
              Unless
      otherwise terminated by the operation of law, or extended or by acts of
      the parties in accordance with the terms of this Agreement, this Agreement
      will be in force from the Effective Date and will remain in effect for the
      life of the last-to-expire patent or last-to-be-abandoned patent
      application licensed under this Agreement, whichever is
    later.

            

    

    

    
      	
               
      9.2  

            	
              Any
      termination of this Agreement shall not affect the rights and obligations
      set forth in the following
articles:

            

    

     

    
      	
              Article
      2

            	
              Definitions

            
	
              Article
      4

            	
              Sublicenses

            
	
              Article
      8

            	
              Books
      and Records

            
	
              Article
      9

            	
              Life
      of the Agreement

            
	
              Article
      12

            	
              Disposition
      of Licensed Products Upon Termination

            
	
              Article
      13

            	
              Use
      of Names and Trademarks

            
	
              Article
      14

            	
              Limited
      Warranties

            
	
              Article
      16

            	
              Indemnification

            
	
              Article
      19

            	
              Notices

            
	
              Article
      20

            	
              Late
      Payments

            
	
              Article
      22

            	
              Confidentiality

            
	
              Article
      25

            	
              Applicable
      Law; Venue; Attorney’s Fees

            

    

     

    
      	
               
      9.2   

            	
              Any
      termination of this Agreement will not relieve SUBLICENSEE of its
      obligation to pay any monies due or owing at the time of such termination
      and will not relieve any obligations, of either party to the other party,
      established prior to termination.

            

    

    

    

    10.    TERMINATION BY HFTA

    

    
      	
               
      10.1   

            	
              If
      SUBLICENSEE should violate or fail to perform any term of this Agreement,
      then HFTA may give written notice of such default ("Notice of Default") to
      SUBLICENSEE.  If SUBLICENSEE should fail to repair such default
      within sixty (60) days of the effective date of such notice, HFTA will
      have the right to terminate this Agreement and the licenses herein by a
      second written notice ("Notice of Termination") to SUBLICENSEE; provided
      that if the default is not curable in sixty days but SUBLICENSEE is
      working in good faith to cure the default, SUBLICENSEE may extend the
      period for curing such default by an additional ninety days by making a
      payment of $25,000 to HFTA together with written notice setting forth its
      plan for curing such default, provided such payment and plan are delivered
      to HFTA within the foregoing sixty day periodthis extended cure period
      does not apply to failure of SUBLICENSEE to make timely payments to HFTA.
      If a Notice of Termination is sent to SUBLICENSEE, this Agreement will
      automatically terminate on the effective date of such
      notice.  Such termination will not impair any accrued rights of
      HFTA.  These notices will be subject to Article 19
      (Notices).

            

    

     

    
11.    TERMINATION BY
SUBLICENSEE

    

    
      	
               11.1  

            	
              SUBLICENSEE
      will have the right at any time to terminate this Agreement in whole by
      giving notice in writing to HFTA.  Such notice of termination
      will be subject to Article 19 (Notices) and termination of this Agreement
      will be effective ninety (90) days after the effective date of such
      notice.

            

    

    

    
      	
               
      11.2   

            	
              Any
      termination pursuant to Paragraph 11.1 will not relieve SUBLICENSEE of any
      obligation or liability accrued hereunder prior to such termination or
      rescind anything done by SUBLICENSEE or any payments made to HFTA
      hereunder prior to the time such termination becomes effective, and such
      termination will not affect in any manner any rights of HFTA arising under
      this Agreement prior to such
termination.

            

    

     

     

    
      12.    DISPOSITION OF LICENSED PRODUCTS UPON
TERMINATION

    

     

    
      	
               
      12.1  

            	
              Upon
      termination of this Agreement, for a period of one hundred twenty (120)
      days after the date of termination SUBLICENSEE may complete and SELL any
      partially made LICENSED PRODUCTS and continue to render any previously
      commenced LICENSED SERVICES, and continue the practice of LICENSED METHOD
      only to the extent necessary to do so; provided, however, that all such
      SALES will be subject to the terms of this Agreement including, but not
      limited to, the payment of royalties at the rate and at the time provided
      herein and the rendering of reports
thereon.

            

    

    

    

    13.    USE OF NAMES AND
TRADEMARKS

    

    
      	
               
      13.1   

            	
              Nothing
      contained in this Agreement will be construed as conferring any right to
      use in advertising, publicity or other promotional activities any name,
      trademark, trade name, or other designation of any party hereto by the
      other (including any contraction, abbreviation, or simulation of any of
      the foregoing).  Unless required by law or consented to in
      writing by HFTA and REGENTS, the use by SUBLICENSEE of the name “HFTA”,
      "The Regents of the University of California" or the name of any
      University of California campus in advertising, publicity or other
      promotional activities is expressly
prohibited.

            

    

    

    

    14.    LIMITED
WARRANTIES

    

    
      	
               
      14.1   

            	
              HFTA
      warrants to SUBLICENSEE that it has the lawful right to grant this
      license. HFTA has not received any notice that REGENTS PATENT RIGHTS
      infringe on the rights of any other
person.

            

    

    

    
      	
               
      14.2   

            	
              This
      license and the associated INVENTION are provided WITHOUT WARRANTY OF
      MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
      EXPRESSED OR IMPLIED. EXCEPT AS SET FORTH IN PARGRAPH
      14.1.  HFTA MAKES NO REPRESENTATION OR WARRANTY THAT THE
      INVENTION, REGENTS’ PATENT RIGHTS, LICENSED PRODUCTS, LICENSED SERVICES OR
      LICENSED METHOD WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY
      RIGHT.

            

    

    

    
      	
               
      14.3   

            	
              IN
      NO EVENT WILL HFTA BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL
      DAMAGES RESULTING FROM EXERCISE OF THIS SUBLICENSE OR THE USE OF THE
      INVENTION, REGENTS’ PATENT RIGHTS, LICENSED METHOD, LICENSED SERVICES OR
      LICENSED PRODUCTS.

            

    

    

    
      	
               
      14.4   

            	
              Nothing
      in this Agreement is or will be construed
as:

            

    

    

    
      	
               
      (a)  

            	
              A
      warranty or representation by HFTA or REGENTS as to the validity,
      enforceability or scope of any REGENTS' PATENT RIGHTS;
  or

            

    

    

    
      	
               
      (b)  

            	
              A
      warranty or representation that anything made, used, or SOLD under any
      license granted in this Agreement is or will be free from infringement of
      patents of third parties; or

            

    

    

    
      	
               
      (c) 

            	
              An
      obligation to bring or prosecute actions or suits against third parties
      for patent infringement, except as provided in Article 15;
    or

            

    

    

    
      	
               
      (d) 

            	
              Conferring
      by implication, estoppel, or otherwise any license or rights under any
      patents of HFTA or REGENTS other than REGENTS' PATENT RIGHTS as defined
      herein, regardless of whether such patents are dominant or subordinate to
      REGENTS’ PATENT RIGHTS; or

            

    

    

    
      	
               
      (e)  

            	
              An
      obligation to furnish any know-how not provided in the patents and patent
      applications under REGENTS' PATENT
RIGHTS.

            

    

    

    

    15.    PATENT INFRINGEMENT

    

    
      	
               
      15.1  

            	
              In
      the event that SUBLICENSEE learns of the substantial infringement of any
      REGENTS' PATENT RIGHTS under this Agreement, SUBLICENSEE will promptly
      provide HFTA with notice and reasonable evidence of such infringement
      (“Infringement Notice”).  During the period and in a
      jurisdiction where SUBLICENSEE has exclusive rights under this Agreement,
      neither party will notify a third party, including the infringer, of the
      infringement without first obtaining consent of the other party, which
      consent will not be unreasonably withheld.  If
      SUBLICENSEE  puts such infringer on notice of the existence of
      any REGENTS PATENT RIGHTS with respect to such infringement without first
      obtaining the written consent of HFTA and if a declaratory judgment action
      is filed by such infringer against HFTA or REGENTS, then SUBLICENSEE’s
      right to initiate a suit against such infringer for infringement under
      Paragraph 15.2 below will terminate immediately without the obligation of
      HFTA to provide notice to the SUBLICENSEE. Both parties will use diligent
      efforts, in cooperation with each other, to terminate such infringement
      without litigation.

            

    

    

    
      	
               
      15.2  

            	
              If
      the infringing activity of potential commercial significance has not been
      abated within ninety (90) days following the effective date of the
      Infringement Notice, SUBLICENSEE may institute suit for patent
      infringement against the infringer.  HFTA or REGENTS may
      voluntarily join such suit at its own expense, but may not thereafter
      commence suit against the infringer for the acts of infringement that are
      the subject of SUBLICENSEE’s suit or any judgment rendered in that
      suit.  SUBLICENSEE may not join HFTA or REGENTS in a suit
      initiated by SUBLICENSEE without HFTA or REGENTS’ prior written
      consent.  If, in a suit initiated by SUBLICENSEE, HFTA and/or
      REGENTS are involuntarily joined other than by SUBLICENSEE, SUBLICENSEE
      will pay any costs incurred by HFTA and REGENTS arising out of such suit,
      including but not limited to, any legal fees of counsel that HFTA or
      REGENTS select and retain to represent them in the
  suit.

            

    

    

    If,
within one hundred and twenty (120) days following the effective date of the
Infringement Notice, the infringing activity of potential commercial
significance has not been abated and if SUBLICENSEE has not brought suit against
the infringer, HFTA or REGENTS may institute suit for patent infringement
against the infringer.  If HFTA or REGENTS institutes such suit,
SUBLICENSEE may not join such suit without HFTA and REGENTS’ consent and may not
thereafter commence suit against the infringer for the acts of infringement that
are the subject of HFTA or REGENTS’ suit or any judgment rendered in that
suit.

    

    
      	
              15.3  

            	
              Such
      legal action as is decided upon will be at the expense of the party on
      account of whom suit is brought and all recoveries recovered thereby will
      belong to such party, provided that legal action brought jointly by HFTA
      or REGENTS and SUBLICENSEE and participated in by both or all, will be at
      the joint expense of the parties and all recoveries will be allocated in
      the following order:  a) to each party reimbursement in equal
      amounts of the attorney's costs, fees, and other related expenses to the
      extent each party paid for such costs, fees, and expenses until all such
      costs, fees, and expenses are consumed for each party; and b) any
      remaining amount shared jointly by them in proportion to the share of
      expenses paid by each party, but in no event will HFTA’S OR REGENTS’ share
      be less than ten percent (10%) each of such remaining amount if each is a
      party.

            

    

    

    
      	
              15.4  

            	
              Each
      party will cooperate with the other in litigation instituted hereunder but
      at the expense of the party on account of whom suit is
      brought.  Such litigation will be controlled by the party
      bringing the action, except that HFTA and REGENTS may be represented by
      counsel of their choice in any suit brought by
  SUBLICENSEE.

            

    

    

    
      	
              15.5  

            	
              Any
      agreement made by SUBLICENSEE for the purposes of settling litigation or
      other dispute shall comply with the requirements of this
      Agreement.

            

    

    

    

    16.    INDEMNIFICATION AND
GUARANTEES

    

    
      	
               
      16.1  

            	
              SUBLICENSEE
      will be required to indemnify, hold harmless, and
      defend:   HFTA and REGENTS and their officers, employees,
      and agents; sponsor(s) of the research that led to the INVENTION; and the
      inventors of any patents and patent applications under REGENTS' PATENT
      RIGHTS and their employers against any and all claims, suits, losses,
      damages, costs, fees, and expenses resulting from or arising out of
      exercise of this sublicense. This indemnification will include, but not be
      limited to, any product liability.

            

    

    

    
      	
               
      16.2   

            	
              SUBLICENSEE,
      at its sole cost and expense, shall insure its activities in connection
      with any work performed hereunder and shall obtain, keep in force, and
      maintain the following insurance:

            

    

    

    
      	
            	
                (a)   

            	
              Commercial
      Form General Liability Insurance (contractual liability included) with
      limits as follows:

            

    

    

    Each
Occurrence
......................................................$2,000,000

    Products/Completed
Operations Aggregate.... $5,000,000

    Personal
and Advertising Injury ......................$2,000,000

    General
Aggregate ..............................................$5,000,000

    

    If the
above insurance is written on a claims-made form, it shall continue for no less
than three (3) years following termination or expiration of this Agreement. The
insurance shall have a retroactive date of placement prior to or coinciding with
the Effective Date of this Agreement; and

    

    
      	
               
      (b)  

            	
              Worker's
      Compensation as legally required in the jurisdiction in which SUBLICENSEE
      is doing business.

            

    

    

    
      	
               
      16.3   

            	
              The
      coverage and limits referred to in Paragraph 16.2  above will not in
      any way limit the liability of SUBLICENSEE under this Article. Upon the
      execution of this Agreement, SUBLICENSEE will furnish HFTA with
      certificates of insurance evidencing compliance with all requirements. Such
      certificates will: 

            

    

     

    
      	
            	
               
      (a)   

            	
              provide
      for thirty (30) days (ten (10) days for non-payment of premium) advance
      written notice to HFTA of any cancellation of insurance coverage;
      SUBLICENSEE will promptly notify HFTA of any material modification of the
      insurance coverage;

            

    

     

    
      
        	
              	
                 
      (b)   

              	
                
                  indicate
      that HFTA and REGENTS have been endorsed as additional insureds under the
      coverage described above in Subparagraph l6.2;
  and

                

              

      

       

    

    
      	
            	
               
      (c)   

            	
              include
      a provision that the coverage will be primary and will not participate
      with, nor will be excess over, any valid and collectable insurance or
      program of self-insurance maintained by HFTA or
  REGENTS.

            

    

    

    
      	
              16.4  

            	
              HFTA
      will promptly notify SUBLICENSEE in writing of any claim or suit brought
      against HFTA for which HFTA intends to invoke the provisions of this
      Article 16,
      and vice versa with respect to SUBLICENSEE or CTB. SUBLICENSEE will
      keep HFTA informed of its defense of any claims pursuant to this Article
      16.

            

    

    

    
      	
              16.5  

            	
              CTB
      expressly indemnifies and guarantees to HFTA the faithful performance of
      all of the obligations of SUBLICENSEE under this agreement and any
      modifications thereto. CTB waives notice of acceptance hereof; notice of
      the existence, creation or acquisition of any of said obligations; notice
      of an event of default by SUBLICENSEE; notice of the amount of the
      obligations outstanding at any time; notice of any adverse change in the
      financial condition of SUBLICENSEE or of any other fact that might
      increase CTB’s risk; presentment for payment; demand; protest and notice
      thereof as to any instrument; default; and all other notices and demands
      to which CTB would otherwise be entitled except as expressly provided
      herein. CTB waives any defense arising from any defense of SUBLICENSEE, or
      by reason of the cessation from any cause whatsoever of the liability of
      SUBLICENSEE.  HFTA’s failure at any time to require performance
      by SUBLICENSEE of any provision of this agreement shall not waive, alter
      or diminish any right of HFTA thereafter to demand strict compliance and
      performance therewith. CTB also waives any defense arising from any act or
      omission of HFTA that changes the scope of CTB’s risk
      hereunder.  CTB waives any right to assert against HFTA any
      defense (legal or equitable), setoff, counterclaim, or claims that CTB may
      now or hereafter have against SUBLICENSEE or any other person liable to
      HFTA with respect to the obligations in any manner or whatsoever. This is
      a primary obligation of CTB.

            

    

    

    

    17.    COMPLIANCE WITH
LAWS

    

    
      	
               
      17.1   

            	
              SUBLICENSEE
      will comply with all applicable international, national, state, regional,
      and local laws and regulations in performing its obligations hereunder and
      in its use, manufacture, SALE or import of the LICENSED PRODUCTS, LICENSED
      SERVICES, or practice of the LICENSED METHOD.  SUBLICENSEE
      understands that HFTA is subject to United States laws and regulations
      (including the Arms Export Control Act, as amended, and the Export
      Administration Act of 1979), controlling the export of technical data,
      computer software, laboratory prototypes and other commodities, and HFTA’S
      obligations under this Agreement are contingent on compliance with such
      laws and regulations.  The transfer of certain technical data
      and commodities may require a license from the cognizant agency of the
      United States Government and/or written assurances by SUBLICENSEE that
      SUBLICENSEE will not export such technical data and/or commodities to
      certain foreign countries without prior approval of such
      agency.  HFTA neither represents that a license will not be
      required nor that, if required, it will be
  issued.

            

    

    

    

    18.    GOVERNMENT APPROVAL OR
REGISTRATION

    

    
      	
               
      18.1  

            	
              If
      this Agreement or any associated transaction is required by the law of any
      nation to be either approved or registered with any governmental agency,
      SUBLICENSEE will assume all legal obligations to do
      so.  SUBLICENSEE will notify HFTA if it becomes aware that this
      Agreement is subject to a United States or foreign government reporting or
      approval requirement.  SUBLICENSEE will make all necessary
      filings and pay all costs including fees, penalties, and all other
      out-of-pocket costs associated with such reporting or approval
      process.

            

    

    

    

    19.    NOTICES

    

    
      	
               
      19.1 

            	
              All
      notices under this Agreement will be deemed to have been fully given and
      effective when done in writing and delivered in person, or mailed by
      registered or certified U.S. mail, or deposited with a carrier service
      requiring signature by recipient, and addressed as
  follows:

            

    

     

    

    
      	
              To
      HFTA:

            	
              HFTA

            	 
      
	 
      	
              Attn.:
      Lee M. MacLean

            	 
      
	 
      	
              2424
      Covey Way

            	 
      
	 
      	
              Livermore,
      CA 94550

            	 
      
	 
      	
              lmmaclean@comcast.net

            	 
      
	 
      	
              Ph.
      925-292-5260

            	
              Fax
      925-292-5262

            

    

     

    

    
      	
              To
      CTB and SUBLICENSEE:

            	
              CleanTech
      Biofuels, Inc.

            	 
      
	 
      	
              Attn.:  Edward
      P. Hennessey Jr.

            	 
      
	 
      	
              7386
      Pershing Avenue

            	 
      
	 
      	
              St.
      Louis, MO 63130

            	 
      
	 
      	
              ehennesseyjr@sbcglobal.net

            	 
      
	 
      	
              Ph.
      314-802-8670

            	
              Fax314-802-8675

            

    

     

    Either
party may change its address upon written notice to the other
party.

     

     

    20.    LATE PAYMENTS

    

    
      	
               
      20.1  

            	
              If
      monies owed to HFTA under this Agreement are not paid when due,
      SUBLICENSEE will pay to HFTA a late fee in the amount of five percent (5%)
      of the sum not timely paid as well as interest charges at a rate of ten
      percent (10%) per annum on the sum not timely paid.  Such
      interest will be calculated from the date payment was due until actually
      received by HFTA.  Such late fees and accrual of interest will
      be in addition to, and not in lieu of, enforcement of any other rights of
      HFTA related to such late payment.  Acceptance of any late
      payment will not constitute a waiver under Article 21 (Waiver) of this
      Agreement.

            

    

    

    

    21.    WAIVER

    

    
      	
              21.1  

            	
              The
      failure of either party to assert a right hereunder or to insist upon
      compliance with any term or condition of this Agreement will not
      constitute a waiver of that right or excuse a similar subsequent failure
      to perform any such term or condition by the other party.  None
      of the terms and conditions of this Agreement can be waived except by the
      written consent of the party waiving
compliance.

            

    

    

    

    22.      CONFIDENTIALTY

    

    
      	
               
      22.1  

            	
              This
      Article governs the conditions of disclosure by the Parties to one another
      of Confidential Information, including, but not limited to methods and
      apparatus for treating biomass material using mineral acid and other
      catalysts, methods and organisms for fermentation, industrial process
      technology, licensing and other contractual agreements, and business
      plans.

            

    

    

    
      	
               
      22.2  

            	
              During
      the course of this Agreement one Party may disclose to the other
      information and data which the Discloser considers proprietary and treats
      as secret and confidential (“Confidential Information”).  In
      this Article, the Party who discloses Confidential Information will be
      called the “Discloser,” and the Party to whom Confidential Information is
      disclosed will be called the
“Recipient.”

            

    

    

    
      	
               
      22.3  

            	
              Documents
      containing Confidential Information shall be marked by the Discloser with
      an appropriate, stamp, legend or other appropriate written notice thereon
      when transmitted in writing or other tangible or retainable
      form.  Oral or visual disclosures of Confidential Information
      are to be reduced to writing within ten (10) working days from the time of
      such disclosures.  During that interim period, such information
      shall be protected as Confidential
Information.

            

    

    

    
      	
               
      22.4  

            	
              Each
      Party agrees that it and its employees will use the Confidential
      Information of the other Party only in connection with its discussions
      with the Discloser and in the performance of this Agreement, and for no
      other purpose whatsoever.

            

    

    

    
      	
               
      22.5  

            	
              The
      Recipient shall maintain all Confidential Information secret and
      confidential.  All Confidential Information delivered pursuant
      to this Agreement shall be maintained in confidence with the same level of
      care as the Discloser maintains its own Confidential Information, but in
      no event maintained with any less than a reasonable standard of
      care.

            

    

    

    
      	
               
      22.6  

            	
              The
      Recipient shall not transmit or otherwise disclose Confidential
      Information of the Discloser to any third party, including affiliates,
      subsidiaries, consultants or subcontractors of the Recipient, without
      obtaining prior written approval of the Discloser. In the event the
      Discloser approves of such disclosure or transmittal, the Recipient shall,
      prior to making such disclosure or transmittal, obtain a written
      commitment from such third party making the terms of this Agreement
      applicable to such third party and shall deliver such written commitment
      to Discloser in a form acceptable to Discloser, and thereafter shall
      disclose and transmit such Confidential Information to such third party
      only on a proprietary and confidential
basis.

            

    

     

    
      	
               
      22.7  

            	
              The
      Recipient shall not make any copy or in any way reproduce or excerpt
      Confidential Information of the Discloser, except where necessary for the
      performance of this Agreement, hereof, or as authorized by the Discloser
      in writing.  Any such copies or excerpts shall include the
      Discloser’s written proprietary
notice.

            

    

     

    
      
        	
                 
      22.8  

              	
                Nothing
      herein shall apply to any
information:

              

      

       

    

    
      	
            	
               
      a)  

            	
              which
      is now known or readily available to the trade or public, or which becomes
      so known or readily available without fault of the
    Recipient;

            

    

    

    
      	
            	
               
      b)  

            	
              which
      is possessed by the Recipient prior to its disclosure hereunder by the
      Discloser;

            

    

    

    
      	
            	
               
      c)  

            	
              which
      is legally acquired from a third party without restriction, which third
      party did not acquire the information under an obligation of
      confidentiality; or,

            

    

    

    
      	
            	
               
      d)  

            	
              which
      is developed independently by the Recipient without benefit of
      Confidential Information furnished hereunder by the
    Discloser.

            

    

    

    
      	
               
      

            	
              Confidential
      Information, as a whole, shall not be deemed to be in the public domain
      merely because any part of said information is embodied in general
      disclosures or because individual features, components or combinations
      thereof are now or become known to the
public.

            

    

    

    
      	
               
      22.9   

            	
              Nothing
      herein shall be construed as granting or implying any right other than
      REGENT’S PATENT RIGHTS, or as permitting the Recipient to unfairly obtain
      the right to use Confidential Information which becomes publicly known
      through an improper act or omission on its
part.

            

    

    

    
      	
               
      22.10 

            	
              Upon
      termination of this Agreement, each Recipient shall return to the
      Discloser all documents containing Confidential Information within twenty
      (20) days from such termination, and further, each Recipient shall destroy
      all compilations of Confidential Information which it created or
      possesses.

            

    

    

    
      	
               
      22.11 

            	
              Termination
      or expiration of this Agreement for any reason shall not relieve the
      Recipient of the obligation not to disclose Confidential Information in
      any manner received hereunder, as provided in this
    Agreement.

            

    

    

    
      	
               
      22.12  

            	
              This
      Agreement contains the entire understanding between the Parties,
      superseding all prior or contemporaneous communications, agreements and
      understandings between the Parties with respect to the disclosure of
      Confidential Information described herein. The rights and obligations
      provided by this Agreement shall take precedence over any statements made
      concurrently with the receipt of Confidential Information, in the event of
      an inconsistency between such statements and this
    Agreement.

            

    

    

    
      	
               
      22.13  

            	
              If
      it appears that either Party has unlawfully disclosed or has threatened to
      disclose Confidential Information in violation of this Agreement, the
      other Party shall be entitled to an injunction to restrain the disclosure,
      in whole or in part, of Confidential Information.  In any action
      between the Parties to enforce or interpret the provisions of this
      Agreement, venue shall be proper in the State of California, and the
      prevailing Party shall be entitled to recover from the other Party its
      costs of arbitration or suit, including reasonable attorneys’ fees and
      expert’s fees.

            

    

    

    

    

    23.    FORCE MAJEURE

    

    
      	
               
      23.1  

            	
              Except
      for the  obligations of SUBLICENSEE and CTB to make any payments
      to HFTA hereunder, the parties to this Agreement shall be excused from any
      performance required hereunder if such performance is rendered impossible
      or unfeasible due to any catastrophes or other major events beyond their
      reasonable control, including, without limitation, war, riot, and
      insurrection; laws, proclamations, edicts, ordinances, or regulations;
      strikes, lockouts, or other serious labor disputes; and floods, fires,
      explosions, or other natural disasters.  When such events have
      abated, the parties' respective obligations hereunder will
      resume.

            

    

    

    

    24.    SEVERABILITY

    

    
      	
               
      24.1  

            	
              The
      provisions of this Agreement are severable, and in the event that any
      provision of this Agreement will be determined to be invalid or
      unenforceable under any controlling body of law, such invalidity or
      enforceability will not in any way affect the validity or enforceability
      of the remaining provisions hereof.

            

    

    

    

    25.    APPLICABLE LAW; VENUE; ATTORNEYS’
FEES

    

    
      	
               
      25.1  

            	
              THIS
      AGREEMENT WILL BE CONSTRUED, INTERPRETED, AND APPLIED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules
      that would direct the application of the laws of another jurisdiction, but
      the scope and validity of any patent or patent application under REGENTS’
      PATENT RIGHTS will be determined by the applicable law of the country of
      such patent or patent application.  Any legal action brought by
      the parties relating to this Agreement will be conducted in San Francisco,
      California. The prevailing party in any legal action under this Agreement
      will be entitled to recover its reasonable attorneys’ fees in addition to
      its costs and necessary
disbursements.

            

    

    

    

    26.    SCOPE OF
AGREEMENT

    

    
      	
               
      26.1  

            	
              This
      Agreement incorporates the entire agreement between the parties with
      respect to the subject matter hereof, and this Agreement may be altered or
      modified only by written amendment duly executed by the parties
      hereto.

            

    

     

    
 

    
      
        
           

          
            	
                  	 
      	
                  

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
originals by their duly authorized officers or representatives.

    

    

    
      	
              CLEANTECH
      BIOFUELS, INC.

            	 
      	
              HFTA

            
	 
      	 
      	 
      
	
              By:

            	 /s/
      Edward P. Hennessey, Jr.	 
      	
              By:

            	 /s/
      Lee M. MacLean
	 
      	
              Edward
      P. Hennessey, Jr.

            	 
      	 
      	
              Lee
      M. MacLean

            
	 
      	
              President
      and CEO

            	 
      	 
      	
              President

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Date

            	 
      March 20, 2008	 
      	
              Date

            	 
      March 20, 2008Exhibit 10.1

                          VISION ACQUISITION III, INC.

                           Private Placement of Units

                           PLACEMENT AGENCY AGREEMENT

<PAGE>

                          VISION ACQUISITION III, INC.

                           Private Placement of Units

                           PLACEMENT AGENCY AGREEMENT

                                                      Dated as of March 19, 2008

Meyers Associates L.P.
45 Broadway, 2nd Floor
New York, New York 10006

Ladies and Gentlemen:

         Vision Acquisition III, Inc., a Delaware corporation (the "Company")
proposes to offer for sale (the "Offering") in a private offering pursuant to
Section 4(2) and/or Section 4(6) of the Securities Act of 1933, as amended (the
"Act"), and Rule 506 of Regulation D promulgated thereunder, a minimum of $8,000
(the "Minimum Offering") of units ("Units"). Each Unit consists of 10,000 shares
of Common Stock, par value $.0001 per share (the "Common Stock"). Each investor
("Investor") may purchase only one Unit at a per Unit price of $200, or $.02 per
share. The Units are being offered during an offering period commencing on the
date hereof and expiring the earliest of: (i) 60 days thereafter, unless
extended by the Company and the Placement Agent (defined below) for up to an
additional sixty (60) days; (ii) the sale of Units constituting at least the
Minimum Offering, or (iii) the termination of the Offering by the Company and
the Placement Agent (such period, as same may be extended, being hereinafter
referred to as the "Offering Period"). Offers and sales of the Units shall be
solely to Accredited Investors (as defined in Regulation D). This Agreement
shall confirm our agreement concerning Meyers Associates L.P. acting as our
exclusive placement agent (the "Placement Agent" or "Meyers") in connection with
the offer and sale of the Units.

         l.       Appointment of Placement Agent.

                  On the basis of the representations and warranties contained
herein, and subject to the terms and conditions set forth herein, the Company
hereby appoints Meyers Associates L.P. as its Placement Agent and grants to it
the exclusive right to offer, as its agent, the Units pursuant to the terms of
this Agreement. The Company expressly acknowledges and agrees that Meyers'
obligations hereunder are not on a firm commitment basis and that the execution
of this Agreement does not constitute a commitment by Meyers to purchase the
Units and does not ensure the successful placement of the Units or any portion
thereof. Further, Meyers' obligation to use its best efforts to assist the
Company in the Offering is subject to the completion of a due diligence review
of the Company, and the market for such securities generally, as well as general
market conditions. On the basis of such representations and warranties, and
subject to such conditions, Meyers hereby accepts such an appointment and agrees
to use its reasonable best efforts to secure subscriptions to purchase the
Units.

<PAGE>

         2.       Terms of the Offering.

                  (a)      The Company shall prepare and deliver to the
Placement Agent copies of a Confidential Private Placement Memorandum (the
"PPM"), relating to, among other things, the Company, the Common Stock and the
terms of the sale of the Units. The PPM, including all exhibits and appendices
thereto, the Subscription Agreement, Accredited Investor Questionnaire and
Registration Rights Agreement, are referred to herein as the "Offering
Documents" and shall include any supplements or amendments in accordance with
this Agreement. The Company shall utilize the services of securities counsel
with experience in private placement offerings and the rules and regulations of
the Securities and Exchange Commission ("SEC") in drafting the Offering
Documents.

                  (b)      The Offering shall consist of the Minimum Offering of
$8,000 of Units. There is no maximum number of Units being offered. The terms of
the Offering and Common Stock are further described in the Offering Documents
which are incorporated herein. In the event a subscription is not accepted, such
rejected subscription funds will be returned to the subscriber without interest
or deductions.

                  (c)      The Units are being offered on a "best efforts all or
none" basis as to the Minimum Offering. The Offering shall commence on the date
that the Company delivers to the Placement Agent the Offering Documents that
have been completed to the reasonable satisfaction of the Placement Agent and
its counsel, and shall expire at 5:00 p.m., New York time, on a date which is
the earliest to occur of (ii) 60 days thereafter and may be extended for up to
an additional 60-day period at the discretion of the Company and Placement
Agent, (ii) in the discretion of the Company, the sale of Units constituting at
least the Minimum Offering, and (iii) termination of the Offering Period by the
Company and the Placement Agent.

                  (d)      Each prospective Investor who desires to purchase the
Units shall deliver to the Placement Agent a fully executed subscription
agreement and questionnaire (collectively, hereinafter the "Subscription
Agreement"), in the form annexed to the PPM and immediately available funds in
the amount necessary to purchase the number of Units such Investor desires to
purchase. Neither the Company nor the Placement Agent shall have any obligation
to independently verify the accuracy or completeness of any information
contained in any Subscription Agreement or the authenticity, sufficiency, or
validity of any check delivered by any Investor in payment for Units.

                  (e)      The Placement Agent shall deliver each subscription
funds received from an Investor to the Company for deposit in a segregated
escrow account (the "Escrow Account") at Signature Bank institution, which shall
serve as the escrow agent for this Offering (the "Escrow Agent"), pursuant to
that certain escrow agreement by and among the Company, Meyers and the Escrow
Agent, dated March 19, 2008 (the "Escrow Agreement") and shall deliver the
executed copies of the Subscription Agreement received from such Investor to the
Company. All funds shall be held in the segregated account pending acceptance of
the subscription. The Company shall notify the Placement Agent promptly of the
acceptance or rejection of any subscription.

                                       2
<PAGE>

                  (f)      Meyers may engage other persons selected by Meyers to
assist Meyers in the Offering (each such broker/dealers being hereinafter
referred to as a "Selling Group Member") and Meyers may allow such Selling Group
Member such part of the compensation and payment of expenses payable to Meyers
under Section 5 hereof as Meyers shall determine. Any such Selling Group Member
shall be a member firm in good standing as a broker-dealer under the rules of
the Financial Industry Regulatory Authority, Inc ("FINRA"). Each Selling Group
Member shall be required to agree in writing to comply with the provisions of
this Section 2. The Company hereby agrees to make such representations and
warranties to, and covenants and agreements with, any Selling Group Member
(including an agreement to indemnify such Selling Group Member on terms
substantially similar to Section 12 hereof) as provided herein.

         3.       Closings: Release of Funds.

                  The date that the subscriptions of at least the Minimum
Offering amount are accepted by the Company and funds are released from the
Escrow Account shall be deemed the "Closing Date." At least one (1) day prior to
the release of funds, the Company and the Placement Agent shall send written
notice to each other, which notice shall state the amount of funds to be
released, the name and address of each subscriber whose subscription has been
accepted, and the amount of each subscription.

         4.       Representations and Warranties of the Placement Agent.

                  The Placement Agent represents and warrants to and covenants
with the Company as follows:

                  (a)      The Placement Agent is duly incorporated and validly
existing and in good standing under the laws of its state of incorporation.

                  (b)      The Placement Agent is, and at the time of the
Closing will be, a member in good standing of FINRA.

                  (c)      Sales of Units by the Placement Agent will only be
made in such jurisdictions in which the Placement Agent or a Selling Group
Member is a registered broker-dealer or where an applicable exemption from such
registration exists.

                  (d)      Offers and sales of Units by the Placement Agent will
be made only in accordance with this Placement Agreement and in compliance with
the provisions of Section 4(2) and Section 4(6) of the Act and Rule 506 of
Regulation D promulgated thereunder (it being understood and agreed that the
Placement Agent shall be entitled to rely upon the information and statements
provided by the Investor in the Subscription Agreement), and the Placement Agent
will furnish to each investor a copy of the Offering Documents prior to
accepting any subscription for the Units.

         5.       Compensation.

                  (a)      The Placement Agent shall be entitled, on the Closing
Date, as compensation for Meyers' services as Placement Agent under this
Agreement, to selling commissions equal to 10 % of the gross proceeds received
by the Company from the sale of the Units effected at the Closing (the
"Placement Agent's Fees").

                                       3
<PAGE>

                  (b)      Concurrent with, and as a condition to, the Closing
of the Offering, the Company shall sell to the Placement Agent (or its
designated affiliates), for nominal consideration, 285,000 shares of Common
Stock (the "Placement Agent's Shares" and together with the Placement Agent's
Fees, the "Placement Agent's Compensation"). The Company covenants and agrees
that with respect to registration under the Act of the shares of Common Stock,
the Placement Agent shall be entitled to the same registration rights as
provided to Investors in the Offering.

         6.       Representations and Warranties of the Company.

                  (a)      The Company represents and warrants to, and agrees
with, the Placement Agent that as of the date hereof and as of the Closing Date
(except as affected by the Offering):

         (i)      Assuming the accuracy of the representations and warranties of
the Investors set forth in the Subscription Agreement and the representations
and warranties of the Placement Agent set forth herein, the Offering Documents
(a) contain, and at all times during the period from the date hereof to and
including the Closing Date, will contain all information required to be
contained therein, if any, pursuant to Rules 502 and 506 of Regulation D and all
applicable federal and/or state securities and "blue sky" laws, (b) do not, and
during such period 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 made therein not
misleading, and (c) no supplemental sales material supplied or approved in
writing by any officer of the Company (when read in conjunction with the
Offering Documents, whether designated only for broker-dealer use or otherwise)
includes or will include any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements therein in
the light of the circumstances under which they were made not misleading. Each
contract, agreement, instrument, lease, license, or other document required to
be described in the Offering Documents shall be, and have been, accurately
described therein.

         (ii)     No information (it being understood that neither the Company
nor any of its officers or directors or employees shall provide any written
information to any Investor which is not contained in the Offering Documents)
provided by the Company to Investors pursuant to Section 7(f) hereof shall
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 circumstances made therein not misleading.

         (iii)    The Company has not, directly or indirectly, solicited any
offer to buy or offered to sell any Common Stock or any other securities of the
Company during the twelve-month period ending on the date hereof except as may
be properly described in the Offering Documents, and has no present intention to
solicit any offer to buy or to offer to sell any of the Units, any Common Stock
or any other securities of the Company other than pursuant to this Agreement.

                                       4
<PAGE>

         (iv)     The Company is, and at all times during the period from the
date hereof to and including the Closing Date will be, a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, with full corporate power and authority, and has obtained all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits and declarations of and from, and has made filings with, all
federal, state and local authorities, to own, lease, license, and use its
properties and assets and to conduct its business as presently conducted as
described in the Offering Documents and/or in any such case where the failure to
have any of the foregoing would not have a material adverse effect on the
Company's presently conducted business. As of the date hereof, the Company is,
and at all times during the period from the date hereof to and including the
Closing Date, duly qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or use of property and
assets or the conduct of its business makes such qualification necessary except
where the failure to be so qualified would not have a material adverse effect on
the Company's business.

         (v)      The documents filed by the Company with the SEC (the "SEC
Reports"), do 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 not misleading, all in light of the circumstances under which
they were made. Each statute, regulation, legal and governmental proceeding,
contract, agreement, instrument, lease, license, or other document described in
the SEC Reports has been accurately described therein in all material respects.

         (vi)     No document provided by the Company to Investors pursuant to
Section 6(a)(vii) hereof, and no oral information provided by the Company to
Investors, will 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 not misleading. Contracts to which the Company is a party
provided by the Company to Investors shall not be deemed to contain any untrue
statement of a material fact or to omit to state any material fact if the
contract so provided is a true, correct and complete copy of such contract, as
amended or modified through the date it is so provided.

         (vii)    The Company does not own, directly or indirectly, an equity or
other ownership interest equal to or greater than 50 percent in any corporation
or other entity.

         (viii)   Since the dates as of which information is given in the
Offering Documents, other than as set forth therein, (A) there has not been any
material adverse change or any development involving a prospective material
adverse change in the general affairs, business, prospects, properties,
management, condition (financial or otherwise) or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, (B) except in the ordinary course of business, the Company has not
incurred will not have incurred, any material liabilities or obligations, direct
or indirect, or have entered into any material transaction, (C) the Company has
not and will not have paid or declared any dividends or other distributions on
its capital stock and (D) there has not been any change in the capital stock of
the Company or any material change in the short-term or long-term debt of the
Company. Notwithstanding this, Meyers acknowledges that as a shell company, its
ability to continue as a going concern is in question.

                                       5
<PAGE>

         (ix)     The Company's auditors, whose report on the Company's audited
financial statements is included in the SEC Reports included as part of the
Offering Documents, are independent public accountants with respect to the
Company as required by the Act and the rules and regulations thereunder.

         (x)      The Company's financial statements, together with related
notes and schedules of the Company, included as part of the Offering Documents
comply in all respects with the requirements of the Act and the rules and
regulations thereunder and present fairly the financial position of the Company
on the respective dates indicated and its statement of operations for the
respective periods covered thereby. Any condensed financial information
appearing in the Offering Documents is fairly stated in all material respects in
relation to the financial statements of the Company from which they have been
derived. Such financial statements, and related notes and schedules, have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis through the entire period involved.

         (xi)     Except as described in the Offering Documents, there is no
action, suit, investigation or proceeding pending or threatened before or by any
Federal or state court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, or arbitrator to which the Company
is or may become a party or of which any property of the Company is subject or
affected that (A) might affect the consummation of the transactions contemplated
under this Agreement, including the issuance or validity of the Common Stock
offered hereby, or (B) might have a material adverse effect on the condition
(financial or otherwise), sales, properties, earnings, net worth, prospects,
results of operations or businesses of the Company, taken as a whole ("Material
Adverse Effect"), or any of its principal officers. All pending legal or
governmental proceedings to which the Company is a party or of which any of its
properties are subject or affected which are not described in the Offering
Documents, including ordinary routine litigation incidental to the business,
would not have a Material Adverse Effect. No labor dispute with the employees of
the Company exists or is threatened or imminent that could have a Material
Adverse Effect.

         (xii)    The Company has all approvals, licenses, franchises,
authorizations and permits (collectively, "permits") necessary under all
applicable statutes, codes, rules, regulations, orders and decrees of
governments or governmental bodies (collectively, "laws"), which are material to
the ownership, lease or use of their respective properties or the conduct of
their respective businesses as described in the Offering Documents. The Company
has not received notice of any proceedings relating to the revocation or
modification of any such permits which, singly or in the aggregate, would have a
Material Adverse Effect, and the Company is in all material respects in
compliance with such permits and laws.

         (xiii)   The Company does not own or license any patents, patent
applications, inventions, trademarks, trade names, applications for registration
of trademarks, copyrights, know-how, trade secrets, licenses and rights in any
thereof ("Proprietary Rights"). The Company does not have any knowledge of, and
the Company has not received any notice of any pending conflict with or
infringement of, the rights of others with respect to any Proprietary Rights or
with respect to any license of Proprietary Rights. No action, suit, arbitration,
or legal, administrative or other proceeding, or domestic or foreign
governmental investigation is pending or, to the best of the Company's
knowledge, threatened, which involves any Proprietary Rights. The Company is not

                                       6
<PAGE>

subject to any judgment, order, writ, injunction or decree of any court or any
Federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or any
arbitrator, or has entered into or is a party to any contract which restricts or
impairs the use of any such Proprietary Rights in a manner which would have a
material adverse effect on the use of any of the Proprietary Rights. The Company
has not received written notice of any pending conflict with or infringement
upon such third party proprietary rights.

         (xiv)    The Company has an authorized, issued and outstanding
capitalization as set forth in the Offering Documents; all of the issued shares
of capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the descriptions thereof
contained in the Offering Documents; and none of the issued shares of capital
stock of the Company has been issued in violation of any preemptive or similar
right. Except as described in the Offering Documents, there are no outstanding
(A) securities or obligations of the Company convertible into or exchangeable
for any shares of capital stock of the Company, (B) warrants, rights or options
to subscribe for or purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations or (C) obligations for the
Company to issue such shares, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or obligations.

         (xv)     Except as described in the Offering Documents, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such securities
in the securities being registered pursuant to any registration statement filed
by the Company under the Act.

         (xvi)    The shares of Common Stock to be issued and sold to Investors
as provided in the Subscription Agreement have been duly authorized and when
issued and delivered against payment therefor, will be validly issued, fully
paid and nonassessable and will conform to the description thereof in the
Offering Documents, and there are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any shares
of the Common Stock issuable to Investors under the Company's Certificate of
Incorporation or by-laws or any agreement or other outstanding instrument to
which the Company is a party or is otherwise known to the Company.

         (xvii)   The Placement Agent's Shares have has been duly authorized
and, when issued and delivered against payment therefor, will be validly issued,
fully paid and nonassessable; and there are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or transfer of
the Placement Agent's Shares pursuant to the Company's Certificate of
Incorporation or by-laws or any agreement or other outstanding instrument to
which the Company is a party or is otherwise known to the Company.

         (xviii)  All offers and sales of securities of the Company issued prior
to the date hereof were at all relevant times duly registered or exempt from the
registration requirements of the Act or issued in compliance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations thereunder and were duly registered or the subject of an available

                                       7
<PAGE>

exemption from the registration requirements of the applicable state securities
or Blue Sky laws and all applicable securities laws and regulations of any
foreign country in which such securities were offered or sold.

         (xix)    The Company is not (A) in violation of its Certificate of
Incorporation or by-laws, (B) in violation of any statute, law, rule, code,
administrative regulation, ordinance, judgment, order or decree of any
government, governmental instrumentality, court, domestic or foreign, or
arbitration panel or other body applicable to it where such violation would have
a Material Adverse Effect or (C) in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, voting agreement, voting trust agreement, loan
agreement, bond, debenture, note or other evidence of indebtedness, lease,
sublease, license agreement, contract or other agreement or instrument to which
it is a party or by which it or any of its respective properties are bound or
affected ("Contracts"), where such defaults, singly or in the aggregate, would
have a Material Adverse Effect. To the knowledge of the Company, no other party
under any Contract is in default in any material respect thereunder which
affects the Company.

         (xx)     The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Subscription
Agreement, the Registration Rights Agreement and the Escrow Agreement. This
Agreement, the Subscription Agreement, the Registration Rights Agreement and the
Escrow Agreement have been duly and validly authorized, executed and delivered
by the Company, and each such agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
respective terms, except as rights to indemnity and contribution hereunder and
thereunder may be limited by the securities laws of the United States and except
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws or equitable principles affecting the enforcement of creditors'
rights generally;

         (xxi)    The issuance of the shares of Common Stock and the Placement
Agent's Shares, the execution, delivery and performance of this Agreement,
Subscription Agreement and the Registration Rights Agreement, the delivery of
the Placement Agent's Shares, and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with or result in
a material breach or violation of any of the terms or provisions of, or
constitute a material default under, or give rise to rights of termination
under, or result in the acceleration of any obligation under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any indenture, mortgage, deed of
trust, voting agreement, voting trust agreement, loan agreement, bond,
debenture, note or other evidence of indebtedness or result in a material breach
or violation of any of the terms or provisions of, or constitute a material
default under any lease, sublease, contract or other agreement or instrument to
which the Company is a party or by which the Company or any of its properties or
assets are bound or affected, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or by-laws of the Company or
a material violation of any applicable statute, law, rule, code, administrative
regulation, ordinance, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, or arbitration panel or other
body, having jurisdiction over the Company or any of its properties or
obligations.

                                       8
<PAGE>

         (xxii)   No consent, approval, authorization, license or order of or
from, or registration, qualification, declaration or filing with, federal,
state, local, foreign or other governmental authority or any person or court,
administrative agency, or other body is required for the consummation of the
transactions contemplated in this Agreement, or the Offering Documents, except
as may have been made or may be required obtained under FINRA, any federal or
state securities laws or Blue Sky laws or pursuant to Regulation D.

         (xxiii)  The Company is in compliance in all material respects with all
applicable federal, state and local environmental laws and regulations,
including, without limitation, those applicable to emissions to the environment,
waste management and waste disposal (collectively, the "Environmental Laws"),
except for any noncompliance as may be described in the Offering Documents, and
to the best of the Company's knowledge, there are no circumstances that would
prevent, interfere with, or materially increase the cost of such compliance in
the future. Except as set forth in the Offering Documents, there is no claim
under any Environmental Law, including common law ("Environmental Claim"),
pending or, to the knowledge of the Company, threatened against or affecting the
Company and, to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, events or incidents, including,
without limitation, releases of any material into the environment, that could
form the basis of any Environmental Claim against or affecting the Company or
its Controlled Subsidiaries.

         (xxiv)   The Company does not own or lease any real property.

         (xxv)    The Company (A) has paid all federal, state, local and foreign
taxes for which it is liable and has furnished all information returns it is
required to furnish pursuant to the Internal Revenue Code of 1986, as amended,
(B) has established adequate reserves for such taxes which are not due and
payable and (C) does not have any tax deficiency or claims outstanding, proposed
or assessed against it.

         (xxvi)   The Company maintains insurance of the types and in amounts
which it deems adequate for its business, all of which are in full force and
effect.

         (xxvii)  Other than set forth herein, there are no claims, payments,
issuances, arrangements or understandings, whether oral or written, for services
in the nature of a finder's or origination fee with respect to the sale of the
Units.

         (xxviii) Neither the Company nor, to the best of the Company's
knowledge, any of the Company's officers, employees, agents or any other person
acting on behalf of, at the direction of or for the benefit of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (a) might subject the Company or any other such person to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might have had a
Material Adverse Effect or (c) if not continued in the future, might result in a

                                       9
<PAGE>

Material Adverse Effect. The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.

         (xxix)   The Company has not relied on Meyers or its legal counsel for
any legal, tax or accounting advice in connection with the Offering.

         (xxx)    During the past five years, none of the current officers or
directors of the Company have been:

                  (a)      The subject of a petition under the federal
bankruptcy laws or any state insolvency law filed by or against them, or by a
receiver, fiscal agent or similar officer appointed by a court for their
business or property, or any partnership in which any or them was a general
partner at or within two years before the time of such filing, or any
corporation or business association of which any of them was an executive
officer at or within two years before the time of such filing;

                  (b)      Convicted in a criminal proceeding or a named subject
of a pending criminal proceeding (excluding traffic violations and other minor
offenses);

                  (c)      The subject of any order, judgment, or decree not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining any of them from, or
otherwise limiting, any of the following activities:

                  (i)      acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the foregoing, or
as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with any such activity;

                  (ii)     engaging in any type of business practice; or

                  (iii)    engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities law or federal commodity laws.

                  (iv)     the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated of any federal or state authority
barring, suspending or otherwise limiting for more than sixty (60) days their
right to engage in any activity described in paragraph (3)(i) above, or be
associated with persons engaged in any such activity;

                  (v)      found by any court of competent jurisdiction in a
civil action or by the SEC to have violated any federal or state securities law,
and the judgment in such civil action or finding by the SEC has not been
subsequently reversed, suspended or vacated; or

                                       10
<PAGE>

                  (vi)     found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.

                  (vii)    found by a court or an administrative agency to have
or is alleged to have violated any Canadian or foreign securities laws.

         (xxxi)   Neither the Company nor, to the knowledge of the Company, any
of its affiliates has, directly or through any agent, sold, offered for sale or
solicited offers to buy nor will any of the foregoing directly buy any security
of the Company, as defined in the Act, which is or will be integrated with the
sale of the Units in a manner that would require the registration, pursuant to
the Act, of the Offering.

         (xxxii)  During the period commencing on the date hereof and ending on
the Closing Date, the Company shall not, without prior notice to and consent of
the Placement Agent: (A) issue any securities or incur any liability or
obligation, primary or contingent, for borrowed money; (B) enter into any
transaction not in the ordinary course of business; or (C) declare or pay any
dividend on its capital stock,

         (xxxiii) Neither the Company nor any of its officers, directors, or
affiliates, has engaged or will engage, directly or indirectly, in any act or
activity that may jeopardize the status of the offering and sale of the Units as
an exempt transaction under the Act or under all applicable federal and/or state
securities or "blue sky" laws of any jurisdiction in which the Units may be
offered or sold.

         7.       Covenants of the Company.

                  The Company covenants that it will:

                  (a)      Notify Meyers immediately, and confirm such notice in
writing, (i) when any event shall have occurred during the period commencing on
the date hereof and ending on the Closing Date, as a result of which the
Offering Documents would include 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, and (ii) of the receipt of any notification with respect
to the modification, rescission, withdrawal, or suspension of the qualification
or registration of the Units, or of an exemption from such registration or
qualification, in any jurisdiction. The Company will use its best efforts to
prevent the issuance of any such modification, rescission, withdrawal, or
suspension and if Meyers so request, to obtain the lifting thereof as promptly
as possible.

                  (b)      Not make any supplement or amendment to the Offering
Documents unless such supplement or amendment complies with the requirements of
the Act and Regulation D and the applicable federal and/or state securities and
"blue sky" laws and unless Meyers shall have approved of such supplement or
amendment in writing. If, at any time during the period commencing on the date
hereof and ending on the Closing Date, any event shall have occurred as a result
of which the Offering Documents contains any untrue statement of a material fact

                                       11
<PAGE>

or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or if, in the opinion of counsel
to the Company or counsel to the Placement Agent, it is necessary at any time to
supplement or amend the Offering Documents to comply with the Act, Regulation D,
or any applicable securities or "blue sky" laws, the Company will promptly
prepare an appropriate supplement or amendment (in form and substance
satisfactory to Meyers) which will correct such statement or omission or which
will effect such compliance.

                  (c)      Deliver without charge to the Placement Agent such
number of copies of the Offering Documents and any supplement or amendment
thereto as may reasonably be requested by the Placement Agent.

                  (d)      Not, directly or indirectly, solicit any offer to buy
from, or offer to sell to any person any Units, except through the Placement
Agent.

                  (e)      Use its best efforts to qualify the Common Stock for
offering and sale under, or establish an exemption from such qualification or
registration under, the securities or "blue sky" laws of the jurisdictions as
may be required by the Placement Agent; provided, however, that the Company will
not be obligated to qualify to do business as a dealer in securities in any
jurisdiction in which it is not so qualified. The Company will not consummate
any sale of Common Stock in any jurisdiction or in any manner in which such sale
may not be lawfully made; in this regard the Company shall be entitled to rely
on the Placement Agent's representations herein, and the representations of
Investors in the Subscription Agreement and on the Blue Sky qualifications
affected by the Placement Agent's counsel.

                  (f)      At all times during the period commencing on the date
hereof and ending on the Closing Date, provide to each Investor or his Purchaser
Representative (as defined in Regulation D), if any, on request, such
information (in addition to that contained in the Offering Documents) concerning
the Offering, the Company and any other relevant matters, as it possesses or can
acquire without unreasonable effort or expense, and to extend to each Investor
or his Purchaser Representative, if any, the opportunity to ask questions of,
and receive answers from, the President or other Executive Officers of the
Company concerning the terms and conditions of the Offering and the business of
the Company and to obtain any other additional information, to the extent it
possesses the same or can acquire it without reasonable effort or expense, as
such Investor or Purchaser Representative may consider necessary in making an
informed investment decision or in order to verify the accuracy of the
information furnished to such Investor or Purchaser Representative, as the case
may be.

                  (g)      Provide to each Investor or his Purchase
Representative any information required to be delivered by Rule 502(b) of
Regulation D.

                  (h)      Disclose to each Investor, in writing, any material
relationship between such Investor's Purchaser Representative, if any, or its
affiliates, on the one hand, and the Company or its affiliates, on the other
hand, which, to the knowledge of the Company, then exists or is understood to be
contemplated or has existed at any time during the previous two years and any
compensation received or to be received as a result of such relationship.

                                       12
<PAGE>

                  (i)      Notify Meyers promptly of the acceptance or rejection
of any subscription. The Company shall not (i) accept subscriptions from, or
make sales of Units to, any prospective Investors who are not, to the Company's
knowledge, accredited investors, or (ii) unreasonably reject any subscription
for Units, provided, that the Company may reject subscriptions if it, in its
sole discretion, determines that, notwithstanding the lack of a maximum offering
amount, it desires to terminate the Offering when it is satisfied with the total
number of Units sold.

                  (j)      Cooperate with Placement Agent's counsel to file five
copies of a Notice of Sales of Securities on Form D with the SEC no later than
15 days after the sale of the Units, and/or such documents or certificates as
are required by any particular state "blue sky" law. The Company shall file
promptly such amendments to such Notice on Form D as shall become necessary and,
as requested by Meyers, shall also comply with any filing requirement imposed by
the laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish Meyers with copies of all such filings.

                  (k)      Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and sale of the Units
as exempt transactions under the Act or under the securities or "blue sky" laws
of any jurisdiction in which the Offering may be made. Without limiting the
generality of the foregoing, and notwithstanding anything contained herein to
the contrary, the Company shall not, directly or indirectly, engage in any
offering of securities which, if integrated with the Offering in the manner
prescribed by Rule 502(a) of Regulation D and applicable releases of the SEC,
may jeopardize the status of the offering and sale of the Units as exempt
transactions under Regulation D.

                  (l)      Apply the net proceeds from the sale of the Units as
set forth in the PPM.

                  (m)      Not, during the period commencing on the date hereof
and ending on the Closing Date, issue any press release or other communication,
or hold any press conference with respect to the Company, its financial
condition, results of operations, business, properties, assets, or liabilities,
or the Offering, without Meyers' prior written consent, except as required by
applicable securities laws and except as may be related to the marketing and
sale of its products in the normal course of business.

                  (n)      Provide each Investor with a full executed copy of
that certain Registration Rights Agreement by and between the Company and each
Investor in the form attached as an exhibit to the PPM (the "Registration Rights
Agreement") which agreement will provide that the Company shall file a
registration statement (the "Registration Statement") with the SEC within 30
days of the closing of a merger or other business combination with an operating
business ("Merger") or any other event pursuant to which the Company ceases to
be a "shell company," and a "blank check company" as defined under the Exchange
Act. Pursuant to the terms of the Registration Rights Agreement, the Company
shall use its best efforts to obtain an order of effectiveness from the SEC
declaring the registration statement effective as soon as reasonably possible,
but in no event later than 150 days from the closing of a Merger or 180 days if
the registration statement is subject to review and comment from the SEC and to
maintain the effectiveness of such registration statement until the date which
is the earlier of (i) at such time that the sale of all Registrable Securities

                                       13
<PAGE>

(as defined in the Registration Rights Agreement) covered thereby has been
completed, or (ii) at such time that all Registrable Securities covered thereby
may be sold without volume restrictions pursuant to Rule 144.

         8.       Payment of Expenses.

                  The Company shall pay all fees, charges, expenses and
disbursements relating to the Offering, including, without limitation, all fees,
charges, expenses and disbursements in connection with (a) the preparation,
printing, filing, distribution and mailing of the PPM and any supplement and
amendment thereto and all other documents relating to the Offering and the
purchase, sale and delivery of the Units, including the cost of all copies
thereof; (b) the issuance, sale, transfer and delivery of the Units, including
any transfer or other taxes payable thereon and the fees of any transfer agent
or registrar; (c) the registration or qualification of the Common Stock for
offer and sale under the securities laws of such states and other jurisdictions
as Meyers may designate (including, without limitation, all filing and
registration fees and the reasonable "blue sky" fees and disbursements of
Meyers's counsel); (d) legal fees of Meyer's counsel not to exceed $5,000; and
(e) printing, mailing, travel and lodging expenses and other out-of-pocket
expenses incurred by Meyers in connection with this Offering; provided, that all
out-of-expenses in excess of $200 shall be subject to the prior approval of the
Company, which approval shall not be unreasonably withheld. Upon Meyers's
request, the Company shall provide funds to pay all such fees, charges, expenses
and disbursements in advance.

         9.       Conditions of Placement Agent's Obligations.

                  The obligations of the Placement Agent pursuant to this
Agreement shall be subject, in its discretion, to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the Placement Agent, as of the date hereof and as of the Closing Date, with
respect to the performance by the Company of its obligations hereunder, and to
the following conditions:

                  (a)      On or prior to the Closing Date the Placement Agent
shall have been furnished such information, documents, certificates, and
opinions as it may reasonably require for the purpose of enabling it to review
the matters referred to in Section 6, and in order to evidence the accuracy,
completeness, or satisfaction of any of the representations, warranties,
covenants, agreements, or conditions herein contained, or as it may otherwise
reasonably request.

                  (b)      At the Closing, the Placement Agent shall have
received a certificate of the President and of the Chief Financial Officer of
the Company, dated as of the Closing Date to the effect that, as of the date of
this Agreement and as of the Closing Date the representations and warranties of
the Company contained herein were and are accurate, and that as of the Closing
Date the obligations to be performed by the Company hereunder on or prior
thereto have been fully performed. Notwithstanding the foregoing, the Company
hereby represents and warrants that at the Closing, the representations and
warranties contained herein shall be true and correct in all respects.

                  (c)      All proceedings taken in connection with the
issuance, sale, and delivery of the Units shall be satisfactory in form and
substance to Meyers and Meyers counsel.

                                       14
<PAGE>

                  (d)      There shall not have occurred after the date hereof,
at any time prior to each Closing: (A) any domestic or international event, act,
or occurrence which has materially disrupted, or in Meyers' opinion will in the
immediate future materially disrupt the securities markets; (B) a general
suspension of, or a general limitation on prices for, trading in securities on
any national securities exchange or the over-the-counter market; (C) any banking
moratorium declared by a state or federal authority; (D) any material
interruption in the mail service or other means of communication within the
United States; or (E) any change in the market for securities in general or in
political, financial, or economic conditions which, in Meyers' judgment, makes
it inadvisable to proceed with the offering, sale, and delivery of the Units.

                  Any certificate or other document signed by any officer of the
Company and delivered to Meyers or to Meyers' counsel at the Closing shall be
deemed a representation and warranty by the Company hereunder as to the
statements made therein. If any condition to Meyers obligations hereunder has
not been fulfilled as and when required to be so fulfilled, Meyers may terminate
this Agreement or, if Meyers so elects, in writing waive any such conditions
which have not been fulfilled or extend the time for their fulfillment. In the
event that Meyers elects to terminate this Agreement, Meyers shall notify the
Company of such election in writing. Upon such termination, neither party shall
have any further liability or obligation to the other except as provided in
Section 11 hereof.

         10.      Conditions of Company's Obligations.

                  The obligations of the Company pursuant to this Agreement
shall be subject, in its discretion, to the performance by the Placement Agent
in all material respects of its obligations hereunder and to the continuing
accuracy of the representations and warranties of the Placement Agent contained
herein.

         11.      Termination.

                  (a)      This Agreement is effective upon the date hereof and
shall remain in effect until (i) the Closing Date, or (ii) the earlier
termination as herein provided. The Agreement may be terminated as follows:

                  (i)      by either Party at any time prior to the expiration
of the Offering Period in the event that the other shall have failed to perform
any of its material obligations hereunder. In the event of any such termination
by the Company, the Placement Agent shall not be entitled to any amounts
whatsoever except as may be due under any indemnity or contribution obligation
provided herein or any of the Offering Documents, at law or otherwise.

                  (ii)     upon mutual agreement of the Company and Placement
Agent at any time prior to the expiration of the Offering Period.

                  (b)      Before any termination by the Placement Agent or by
the Company pursuant to this Section 11 shall become effective, the terminating
party shall give written notice to the other party of its intention to terminate
the Agreement (the "Termination Notice"). The Termination Notice shall specify

                                       15
<PAGE>

the grounds for the proposed termination. If the specified grounds for
termination, or their resulting adverse effect on the transactions contemplated
hereby, are curable, then the other party shall have ten (10) days from the
Termination Notice within which to remove such grounds or to eliminate all of
their material adverse effects on the transactions contemplated hereby;
otherwise, the Offering shall terminate.

                  (c)      Upon any termination pursuant to this Section 11, the
Placement Agent and the Company shall instruct the Escrow Agent to cause all
monies received with respect to the subscriptions for Units not accepted by the
Company to be promptly returned to such Investors without interest, penalty,
expense or deduction. The Company shall be responsible for any outstanding fees
owed to the Escrow Agent.

                  (d)      Neither party shall have any liability or continuing
obligation to the other upon termination of this Agreement in accordance with
paragraph 11 except that, regardless of which party elects to terminate, (i) the
Company agrees to reimburse the Placement Agent for, or otherwise pay and bear,
the expenses and fees to be paid and borne by the Company as provided for in
paragraph 8 above and to reimburse the Placement Agent for the full amount of
its actual out-of-pocket expenses for which it is responsible pursuant to the
terms hereof (which shall include, without limitation, the fees and
disbursements of the Placement Agent's counsel, travel and lodging expenses,
mailing, printing and reproduction expenses, and any expenses reasonably
incurred by the Placement Agent in conducting its due diligence) less amounts
previously paid to the Placement Agent in reimbursement for such expenses and
the advance against expenses delivered upon the execution of this Agreement, and
(ii) the provisions of paragraph 13 and the Indemnification Provisions in
paragraph 12 shall remain in full force and effect; provided further, that in
the event the Company terminates this agreement, except as otherwise provided
herein, prior to the consummation of the Offering, and within 90 days from the
date of such termination, consummates any financing, merger, acquisition or like
transaction introduced to, or considered by, the Company, during the term
hereof, the Placement Agent shall be entitled to receive an amount equal to 10%
of the aggregate amount of such financing. In the event the Placement Agent
arranges the sale of any securities under this Agreement, paragraphs 4, 5, 6, 7,
8, 12, 13, 14 and 15 shall survive the termination of this Agreement.

         12.      Indemnification and Contribution.

                  (a)      The Company agrees to indemnify and hold harmless the
Placement Agent, its officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all loss, liability, claim, damage, and expense whatsoever (which shall
include, for all purposes of this Section 12, but not be limited to, attorneys'
fees and any and all expense whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising primarily and directly out of, based
upon, or in connection with (i) any untrue statement or alleged untrue statement
of a material fact contained in the Offering Documents or in any document
delivered or written statement made pursuant to Section 7(f) in any application
or other document or communication (it being understood that neither the Company
nor any officer, director or employee shall provide any information to any
prospective Investor which is not contained in the Offering Documents) (in this

                                       16
<PAGE>

Section 12 collectively called an "application") executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to register or qualify the Units
under the "blue sky" or securities laws thereof or in order to secure an
exemption from such registration or qualification or filed with the SEC; or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 12(b) with respect to
the Placement Agent expressly for inclusion in the Offering Documents or in any
application, as the case may be; or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.

                  If any action is brought against the Placement Agent or any of
its officers, directors, partners, employees, agent, or counsel, or any
controlling persons of the Placement Agent (an "indemnified party"), in respect
of which indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
(the "indemnifying party") in writing of the institution of such action (but the
failure so to notify shall not relieve the indemnifying party from any liability
it may have other than pursuant to this Section 12(a)) and the indemnifying
party shall promptly assume the defense of such action, including the employment
of counsel (reasonably satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party shall have the right to employ its
own counsel in any such case, but the fees and expense of such counsel shall be
at the expense of such indemnified party unless the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or the indemnifying party shall not have
promptly employed counsel satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different from
or additional to those available to one or more of the indemnifying parties, in
any of which events such fees and expenses of one such counsel shall be borne by
the indemnifying party and the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties.
Anything in this paragraph to the contrary notwithstanding, the indemnifying
party shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to notify the
Placement Agent of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of the
Units, the Offering Documents, or any application.

                  (b)      The Placement Agent agrees to indemnify and hold
harmless the Company, its officers, directors, employees, agents, and counsel,
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to the Placement Agent in Section
12(a), with respect to any and all loss, liability, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 12, but not be
limited to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or

                                       17
<PAGE>

in connection with (i) statements or omissions, if any, made in the Offering
Documents in reliance upon and in conformity with written information furnished
to the Company as stated in this Section 12 with respect to the Placement Agent
expressly for inclusion in the Offering Documents, and (ii) the failure of the
Placement Agent to comply with the provisions of Section 2(c) hereof or with the
"blue sky" or securities laws of the jurisdictions in which the Placement Agent
solicits offers to buy or offers to sell any Units or any breach of any
representation, warranty, covenant or agreement of the Placement Agent contained
in this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability the Placement Agent may otherwise have, including liabilities
arising under this Agreement. If any action shall be brought against the Company
or any other person so indemnified and in respect of which indemnity may be
sought against the Placement Agent pursuant to this Section 12, the Placement
Agent shall have the rights and duties given to the indemnifying party, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 12(a) hereof.

                  (c)      To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section
12(a) or 12(b) hereof but it is found in a final judicial determination, not
subject to further appeal, that such indemnification may not be enforced in such
case, even though this Agreement expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks contribution under the
Act, the Exchange Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any officer, director,
employee, agent, or counsel of the Company, or any controlling person of the
Company), on the one hand, and the Placement Agent (including for this purpose
any contribution by or on behalf of an indemnified party), on the other hand,
shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Placement Agent, on the other hand; provided, however, that if
applicable law does not permit such allocation, then other relevant equitable
considerations such as the relative fault of the Company and the Placement Agent
in connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative benefits received
by the Company, on the one hand, and the Placement Agent, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of compensation payable to the Placement Agent pursuant to Section
5(a) hereof but before deducting expenses) received by the Company, and (y) the
compensation received by the Placement Agent pursuant to Section 5(a) hereof.

                  The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission, shall be determined by,
among other things, whether such statement, alleged statement, omission, or
alleged omission relates to information supplied by the Company or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Placement Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Placement Agent for contribution were determined by pro rata
or per capita allocation of the aggregate losses, liabilities, claims, damages,
and expenses or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 12(c). In no case shall the
Placement Agent by responsible for a portion of the contribution obligation in
excess of the Placement Agent's Compensation received pursuant to Section 5(a)

                                       18
<PAGE>

hereof. No person guilty of a fraudulent misrepresentation shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 12(c), each person, if any, who
controls the Placement Agent within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partners,
employee, agent, and counsel of the Placement Agent, shall have the same rights
to contribution as the Placement Agent, and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, employee, agent, and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this Section 12(c). Anything in this Section
12(c) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent. This Section 12(c) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.

                  (d)      Survival of Indemnities, Representations, Warranties,
etc. The respective representations and warranties of Meyers and the Company as
set forth in this Agreement or made by them respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of Meyers, the Company, or any of the
officers or directors of the Company or any controlling person, and shall
survive delivery of and payment for the Units.

         13.      Non-Solicitation.

                  The Company agrees that, for a period of one year from the
date hereof, it shall not solicit any offer to buy from or offer to sell any
person introduced to the Company by the Placement Agent in connection with the
Offering, directly or indirectly, any securities of the Company or of any other
entity, or provide the name of any such person to any other securities broker or
dealer or selling agent. In the event that the Company, directly or indirectly,
solicits, offers to buy from or offers to sell to any such person any such
securities, or provides the name of any such person to any other securities
broker or dealer or selling agent, and such person purchases such securities or
purchases securities from any other securities broker or dealer or selling
agent, the Company shall pay to the Placement Agent an amount equal to 10% of
the aggregate purchase price of the securities so purchased by such person.

         14.      Representations and Agreements to Survive Delivery.

                  All representations, warranties, covenants, and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants, and agreements at the Closing Date and, such representations,
warranties, covenants, and agreements, including the indemnification and
contribution agreements contained in Section 12, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Placement Agent or any indemnified person, or by or on behalf of the Company
or any person or entity which is entitled to be indemnified under Section 12(b),
and shall survive termination of this Agreement or the issuance, sale, and
delivery of the Units. In addition, notwithstanding any election hereunder or
any termination of this Agreement, and whether or not the terms of this
Agreement are otherwise carried out, the provisions of Sections 6, 7(a), 7(c),
10 and 12 shall survive termination of this Agreement and shall not be affected
in any way by such election or termination or failure to carry out the terms of
this Agreement or any part thereof.

                                       19
<PAGE>

         15.      Notices.

                  All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Placement
Agent, shall be mailed by certified mail, hand delivered, or sent by overnight
courier service, to Meyers Associates L.P. 45 Broadway, New York, New York
10006, Attention: Bruce Meyers, with a copy to Phillips Nizer LLP, 666 Fifth
Avenue, 28th Floor, New York, NY 10103, Attention: Elliot H. Lutzker, Esq.; or
if sent to the Company, Vision Acquisition III, Inc., 20 West 55th Street, 5th
Floor, New York, NY 10019, Attention: Antti William Uusiheimala, with a copy to
Feldman Weinstein & Smith LLP, 420 Lexington Avenue, Suite 2620, New York, NY
10170; Attention: David Feldman, Esq. All notices hereunder shall be effective
upon receipt by the party to which it is addressed.

         16.      Parties; Assignment.

                  This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Placement Agent and the Company and the persons and
entities referred to in Section 12 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
permitted assigns (which shall not include any purchaser, as such, of Units),
and no other person shall have or be construed to have any legal or equitable
right remedy, or claim under or in respect of or by virtue of this Agreement or
any provision herein contained. This Agreement may not be assigned by the
Placement Agent except upon the prior written consent of the Company.

         17.      Construction.

                  This Agreement shall be construed in accordance with the laws
of the State of New York, without giving effect to conflict of laws. Any or all
actions or proceedings which may be brought by the Company or Meyers under this
Agreement shall be brought in the federal or state courts having a situs within
the State of New York, New York County, and the Company and Meyers each hereby
consent to the jurisdiction of any local, state, or federal court located within
the State of New York, New York County and waive all objections to venue.

         18.      Entire Agreement.

                  This Agreement supersedes all prior agreement between the
parties with respect to the Units to be offered and sold hereunder and with the
subject matter hereof.

         19.      Severability.

                  If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future laws, such provision shall
be fully severable. This Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid or unenforceable provision there shall be

                                       20
<PAGE>

deemed added automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible to
cause such provision to be legal, valid and enforceable.

         20.      Headings.

                  The captions and headings used in this Agreement are for
convenience only and do not in any way affect, limit, amplify or modify the
terms and provisions of this Agreement.

         21.      Modification; Performance; Waiver.

                  No provision of this Agreement may be changed or terminated
except by a writing signed by the party or parties to be charged therewith.
Unless expressly so provided, no party to this Agreement will be liable for the
performance of any other party's obligations hereunder. Any party hereto may
waive compliance by the other with any of the terms, provisions and conditions
set forth herein; provided, however, that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver shall
be deemed to constitute or imply waiver of any other term, provision or
condition of this Agreement.

         22.      Counterparts.

                  This Agreement may be executed in counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement.

                  [Remainder of Page Intentionally Left Blank]

                                       21
<PAGE>

         If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.

                                       Very truly yours,

                                       VISION ACQUISITION III, INC.

                                       By: _____________________________________
                                           Name:  Antti William Uusiheimala
                                           Title: President
Accepted as of the date
first above written:

Meyers Associates L.P.

By: ______________________________
    Name:  Bruce Meyers
    Title: President

                                       22

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